Montreal’s Lightspeed POS Inc.‘s revenue and customer base got a boost in the midst of the COVID-19 pandemic, even as growth in the amount of money processed by its cloud-based point-of-sale platform slowed.
In reporting its fiscal first-quarter 2021 earnings Thursday, the company said that small and medium-sized businesses shifted away from legacy point-of-sale systems to embrace its digital, integrated suite of products during the pandemic.
Though business slowed significantly in April, it soon accelerated, pushing revenue up 51 per cent to US$36.2-million. But the company’s loss for the quarter more than doubled from a year earlier to US$20.1-million, as it increased both general and research-and-development costs and paid out compensation related to a number of recent acquisitions.
In the quarter ended June 30, the total customer locations it served grew to 77,000, up 34 per cent from a year earlier and 2 per cent from the end of April at the height of the pandemic’s uncertainty. Though a higher-than-usual number of customers left Lightspeed during the quarter, the company said this was offset by the pace of new-customer growth.
Lightspeed’s share price on the Toronto Stock Exchange was volatile when markets opened Thursday. It closed down 1.82 per cent to $41.07.
The total volume of transactions processed by Lightspeed’s software grew 17 per cent, year over year, to more than US$5.4-billion. Transaction volumes collapsed in April – among its restaurant clients, the amount of payments Lightspeed processed fell by more than 80 per cent – but grew through May and June, the company said.
The growth of that transaction volume significantly decelerated from the prior quarter, however; in the quarter that ended in March, its year-over-year transaction-volume growth was 70 per cent.
Despite this deceleration, Bank of Montreal analyst Thanos Moschopoulos said Thursday morning that the transaction volume growth was a sign that Lightspeed was weathering the pandemic with “significantly more resilience” than he had expected. This was boosted, he added, by the fact that the company said e-commerce transactions nearly doubled year over year.
Royal Bank of Canada Capital Markets analyst Paul Treiber said Lightspeed’s results showed that its customer base was resilient. However, he held a conservative outlook on the stock because of the lack of visibility over future customer turnover. “While growth may re-accelerate in the future, we are maintaining our neutral stance on the stock, as valuation appears high relative to growth deceleration,” he wrote in a research note.
Though it did not announce any significant acquisitions in the quarter, Lightspeed has boosted its growth in recent years by buying up competitors and similar businesses around the world. In January, Lightspeed said it would buy German point-of-sale company Gastrofix GmbH for more than $100-million in cash and stock, with some of that value tied to hitting performance targets. It marked the fourth Lightspeed acquisition since going public in March, 2019.
These acquisitions have given Lightspeed footprints in markets around the world, including other European markets as well as Australia. The company said that this has helped boost its fortunes during the pandemic.
"This diversity is proving to be an asset as countries and economies around the world recover at differing rates," said Brandon Nussey, Lightspeed's chief financial officer, on an analyst conference call Thursday morning.
Earlier this week, Lightspeed announced a partnership with U.S. payment platform Stripe Inc. to provide business financing of up to US$50,000 for U.S. retail customers that use its payment-processing platform. Many retail businesses struggle to get loans, and an increasing number of commerce platforms, including Ottawa’s Shopify Inc., have begun to offer similar financing services in recent years.
The company has also partnered with Google to help physical retailers build an online presence during the pandemic.
Though Lightspeed did not provide a forecast for the remainder of its 2021 fiscal year on Thursday, it said it expected revenue of between US$38-million and US$40-million for its next quarter.
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