Lightspeed Commerce Inc. LSPD-T reported better-than-expected earnings Thursday and maintained its financial forecast for the year – while signalling it plans to keep hiring rather than laying off employees as many other technology companies have.
“We’re in a strong position, the products are better than they’ve ever been, and we’re more competitive than ever,” chief executive officer Jean Paul Chauvet in an interview with The Globe and Mail. “For us, there are no choppy waters right now.”
Montreal-based Lightspeed, which sells software to restaurants, retailers, golf and hospitality businesses to run their point of sale systems, accept payments and handle tasks including inventory management, said it generated revenue of US$173.9-million in its first quarter ended June 30, up 50 per cent from the same period a year ago.
The company booked a net loss of US$100.8-million, more than double the level a year earlier. However, its adjusted operating loss, which analysts track more closely and which Lightspeed says more truly reflects its financial health, as it excludes acquisition-related costs and stock-based compensation, was US$15.6-million. Analysts had forecast US$168.4-million revenue and a US$16.2-million operating loss.
Gross transaction volume, the value of sales transacted over its platform, increased by 36 per cent to US$22.1-billion. GTV from existing customers increased by 25 per cent.
Lightspeed held to earlier targets of full-year revenue ranging between $740-million and US$760-million, and an adjusted operating loss of US$35-million to US$40-million even after factoring in expectations of high inflation and a worsening economy. The company is holding to a goal of breaking even on an operating basis in the year ended March 31, 2024.
“While impossible to predict the severity of any recession, we have stress-tested our forecasts based on various economic outcomes,” chief financial officer Asha Bakshani told analysts on a conference call.
The company said customers continue to adopt its payments offering, which doubles average revenue per client. Just under 15 per cent of customers now use Lightspeed for payments, up from 12 per cent in the preceding quarter. Lightspeed aims to have half its customers on its payments service within four years, which it believes would boost free cash flow to 20 per cent of revenues.
Nonetheless, the stock price on Thursday closed down 11.9 per cent at $27.71 on the Toronto Stock Exchange after rising by 36 per cent over the previous five trading sessions. The selloff may reflect investor disappointment that Lightspeed didn’t increase its guidance, National Bank Financial analyst Richard Tse said in a note. He and other analysts said the stock remained relatively undervalued compared to other tech stocks.
Lightspeed stock is down more than 80 per cent from its 52-week high after a critical report last September by short-seller spruce Point Capital Management that the company has said contained inaccuracies and mischaracterizations, and exacerbated by a broad sell-off of tech stocks.
Another negative, Mr. Tse wrote, was that Lightspeed added just 3,000 physical locations during the quarter, ending with 166,000 (Lightspeed also has 160,000 e-commerce-only customers mostly inherited from a 2021 acquisition). Mr. Nussey said the muted gains were due to Lightspeed shedding thousands of smaller customers such as convenience stores and food trucks that it had picked up in its recent spate of acquisitions and that “do not represent a compelling fit” for the company.
Lightspeed, which has about 3,000 employees, has also fared far better in a post-pandemic-lockdown world than fellow Canadian commerce software giant Shopify Inc., which provides tools used primarily by e-commerce merchants to run their businesses. Shopify last week cut 1,000 jobs, as chief executive officer Tobi Lutke acknowledged he had been wrong assuming a shift to online shopping during the pandemic would lead to permanently accelerated consumer adoption of e-commerce.
By contrast, 90 per cent of Lightspeed’s business comes from physical locations such as bike stores, restaurants, golf clubs and hotels – businesses that are more complex to manage than a typical e-commerce company, and which have done better as traffic has started returning to normal.
“We’re not an e-commerce company, we’re not a pure digital company” that benefitted from the shift to online channels as other digital companies did, Mr. Chauvet said. “COVID for us was not great. But the world we’re in today is good for us.”
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