Lightspeed POS Inc. shares hit an all-time high Thursday after the Montreal commerce-software provider posted sharply higher-than-expected revenue gains for the first quarter and increased its financial forecast for the year as it benefited from reopening economies.
The company booked US$115.9-million in revenue during the quarter ended June 30, more than 20-per-cent higher than analyst expectations and its own cautious forecast earlier in the year. The result was 220-per-cent higher than its revenue a year earlier, when its restaurant and physical retailer customers were hit by shutdowns during the pandemic. Lightspeed’s net loss widened to US$49.3-million from US$20.1-million a year earlier, but analysts pay closer attention to its adjusted net loss, which was 5 cents a share, better than the 9-cent loss they expected.
“It seems like they’re firing on all cylinders,” said BMO Capital Markets analyst Thanos Moschopoulos in an interview. “What surprised them and us was just how quickly things seem to have come back … this is quite a larger beat than I was looking for.”
Lightspeed’s results were helped by acquisitions of competitors Vend, ShopKeep and Upserve in the past year, but even factoring out those deals, it posted a 78-per-cent increase in its subscription and transaction revenues, compared with a year ago. The company’s hospitality customers accounted for a 380-per-cent revenue growth year-over-year, while transaction revenue – driven by customers’ adoption of its payment-processing service – more than quintupled to US$56.5-million.
Gross transaction volumes (GTV) processed by Lightspeed’s 150,000 customers in the quarter was US$16.3-billion, 203 per cent above the same period a year earlier – and up 51 per cent from $10.8-billion just one quarter earlier. Lightspeed’s average revenue per user increased by 44 per cent, to $230 year over year.
“We were optimistic that as economies reopened our customers would be beneficiaries, and we saw that happen in this quarter,” chief financial officer Brandon Nussey said on a call with analysts. He said the company would “remain conservative in our near-term view” given the surge in COVID-19 cases from the Delta variant.
Company executives said they believed they could increase Lightspeed’s share of its GTV that generates payments revenue to 50 per cent in the future from 10 per cent now. That would translate to hundreds of millions of dollars in added revenues, based on the fees Lightspeed charges on the payments that pass through its platform. Jean Paul Chauvet, Lightspeed’s president, said the company has seen strong uptake as it has rolled out payments services to Europe this year.
“The numbers were strong across the board,” National Bank Financial analyst Richard Tse said in an e-mail. “Perhaps more importantly, organic growth was equally strong and with recent acquisitions adding critical mass, we think that will add momentum to their growing market share gains.”
Lightspeed increased its revenue forecast to between US$510-million and US$530-million for the year, up from its prior estimate of US$430-million to US$450-million, and said it expected an adjusted operating loss before interest, taxes, depreciation and amortization of about US$35-million.
Lightspeed stock touched an intraday high of $121.94 on the Toronto Stock Exchange before closing at $119.89, up 7.1 per cent on the day. The stock has almost tripled in the past 12 months.
Lightspeed has had a transformative year. The company, which targets restaurant/hospitality providers and retailers that have complex inventory needs such as bike shops, electronics merchants and jewellers, announced deals to buy five companies for more than US$2-billion in the past 10 months. After going public on the Toronto Stock Exchange in March, 2019, it cross-listed on the New York Stock Exchange last September, raising nearly US$400-million.
In addition to buying three point-of-sale competitors, Lightspeed announced two deals in June for companies that expand its focus beyond its core offering – selling cloud-based, point-of-sale software that replaces legacy terminal providers such as NCR or Micros.
Lightspeed bought Ecwid Inc., an emerging rival to Canadian commerce software giant Shopify Inc., which provides Lightspeed with an e-commerce platform, enabling its customers to sell through a range of social-media sites and marketplaces. It also bought NuOrder Inc., which provides a platform for 100,000 retailers to automate wholesale product ordering from thousands of brands. That will help Lightspeed accelerate its nascent strategy to supply goods to its clients.
The NuOrder deal closed last month and the Ecwid purchase is expected to close by early fall.
Lightspeed is set to roll out revised versions of its core software for its customers in the coming months, stitching in technology and features inherited from its acquisitions. Further out, the company is looking to add a suite of financial services offerings that could include payroll management or tax services, CEO Dax Dasilva said in an interview. “They’re things we know our customers procure from other vendors, and they’re already trusting Lightspeed with a lot of their core financial services,” he said. “We really do believe we would be providing many more of those things.” He said the company could either build the offerings themselves “but we may also partner with or acquire” enterprises that sell them.
To reflect its expanding strategy beyond providing point-of-sale software, Lightspeed sought shareholder approval Thursday to change its name to Lightspeed Commerce Inc.
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