Lightspeed stock: The company with Shopify-like ambitions – The Average Joe
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    Lightspeed stock: The company with Shopify-like ambitions

    Kevin Roche — Analyst

    August 10, 2021


    Just like Homer Simpson, Lightspeed is here for small businesses.

    The Canadian software company with roots in the restaurant industry saw its sales explode and its stock price with it — rising 300% over the past year. Now, it’s set its sights on a bigger market.

    Every small business’ hero

    Similar to its Canadian counterpart, Shopify (NASDAQ:SHOP), Lightspeed offers businesses digital tools to run their operations easily (i.e. inventory management, digitizing checkout, point-of-sale checkout tablets). But there are a few key differences between the two companies:

    • Shopify focuses on e-commerce heavy businesses without a big in-person retail presence.
    • Lightspeed focuses on businesses with a big in-person presence, like restaurants, retail stores and golf courses.

    Selecting a software for your business? Restaurants, go with Lightspeed.  Online-only clothing retailers, go with Shopify. But Lightspeed wants to blur the lines.

    With 18.6% share of the POS software market already, Lightspeed is looking further into the e-commerce market — pulling off an important acquisition in July to do so:

    • Acquired Ecwid, a US-based global eCommerce platform, for ~$500m.
    • Ecwid has the 14th largest share of the eCommerce software market, giving Lightspeed more firepower to go up against Shopify.

    Intergalactic growth

    Lightspeed is growing at the speed of light via its acquisition strategy. In the past two years, Lightspeed acquired 6 companies worth over $2.2b.

    The company released its quarterly earnings on Aug 5 and it’s burning through cash as fast as it’s making it:

    • $116m in sales, up 220% from the same period in 2020.
    • $49.3m in net losses, nearly 250% more than the same period in 2020.

    When it comes to growth, investors are happy to overlook its losses. Lightspeed’s customer base grew to over 21k businesses last year — a small portion of the 30m+ small businesses up for grabs in the US.

    Investors: Fast enough to close this gap?

    For a Canadian company, Lightspeed has big ambitions with a heavy focus on the international markets. Aligned with their goals, Lightspeed — previously only listed in Canada — listed on the US Nasdaq market last October.

    Joe’s Take: The company already makes nearly half its sales outside of Canada, and recently expanded into five European markets. Regardless of the money it’s losing, Lightspeed’s set course on becoming a global name. Growth first, profitability later.

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