Lightspeed Commerce (TSX:LSPD) stock has been brutalized. Trading near $15.75 as of June 2025, the stock sits a staggering 90% below its 2021 peak. Years of negative sentiment, hefty goodwill write-offs (US$556 million just this past quarter!), and persistent cash burn have left many investors running for the hills. But could this battered and undervalued TSX tech stock be setting up for a major turnaround? Let’s dig in.
The bear case: Real risks still linger
Investors’ concerns about Lightspeed stock aren’t trivial. A sentiment abyss, cash flow negative operations, and sustained margin compressions are on focus.
Years of underperformance following a scathing short-seller attack and high-profile struggles have deeply scarred investor confidence. Trust needs rebuilding.
Further, the company remains cash flow negative in 2025 despite hitting positive adjusted earnings before interest, taxes, depreciation, and amortization (adjusted EBITDA) – a measure of core operating profitability – of US$53.7 million in fiscal 2025. Lightspeed is still spending more cash than it generates.
Most noteworthy, Lightspeed’s gross margins compressed significantly, from 57.1% in 2021 to 41.8% during the past 12 months (though the most recent quarter saw a bounce to 44%). This reflected a higher mix of lower-margin invoices.
The bull case: 5 reasons Lightspeed Commerce’s pivot is gaining traction
Beneath Lightspeed stock’s gloom, significant strategic shifts are underway, backed by concrete data from the company’s latest earnings call on May 22:
- Radical focus and execution: Lightspeed isn’t chasing everything anymore. Management has ruthlessly refocused on two core markets with proven strength: Complex retail in North America and Hospitality in Europe. This isn’t just talk. In these “growth engines,” customer locations grew over 3% in fiscal 2025, and Gross Transaction Volume (GTV) grew 6% – despite the strategic pivot only starting in December 2024. Last quarter was a record month for the company’s new outbound sales efforts.
- Aggressive share repurchases: Lightspeed is putting its idle cash hoard to work, repurchasing 18.7 million shares (about 12% of shares outstanding) for US$219 million over the past year. With about US$200 million left under its current US$400 million board authorization, this supports the share price and signals management’s belief in undervaluation.
- Software ARPU power: Software revenue per user (ARPU) grew a solid 11% year-over-year during the past quarter, hitting US$489 (or US$545 under Lightspeed’s new, more relevant definition). This could prove that customers are adopting more modules and tolerating price increases, highlighting the platform’s value in target markets.
- A visible path to profitability: Lightspeed’s financial guidance for the next 12 months is promising: Management targets revenue growth of 10–12% year-over-year, with adjusted EBITDA rising 30% from recent levels. I expect the company to turn free-cash-flow positive within the next two years.
- A compelling valuation: Lightspeed stock trades at a forward Enterprise Value-to-Revenue (EV/Revenue) multiple of just 0.87. Compare this to profitable peer SPS Commerce at 6.7 times, or even NCR Voyix at 1.1 times despite its revenue growth struggles. Lightspeed’s current valuation seems to price in perpetual failure, ignoring the tangible progress being made.
Investor takeaway: A high-potential, high-risk contrarian bet
Lightspeed stock is undeniably still a risky investment. The cash burn and history of disappointment demand caution. However, the setup is intriguing for patient, contrarian, long-term oriented investors. The strategic pivot is showing early, measurable results. Management is executing aggressively on costs, focus, and capital return (share buybacks). The tech stock’s valuation is deeply discounted, offering substantial upside if the turnaround continues.
The next 12–18 months are critical. If Lightspeed delivers on its fiscal 2026 guidance and demonstrates clear progress towards cash flow positivity, the negative sentiment that has crushed the TSX tech stock could reverse dramatically. The potential rewards for getting in near current lows could be significant.
Is Lightspeed stock a buy now? The beaten-up TSX tech stock is a speculative buy for those with a higher risk tolerance and a long-term horizon who believe in management’s refocused strategy. The evidence from recent earnings suggests the darkest days might be behind Lightspeed Commerce, and the path towards redemption, while challenging, is being actively forged. Keep LSPD on your watchlist, keep researching, and size any buy positions appropriately. This TSX tech stock could be one of the more fascinating turnaround stories to watch in 2025 and beyond.
