Today TD comments (for what it's worth)Event Capital Markets Day Impact: NEUTRAL The event supported our view of payments being a large, untapped opportunity and for near-term lockdowns and supply chain challenges to be temporary. We also believe the Supplier Network opportunity looks compelling as the company solidifies its position with large, complex SMBs. We believe the market may have been looking for more material announcements today, which may be driving the shares down over 6%. With the shares trading at 10.6x forward revenue, well below ecommerce peers at 13.6x and Shopify at 34.7x, Lightspeed remains our top pick.
Spotlight on the Supplier Network. The focus was on Lightspeed's initiative to provide merchants centralized, direct access to suppliers in F2023. The value proposition for merchants is that it will simplify the ordering process, see supplier inventory, and even arrange for dropshipping if the merchant does not have stock of the products. In turn, suppliers get a wealth of real-time info, such as pricing, sellthrough, and trends, and discover new merchants to improve distribution. Lightspeed plans to monetize the endeavour by providing payments and capital services for these B2B transactions and by offering data services to suppliers, such as a fee for helping them find new retailers.
Accelerating payments adoption. It took the U.S. retail market, Lightspeed's first payments market, 32 months to reach 20% GTV adoption, whereas it took only 20 months for the Canadian retail market to reach 15%. We believe this acceleration will continue as payments is now available to 70% of its customer base. We continue to believe that this is the company's largest growth opportunity with only 11% penetration.
Targeting 35%-40% organic growth. Lightspeed exceeded this organic growth rate in each of the last five quarters. Management expects to achieve this target through growing locations, increasing software ARPU, and growing payments adoption. The company is also seeing strong operating leverage as it drives higher gross profit per customer with minimal incremental S&M spending. Management expects ~20% EBITDA margin as payments reaches 50% of GTV. With over $1bln in cash, management is also open to acquiring into different geographies and technologies to accelerate the roadmap