Payments-and-retail platform Lightspeed Commerce Inc. LSPD-T said pressure from an e-commerce slowdown is weighing on its business, as the Montreal-based technology company warned its revenue for the current fiscal year is expected to come in at the low end of its forecast range.
On Thursday, Lightspeed posted a higher-than-anticipated loss of US$814.8-million for its latest quarter, largely because of a recent spree of acquisitions, with revenue up year-over-year to US$188.7-million from US$152.7-million. The company laid off nearly one-10th of its work force last month.
In an interview, chief executive Jean Paul Chauvet said consumer spending is a sector-wide concern, but it particularly affects Lightspeed because it represents over half of its total revenue. “All in all today, though, I’m actually quite happy with our numbers,” he said of the quarter ended Dec. 31, 2022, which showed the company broke even on an adjusted earnings basis.
Lightspeed believes consumer spending will remain under pressure in the near term, and that this presents a headwind in the months ahead. The company foresees annual revenue to be between US$730-million to US$740-million.
“I think the tech market is shifting in general, and so are we, from a grow-at-all-costs mentality to ensuring that there is viability and profitability in the long run. Stock prices go up and down, but the companies that survive are those that have a fundamentally strong business,” Mr. Chauvet said.
Shares of Lightspeed were down 6.1 per cent, closing at $23.37 on the Toronto Stock Exchange upon Thursday’s financial results.
National Bank of Canada managing director Richard Tse said investors aren’t willing to give Lightspeed a “free pass.” The company’s “cautious commentary on the macro environment is causing pause for the stock,” Mr. Tse said in an e-mail, adding that the company has faced significant volatility over the past few years.
Lightspeed provides point-of-sale, inventory and payment software for global retailers, restaurants and hospitality businesses. Although this means it competes with other e-commerce companies, such as Ottawa-based Shopify Inc. SHOP-T and San Francisco-based Square owner Block Inc., Mr. Chauvet said Lightspeed is “focused more so than others on targeting the high-end portion of the sector – Michelin stars, fine dining, table service, and that kind of thing.”
This focus is meant to capture clients that deliver high merchandise value, Mr. Chauvet added. But that hasn’t been easy for Lightspeed or other companies in recent months. While many retailers had anticipated the COVID-19 pandemic to permanently change how people shop, consumers have gradually reduced their online spending.
These headwinds for Lightspeed prompted the company to chop around 300 jobs in January, many of those being management roles. Doing so significantly reduced its operating costs, Mr. Chauvet said.
The company-wide restructuring from the layoffs is in line with its strategy to focus on a single product, rather than many of them, Mr. Chauvet said. Calling January’s cuts a “one-and-done situation,” he added that Lightspeed is now hiring again and plans to employ around 150 or so new staffers in the coming months.
Over several years, Lightspeed has acquired many competitive products and even the companies that make them. In 2021, it bought New Zealand-based Vend Ltd., a retail-management software maker, for about US$350-million in cash and stock. Shortly before that, it purchased Rhode Island-based online restaurant-managing platform Upserve Inc. for US$430-million, and cloud-based point-of-sale system ShopKeep Inc. from New York for US$440-million.
Now, Lightspeed believes this strategic shift to a single product from those acquisitions will help fulfill its goal of breaking even or turning positive its earnings before interest, taxes, depreciation and amortization in fiscal year 2024, Mr. Chauvet said.
But in the latest quarter, the company took a non-cash goodwill impairment charge of US$748.7-million. That charge, Mr. Chauvet said, arose from an accounting test, and was related to Lightspeed’s spree of acquisitions, which grew its goodwill to US$2.1-billion.
Temur Durrani