Some of the best investing stories begin with a company that no one is paying attention to until it’s too late. Lightspeed Commerce (TSX:LSPD) might be one of those stories in the making. This Canadian tech stock has taken its fair share of hits, but if you zoom out and look at what’s actually happening under the hood, it could quietly be setting up to become a monster winner over the next decade.
What happened
Lightspeed stock has been on a rollercoaster. The Canadian stock dropped about 7% over the past year, and it’s still trading more than 35% below its 52-week high. That kind of performance turns off most investors. But for those willing to look deeper, Lightspeed is showing signs of a business that’s evolving.
In its most recent quarter, revenue climbed 15% to nearly $305 million. The Canadian stock also expanded its gross profit margin to 42%, up from 41% last year. Even more important than the top line, Lightspeed posted adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $15.9 million, up more than 50% from a year ago. It’s not profitable yet under standard accounting, but it’s moving decisively in the right direction.
More to come
Lightspeed is going all-in on the two strategic growth engines of retail in North America and hospitality in Europe. These are mature, fragmented markets where Lightspeed’s unified platform is gaining traction. It added about 1,700 net customer locations last quarter and now serves roughly 145,000 locations worldwide. It also boosted average revenue per user by 16%, showing it’s growing its footprint and monetizing it better, too.
What makes this Canadian stock really interesting is the mix of recurring software revenue and fast-growing payments revenue. Payments now represent more than two-thirds of revenue, and gross payment volume surged 21% to $10.2 billion. That trend matters because it creates a flywheel. As more customers use Lightspeed’s payments system, margins improve and loyalty increases. It also helps the Canadian stock upsell additional services and create sticky customer relationships.
Looking ahead
Lightspeed isn’t sitting on its hands either. The Canadian stock rolled out new tools across its product suite, including artificial intelligence (AI)-powered analytics, enhanced inventory management, and faster payments solutions. It even launched features for restaurants to improve table turnover. It’s now executing a clear strategy to lead in two sectors it knows it can dominate.
One reason the Canadian stock remains under the radar is its net loss of $49.6 million last quarter. But dig deeper and you’ll see that number is largely skewed by non-cash items like amortization and stock-based compensation. Adjusted income came in positive at $7.9 million. Meanwhile, the balance sheet is rock-solid with $448 million in cash and minimal debt.
Foolish takeaway
Risks remain, especially with tech sentiment still shaky and competition in the payments space intense. But Lightspeed’s current valuation doesn’t reflect the progress it has made. Its price-to-sales ratio sits around 1.6, and the Canadian stock is actively buying back shares, about 12% of its float over the past few months. That signals confidence from the inside, even if the market hasn’t caught up yet.
Sometimes it’s not the biggest name or flashiest brand that ends up delivering life-changing returns. It’s the one quietly stacking wins, improving margins, adding customers, and being underestimated. Lightspeed has been knocked down, but the fundamentals are building. And if it keeps this pace, it just might turn out to be the hidden gem of the decade.
