MONTREAL — After a year of widespread closures among brick-and-mortar businesses, Lightspeed reported a bigger loss in its fourth-quarter earnings for the three months ending March 31. Still, with a global vaccine rollout in the works, the Montreal-based payments company is optimistic about the months ahead: it posted a solid outlook for the upcoming year, pleasing the market and sending its shares more than 13 per cent higher Thursday morning. 

Lightspeed’s latest earnings report comes a week after it announced a new partnership with Google to help its merchants reach more customers online—bolstering its strategy of helping them operate through multiple sales channels, like e-commerce.

Here are some key takeaways from Lightspeed’s earnings report:

• Lightspeed’s quarterly net loss widened to US$42 million from US$18.6 million last year.
• Its full-year net loss was US$124.3 million, compared with US$53.5 million a year earlier.
• Revenue grew 127 per cent to US$82.4 million in Q4, driven largely by its acquisitions of Upserve and ShopKeep, which added US$31.2 million in revenue.
• The total value of transactions conducted using Lightspeed’s platform in the 2021 fiscal year was more than US$33 billion, amounting to roughly US$600,000 per customer.

The reopening bump: Lightspeed’s point-of-sale software and hardware businesses are benefiting from the COVID-19 vaccine rollout and reopening of parts of the U.S., U.K. and Australia this spring, with volume for its hospitality segment growing 10 per cent from February to March and another 14 per cent from March to April. Given the robust growth in recent months, Lightspeed expects a US$30-million loss in its 2022 fiscal year and revenue between US$430 million and US$450 million. (Total revenue in 2021 rose 84 per cent from the previous year to US$221.7 million.) “Although we entered the quarter under challenging conditions as lockdown measures increased globally, we saw strength in March and are encouraged by the reopenings we are seeing around the world,” CFO Brandon Nussey said in a statement. 

 

Dasilva told The Logic in an interview Thursday that he expected the bump to last. “I don’t think this was a one-quarter happening, the reopening,” Dasilva said. “I think that’s going to happen over a longer period of time.”

The increases have been sharper in some places than others: in Australia, for example, Lightspeed saw 75 per cent growth in transaction volumes year over year in its hospitality segment, Dasilva said.

The market reacts: Lightspeed stock was up more than 13 per cent to more than $79 a share as of 2:50 p.m. ET. Suthan Sukumar, principal at Toronto-based Eight Capital, said the better-than-expected quarterly results and strong guidance would be a boon to the stock, and set his price target for Lightspeed at $120. “We continue to see a strong growth outlook for LSPD given their dominant market positioning in light of the early days industry transition to cloud-based POS, with growing tailwinds from greater merchant adoption of omnichannel and payments,” Sukumar wrote in a note Thursday. “We continue to see reopening of key operating markets in quarters ahead as a potential catalyst for accelerated growth.” Lightspeed’s stock has traded in a wide range so far this year, reaching as high as $102 in February.

Thanos Moschopoulos, an analyst at BMO Capital Markets, wrote in a post-earnings research note Thursday that Lightspeed had been seeing better economics on payments at its recently acquired businesses, adding that the end of pandemic restrictions would give the company’s performance a boost. “We view the stock’s valuation as attractive relative to its growth, particularly given that it should be a strong beneficiary of the re-opening,” Moschopoulos wrote.

OK Google: Lightspeed’s new agreement would integrate its product with Google platforms such as Google Local Inventory Ads and Google Smart Shopping Campaigns. On a call with analysts Thursday morning, Dasilva said Lightspeed hopes the partnership will drive traffic to local businesses and allow them to more proactively market products to customers in their area. “What this does is it levels the playing field with Amazon and other larger players so that local businesses can have their inventory found, so that people can shop local,” Dasilva told The Logic.

Platform games: The Google partnership is part of Lightspeed’s overall strategy of helping brick-and-mortar retailers operate across multiple platforms, not just through its traditional in-person payments business. That’s been especially important as more commerce has shifted online during the pandemic. On its earnings call, Lightspeed executives said that while physical retail sales have rebounded somewhat since their lockdown lows, the company’s ultimate goal is to help its customers make sales through multiple channels. “What I think the pandemic has done is it’s made businesses understand that this is not a nice-to-have … now it’s a must-have,” Dasilva said. “Our system is no longer an aspirational type of system to have. It’s what’s going to run businesses interacting with modern consumer behaviour.”

The recurring dream: In its earnings presentation, Lightspeed played up the fact that an increasing portion of its revenue came from recurring payments and transactions, which rose 137 per cent in the fourth quarter. Ninety-one percent of its revenue now comes from recurring sources—a statistic that could please investors, given that those revenue streams are considered more reliable than other income sources.