Lightspeed Commerce Inc.
(LSPD-N, LSPD-T) US$17.94 | C$24.62
Q2/F23 Call Highlights: Cautious on Macro
Event
Lightspeed held its conference call and we had a follow-up call with management.
Impact: NEGATIVE
A focus on larger customers. The lower-than-expected 1k customer locations added in Q2/F23 were a result of two dynamics: 1.) Lightspeed is focusing on bringing in larger customers, rather than targeting a volume of new customers. This was highlighted in our meetings with the CFO a couple months ago and resulted in gross customer location additions moderating. However, we continue to believe focusing on larger customers with less churn makes sense in the current macro environment. Customers with annual GTV of $500k+ have a churn rate that is less than half of the overall customer churn. These large customer locations grew by 25% y/y in the quarter, whereas customers with less than $200k of GTV shrank y/y. 2.) The company saw churn increase on smaller customers, supporting the initiative to target higher end merchants.
FX and macro drive outlook caution. F2023 revenue guidance was reduced to $730mm-$740mm, from $740mm-$760mm previously. The lowered guidance is due to weaker FX and some slowing in consumer spending exiting the quarter. Management noted signs of consumer spending stress in September where spending on several categories, including hospitality in the EU, weakened. Given these trends entering the important holiday shopping season resulted in management being cautious and taking guidance lower. Management remains focused on integrating all its solutions onto two key platforms (one each for retail and hospitality), driving payments adoption, and reaching profitability. We believe that the first two goals will help the company reach its profitability target, which was reiterated to be EBITDA breakeven for F2024
Results in-line. Revenue of $183.7mm was in-line with expectations for $183.2mm (TD)/$182.9mm (consensus) and represented 38% y/y growth. Subscription and transaction-based revenue of $175.8mm grew by 41% y/y, 35% organically, and was also relatively in-line with expectations of $176.0mm (TD)/$170.2mm (consensus). EBITDA of ($8.5mm), was slightly above expectations of ($9.7mm). Locations, ex- Ecwid, grew to ~167,000, up from ~166,000 q/q. GTV of $22.3bln was up ~18% y/ y, or ~26% y/y in cc.