CIBCEQUITY RESEARCH
March 10, 2022 Blog
BLOG: Slow Start To In-room Dining
Reverses, Lightspeed Well Positioned
As the world emerges from the pandemic, we continue to track global web
traffic to e-commerce and payment processing businesses among others.
Our aim is to leverage this information to understand the recovery across the e-commerce and restaurant industries. This is our 32nd Blog of the series.
The conflict in Ukraine has raised questions on how it will impact growth in
consumer spending in Europe and globally. To help inform the early
implications, we have revisited restaurant and hospitality data in Europe,
Australia and the United States. This is important to Lightspeed as these
regions represent its primary markets for restaurant and hospitality cloud-
based point-of-sale (POS) systems, integrated Payments, Advanced
Analytics as well as the company’s other omni-channel modules like
Delivery, Order Anywhere and Loyalty among many others. Currently, ~49% of the company’s customer locations are in Europe & Rest of World with the remaining 51% in North America. Its business is split between 39% of customer locations in the restaurants & hospitality industry and 61% in retail.
Restaurant data in Lightspeed’s primary markets showed a relatively slow
start in the first calendar quarter as consumers hesitated to dine-in amidst
rising Omicron cases. However, this slow start reversed in February and so far into March, with a particularly robust rebound in Germany and Australia as both countries have lifted most hospitality restrictions. If these trends continue, they may help offset some of the seasonality inherent in the quarter and be further amplified by a successful European roll-out of
Lightspeed Payments and its K Series platform.
Russia’s full-scale invasion of Ukraine does not appear to have impacted
dine-in levels in the U.S. nor Germany, at least as reflected in our current
dataset (up to March 6). However, its impact on oil prices and the associated rise in prices of certain goods may eventually lead to a decline in consumer spending, which poses a risk to any upside potential. Historically, a spike in oil prices has caused consumers to reduce spending on large ticket items and non-durable goods, including dining out (The Atlantic).
These restaurant trends, along with web traffic data and peer commentary
provide a directionally supportive backdrop for FactSet expectations in the
March quarter. Consensus expects Lightspeed’s FQ4 sales to drop
sequentially to $141M but rise to $161MM in FQ1/23 (FactSet). This Blog
discusses these trends and their implications for Lightspeed in more detail