Macquarie Research Technology4 January 2019 2Top Picks 2019Shopify: Growth, Innovation and Dilution Fig 1 Shopify recovers ad spend per merchant within four monthsSource: Company Documents, Macquarie Research, January 2019Fig 2 Since 2014 shareholders have been diluted by 171%Source: Company Documents, Macquarie Research, January 2019Shopify: Strong Growth, Compelling Business Model, but High Valuation and Dilution: Shopifyoffers a classic growth profile – in that revenue growth is almost entirely organic, and returns on capitalhave the prospects of being high thanks to that growth. In addition, it operates a SaaS model, whichreduces the need for capital in order to grow. SHOP has a high growth profile, faces weak competitionand we believe will likely outperform on profitability improvement. The downside is that it trades at avery high multiple and shareholders never know when another round of what we believe areunnecessary capital raises will occur.-1.002.003.004.005.006.00$-$200$400$600$800$1,000$1,200$1,400$1,600 2015A2016A2017A Mo nth s $ U SAverage Revenue Per MerchantAdvertising Spent per new Merchant Months To Pay Back Ad Investment-20,00040,00060,00080,000100,000120,000140,000 2014A2015A2016A2017A2018E2019E Sah are s (0 00) CLS is trading belowbook value.SHOP continues to seehigh growth, limitedcompetition and acompelling businessmodel.OTEX remains relativelyleveraged with littleorganic growth,suggesting a stagnantshare price.Macquarie Research Technology4 January 2019 3Celestica: Low Valuation – High Cash FlowFig 3 Improving Sales Mix Source: Company Documents, Macquarie Research, January 2019Celestica offers great value: Flush with cash and trading at depressed levels (3.2x EV/EBITDA) webelieve CLS should be owned. The company has transitioned its business into higher-margin areas,should see cash flow increase throughout the year thanks to working capital coming down andprofitability improving, and will likely act on its Normal Course Issuer Bid (NCIB). CLS is trading at leastone standard deviation below its average P/E and EV/EBITDA range and below book value. CGI: One Way or AnotherFig 4 Accenture returns more of its FCF to shareholders – and trades at a premiumSource: FactSet, Macquarie Research, January 2019Acquisition or buybacks could push shares higher: CGI has a strong balance sheet, very healthycash flow and a history of making smart, transformative acquisitions. Valuation remains relatively highby historic comparison, but we see a pathways for further multiple expansion if the company puts itsbalance sheet to work. CGI trades at a discount to Accenture, even though it is now more profitable.The key reason, we believe, is that Accenture returns far more of its FCF to shareholders in dividendsand buybacks.Enterprise25% Advanced TechnologySolutions33% Cloud & Connectivity 42% 2018E --EBIT 3.2% Enterprise 18% AdvancedTechnologySolutions42% Cloud &Connectivity 40% 2019E --EBIT 4.3% 0% 20% 40% 60% 80% 100% 120% 140% 2014A2015A2016A2017A2018A % of FCF Returned to Investors (Dividends or Buy-Backs) GIBaACN Macquarie Research Technology4 January 2019 4BlackBerry: A Software CompanyFig 5 Software is now the vast majority of revenue Source: Company Documents, Macquarie Research, January 2019Transition complete – 83% recurring revenue: BlackBerry appears to be entering 2019 in goodshape. Its growth profile looks promising thanks to the recent acquisition, the ability of the Enterprisebusiness to increase ASPs and the growing importance of QNX. Valuation is down well below compssuch as VM-Ware and Citrix, and the business has fully transitioned to a high=margin, highly recurringsoftware model. OTEX: Debt High – Growth LowFig 6 Debt Limiting Capacity to Grow by AcquisitionSource: Company Documents, Macquarie Research, January 2019Low Valuation, High Profitability, No Growth: OTEX has grown on the back of several acquisitionsover the past few years – largely financed through debt and equity issues. The balance sheet remainsrelatively leveraged, and therefore the engine for growth lacks ample fuel. We believe it will take thecompany two years to significantly de-leverage to the point where M&A can drive growth again. In themeantime organic growth is very low. Handsets39% SAF35% Software23% Other3% 2016A--Sales $2,193M Handsets7% SAF12% Software81% 2018A --Sales $967M$1.00$1.20$1.40$1.60$1.80$2.00$2.20$2.40$2.60$2.80$3.00 - 500 1,000 1,500 2,000 2,500 3,000 3,500 2013A2014A2015A2016A2017A2018A2019E2020E US$US$M SalesNet DebtEPS 。。。。。。