Some thoughts about LSPD next steps

I’ve listened and read the latest podcast on LSPD where the president and head of IR discuss about the recent acquisitions and how they relate to their strategy moving forward. It was compelling. Then I sifted through the MF posts, learned more about the acquisitions and became even more excited. As they clearly state, they are doing them to grow into new markets and new capabilities. Their value proposition is to offer a simple, integrated and easy way for small retailers to upscale to a fully omnichannel and headless commerce (extend your shop with eCommerce, then go on an sell on tiktok, instagram, and the like).

Then the B2B commerce space sounds to me as an excellent move to leverage on all the data and reach of their retailers footprint. So far from this, all good. Yes, I am starting to keep an eye on SHOP and others, but the SaaS model requires very little people to be run. For example, Salesforce used to be less than 25 engineers for quite a long time, so they don’t need heavy investments on people to do something amazing, just hire the smartest.

Good enough for the bull case. Now what bothers me is that if Lightspeed business “is all about data”, to which I agree, I don’t see anything related to AI, which I see it is how you really leverage and bring disruptive innovation nowadats when you sit on top of all that data and SaaS services. I went to LinkedIn and found no AI / ML related hirings, while they are heavy into Data Architects. While it might make sense to first put all your data in place, then put AI on top, I am more inclined to do both, in fact AI could help you put your data in place by surfacing the most relevant, insightful and hence guide your efforts.

For example, just imaging a Smart Assistant suggesting retailers about next best products to buy, or sell, or promotions to run or replenishments. Personalized, to their shop. Then go back to suppliers and do the same. The key is personalization at scale, this is what AI enables you to do. This is way beyond a daily report. It’s about timely, real time insights and suggestions.

In short, I would like to see, and I don’t see, an AI story on top of everything they are doing. A compelling AI story to be honest, is what I am expecting. AI related acquisitions are very expensive nowadays, but I see it as core to their business and hence I don’t think just partnering would be a good thing, perhaps I’m wrong.

What are your thoughts on this? Anyone did already any research about it willing to share back here to enhance and deepen our understanding of this company?

Cheers,
Willie.

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The one thing keeping me out of this stock presently is hardware. As my handle would indicate, I’m in the chips business and used to mod the boards for Semiconductors back when MF was on AOL only (early 90s), in other words, I’ve lived thru these cycles for 30+ years.

I have not studied LSPD deeply because I’m of the belief that every customer needs LSPD hardware to onboard, and that’s where I lose interest. Perhaps I’m wrong about that? I get that the whole value is the data, but I’d be concerned with LSPD’s growth being supply-constrained and not just for a few months. Our industry is in poor shape to fix supply-constraints in the coming months or quarters.

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I have not studied LSPD deeply because I’m of the belief that every customer needs LSPD hardware to onboard, and that’s where I lose interest.

Thanks MFChips for your very insightful comments. It appears that Lightspeed runs on iPad and supports any POS hardware, and you could attach the iPad to a stand. They do sell their own hardware and integrate with other POS’s. So it’s an elegant solution to the hardware issue you mention, even perhaps this design works to their advantage provided iPads are not on shortage, or the shortage is lower.

POS Hardware
Lightspeed Retail POS works with any iPad or a web browser on any computer or mobile device. If you use an iPad as your POS terminal, it is fully mobile, which means you can complete customer transactions from anywhere in the store. Or, you can pair it with a stand to make it a stationary POS terminal. The iPad can also be set up as the customer-facing display.

Lightspeed supports third-party POS hardware, which you can buy from Lightspeed either separately or as a bundled package. The POS vendor lists the makes and models it supports on its website. If you already own POS hardware, check with Lightspeed to see if it’s compatible. Lightspeed is also an authorized Apple reseller, which means you can purchase the iPads from Lightspeed as well.

More info here: https://www.businessnewsdaily.com/8067-best-ipad-pos-system…

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Good post, MFChips, and all valid points. I find myself thinking about it this way:

  1. Chip shortages are cyclical and temporary. Always have been, always will be.

  2. Any company in the POS space will have the same issue. The only way to avoid it as an investor is stay away from the sector entirely (a perfectly acceptable strategy, of course).

  3. No merchant is going to shrug his shoulders and say “Well, I’ll just use a scratchpad while I wait for hardware to clear up.” They are likely to keep working to find a solution.

I see this as nothing more than a blip for LSPD if it has any real effect at all. With a company like ROKU, it’s more concerning because of its huge size, proprietary hardware, and tough seasonal comps. In LSPD’s case, there’s an argument the smaller base, third-party hardware integrations, and acquisitive growth should keep the top line strong while navigating any chip issues. As willieram points out, merchants don’t need LSPD’s hardware to make the platform work. They simply need any hardware they can find that integrates with it.

Unfortunately, widgets always complicate things. Also unfortunately, they come with the turf for companies like SHOP, SQ, LSPD, GLBE, etc. As mentioned above, the only way to truly avoid it is not own any at all. Personally, I’m betting LSPD is in a position where this won’t be a big issue. Besides, I find it hard to believe Lightspeed would recently release not one but two entirely upgraded platforms if management was worried at all about the hardware to meet demand.

That’s not to say I know how things will turn out, but I do see that as the other side of the coin.

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Willieram et all,

“POS Hardware
Lightspeed Retail POS works with any iPad or a web browser on any computer or mobile device.”.

I read the above to mean that LSPD’s software is integrated with any of the devices and uses iPad or any browser to any omnichannel device.

For additional details: see the link below from LSPD retail help center: https://retail-support.lightspeedhq.com/hc/en-us/articles/22…
“ Lightspeed Retail is designed, built and tested to be used on computers running Apple’s macOS operating system or Microsoft’s Windows operating system.”

And further below: they list all the terminals, printers and other type of hardware they support. The videos of LSPD retail (eg https://youtu.be/qZ71jKEIfxA ), show only the software running on Mac. The only LSPD branded item I am able to see on these videos are the terminal stands.

I have a starting position of 3% in LSPD, what’s preventing me from going more into LSPD? Below are a few concerns that
Management has not addressed:

  1. Management refers to the comprehensive data strategy and the benefit to the company, suppliers, merchants from the all encompassing data about buyers, demand, inventory etc - when you grow through acquisitions - each of the companies are built on a different tech stack and it’s Significantl effort to combine all the acquired companies onto the same stack.

  2. I am anxiously waiting to see the organic growth of the company’s results thjs quarter.

  3. LSPD’s expansion into restaurants. Restaurants is a crowded marketplace for POS and if they are able to make a successful penetration - a lot more growth will follow.

Matthew
Currently Long LSPD 3% but would like to bump it up.

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