Hi,
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!):
- “LSPD a new position” with lots of background and information: https://discussion.fool.com/lspd-a-new-position-34744143.aspx
- “Lightspeed Calendar q4 2020”: https://discussion.fool.com/lightspeed-calendar-q4-2020-34751082…
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 (https://www.sedar.com/DisplayCompanyDocuments.do?lang=EN&…). 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
Context
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): https://investors.lightspeedhq.com/English/news/news-details…
- 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”: https://investors.lightspeedhq.com/English/news/news-details…
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.