Lightspeed Commerce Inc. LSPD-T is betting that its payment-processing services will guide it to profitability after a wave of acquisitions and pandemic reopenings have boosted the customer base that the Montreal company hopes to sell those services to.
The point-of-sale, payments and e-commerce company is now used by 163,000 restaurants, retailers and hospitality providers. Its revenue grew 78 per cent to US$146.6-million in the quarter that ended in March, from US$82.4-million a year earlier, beating analysts’ consensus forecast of US$141-million.
The boost was largely driven by an increased payments volume, the company said Thursday as it announced its latest financial results. The average monthly revenue it receives per retailer also grew by 35 per cent, to US$270 from US$200. Lightspeed’s Toronto-listed shares experienced volatile trading after markets opened, but had jumped by 10.11 per cent to $28.65 at Thursday’s close.
The growth news was released after a rocky eight months in which Lightspeed’s share price collapsed nearly 80 per cent, after a short-seller report raised questions about the company’s financials and investors began a massive selloff of tech companies. That growth also came with caveats: Lightspeed’s loss widened to US$114.5-million in the quarter or 77 US cents a share, from US$42-million or 34 US cents last year.
After a pile of acquisitions in recent years, Lightspeed has been integrating its services for retailers and restaurants into one-stop-shop platforms, combining long-time services such as point-of-sale software with e-commerce offerings such as inventory management. In an interview Thursday, chief executive officer Jean Paul Chauvet said these integrations will boost the revenue it gets from each client, especially as lockdowns end around the world. “The vast majority of our customers are merchants that run in the physical world,” he said.
The CEO said be believed that payment processing will be a key part in boosting this revenue and helping Lightspeed reach profitability, at least on adjusted terms. “It’s very easy for us to envision a world” in the next two or three years, Mr. Chauvet said, where half of the transactions processed by Lightspeed customers are handled by Lightspeed’s own payment service. “Payments is very transformative for Lightspeed.”
In an e-mail, Bank of Montreal analyst Thanos Moschopoulos said Thursday’s results show that Lightspeed is “on track, despite the sharp selloff that the stock has experienced in recent months.” He, too, said he believed payment processing was a path to profitability, since the business line “is substantially increasing the revenue they can capture from a given customer.”
National Bank of Canada analyst Richard Tse noted that the company wouldn’t break even on its earnings before interest, taxes, depreciation or amortization – Lightspeed’s own key metric for profitability targets – until 2024. Still, he said the company’s results and outlook were both “solid” before even considering the benefits it could see from integrating its services into single platforms for restaurant and retail customers.
Lightspeed forecast a brighter next few years than some analysts did, with revenue of between US$740-million and US$760-million over its next fiscal year, and an adjusted lost of US$35-million to US$40-million, equal to about 5 per cent of its revenue.
But industries the world over are reeling from record inflation, squeezing the disposable income of the very consumers Lightspeed hopes will deliver it revenue. Asked about this, Mr. Chauvet said that he hopes his company’s clients will turn to Lightspeed products to automate some of their back office as they try to do more with less.
Last September, short-seller Spruce Point Capital Management alleged it had found inconsistencies in Lightspeed’s disclosures about its customer base, its potential market and revenue per customer. The company said Spruce Point’s allegations contained “inaccuracies and mischaracterizations,” but its share price soon began to plummet. The damage was exacerbated by both the broad selloff of tech stocks and the rise of the Omicron COVID-19 variant, which threw many jurisdictions’ (and retailers’) reopening plans into disarray.
Dax Dasilva stepped down from the CEO position last February, four months after the short-seller report and 17 years after he founded the company, becoming executive chairman, as its president, Mr. Chauvet, took over the top job.
With a report from Sean Silcoff.
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