Lightspeed Commerce keeps Outperform rating with ATB Capital

ATB Capital Markets analyst Martin Toner says for investors to dig deeper into the story behind Lightspeed Commerce (Lightspeed Commerce Stock Quote, Charts, News, Analysts, Financials TSX:LSPD) and you’ll find a company continuing to execute. Toner reviewed Lightspeed’s latest quarterly results in an update to clients on Thursday where he maintained an “Outperform” rating on the stock.

Montreal-headquartered Lightspeed, a payments and e-commerce platform for merchants in a range of industries, announced its second quarter fiscal 2023 financials on Thursday, showing revenue up 38 per cent year-over-year to $183.7 million and a net loss of $79.9 million or negative $0.53 per share. Adjusted EBITDA was a loss of $8.5 million compared to a loss of $8.6 million a year earlier, while the company’s gross transaction volume (GTV) for the fiscal Q2 grew by 18.6 per cent to $22.3 billion. (All figures in US dollars except where noted otherwise.)

“This is a critical moment in time for our customers in retail and hospitality.” said JP Chauvet, CEO of Lightspeed, in a press release. “They are recognizing that technology is the key to evolving their businesses. Lightspeed’s omni-channel commerce platform helps SMBs automate mundane tasks, better connect with consumers and act on compelling data insights, which is why we continue to see strong demand for our technology solutions.”

Commenting on the quarter, Toner said Lightspeed’s top and bottom lines beat analysts’ estimates. The $183.7 million in revenue was above his estimate at $178.6 million as well as the consensus call at $182.9 million, while the adjusted EBITDA loss of $8.5 million was also better than his negative $17.0 million forecast and the Street’s negative $10.5 million.

At the same time, Toner noted management’s revenue guidance, which at $189-$194 million for the current fiscal third quarter came in lower than the consensus expectation at $199.9 million. 

“Revenue guidance for FY2023 was also lowered to $740 million – $750 million from $740 million – $760 million previously. The Company reported gross margin of 44.4 per cent, down 440bp year over year. The 0.5 per cent revenue beat versus consensus for Q2/FY23 was Lightspeed’s lowest ever,” Toner wrote.

Lightspeed’s share price has fallen hard over the past year, taking the stock from a high of around $150 to now in the low $20 range. But Toner sees a brighter future and is pairing his “Outperform” rating with a maintained target price of $70.00 per share, which at press time represented a projected one-year return of 184 per cent.

“We believe the stock remains undervalued relative to the Company’s growth target and our estimates, which should cushion the impact of today’s mixed results,” Toner said. “Given currency moves and the tough comparable in the upcoming Q3/FY22, today’s results show that the Company’s story remains on track and that LSPD continues to perform at a high level.”