Lightspeed POS Inc

Lightspeed POS Inc (TSX: LSPD) is a software & computer services company, offering sales platform solutions. The Group’s software and solutions help the user in the management of the entire business from inventory, sales, customer preferences and analytics.

Financial Highlights – Improved Financial Performance in FY2020 (31^st March 2020)

(Source: Annual Report, Company Website) 

For the financial year ending 31^st March 2020, driven by an increase in revenue from software and payment, the revenue surged by 56 per cent to USD 120,637 thousand as against USD 77,451 thousand in FY2019. In Q4 FY2020, the revenue stood at USD 36,271 thousand versus USD 21,285 thousand in Q4 FY2019. Due to an increase in the operating expenses for the period, the group reported an operating loss for USD 58,407 thousand in FY2020 versus an operating loss of USD 23,216 thousand in FY2019. The operating loss for Q4 FY2020 stood at USD 20,482 thousand versus an operating loss of USD 8,795 thousand in Q4 FY2019. The LBT (loss before tax) stood at USD 56,641 thousand in FY2020 versus an LBT of USD 214,254 thousand in FY2019. The group’s Net loss for the financial year 2020 stood at USD 53,531 thousand versus a Net loss of USD 183,525 thousand in FY2019. The net loss stood at USD 18,597 thousand in Q4 FY 2020 versus a net loss of USD 96,076 thousand in the fourth quarter of the financial year 2019.

Share Price Performance

 Daily Chart as of 28^th May 2020, after the market closed (Source: Refinitiv, Thomson Reuters)

Lightspeed POS Inc shares closed at CAD 31.84 at the time of writing after the market close on 28^th May 2020. Stock's 52 weeks High is CAD 49.70 and Low is CAD 10.50.

Conclusion

The Company has shown an increase in financial performance in the fourth quarter and in the financial year 2020. Both the top-line and the bottom-line performance have improved, while the profitability remained in the negative zone for the period. The Company continues to implement the strategy and business model to deliver returns. There remained a significant pipeline of business opportunity for the company. The Group’s recurring revenue from software and payments surged significantly by 56 per cent. As more and more businesses started moving to cloud-based alternatives, the company’s platform is expected to increase profitability and outperform its competitors. The merchant base of Lightspeed is expanding rapidly and is progressing well to become a global leader in serving hospitality merchants and complex SMBs. To expand its operations, the Group is looking for acquisitions and organic growth.  In Q4 FY2020, Lightspeed’s total revenue showed growth of 70 per cent, which was above expectations.

Based on the above rationale, we have given a "Hold" recommendation at the closing price of CAD 31.84 (as on 28^th May 2020).