Canada NewsNews

Lightspeed Commerce gets its groove back as stock bounces higher than rival Shopify

The company’s stock is up 30 per cent this week

Article content

Lightspeed Commerce Inc., the Montreal-based maker of retail software, is getting its groove back.

Advertisement 2

Story continues below

Article content

The company’s stock is up about 40 per cent over the past week or so, a glimmer of hope for a company that started to talk about itself as a rival to e-commerce heavyweight Shopify Inc. during the pandemic, and then stumbled badly amid attacks from a short seller and the broader retreat of investors from digital upstarts that put growth ahead of profit.

Lightspeed on May 19 reported that revenue increased 78 per cent in the quarter ended March 31 from a year earlier, as gentler COVID-19 restrictions allowed the restaurants, independent retailers, golf clubs and other retail businesses that use Lightspeed’s software to fully reopen.

Losses widened to 77 cents per share, compared with a loss of 34 cents per share in the same period in 2021, but the company said it was on track to break even by March 2024 while still achieving revenue growth of around 35 per cent. The prediction marked the first time Lightspeed had set out a timeline for profitability.

Advertisement 3

Story continues below

Article content

“We are delivering on what we say we are going to do,” chief executive Jean Paul Chauvet said in an interview with the Financial Post’s Larysa Harapyn. “Our investors are going to see that at some point and the stock should follow. We’re focusing on what we can control. We are building a long-term company. We want a company that creates a tonne of value long term.”

We are delivering on what we say we are going to do

Jean Paul Chauvet

Lightspeed’s stock price was trading around $30 per share on the morning of May 20, an increase of about 40 per cent since May 11, even as much of the recent news coming from global stock markets has been negative. The S&P/TSX composite index was little changed ahead of the long week, and Shopify Inc., Lightspeed’s bigger rival in digital commerce, was up only three per cent after crashing back to pre-pandemic levels earlier this month amid the technology rout.

Advertisement 4

Story continues below

Article content

Adolescence has been rocky for Lightspeed, which went public in Toronto to much fanfare in January 2019, 14 years after Dax Dasilva started the company in an off-the-beaten-track corner of Montreal.

Lightspeed, which initially focused on point-of-sale software for restaurants and mom-and-pop retailers, was walloped by the lockdowns that followed the early waves of the pandemic. Its share price plummeted 72 per cent to $13.50 on March 20, 2020, from a high the previous August, as COVID-19 restrictions forced many of its clients to close.

Investors then had a change of heart when it became clear that vaccines would allow for a faster-than-expected reopening of economies, and the stock surged to $168.84 in September 2021, as traders got excited about digitally oriented growth companies.

Advertisement 5

Story continues below

Article content

  1. The French Vanilla cold-brew coffee, called Biebs Brew, is the second product that Tim Hortons has developed in collaboration with Justin Bieber.

    Tim Hortons unveils new ‘Biebs Brew’ partnership with Justin Bieber

  2. People have lunch at a McDonald's next to the Kremlin in Moscow on March 10, 2022.

    McDonald’s exits Russia after 30 years following Ukraine invasion

  3. A man walks past a Sleep Country store on Queen Street East in Toronto’s Beaches area.

    Sleep Country’s CEO seeks acquisitions as revenue soars

That excitement has been replaced by trepidation over the acceleration of global inflation. Even after this week’s pop, Lightspeed’s shares were still down about 40 per cent from the start of the year, as investors have generally soured on growth stocks amid worries about runaway prices and the lengths to which central banks might go to get inflation under control.

Lightspeed also has had to contend with allegations from short-seller Spruce Point Capital Management LLC that it was inflating many of its performance metrics, a charge the company said was false. In February, the company announced that Dasilva was stepping down as CEO, a natural leadership transition that nonetheless created additional uncertainty.

Advertisement 6

Story continues below

Article content

Chauvet, a Lightspeed executive since 2012 who had been serving as president when he took over as CEO, insisted the company was in a “strong position.” After executing a string of acquisitions as its stock price rose during the pandemic, he said the priority now is to focus on “operational efficiency.”

Chauvet said he was unconcerned by the growing threat of a recession, suggesting a downturn might even be good for Lightspeed, since its software platform is geared toward boosting efficiency by integrating online and in-store sales and inventory management.

“Our customers need to do more with less in that context,” he said. “That’s what Lightspeed does. We help them automate processes. We help them automate how they work with suppliers, their workflows. So, that should also be a strong drive towards companies like ours.”

• Email: [email protected] | Twitter:

Advertisement

Story continues below

Comments

Postmedia is committed to maintaining a lively but civil forum for discussion and encourage all readers to share their views on our articles. Comments may take up to an hour for moderation before appearing on the site. We ask you to keep your comments relevant and respectful. We have enabled email notifications—you will now receive an email if you receive a reply to your comment, there is an update to a comment thread you follow or if a user you follow comments. Visit our Community Guidelines for more information and details on how to adjust your email settings.

View Article Origin Here

Related Articles

Back to top button