Talking Lightspeed POS (LSPD) & some Shopify


I wanted to dive a little deeper in to Lightspeed, which I own, to see if I wanted to add some more. I went down a bit of a rabbit hole to find these numbers. I will post the numbers first and then some further topics for discussion.

A couple of previous posts on Lightspeed by Ethan1234 (thank you!):

Mining Numbers
Here is how I found them:

  • The most recent numbers and guidance are lifted directly of the SEC filing. However, that only covers the most recent quarter and I need far more context then that
  • Most of the other numbers were found at the Canadian source, SEDAR (…). I didn’t find a direct link so I had to click through them one at a time. Search “Interim financial statements/report - English” for the quarterly reports.
  • The March quarter didn’t have a quiarterly report, only a yearly, but I found inside it a nice summary of some of the metrics, such as the revenue and costs, and they were not the same as the quarterly numbers! Since the title of this yearly report had the word “audited” in it, I assumed these to be the numbers to keep. Search “Audited annual financial statements - English” for the yearly reports.

Here is my composite of the numbers for discussion, including guidance.

        	4Q'21	3Q'21	2Q'21	1Q'21	4Q'20	3Q'20	2Q'20	1Q'20		
        	GUIDE	Dec-20	Sep-20	Jun-20	Mar-20	Dec-19	Sep-19	Jun-19	Mar-19	Dec-18
Revenue 	70	57.6	45.5	36.2	36.2	32.2	28	24	21.2	20
YoY     	93.4%	78.9%	62.5%	50.8%	70.8%	61.0%	51.4%	37.9%	--	--
QoQ     	21.5%	26.6%	25.7%	0.0%	12.4%	15.0%	16.7%	13.2%	6.0%	8.1%
QoQ$     	12.4	12.1	9.3	0.0	4.0	4.2	4.0	2.8	1.2	1.5
Gross Profit    	33.2	27.5	21.6	22.6	20.6	18.5	15.6	14.3	14.1
GM       		73.5%	65.5%	67.6%	60.2%	56.3%	51.4%	53.8%	48.3%	41.8%
G&A	        	20.7	8.2	6.7	7.3	7.2	5.2	4.4	4.7	3.4
R&D	        	16.4	12.2	9.8	10.1	8.0	7.3	6.3	5.0	5.0
S&M	        	28.0	19.3	15.1	15.2	15.0	12.0	13.0	11.3	10.0
Rest	        	12.8	8.4	10.5	10.5	6.8	5.2	2.3	2.1	1.5
Op Exp	         	77.9	48.1	42.1	43.1	37.0	29.7	26.0	23.1	19.9
Op P/L	        	-44.6	-20.7	-21.3	-20.4	-16.4	-11.3	-10.2	-8.8	-5.7
Debt (long)		29.7	29.7	29.7	8.1	0?	0?	0?	0?	0?
Cash	        	232.6	513.1	203.5	211.0	126.6	171.8	191.4	207.7	14.9
Shares	        	118.840	104.471	92.970	92.207	85.984	85.321	84.275	83.752	30.139

This started as a different post where I was going to discuss some broader portfolio changes that included why I own both SHOP and LSPD. I think this is interesting context so I am just posting it here instead as a dedicated post

The short version: 1/7th the size of SHOP, growing faster and competing while also taking a different approach to the market.

Lightspeed POS, based out of Montreal, QC, Canada, offers a one-stop-shop POS-first approach while still offering easy to add on modules that cover most of what you can get at SHOP but with more simplicity and less learning curve. If you consider that the kind of business that is attracted to LSPD’s products are the ones that need a POS, which means brick-and-mortar-first, this approach is very very attractive. Compared to SHOP which tends to favor the online-first business that inherently comes from a more technologically-advanced starting point. So even though there is a lot of overlap between the offerings of these two companies, they are appealing to two opposing ends of the spectrum of company types. That said, Shopify does offer POS integrations (both their own and 3rd party), so there IS still some direct competition, but also plenty of room.

The interesting part is that Lightspeed appears to be the more expensive and less-featured at both the base subscription as well as add-ons (in some cases the add-ons are free at SHOP but cost $15-$45 per module per month at LSPD). Even so, and even though their primary market is SMBs, they show Sony and Five Guys as customers, so they must be doing some things right even on the large customer side. So again, I think the difference in go-to-market approach is key as it means they don’t need to really compare apples-to-apples and so a side-by-side price comparison isn’t important in my mind.

