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Lightspeed POS, presently known as Lightspeed Commerce Inc, is a Canadian retail POS company that offers a Software as a Service (Saas) based e-commerce platform primarily to small and medium-sized businesses located in Canada, United States, Germany, and Australia, among others. During the pandemic when online shopping was at its peak, the company’s omnichannel commerce software aiding online payment solutions got a massive boost and as a result the company’s share also blew up. Within the past year, Lightspeed stock has gained around 200%, and even now, the stock is continuing to outperform the market and has gained about 40% year to date.
Is Lightspeed Stock Worth Buying Right Now and Into 2022?
Strategic Moves In Play
Lightspeed’s innovative business model has shown immense growth potential over the years and has grown consistently even during tough times. This was possible because the management at Lightspeed is highly focused on increasing the company’s business by both organic and inorganic means and has been consistently taking a series of well-strategized steps to route the company towards success. The company’s financials are proof that its business strategies are bearing fruit.
Mergers and acquisitions of growth-oriented businesses are the modern-day tools for achieving great success in a short span of time because of the synergy that the combined businesses bring to the table. Lightspeed capitalized very well on this phenomenon. Though the e-commerce business is kind of fragmented, the small company believes in consolidation and is always in search of suitable target businesses that can help in improving its performance manifold times.
Lightspeed’s previous acquisitions of small businesses like Vend, ShopKeep, and Upserve gave the company its required revenue momentum. Its recent acquisition of reputed e-commerce platform, Ecwid, and of the B2B ordering platform, NuOrder, for $425 million will further improve the company’s performance in the coming years as the company believes this twin deal would integrate more merchants, suppliers, and consumers together.
Apart from expanding through acquisitions, the company is also focusing on improving itself organically. It has been consistently expanding its customer locations at a much faster pace than other companies in the same field. In the last quarter, the company’s total customer locations have increased by about 95% compared to last year and have reached 150,000 customer locations.
Lightspeed has got listed in the NYSE back in September 2020 and with that has been impressing American customers as well. Also, it still has unrestricted cash and cash equivalents amounting to $603.7 million in its account which it can utilize further to implement some more exciting business deals in the coming days.
Strong Revenue Growth
Lightspeed has performed well consistently over the years and has seen strong revenue growths along with achieving a strong balance sheet position. Even last year when the pandemic had badly affected all the businesses around the world Lightspeed had stunned everyone by achieving an 83.8% sales growth year-over-year. The company’s growth momentum has continued this year as well as the economy has started reopening and that can be clearly seen from its quarterly reports.
Recently, the company has come up with its financials for the Q1 of Fiscal Year 2022. The quarter result showed a massive 220% improvement in the company’s revenues year-over-year with its revenue reaching the $119.5 million mark. Lightspeed has stated that its previous acquisitions of ShopKeep, Upserve, and Vend have increased its revenue by over $50.5 million. Further, its recurring subscription revenue had also increased by 115% year over year while the transactions revenue saw a massive 453% rise.
As the economy has started reopening with the lifting up of lockdowns, the company also managed to deliver a GTV (Gross transaction volume) of $16.3 billion this quarter which is 203% higher than last year. This growth included a 91% year-over-year organic growth that was achieved without any acquisitions. Moreover, the software and payment sales also saw a strong organic growth of 78%.
The company has projected its revenue would increase between 130% and 139% in the following quarter. Therefore, the pace at which Lightspeed is moving it might see profitability soon.
High Growth-oriented Business Model
Following the pandemic, customers these days are entering into a new world of commerce and as a result, companies like Lightspeed have come into an advantageous position as they can help their customers simplify operations and increase their scale of business, thereby providing them with a phenomenal online experience. Though Lightspeed had to suffer a major revenue loss at the beginning of the pandemic due to country-wide lockdowns, the company quickly reacted to the adverse situation and updated its offerings in order to meet the rising demand through its omnichannel selling platform by capitalizing on the increased e-commerce momentum.
It has gained immense popularity in the process of helping small- and medium-sized businesses secure their online presence effectively and this shift towards the online shopping model has worked significantly in the company’s favor with its shares soaring high since then.
Moreover, the sharp recovery of the hospitality sector has been another force that has contributed to Lightspeed’s rising GTV last quarter. Post the pandemic, physical retail business has been picking up once again and because of being in a diversified industry and having a large geographical footprint apart from the omnichannel presence, Lightspeed could benefit from this shift in customers preference as well. For its amazing ability to comprehend what the customers are up to; the company has successfully emerged as the technology that customers all over the world prefer.
Lightspeed has impressed its investors over the years with its performance. Owing to the constant sales and earnings growth approach, the company could provide a massive 3,820% return in the past five years. Looking at the current scenario it seems the stock will still continue with its bullish behavior and is not going to slow down anytime soon. Investing in such high growth-oriented companies having a rich growth history like Lightspeed is always worth it. As the stock is still trading near $120 it is the perfect time to buy it before it reaches $200.
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