Lightspeed bets on bigger customers


Along with a restructuring announced last month, payments company Lightspeed Commerce is narrowing its customer focus with the aim of becoming profitable.  

Lightspeed, a Canadian provider of point-of-sale software services for merchants, is making a “deliberate effort to pursue larger, more profitable customers” as it targets profitability in fiscal year 2024, CEO Jean Paul Chauvet said Thursday during the company’s fiscal third quarter earnings call with analysts. 

Last month, Lightspeed cut 300 employees, about 10% of its headcount, including a chunk of managers, the company said. The goal of the restructuring was to “remove a lot of management, remove a lot of overhead, become much leaner” as the company pursues bigger customers, Chauvet said Thursday. 

Lightspeed’s net loss for the quarter widened to $814.8 million over the year-ago period due to write-downs of NuORDER and Ecwid, according to a Thursday news release. Lightspeed acquired those companies in 2021. The company’s revenue for the quarter rose 24%, to $188.7 million, over last year.

Targeting merchants

Lightspeed’s customer location count was 167,000 at the end of the quarter, which RBC Capital Markets analyst Daniel Perlin called about a 5% increase over the year-ago quarter.

While the count was flat compared to the second fiscal quarter, the company touted the rising number of venues with higher gross transaction value.

The number of merchant locations with more than $500,000 in annualized GTV increased 15% over the same quarter last year, and now represents 32% of total venues, company executives said Thursday. Customer locations with more than $1 million in annualized GTV were up 19% year over year.

Smaller merchants are also more likely to drop off as clients while the larger merchants are steadier customers, Chauvet noted. Instead of coffee shops, Lightspeed will pursue fine dining, Michelin-starred restaurants, Chauvet explained. Also, the company is targeting “more established” merchant customers in the U.S., Chauvet told analysts.

Lightspeed is also pursuing growth by getting more of its point-of-sale customers to tap the company for payments processing, too, executives said during Thursday’s call. 

“We believe the (Lightspeed) story is continuing to evolve, with an increasingly larger portion of the company’s revenues being generated by payments,” Perlin wrote in a Feb. 2 note to investor clients.

Lightspeed is among a group of payments companies analysts have pegged as possible acquisition targets amid declining valuations.

Consumer spending challenge

The uncertain macroeconomic climate has led Lightspeed to heighten its focus on achieving profitable growth, Chauvet said. In addition to chasing bigger customers and trying to process payments for more of them, Lightspeed also seeks to reduce operating expenses and limit marketing spending, he said. 

“We are going to be deploying marketing dollars and sales teams to ensure that we attract the customers in a profitable way, and so we will not be going after the entire market, but going after the more established” clients,  Chauvet said. 

Lightspeed executives also said they expect consumer spending to remain “challenged” in the near term. “Given that our transaction-based revenues are now over half of our total revenues, weaker growth in GTV presents a headwind for us in the months ahead,” Chief Financial Officer Asha Bakshani said during Thursday’s call. 


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