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

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

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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.

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“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.

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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.

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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.

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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.”

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