Lightspeed Surpasses Fiscal Q3 Revenue, Profitability Goals, Shares Decline Nonetheless

Lightspeed Commerce, headquartered in Montréal, surpassed its revenue and loss reduction projections for the fiscal third quarter, as outlined in its recent financial report.

During fiscal Q3 2024, Lightspeed Commerce reported total revenue of nearly $240 million USD, marking a significant 27 percent year-over-year increase. This performance exceeded the company's earlier revenue forecast range of $232 million to $237 million.

Furthermore, Lightspeed achieved positive adjusted earnings before income, taxes, depreciation, and amortization (EBITDA) for the second consecutive quarter since its initial public offering, reaching $3.6 million. This figure was nearly double the $2 million initially anticipated by the company. This achievement is in line with Lightspeed's commitment to achieving breakeven or better EBITDA this year.

Furthermore, Lightspeed managed to narrow its net loss to $40.2 million compared to both the previous quarter and the same period last year.Despite exceeding its forecasts, Lightspeed's stock price has experienced a significant decline of more than 24 percent since market open today on both the Toronto and New York stock exchanges. This downturn comes as the company's latest guidance and disciplined growth approach have not fully resonated with investors.

Looking ahead to the coming fiscal year, Lightspeed has pledged to prioritize the growth of its top-line revenue while maintaining its progress toward achieving positive adjusted EBITDA. By pursuing this strategy, the company aims to strike a better balance between revenue growth and profitability. This goal reflects the ongoing challenge faced by Lightspeed and other publicly traded tech companies in meeting the competing demands of investors for both revenue growth and profitability.

Lightspeed CEO Jean Paul (JP) Chauvet emphasized during the company's fiscal Q3 earnings call that growth would remain their top priority. While they intend to maintain positive adjusted EBITDA on an annualized basis, they are committed to prioritizing growth over profitability. Chauvet emphasized that, in their efforts to strike a balance between growth and profitability, they would lean more towards prioritizing growth.

One factor contributing to Lightspeed's stock price decline was a critical report issued by a short-seller. Short-sellers are investors who bet against a company's stock, often by selling borrowed shares in anticipation of buying them back at a lower price. The report raised concerns about Lightspeed's key metrics, such as its customer count and gross transaction volume (GTV). These metrics are essential indicators of a company's performance and growth potential, so any doubts raised about them can significantly impact investor confidence.

The report likely fueled investor skepticism and contributed to downward pressure on Lightspeed's stock price. Negative reports from short-sellers can erode investor confidence and lead to a sell-off as investors react to the concerns raised. Additionally, during times of market volatility or sector-wide downturns, investors may be more risk-averse and react more strongly to negative news or uncertainties surrounding a company.

Overall, while the short-seller report played a role in Lightspeed's stock price decline, it's essential for investors to conduct thorough research and consider various factors before making investment decisions.