Recent quarter highlights (Q3):…

  • Total revenue of $57.6 million, an increase of 79%
  • Excluding recent acquisitions, organic growth was 53.7% off $49.3M in revenue.
  • Recurring software and payments revenue of $52.5 million, an increase of 85%, so not a pure recurring number here.
  • Acquisitions of ShopKeep and Upserve adding ~30k “locations” over the ~84k added this quarter organically. So 115k total locations up from a total of 66k YoY!
  • announced the availability of Supplier Network. This initiative will enable retailers to connect directly with their suppliers through the Lightspeed POS solution.
  • approximately 15% of U.S. and 12% of Canadian Retail GTV, respectively, was processed by Lightspeed Payments in the last week of the quarter.

The Short Leash
This is a small company with massively accelerating revenue in just the last few quarters as well as greatly improving operating leverage. At the same time they have a bunch of inorganic growth via acquisition, a history share dilution and accelerating losses. That said, the acquisitions seem on-mission, their cash and debt seems well managed by the numbers but I didn’t dive in to each quarter to understand how the acquisitions roll in to the numbers. For example, they do say that “excluding the impact of recent acquisitions, revenue was $49.3M, ahead of the guidance range of $44-$47M”, so note they beat on an organic basis but also grew at 52.2% YoY organically versus 78.9% YoY in total revenue growth.

They did just do a public offering: 02/12/2021, “Lightspeed Announces Closing of US$676.2 Million Public Offering Including Full Exercise of the Over-Allotment Option”:…

With the recent acquisitions, “the Company is restructuring its operations along regional and vertical-specific reporting lines in addition to its current global functional reporting lines. Jim Texier, Chief Product Officer, is leaving the organization as part of this restructuring.” I do not know the circumstances or impact of this.

The bottom line
This is a company that will clearly benefit from more businesses opening and more traffic visiting them. We are seeing acceleration in both revenue and GM. Even if it IS fueled by some acquisitions, they seem smartly chosen. The market opportunity is huge and the company is small.

I could do more research but let me leave it here and see if anyone has any thoughts or concerns to add.


Hi Raf,

Let me start by saying LSPD is a relatively large position for me around 6%, while SHOP is around 15%.

I like both companies and as I live and work in Montreal, know a lot of people working at both.

Jim Texier is one of them. I worked alongside him in his previous position, and actually started moving cash to my now light speed position when he took the CPO role.
I have been screening news for the past few weeks, as I can’t imagine him leaving being a good thing. He is one of the most inspiring leaders I have worked with; I do chat with him from time to time, but he hasn’t mentioned anything and I believe it will stay this way - I respect him all the more for it.

I really like lspd numbers and a lot of current employees are brilliant so I would like to stay invested and even increase my position, since they will benefit a lot from the reopening economy (a bit like Airbnb that I am considering for the same reason, as I do not want to rotate to value stocks …).

But for now, they are on watch list for the simple reason they lost a leader they should not have :slight_smile:

Hope this helps!


Correction: GM equation was a bad copy and paste. This uses ‘Gross Profit / Revenue‘.

        	4Q'21	3Q'21	2Q'21	1Q'21	4Q'20	3Q'20	2Q'20	1Q'20		
        	GUIDE	Dec-20	Sep-20	Jun-20	Mar-20	Dec-19	Sep-19	Jun-19	Mar-19	Dec-18
Revenue 	70	49	45.5	36.2	36.2	32.2	28	24	21.2	20
YoY     	93.4%	52.2%	62.5%	50.8%	70.8%	61.0%	51.4%	37.9%	--	--
QoQ     	42.9%	7.7%	25.7%	0.0%	12.4%	15.0%	16.7%	13.2%	6.0%	8.1%
QoQ$    	21.0	3.5	9.3	0.0	4.0	4.2	4.0	2.8	1.2	1.5
Gross Profit		33.2	27.5	21.6	22.6	20.6	18.5	15.6	14.3	14.1
**GM	        	67.8%	60.4%	59.7%	62.4%	64.0%	66.1%	65.0%	67.5%	70.5%** 

A few points to add about Lightspeed to add to this great discussion:

The good
(1) Lightspeed is expected to be the highest growing public “software” company (you’ll see why software is in air quotes below) in North America – consensus analyst expectations is 93% NTM revenue growth. They generally beat estimates by ~11%, so >100% growth is likely.

(2) The inevitable economic reopening combined with the pandemic-induced push for digitization puts Lightspeed in a unique position to benefit from both trends. 48% of their customers are on retail, 52% in hospitality – and ~80% of those industries are still in legacy systems.

