Lightspeed Stock Soars 19%: What Investors Need to Know

Lightspeed (TSX:LSPD) stock started climbing once more with higher performance and a promising guidance for the next year.

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Lightspeed Commerce (TSX:LSPD) is making a comeback. Shares of the once high-growth tech stock surged up 19% after profits soared past estimates. Yet it seems perhaps that investors were just as excited about the full-time return of founder and once-again chief executive officer (CEO) Dax Dasilva.

What happened?

While other tech stocks were giving out bad news, Lightspeed stock became one of the few, stating investors should watch out for more. The company issued strong-than-anticipated forecasts that caused shares to jump.

Lightspeed stock is now giving a greater emphasis on driving profitability. The stock generated US$230.2 million in the fourth quarter in terms of revenue. What’s more, it trimmed its loss to US$32.5 million, a major improvement from the US$74.5 million loss just a year before.

A large part of this was the conversion of its client to its payments platform. This delivered 32% penetration in the quarter, up from 19% a year ago. And Dasilva predicts this should exceed 40% in the next year.

Digging in

Yet, what did analysts really like? The adjusted earnings before interest, taxes, depreciation, and amortization (EBTIDA). This paints a clearer picture of a company’s operational performance. By stripping away other factors, analysts can better assess how well a company’s core business is performing.

And in this case, analysts were pleased. Lightspeed stock reported US$4.4 million in the quarter. It was also the third straight quarter that the company delivered a positive adjusted EBITDA and beat estimates as well.

Furthermore, Lightspeed stock forecasted even higher adjusted EBITDA for the year. The company expects to generate at least US$40 million, with revenue growth of 20% plus. As they continue to improve their operational performance, this should, according to analysts, help stock price performance.

What’s next?

Overall, analysts liked this more disciplined approach to capital allocation. And as such, it has been reflected into the full-year 2025 guidance. But what’s next for the company?

So, now that the company has profitability in hand and a strong core, the next stage is software growth. That’s what Dasilva is now “laser-focused” on prioritizing. This was a clear request from shareholders of the company, of which Dasilva is the third-highest shareholder.

Another request by shareholders is to drive a more customer locations, especially among customers achieving more than US$500,000 per year in revenue. This was already up year over year, but there will need to be more focus on this client base for the company to reach its goals.

Bottom line

While other software and e-commerce companies have been providing a rough outlook for the next year, Lightspeed stock has been the outlier. The company expects revenue growth of 23% year over year in the first quarter of 2025. Furthermore, it also expects adjusted EBITDA growth of 2.7%.

For the year, Lightspeed stock predicts at least 20% revenue growth, with a minimum US$40 million in adjusted EBITDA, as mentioned. This implies much-improved efficiency, which has already been underway for the company. Overall, with analysts increasing price targets, the founder back on board, and higher-revenue clients, it looks like a good time to be a Lightspeed stockholder.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe has positions in Lightspeed Commerce. The Motley Fool recommends Lightspeed Commerce. The Motley Fool has a disclosure policy.

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