MONTREAL — Lightspeed posted an adjusted loss of US$17.6 million, or US$0.12 per share, in line with analysts’ expectations, as it reported results Thursday from its fiscal first quarter. At a time when rising interest rates and high inflation are hurting many tech companies, investors were watching to see Lightspeed’s progress towards breaking even—a goal it has committed to achieving in its next fiscal year.
Against that economic backdrop, the Montreal-based point-of-sale provider struck a cautious note on its earnings call, even as it said it continued to see a promising return to in-person commerce after lockdowns forced closures for many of its customers during the pandemic. Inflation and rising interest rates are affecting its retail segment more than hospitality, with consumers prioritizing spending on travel and entertainment, chief financial officer Asha Bakshani said.
Talking Point
Montreal point-of-sale company Lightspeed sounded a cautious note when delivering its first-quarter earnings Thursday, warning that despite a return to in-person commerce, trends in inflation and consumer spending could pose challenges to its business.
“Although we remain optimistic on the things under our control,” Bakshani said, “we believe there’s several reasons for caution, given the trends we’re seeing in consumer spend, inflation, foreign exchange exposure and the overall macroeconomic backdrop.”
Here are some of the highlights:
- Q1 revenue increased 50 per cent year over year to US$173.9 million.
- Subscription revenue, which it earns from customers paying to use its software, was US$73.6 million, a 47 per cent increase. Transaction-based revenue—including its payments product—rose 62 per cent to US$91.5 million.
- As of June 30, Lightspeed had roughly US$915 million in unrestricted cash and cash equivalents.
- Customer locations grew to 166,000 from 163,000 in the previous quarter.
Lightspeed also highlighted some of its newer product lines, including Lightspeed Payments, Lightspeed B2B—its supplier network—and its merchant cash advances program, Lightspeed Capital. The company is hoping that Payments, in particular, will help it achieve profitability.
- Lightspeed Payments: Gross payment volume in the quarter increased more than 96 per cent to US$3.3 billion, from US$1.7 billion in the same period last year. Lightspeed attributed the increase both to more transaction volume and a greater share of those transactions being processed through Payments. Lightspeed said it is seeing higher adoption rates for Payments with customers using its new retail and hospitality offerings, which it launched over the last year to integrate technology from companies it acquired. The company is continuing to roll out its new offerings in different geographies and market segments. Lightspeed CEO JP Chauvet said in an interview with The Logic that he expects any drop in transaction-based revenue from slower consumer spending to be offset by rising adoption for Payments. “Even if there’s a slowdown per merchant, we’re bringing on so many new merchants onto the platform that there’s no slowdown for us in the coming year,” he said.
- Lightspeed B2B: Lightspeed launched its long-awaited supplier network in the first quarter, but Chauvet said on the earnings call that it will likely be two years before the company starts to see “material” revenue from that product. The network connects retailers and suppliers, allowing merchants to place orders directly from vendors, and for vendors to more easily connect with new shops to sell to; Lightspeed rolled it out after buying NuOrder in 2021 for roughly US$425 million. Lightspeed B2B has launched for fashion, outdoor and sports retailers in North America, and the company plans to bring that to all retail segments. However, it plans to expand to other verticals slowly, with perhaps two more segments announced by the end of this fiscal year, Chauvet told The Logic.
- Lightspeed Capital: Lightspeed saw a higher rate of merchant cash advances in Q1. As of June 30, the company had US$9.4 million of cash advances outstanding, up 49 per cent from the previous quarter. It’s one of many merchant-focused businesses to have rolled out cash advances as a part of its offerings. Companies like Square and Shopify have been providing similar loans for years. Chauvet told The Logic that the product could be even more important for its customers going into a more uncertain economic environment. Lightspeed plans to introduce more automation into the process, which until now has been largely manual.