Release Date: February 06, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Lightspeed Commerce Inc (LSPD, Financial) achieved a 17% year-over-year revenue growth, aligning with their previously established outlook.
- The company reported a significant increase in payments penetration, rising from 29% to 38% compared to the same quarter last year.
- Lightspeed Commerce Inc (LSPD) raised its adjusted EBITDA outlook for the fiscal year to over $53 million, more than 30% higher than the initial outlook.
- The company announced a share repurchase program to return up to $400 million in cash to shareholders, indicating strong confidence in its financial position.
- Lightspeed Commerce Inc (LSPD) has successfully launched several new initiatives, contributing to a 9% year-over-year software revenue growth, the highest in the last nine quarters.
Negative Points
- Same-store sales in retail remain challenged across many verticals, although the rate of decline is easing.
- The strengthening US dollar is putting downward pressure on non-US dollar-denominated revenue, posing a headwind for the company.
- The company's fiscal fourth quarter is seasonally the weakest for GTV performance, which may impact overall financial results.
- There is a delay in realizing the benefits of the December restructuring, as it will take time to ramp up new hires in growth markets.
- Despite the increase in payments penetration, the quarter-to-quarter growth was closer to 1%, attributed to seasonality, which may affect the pace of reaching the year-end target.
Q & A Highlights
Q: Why was the sale process not the right choice for Lightspeed at this time, and how does the current strategy differ from previous plans?
A: Dax Dasilva, Executive Chairman and Interim CEO, explained that the strategic review was aimed at evaluating the best corporate structure for executing the transformation plan. After assessing multiple options, including a potential sale, the conclusion was that continuing as a public company offers the best path to maximize shareholder value. The focus is now on executing the transformation plan, particularly in North American retail and European hospitality, reallocating resources to these growth markets while maintaining existing customers in non-core areas.
Q: Can you provide insights into the expected timeline for the sales force to become fully productive following the restructuring?
A: Asha Bakshani, CFO, stated that outbound sales representatives typically take about six months to ramp up. The reorganization in December aimed to reallocate resources to growth markets, and the company expects to see an increase in ICP location count and continued software momentum in fiscal 2026.
Q: What is the current status and future outlook for payments penetration at Lightspeed?
A: Asha Bakshani, CFO, noted that while quarter-to-quarter growth in payment penetration was closer to 1% due to seasonality, the company remains confident in reaching 40% to 45% penetration by year-end. The seasonal impact, particularly in the golf vertical, affected the quarterly numbers, but overall growth remains strong.
Q: How does Lightspeed differentiate itself in the competitive landscape, particularly against companies like Shopify and Clover?
A: Jean-David Saint-Martin, President, highlighted that Lightspeed focuses on deep vertical integration in specific areas like sports, outdoor, and hospitality, offering robust inventory management and supplier network integration. This depth in specific verticals sets Lightspeed apart from competitors who may offer broader but shallower solutions.
Q: What are the key drivers behind the recent software revenue growth, and how is the company engaging with customers?
A: Jean-David Saint-Martin, President, attributed the 9% year-over-year software revenue growth to innovation and new product modules, such as the Kitchen Display System and Retail Insights module. The company is also focusing on outbound sales to target larger customers and has implemented price adjustments to reflect the value provided.
Q: How is Lightspeed planning to utilize its share repurchase program, and what is the strategy behind it?
A: Asha Bakshani, CFO, explained that the company plans to execute the remaining $100 million of its current share repurchase authorization immediately and has authorized an additional $300 million for fiscal 2026. The repurchase program reflects confidence in the company's plan and aims to return meaningful capital to shareholders.
Q: Can you elaborate on the impact of seasonality on GTV and how it affects the company's financial outlook?
A: Asha Bakshani, CFO, detailed that fiscal Q4 is typically the weakest quarter for GTV, but improvements are expected in Q1, with strong performance in Q2 and Q3 due to seasonal factors in retail and hospitality. This seasonality is factored into the company's confidence in achieving its financial targets.
Q: What is the company's approach to potential M&A activities following the strategic review?
A: Asha Bakshani, CFO, stated that while there are no plans for large strategic M&A, the company remains opportunistic and open to tuck-in acquisitions that could accelerate roadmaps or provide immediate software uplift. The focus is on enhancing capabilities that align with customer needs.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
