Lightspeed Commerce to double down on quest for profitability after reporting Q3 loss

MONTREAL — Lightspeed Commerce Inc. will redouble its quest for profitability and larger customers after reporting an $814.8 million loss last quarter.

“We’re tracking the more sophisticated segment, we’re tracking the more established segment … so we’re not going to track the entire market,” JP Chauvet, chief executive of the Montreal-based e-commerce tech company, said in a Thursday call with analysts.

While Lightspeed would have cast a “wider fishing net” two years ago when it marketed itself to customers, Chauvet said it wants to target companies that deliver high gross merchandise value — a metric that measures a company’s overall sales over a period of time.

“Fast serve is not what we will focus on,” he said.

“We will focus on fine dining, table service and Michelin stars.”

The increased focus on this segment stems from Lightspeed’s goal of achieving profitability by the end of 2024 on an adjusted earnings before interest, taxes, depreciation and amortization basis.

But the outlook for profitability is getting much bleaker for tech companies, which have watched as investor enthusiasm waned, valuations fell and even the industry’s best-known companies completed their layoffs.

Over the past few months, Shopify Inc., Alphabet Inc., Amazon.com Inc., and Microsoft have all reduced their workforces as they see customers readjusting to pre-pandemic shopping and business habits.

Lightspeed joined the pack last month with a 300 staff cut. Around 50 percent of the graduates were in management positions.

The decision enabled “significant” savings and helped the company streamline the organization to use “leaner” working models and focus on key projects and customers, Chauvet said.

“The decision to reduce headcount is never an easy decision…but it was a necessary decision that strengthens our foundations for future growth.”

His comments came as Lightspeed, which keeps its books in US dollars, said its most recent quarter reported a loss of $5.39 per diluted share, compared to a net loss of $65.5 million, or 44 cents per diluted share in the prior year.

The third quarter was negatively impacted by a $748.7 million non-cash goodwill impairment charge taken by Lightspeed.

The charge resulted from accounting regulations that require an annual review of goodwill. When Lightspeed conducted this test in late December, it was said that certain assumptions in the test were affected by the technical downturn and Lightspeed’s lower share price.

The stock price rose nearly two percent, or 47 cents, to $25.35 in morning trade.

Revenue for the quarter ended December 31 totaled $188.7 million, compared to $152.7 million for the same quarter last year.

Lightspeed’s adjusted diluted earnings per share were flat for the quarter, compared to an adjusted loss of seven cents per share a year ago.

The company now expects adjusted earnings before interest, taxes, depreciation and amortization of approximately $37 million, compared to a previous guidance of approximately $40 million.

It also expects its annual revenue to come in at the low end of its guidance of between $730 million and $740 million.

This report from The Canadian Press was first published on February 2, 2023.

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Tara Deschamps, The Canadian Press