Lightspeed Commerce (TSX: LSPD) got a boost in the share price this week, as Jean-Paul Chauvet stepped down from the chief executive officer (CEO) position at the company. In his place, Dax Dasilva, founder and chief executive from 2005 to 2022, returned for the next stage of Lightspeed stock — one that he called a stage of growth in an interview with Motley Fool.
What happened?
Lightspeed stock climbed 6% after the news hit the headlines. However, this comes after shares dropped after fourth-quarter earnings from the company last week. Lightspeed stock reported total revenue of $239.7 million, up 27% year over year. What’s more, it recorded the second quarter of positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA).
However, shares of Lightspeed stock dropped as the company reported a net loss as well as lower subscription numbers. This, Chauvet said in an interview with the Motley Fool last week, was because all account managers are focused on Unified Payments. The company now has 29% of clients using Unified Payments, but investors still want to see growth in subscription revenue as well.
“We’ve lost some trust,” Dasilva said. “Our payment penetration rate has been growing at a rate that our investors are excited about … we’ve made a lot of progress, but we also have to show software subscription growth. That’s something that I wanna dig into as we move account reps back into software growth.”
What to expect
Chauvet provided the framework for profitability, and that framework will be in use going forward. The company focused on mergers and acquisitions (M&A) and shifting clients over to its software. These M&As total over US$2 billion, and while strong investments at the time, they won’t be something Dasilva will put into place during this growth stage.
“There won’t be large M&A adventures. There won’t be unfunded growth opportunities that we aren’t funding through operational efficiency,” he said.
So, to fuel growth, Dasilva hopes to improve the company’s margins. After two positive quarters, efficiencies now need to be made for the stock. This will likely be more clear when the company comes out with its next earnings report and will likely include the next three years.
A lot has happened
A lot has happened in the last two years while Dasilva has been out of the CEO position. However, Dasilva stated that this provided him with a break from the endless to-do list while still being involved with the company as executive chair.
“Lightspeed is not a company where you can take a two- to three-week vacation and be refreshed … I’m coming back to this very exciting stage of the company with a lot of energy,” Dasilva said.
Dasilva hopes he can get investors excited about the company again, as they were in the past. He noted that while the company has grown from $77.5 million to around $900 million sales, the share price is around the same as what it was during the initial public offering back in 2019. Yet if Dasilva can create a plan and execute that plan that brings in growth from both Unified Payments and subscriptions, perhaps investors will see the share price grow as well.
Dasilva said, “I’m here to reassure investors that we’re focused on strong growth, strong profitability, together. And to have a really crisp business model that they are excited about and can rely on and model and invest in.”
