During fiscal Q3 2024, Lightspeed generated nearly $240 million USD in total revenue—a 27 percent year-over-year increase that topped its prior outlook of $232 million to $237 million.
“As we balance the priorities of growth and profitability, the scale will tip towards growth.”Jean Paul Chauvet, Lightspeed Commerce
Lightspeed also hit positive adjusted earnings before income, taxes, depreciation, and amortization (EBITDA) for the second consecutive quarter and second as a public firm, pulling in $3.6 million, nearly twice the $2 million it previously anticipated, keeping with its promise to be breakeven or better by this metric this year. The company narrowed its net loss to $40.2 million on both a quarterly and year-over-year basis during the fiscal third quarter.
But despite surpassing its forecasts, Lightspeed’s stock price has fallen more than 24 percent since market open today on both the Toronto and New York Stock Exchanges at publication time, as the company’s latest guidance and disciplined approach to growth has not quite resonated with investors.
In the coming fiscal year, Lightspeed has vowed to focus on growing the company’s top-line revenue without sacrificing the progress it has made in becoming adjusted EBITDA positive. By doing this, the firm looks to achieve a better balance between revenue growth and profitability—the two sometimes competing demands that Lightspeed and its publicly traded peers in the tech sector currently face from investors.
“I want to stress that growth will be our top priority,” Lightspeed CEO Jean Paul (JP) Chauvet said during the company’s fiscal Q3 earnings call. “We intend to continue to generate positive adjusted EBITDA on an annualized basis. But as we balance the priorities of growth and profitability, the scale will tip towards growth.”
Lightspeed provides commerce and point-of-sale software to restaurants, retailers, and hospitality providers. The company’s shares plummeted from their COVID-19 pandemic highs amid the broader tech downturn, a drop fuelled partly by a short-seller report critical of the firm’s metrics, including its customer count and gross transaction volume (GTV).
Since early 2022, Chauvet replaced Lightspeed founding CEO Dax Dasilva, the company has overhauled its C-suite, focused on converting its bevy of acquisitions into new flagship products, laid off 10 percent of its staff, and set its sights on profitability and acquiring larger, higher-value customers in a push to woo investors and win back some of its lost stock value.
Lightspeed remains well capitalized today, closing out fiscal Q3 with more than $749 million in cash and cash equivalents—down $12 million from the previous quarter.
The company still sees “massive opportunity” for growth, said Chauvet, who noted that many of Lightspeed’s target customers continue to use legacy systems. He anticipates that the majority will switch to cloud-based offerings over the next few years.
Chauvet argued that Lightspeed is “well positioned” to benefit from such a shift. “With payments now tightly integrated into [our] software platform and mandatory for all eligible customers, we believe our unit economics will only improve.”
He also indicated that the once highly-acquisitive Lightspeed is considering mergers and acquisitions (M&A) once more, describing M&A as “part of [Lightspeed’s] DNA” and citing the company’s long track record of identifying, buying, and integrating other companies.
Lightspeed raised the lower end of its revenue forecast for this fiscal year to between $895 million and $905 million and asserted it remains on track to be EBITDA positive in fiscal Q4.
However, Lightspeed said it “remains cautious on [the company’s] near-term prospects” given the macroeconomic uncertainty and the pace of unified payments adoption in international markets, noting fiscal Q4 is also typically its weakest for GTV.
Feature image courtesy Lightspeed Commerce.