Dax Dasilva is back. And investors are happy to hear it. Shares of Lightspeed Commerce (TSX:LSPD) surged by up to 16% in early morning trading on the announcement Dasilva would be back as chief executive officer (CEO). It was the highest jump in share price since November of 2023.
The founder of Lightspeed stock wasn’t exactly out of the picture after taking an executive chair role two years ago. But after returning as interim CEO when shares of Lightspeed stock plummeted last quarter by 30%, shareholders were happy to hear of his permanent placement.
“In coming back, even before coming back as executive chair, I’ve spent to listening to shareholders just like me,” Dasilva said in an interview with Motley Fool. “And I think what Lightspeed’s focused on right now is the very practical things.”
Yet the founder’s return wasn’t the only piece of good news that Dasilva had to share. Fourth-quarter earnings handily beat estimates, with strong year-over-year growth. And more should be coming in fiscal 2025, according to Dasilva.
What happened?
First, we’ll discuss the earnings. The fourth quarter saw revenue climb 25% year over year, hitting US$230.2 million compared to US$74.5 million the year before. The company’s net loss also continued to see improvement, hitting just US$23.5 million, down from US$74.5 million in 2023.
Some other metrics that held investors’ attention were year-over-year improvements in annual revenue per unit (APRU), up 29% to US$431, and gross transaction volume (GTV), a 2% increase.
“Last year, full-year 2024 was all about making sure that we get penetrated on payments. Unified payments took up a lot of the company’s focus,” Dasilva said. “But that’s where Lightspeed really performs. Is when we focus on something, we really do it well. We achieve.”
On an annual basis, Lightspeed stock surpassed its earnings estimates. The company reported revenue of US$909.3 million for the year, with transaction revenue at US$545.5 million and subscription revenue at US$322 million. The tech stock also continued to see its payments penetration rise, with gross payments volume (GPV) at a solid 32% of its GTV.
Building back trust
A focus for Lightspeed stock since the return of Dasilva has been to build back trust. The CEO wants shares to rise just as much as shareholders, given he’s the number three shareholder of the company as of writing.
What Dasilva found was that shareholders want Lightspeed stock to return to the high growth story it once was. To do that, shareholders want to see operational efficiency improvements, payments penetration, and software growth.
“We have a positive picture on profitability going forward. Next year we’re going to be a strong grower, 20% minimum, but also US$40 million in EBTIDA [earnings before interest, taxes, depreciation and amortization] for full-year 2025,” Dasilva said. “Part one in fiscal 2025, we’re going to drive software revenue, that subscription growth that’s been taking a bit of a backseat to payments penetration.”
Furthermore, Dasilva already took on cost-cutting measures that quickly came into place upon his return. This involved a 10% headcount cut, with the reduction of 280 roles at Lightspeed stock—all while Lightspeed stock continues to focus on tailored product innovations that will attract larger customers (those making more than US$500,000 in annual revenue).
Buying it back
Cost cutting is certainly part of the plan to get Lightspeed stock back on track. However, another part is to reward investors and use the company’s cash reserves. Upon his return, Dasilva stated that the company would not be looking for any large mergers and acquisitions, as the stock has done in the past. Instead, they would reward investors with buybacks.
The company reaffirmed that it would buy back around US$140 million in share repurchases. This was another “big request” from shareholders, according to Dasilva. And one that could potentially offset some of the share base compensation that’s been granted, according to Dasilva.
What’s next?
Dasilva has only been CEO once again for the last 90 days. Yet he’s already outlined some strong growth for the company heading into fiscal 2025. Lightspeed stock is now aiming for between US$255 million and US$260 million in subscription revenue growth for the first quarter of 2025. This would be a year-over-year increase of up to 24%, with subscription revenue in line with the fourth quarter of 2024.
What’s more, the company is now aiming to reach over US$1 billion in revenue for the full year of 2025. And given it achieved US$909 million this year, that certainly looks within reach.
“I believe that we have a lot of value to gain in the public market if we’re aligned with shareholders,” Dasilva said. “I’m personally of the belief that the public markets will reward Lightspeed if we deliver on the things they want to see.”
