CA - Lightspeed Commerce: The Strategic Shift Towards Payment Solutions

2024-03-26 10:05:35 ET

Summary

• Subscription revenue increased by 8.6% YoY to $80.9 million in 3Q24, indicating positive momentum but trailing behind industry peers.
• Transaction-based revenue, primarily payment processing fees, grew 35.5% YoY to $406 million in 3Q24, reflecting the company's focus on bolstering payment revenue.
• Comparison with peers like Toast and Shift4 underscores Lightspeed's lower valuation, attributed to its lowest operating margin and uncertainty regarding sales growth and GAAP profitability.
• Lightspeed's balance sheet boasts a substantial cash position of $749 million with no debt.

Financials

Lightspeed (LSPD)(LSPD:CA) has 3 revenue segments:

1. Subscription revenue (35% of revenue): Merchants will pay a fixed monthly/annual recurring fee to Lightspeed for using its POS system

2. Transaction-based revenue (60% of revenue): Primarily stems from payment processing fees earned through facilitating card transactions for merchants.

3. Hardware sales (5% of revenue): Non-recurring revenue generated from selling the POS system

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