Montreal-based Lightspeed POS Inc. has announced its third acquisition since going public seven months ago and the largest in its 14-year history.
The cloud-based point-of-sale software provider said late Sunday it had paid US$35.3-million in cash and US$7.7-million in Lightspeed shares for Australia-based Kounta Holdings Pty Ltd., whose point-of-sale software is used by more than 7,000 cafés, restaurants and boutique hotels in Australia and New Zealand.
National Bank of Canada analyst Richard Tse said Kounta has few overlapping customers with Lightspeed, which provides software for 51,000 retailers and restaurants to manage inventory and accounting and provide payments services using multiple computer devices. Additional performance-based payouts through 2021 could bring the total deal value to US$61.4-million.
Lightspeed chief financial officer Brandon Nussey said in an interview his company paid “a fair price” to Kounta’s owners – the company’s management and Australian accounting software company MYOB Technology Pty Ltd. – amounting to 6.7 times its US$6.4-million in revenue in the year ended June 30.
“We’re not looking for bargains as part of this [acquisition] strategy,” Mr. Nussey said. “We’re buying good healthy businesses [and] we have to pay market price for those.”
With the deal, Lightspeed has now committed up to US$110-million on deals since its initial public offering, which raised $276-million in March. In addition to Kounta, Lightspeed bought Montreal-based Chronogolf, a provider of cloud-based facilities management software for golf courses, and Swiss-based iKentoo, a similar but smaller player to Lightspeed operating in Europe and South Africa.
BMO Nesbitt Burns analyst Thanos Moschopoulos said the latest deal “is very consistent” with the company’s strategy to do “tuck-in” acquisitions to expand its geographic and market presence. As part of the deal, MYOB will get payments of US$3.4-million split into three annual instalments to market Lightspeed’s offerings to its clients. The deal is expected to close this month.
The company still has a considerable war chest for deals, including an estimated US$130-million to US$140-million of cash, according to Mr. Moschopoulos, and a US$55-million line of credit from Canadian Imperial Bank of Commerce. Mr. Nussey said “we remain active in conversations” about potential deals, but wouldn’t say if Lightspeed will do another one by the end of its fiscal year next March. “We’re always entertaining opportunities. There’s nothing imminent though. This is a really big market opportunity and it’s really fragmented.”
Lightspeed stock has more than doubled from its $16 IPO price on the Toronto Stock Exchange, although it is well off its high of $49.70 amid a sell-off of subscription software stocks in the past three months.
The company is set to report second-quarter earnings on Nov. 7; it has forecast revenue of US$27-million to US$27.5-million for the three months ended Sept. 30 and an operating loss of between US$5.5-million and US$6-million.
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