Lightspeed forges ahead on growth after ‘hurtful’ short-seller report, spiralling stock price give investors pause

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Lightspeed Commerce Inc. wants to be the commerce king as the world emerges from lockdowns that beleaguered high-contact businesses, but it has to overcome investor doubt and pivot its growth strategy.

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“The post-pandemic world is going to be an accelerator for us and it’s going to create a ton of tailwinds,” CEO Jean Paul Chauvet, who took over from founder Dax Dasilva last month, said in an interview with the Financial Post’s Larysa Harapyn.

The point-of-sale software maker, which sells primarily to restaurants, retailers and other smaller businesses, has been on a roller-coaster. Lightspeed’s share price plummeted 72 per cent to $13.50 on March 20 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, as traders got excited about digitally oriented growth companies.

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Dasilva led the company on a shopping spree, acquiring multiple software companies in order to expand the Montreal-based company’s reach in the U.S., Europe and Asia. The strategy might be sound, but lately investors are punishing Lightspeed amid a broad tech sell-off. The company’s share price has fallen all the way back down to $37, raising questions about whether Lightspeed had been overhyped.

Chauvet insists he’s unconcerned about the stock price. He said his focus is on integrating the companies Lightspeed purchased last year, which he said will ultimately make the company stronger in payments and analytics, among other things.

But Chauvet will be doing so with a thorn in his side. In September, short-seller Spruce Point Capital Management published a report that claimed Lightspeed was inflating many of its performance metrics, a charge the company has repeatedly denied.

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“When you hear these accusations, it’s very hurtful,” Chauvet said. “Of course, the stock has reacted very negatively to this but I think for me, it’s, you know, the stock has a short-term perception of the long-term value that we’re creating.”

It didn’t help that following its second-quarter earnings, Lightspeed cut its revenue forecasts, prompting a steep sell-off.

Chauvet said his team will now build on all the newly purchased software and focus on hiring to beef up its research and development teams. Last year, the company launched a revamped version of its restaurant platform that offers inventory and analytics tracking, contactless payments and online ordering.

“We’ve announced to the markets that we’re going to be growing at least between 35 and 40 per cent in the next few years,” Chauvet said. “Ensuring that we have that path to profitability in the coming years is very important.”

In its third quarter, the company said organic growth was up 74 per cent year over year and with the new acquisitions, growth was up 155 per cent.

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