Lightspeed Commerce Inc.
(LSPD-T, LSPD-N) C$40.76 | US$32.08
Q3/F22 First Take: Strong Organic Performance
Event
Q3/F22 results.
Conference Call: 8:00 a.m. ET; 888-330-2513; ID: 74316394. Impact: MIXED
Lightspeed beat expectations (Exhibit 1) despite guidance being issued before Omicron caused new lockdowns. Management also raised its F2022 guidance above its previous guidance range. We are impressed with the strong KPIs and organic growth despite the challenges this quarter. We believe the results demonstrate the resiliency of Lightspeed's business and customers. The only negative we see in the results is that F2022 EBITDA is expected to be at the low end of previous guidance and below consensus. Our discussions with the company suggest that it continues to accelerate growth investments, given is optimism for Lightspeed Restaurants. The Street may also be wary of the CEO transition, but our many meetings with Mr. Chauvet over the years give us great confidence that he is a very capable leader with a good handle on the business. The stock is trading down 12.5% after-hours. We believe this volatile market was looking for a perfect quarter, driving our mixed impact handle, rather than what we would normally view to be slightly positive results. We would be buying on the weakness. Since Lightspeed generated 74% y/y organic subscription and transaction-based revenue growth in a quarter encumbered by a new pandemic wave and supply-chain constraints, we are confident that Lightspeed will reach its 35-40% organic growth target as markets reopen.
Payments contract amendment was factored in the guidance. Lightspeed amended a contract with a payment processing partner that gives Lightspeed better take rates for future transactions and provided a one-time $5.5mm benefit for retroactive transactions. Management claims that these adjustments were included in the Q3/F22 guidance numbers and that the beat this quarter was due to better- than-expected performance from its customers.
Resilient KPIs despite challenging macro. Customer locations, excluding Ecwid, grew to ~159,000, up from ~156,000 q/q. Lightspeed also grew GTV organically by 53% y/y. Payments penetration rate ticked up to only 12%, largely because hospitality GTV, where Lightspeed Payments has low penetration, grew by a very strong 79% y/y organically. ARPU, excluding Ecwid, expanded to $290 as customers took more modules and payments revenue grew.