22-05-2025
Lightspeed stock falls as company reports big goodwill writedown but says turnaround on track
Lightspeed Commerce Inc. LSPD-T reported a net loss of US$575.9-million in its fiscal fourth quarter as its weak share price performance triggered a big goodwill writedown.
The Montreal software company reported year-end fiscal results Thursday and provided a forecast for the year ahead that were largely in line with expectations – but will likely not be enough to reignite investor interest in the former stock market darling, one analyst said.
The stock sold off 7 per cent in early morning trading.
The company, which sells point-of-sale software to retailers, restaurants and hospitality providers globally, reported revenue in fourth quarter ended March 31 was US$253.4-million, up 10 per cent over the same period a year earlier. That was in line with analysts' expectations. Adjusted operating earnings came in at US$12.9-million, slightly below consensus analyst forecasts.
The company's operating profit of US$12.9-million in the quarter was slightly below expectations though the total for its 2025 fiscal year came in at US$53.7-million, ahead of Lightspeed's twice-increased forecasts.
Lightspeed's US$556.4-million non-cash goodwill writedown was triggered by its weak share price, which left the carrying value of the company's net assets at a higher level than its market capitalization at the end of the quarter.
Analysts are more focused on its longer-term outlook after a year in which founder Dax Dasilva returned as chief executive, slashed costs, refocused the company around its two strongest markets – North American retailers and European hospitality providers – and began ramping up efforts to drive customer location growth.
The company, which has pushed customers to adopt its payments solution in the past few years, also abandoned a sale process early this year and embarked on a program to buy back up to US$400-million of shares, or more than 20 per cent of its float. The buyback is now more than half done.
'With many of the hard decisions behind us, fiscal 2026 will be a year of executing on our plan and delivering on our potential,' Mr. Dasilva said on a conference call with analysts
Mr. Dasilva said the company has hired half of a promised 150 outbound sales representatives whose job is to sign up new customers in its two growth areas, with a goal of driving 10 per cent to 15 per cent annual location growth. The company, which has placed an emphasis on growing the number of larger customer locations that generate US$500,000 or more in transaction volumes, said the undisclosed number of establishments was unchanged year-over-year in the quarter.
The company's financial profile is improving, including a marked increase in gross profit. It is targeting annual gross profit increases of 15 per cent to 18 per cent on average over the next three years alongside a goal of 35 per cent average annual gains in adjusted operating profits over that period.
But the company, which went public in 2019 and saw its share price soar in the early part of the pandemic before crashing in 2021, is still a long way off from regaining its status as an exciting, growth-oriented tech company as it tries to balance driving revenues without sacrificing profitability amid a backdrop of global economic uncertainty.
One of its key longer-term goals is to achieve 'rule of 40' results – an industry benchmark that tracks performance in the subscription cloud software market. Investors add a company's revenue growth rate to its adjusted operating profiting margin; if that totals 40, it is considered a top performer.
Lightspeed is targeting revenue gains of 10 per cent to 12 per cent this coming fiscal year and an adjusted operating profit margin of no more than 6 per cent. That adds up to less than half the rule of 40 target.
ATB Financial analyst Martin Toner said in an interview: 'What I see is an inexpensive stock that is trying to get the growth engine humming again. They're struggling to reaccelerate growth. The fundamental momentum isn't there' yet, he said, adding that for technology-oriented investors, 'there are better places to look.'
National Bank Financial analyst Richard Tse said in email 'I think the market wants to see execution on their large merchant count before we get a sustained valuation re-rating of the stock.'
