Lightspeed POS Inc.
(LSPD-T, LSPD-N) C$71.21 | US$58.64
Q4/F21 Preview: Optimistic on Strong Consumer Activity
Event
Q4/F21 Results: Thursday, May 20, 2021, before markets open.
Conference Call: Thursday, May 20, 2021, 8:00 a.m. ET. Event registration link. Impact: NEUTRAL
We expect total revenue of $69.7mm, up 92% y/y. We forecast Software & Payments revenue of $66.6mm, up 110% y/y, or 27% q/q. We estimate total revenue contribution of $21.5mm from recent acquisitions. We also expect ($12.0mm) of EBITDA, or (17.2%) EBITDA margin, in line with the high end of management's guidance range.
We could see the start of accelerating consumer activity this quarter.
We believe that consumers returned to brick-and-mortar retail and hospitality establishments in certain geographies as vaccines were rolled out in the quarter. This was evidenced by the strong monthly U.S. retail and food sales throughout Q1/21. U.S. retail and food sales grew 29% y/y, or 10.7% m/m, in March and continued into April, growing 51% y/y, likely helped by the distribution of stimulus cheques. Shopify's gross merchandise volume grew 114% y/y, suggesting that ecommerce activity also remains strong. Shopify also noted that it expects some consumer spending to rotate back to brick-and-mortar retail and services throughout 2021. Shopify's 2021 outlook supports our view that Lightspeed could see an acceleration in consumer activity throughout the year. Despite the temporary renewed lockdowns in some parts of Europe and Canada, we believe that the customer locations based in these geographies were well equipped with Lightspeed products to mitigate the negative impact. With the expected launch of Lightspeed Payments in the U.K., France, Belgium, the Netherlands, Germany, and Switzerland, we believe Lightspeed is well- positioned to accelerate its payments revenue in these regions as these markets fully reopen.
TD Investment Conclusion
We maintain our BUY rating and C$110 target price. We remain confident that Lightspeed is well-positioned to strongly benefit from the reopening of markets. With ~$594mm of pro forma net cash as of Q4/F21E, we believe Lightspeed has plenty of capital to accelerate its growth initiatives.