Lightspeed receives target cut from Eight Capital

After quarterly financials from Canadian e-commerce company Lightspeed Commerce (Lightspeed Commerce Stock Quote, Charts, News, Analysts, Financials NYSE:LSPD), Eight Capital analyst Adhir Kadve kept a “Buy” rating on the stock in a Friday report while lowering his target from $26 to $18.50 per share.

Montreal-based Lightspeed released its fourth quarter fiscal 2023 financials on Thursday for the period ended March 31, 2023, coming in with total revenue of $184.2 million, up 26 per cent year-over-year. Subscription revenue was up eight per cent to $76.2 million and the Q4 adjusted EBITDA was a loss of $4.3 million compared to a loss of $19.7 million a year ago. (All figures in US dollars.)

“We have welcomed an incredible group of sophisticated, high GTV merchants and restaurants this quarter that see the true value of Lightspeed. Our strong annual net retention rate shows that these types of businesses continue to expand their technology suite with us as they grow and thrive thanks to the power of our platform,” said CEO JP Chauvet in a press release.

For the full year, revenue was up 33 per cent to $730.5 million, while for the upcoming fiscal 2024, Lightspeed has guided for revenue of $875-$900 million, with stronger growth expected over the second half of the year as the company’s unified payments platform rolls out. Lightspeed said it will hit breakeven or better adjusted EBITDA for the year. For the Q1 2024, management has guided for a topline of $195-$200 million and an adjusted EBITDA loss of $10 million.

Kadve said the fiscal Q4 topline was in-line with expectations, with the $184 million comparing to both the consensus and Eight Capital at the same $184 million. The $4.3 million EBITDA loss was ahead of Kadve’s call at negative $7.0 million as well as the Street at negative $7.4 million.

At the same time, Kadve said LSPD’s fiscal 2024 guidance for revenue of $875-$900 million was at midpoint below the consensus expectation of $896 million but higher than his estimate at $880 million. 

Kadve said the company’s comments and actions show that it’s doubling down on its Payments business, aiming for a unified Payments and point-of-sale strategy which will require all new merchants to attach payments. Kadve said the initiative will likely result in lower growth along with an impact on profitability over the first half of the year and a return to more normalized growth over the second half.

“In our view, the initiative will require meticulous execution from Lightspeed and ultimately should result in significant acceleration of Payments adoption and profitable growth ahead for the company, with management targeting a ‘Rule of 40’ business exiting the FY,” Kadve wrote.

At press time, Kadve’s new $18.50 target represented a projected one-year return of 42 per cent.