Lightspeed Commerce (NYSE: LSPD) is a company that provides fintech solutions for small and midsize businesses, including retailers, golf courses, and restaurants. It operates across 100 countries.
Now, all tech stocks have hit turbulence in 2022. However, Lightspeed has been falling a lot earlier than other tech stocks. In September 2021, Spruce Point Capital put out a scathing research report on Lightspeed that said it inflated revenues, overpaid when it acquired companies, and covered up low organic growth using acquisitions.
The report said it expected Lightspeed's share price to fall to $22 from $124 in September 2021. LSPD stock is currently trading at $21.5, which is 85% below all-time highs. Alternatively, Lightspeed said Spruce Point stood to benefit from its short position on its stock.
However, now that Lightspeed is down also 90% since the report was published, let’s see if it is a buy right now. Analysts believe the stock is available at a bargain price. The average target price for LSPD stock is $44.78, which is a potential upside of over 100%.
Lightspeed reports solid numbers for Q4 and fiscal 2022
Lightspeed CEO JP Chauvet was very upbeat when he announced the company’s earnings for the quarter and year ended March 31, 2022. He said, “Consumers are once again dining out and shopping in person, filling up restaurants and stores in cities and neighborhoods all around the world.”
Chauvet added, “With the fear of further lockdowns currently abating, merchants and restaurateurs are operating in a more favorable environment where they can create new concepts, invest in technology and open new locations. This is an environment where Lightspeed will truly shine.”
Lightspeed’s fiscal Q4 revenue grew 78% to $146.6 million. Subscription revenue was up 77% at $70.5 million, and transaction-based revenue came in at $66.7 million, an increase of 88% year-over-year. Net loss for Lightspeed came in at $114.5 million or $0.77 per share compared to $42 million or $0.34 per share. The company had $954 million in cash and equivalents as of March 31, 2022.
Lightspeed also saw a good increase in its ARPU (Average Revenue Per User) numbers. The monthly ARPU from its 163,000 location grew 35% to $270 from around $200 in the corresponding quarter in fiscal 2021. Subscription ARPU increased to $132 from $113 a year earlier. After the quarter, the company launched Lightspeed Retail, which extends Lightspeed’s availability on Android.
LSPD outlook for fiscal 2023
Lightspeed has an encouraging outlook for fiscal 2023 as it expects revenue between $740 million and $760 million in the next 12 months. This is under the assumption that its target organic subscription and transaction-based revenues grow 35-40%. The company however expects an adjusted EBITDA loss of around $35-40 million.
For Q1, LSPD expects revenues of $165 million to $170 million and an adjusted EBITDA loss of $16 million.
Lighstpeed expects to break even in the next couple of years. Brandon Nussey, Lightspeed’s chief financial and operations officer, said, “As we look ahead, we are committed to our path to profitability and have the growth levers to get us there.” The company expects to report break-even adjusted EBITDA (Earnings before Interest, Taxes, Depreciation and Ammortization) by the end of fiscal 2024.
One point potential investors would do well to keep in mind is that Lightspeed stock moves fast. In October 2020, it was trading at $30. In less than a year, it moved up 313%. Once the dust settles from the fall of 2022, Lightspeed could push for a repeat performance.
Disclaimer: The writer is an experienced financial consultant who writes for Finscreener.org. The observations he makes are his own and are not intended as investment or trading advice.
