Advertisement
Canada markets closed
  • S&P/TSX

    21,899.99
    -210.12 (-0.95%)
     
  • S&P 500

    5,123.41
    -75.65 (-1.46%)
     
  • DOW

    37,983.24
    -475.84 (-1.24%)
     
  • CAD/USD

    0.7261
    -0.0043 (-0.59%)
     
  • CRUDE OIL

    85.45
    +0.43 (+0.51%)
     
  • Bitcoin CAD

    88,243.44
    -4,945.63 (-5.31%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • GOLD FUTURES

    2,360.20
    -12.50 (-0.53%)
     
  • RUSSELL 2000

    2,003.17
    -39.43 (-1.93%)
     
  • 10-Yr Bond

    4.4990
    -0.0770 (-1.68%)
     
  • NASDAQ

    16,175.09
    -267.10 (-1.62%)
     
  • VOLATILITY

    17.31
    +2.40 (+16.10%)
     
  • FTSE

    7,995.58
    +71.78 (+0.91%)
     
  • NIKKEI 225

    39,523.55
    +80.92 (+0.21%)
     
  • CAD/EUR

    0.6819
    +0.0013 (+0.19%)
     

Is Lightspeed Commerce Stock a Buy Now?

Shopping and e-commerce
Image source: Getty Images

Written by Rajiv Nanjapla at The Motley Fool Canada

Lightspeed Commerce (TSX:LSPD) is a technology company that unifies online and physical business operations. It also offers global payments and financial solutions while aiding in expansion and connecting with supplier networks. The company has been under pressure this year, losing over 33% of its stock value year to date. Although its third-quarter performance was healthier, the management’s cautious outlook has weighed on investors’ sentiments. So, let’s assess whether Lightspeed is a buy after the steep correction by looking at its recent performance and growth prospects.

Lightspeed’s third-quarter performance

In the third quarter of fiscal 2024, Lightspeed Commerce posted revenue of $239.7 million, representing a 27% increase from the previous year’s quarter. It exceeded the company’s guidance of $232 to $237 million. The strong performance across its three segments drove its topline. Launching new products and expanding its products across new geographical markets drove its customer base and ARPU (average revenue per user). Its ARPU increased 28% to $447.

ADVERTISEMENT

Meanwhile, the Montreal-based tech company’s customers processed GTV (gross transaction value) of around $23.1 billion, representing a 3% increase from the previous year. Its gross payment volumes (GPV) increased by 69% to $6.6 billion. Besides, around 29% of the company’s GTV was completed through its payment solutions, which is encouraging.

The payment processor’s gross margins stood flat at 42%. The gross margin of the subscription segment increased from 73% to 76%, while the gross margin of the transaction-based segment declined from 33% to 30%. Boosted by the topline growth, the company generated an adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) of $3.6 million. It was higher than management guidance of $2 million and an improvement from a loss of $5.4 million in the previous year’s quarter.

After looking at its third-quarter performance, let’s look at its outlook.

Lightspeed’s outlook

After reporting its third-quarter performance, Lightspeed raised the lower end of its fiscal 2024 revenue guidance by $5 million. Now, the management expects its 2024 revenue to be in the range of $895 million to $905 million. However, the company is cautious about its near-term outlook amid the challenging macro environment and uncertainty over the pace of the adoption of unified payments in international markets.

Despite the near-term weakness, the POS and payment platform’s long-term outlook looks healthy. The growth in adopting the omnichannel selling model is expanding the addressable market for Lightspeed. The company is also expanding its product offerings and geographical footprint. Besides, the shift in customer base towards higher GTV locations could also support its growth.

Further, the launch of its Unified Payments initiative has resonated with its customers, with increased adoption and a lower churn rate. The company could also benefit from the increasing portion of its GTV being processed through its payment solutions. Besides, the improving profitability, with the management projecting a breakeven adjusted EBITDA for this fiscal year, is also encouraging.

Amid the recent sell-off, LSPD stock trades at an attractive valuation, with its NTM (next 12 months) price-to-sales at 2 and price-to-book multiple of 0.9.

Investors’ takeaway

Several analysts are predicting a global slowdown due to the impact of monetary tightening initiatives. So, growth stocks, including Lightspeed, could be under pressure in the near term. However, the company offers an excellent buying opportunity for long-term investors, given its solid fundaments, healthy growth prospects, and attractive valuation.

The post Is Lightspeed Commerce Stock a Buy Now? appeared first on The Motley Fool Canada.

Should you invest $1,000 in Lightspeed right now?

Before you buy stock in Lightspeed, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Lightspeed wasn’t one of them. The 10 stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $17,988!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 35 percentage points since 2013*.

See the 10 stocks * Returns as of 1/24/24

More reading

Fool contributor Rajiv Nanjapla has no position in any of the stocks mentioned. The Motley Fool recommends Lightspeed Commerce. The Motley Fool has a disclosure policy.

2024