Canada-based fintech company Lightspeed Commerce (TSX:LSPD) has burned massive investor wealth. The TSX stock went public in early 2019 and currently trades 88% below all-time highs. Valued at $2.9 billion by market cap, Lightspeed Commerce has trailed the broader markets by a wide margin, having gained just 1% since its initial public offering.
In this article, we see if Lightspeed stock can stage a comeback and deliver outsized gains to long-term shareholders.
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An overview of Lightspeed Commerce
Lightspeed Commerce offers small and medium enterprises a platform that unifies digital and physical operations by enabling multi-channel sales, expansion to new locations, global payments, financial solutions, and connections to supplier markets.
Lightspeed’s cloud-based omnichannel commerce platform serves a growing and diverse customer base. The company is well-capitalized and is part of a large total addressable market, which should drive future revenue and earnings higher.
A strong performance in fiscal Q4 of 2024
Lightspeed reported revenue of US$230.2 million in the fiscal fourth quarter (Q4) of 2024, an increase of 25% year over year. Its transaction-based sales stood at US$139 million, up 40% compared to the year-ago period. Meanwhile, subscription sales stood at US$81.3 million, 7% higher than the same period last year.
Lightspeed delivered an adjusted income of US$8.5 million or US$0.06 per share, compared to a loss of US$0.4 million last year. Its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) of US$4.4 million indicated a margin of less than 2%, but the company is now positioned to benefit from economies of scale and high operating leverage.
Lightspeed ended fiscal 2024 with US$722.1 million in cash, providing it with enough flexibility to tide over an uncertain macro environment and support its cash-burn rate.
“On the back of a strong fourth quarter, Lightspeed is coming into the new fiscal year with a revitalized sense of energy and purpose,” said Dax Dasilva, founder and chief executive officer. “I am excited to be guiding the company through the next phase of its evolution. With the strongest product offerings we have ever had and a renewed commitment towards product innovation, Lightspeed is continuing to accelerate its sustainable and profitable growth.”
Is LSPD stock a good buy right now?
Lightspeed believes 2024 was a milestone year for the company as it exceeded its revenue outlook and achieved a full year of positive adjusted EBITDA for the first time. It remains focused on its flagship offering and is on track to end fiscal 2025 with more than US$1 billion in sales by increasing subscription revenue and the customer base.
Lightspeed’s average revenue per user rose 29% to $431, while the average net retention rate stood at 110%, which suggests that existing customers raised spending by 10% in the last 12 months.
Lightspeed forecasts to increase sales by at least 20% year over year in fiscal 2025, while adjusted EBITDA is estimated at more than US$40 million.
An asset-light model should help the company expand adjusted earnings per share from US$0.16 per share in fiscal 2024 to US$0.35 in 2025 and US$0.55 in 2026.
Priced at 38.5 times forward earnings, LSPD stock is not too expensive, given its earnings estimates. Analysts tracking LSPD stock remain bullish and expect it to gain around 40% in the next 12 months.