(3) From a valuation standpoint, Lightspeed seems to be trading at a discount compared to some of the other companies we follow. Although Lightspeed relies less on software and has lower margins, its growth-adjusted EV/NTM-Rev is 0.24, significantly lower than Shopify’s 0.91, or Twilio’s 0.65 (median for >40% growers is 0.77). Ethan1234 highlights what this could mean for Lightspeed’s share price if they continue executing on post 76223, even if its valuation contracts further

The not-so-good
(1) They purposely make it difficult to discover to what extent they’re a software company by reporting “recurring software and payments” and not breaking them down on their quarterly reports. On their last annual report, they indicated that they had $42.1M in deferred revenue out of the $120.6M in net revenue they reported for the year. So by the looks of it, they rely on their payments revenue more so than software, but it will be interesting to see how much its changed on their upcoming annual filing – and hopefully analysts ask questions that can illuminate the breakdown.

(2) Margins have been trending downwards, and judging by their M&A activity, it seems as if they’ll continue contracting as they increase their reliance on payments. Rafes calculated their GM by dividing Lightspeed’s gross profit to their organic revenue, which in my opinion overstates their current margins – as their organic gross profit is lower than the totality.

(3) I don’t see as much improvement on operating leverage either. Operating losses more than doubled QoQ. G&A increased more sequentially than revenue.

The neutral
They made it clear on their recent offering that they will continue relying on acquisitions as a means for expansion. It makes sense, because their sector is highly fragmented – and the market seems to understand it, as share price has risen during the last couple acquisitions announcements. But with high M&A activity comes a high degree of change – so it remains to be seen how they manage this inorganic growth. We’ll need to monitor executives leaving, and unhappy employees

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“Rafe calculated their GM by dividing Lightspeed’s gross profit to their organic revenue, which in my opinion overstates their current margins”
Thanks for pointing that out. When I posted the correction I had the organic revenue number plugged in. In my original post I had the full revenue. Here is the correction with the full revenue and GM:

        	4Q'21	3Q'21	2Q'21	1Q'21	4Q'20	3Q'20	2Q'20	1Q'20		
        	GUIDE	Dec-20	Sep-20	Jun-20	Mar-20	Dec-19	Sep-19	Jun-19	Mar-19	Dec-18
Revenue 	70	57.6	45.5	36.2	36.2	32.2	28	24	21.2	20
YoY     	93.4%	78.9%	62.5%	50.8%	70.8%	61.0%	51.4%	37.9%	--	--
QoQ     	21.5%	26.6%	25.7%	0.0%	12.4%	15.0%	16.7%	13.2%	6.0%	8.1%
QoQ$    	12.4	12.1	9.3	0.0	4.0	4.2	4.0	2.8	1.2	1.5
Gross Profit		33.2	27.5	21.6	22.6	20.6	18.5	15.6	14.3	14.1
GM	        	57.6%	60.4%	59.7%	62.4%	64.0%	66.1%	65.0%	67.5%	70.5%

The fact that we are discussing organic versus acquired growth highlights the conundrum for me as I think through how much of my portfolio I want in this company. I suppose this could just be due to the size of the company and how impactful even a small acquisition is at this phase. There’s just so much change going on. It is hard to know if I can lean on the growth and let the rest play out, in which case I am willing to take on a little bit more risk and stretch to a slightly larger position. The other side of the coin is I could discount some portion of that growth as a thumbnail way to think through the potential churn in the business fundamentals as a whole. How much to discount is then the question. The dilution and increased costs could be looked at as the cost to fuel growth, if managed well. If managed poorly, it is all negative. This company seems to be attacking the opportunity with on-mission acquisitions that do indeed fuel growth in customers and products for expansion. The huge growth in customer locations feels like a very important metric to figure all this out.

Based on all of this I’m inclined to give the growth the benefit of the doubt and assume it is built on quality managment. I currently have Shopify at 9% and Lightspeed at 4% and I am thinking about balancing that a bit more to bring light speed up.



Any idea why operating expenses jumped so much in the last quarter. They were running a little over 100% of revenue, and in the last quarter they jumped to 135%. It was a 62% increase quarter over quarter with just a 20% increase in gross profit. That seems like an alarming increase. Just curious if you know why?

I’m no genius when it comes to interpreting the high-level numbers they report but I do note that the 3 biggest numbers, which are the ones I show above, for G&A, R&D and S&M all have a “notes” “7” next to them, which is the following item and accounts $50.2M of $65.2M when added together:

7. Employee compensation
The total employee compensation comprising salaries and benefits, excluding tax credits and government subsidies for the three and nine months ended December 31, 2020, was $50,255 and $115,050 (December 31, 2019 – $23,639 and $59,473).

(The “7” all shows up next to “direct cost of revenues” but that number is broken out and doesn’t seem to include much of this and only shows hardware and software costs…maybe some is subsidized.)

So perhaps this includes adding the people from the acquired companies to payroll plus perhaps new-hires? They did book that extra $8.3M in revenue from the acquired companies, so it stands to reason they booked some expenses too. To know for sure I’d have to know how this stuff is reported, the timing and rough head counts I supposed, so this is a guess really.

How do you all read this?