If there is a tech stock on the TSX today that deserves some love, it has to be Lightspeed Commerce (TSX: LSPD). Lightspeed stock has continued to see major improvements to its financial status, expanding its revenue forecast, as it continues to move toward profitability.
And yet, shares haven’t moved more than an inch in the last year or so. Not since short-sellers sent Lightspeed stock dropping 30% in a day back in September 2021, with the fall in tech and pandemic stocks coming soon after.
So, is now the time to get back into Lightspeed stock? Or are investors going to remain on the sidelines in 2024 as well?
Progressing forward
Lightspeed stock has earnings coming just around the corner, and they should remain quite positive compared to its last earnings report. The company saw total revenue climb 25% year over year during its second quarter, bringing in more than US$230 million for the quarter. This passed its previous outlook of US$215 million on the high end.
The stock continues to trade at a net loss of US$42.5 million, yet this was the lowest it’s been in the last 10 quarters. Furthermore, it’s half the loss reported at the same time the year before.
Chief Executive Officer JP Chauvet now sees the company achieving profitability in the near future. What’s more, it already reached positive earnings before interest, taxes, depreciation, and amortization (EBITDA) for the quarter. While that was just $200,000 in profit, it’s not nothing! And that’s far beyond the previous forecast of a $4 million loss.
What’s next?
This quarter of profitability is the first step towards profitability for Lightspeed stock, and that achievement should certainly help to win back investors lost during the last few years. The company has already started the process, however, as it looks to unify its many acquisitions into a focused company with a clear path forward.
That path includes Lightspeed Payments, where the company is focusing on unified payments in the future. Already, 25% of its current clients use unified payments. However, the company is aiming for 50% within the next two years.
Once these companies are latched onto payments, it’s unlikely they’ll go anywhere. The payments platform makes it far easier for companies used to using legacy software programs. This locks them in for the foreseeable future.
Rising higher
While shares might not be rising higher, guidance has been for the stock. Lightspeed stock management now believes the company’s total annual revenue guidance should achieve between $890 and $905 million for 2023. Further, it’s on track to break even “or better” for fiscal 2023.
The third-quarter results are due on Feb. 8, 2024. Of course, this won’t be the company’s full-year report, and investors continue to be wary. But come full-year reporting, that could certainly change.
So, is now a good time to buy Lightspeed stock? Absolutely. The company is valuable at these levels and is showing clear signs that it will achieve profitability. What’s more, it looks like the company will not just gain new clients in the future but lock them in. And with shares up 16% in the last year, that could certainly occur again for today’s investors.
