“As the Company continues to onboard more customers on its payments platform and the penetration rate increases, significant revenue growth will follow,” said Mr. * IA Capital Markets’ Neehal Upadhyaya to $23 from $31 with a “buy” rating. “In our view, the initiative will require meticulous execution from Lightspeed and ultimately should result in significant acceleration of Payments adoption and profitable growth ahead for the company, with management targeting a ‘Rule of 40′ business exiting the FY.” “The initiative will likely result in lower growth and an impact on profitability during H1/F23, with a return to more normalized growth and an increase in profitability during H2,” he said. * Eight Capital’s Adhir Kadve to US$18.50 from US$26 with a “buy” rating. Net-net, we believe recent strategy shifts to larger merchants and mandated payments position the company well for stronger growth and profitability long-term, but remain on the sidelines as we await more proof-points of successful execution.” “The accentuated H1 vs H2 dynamics are due to an accelerated payments strategy, with the company shifting gears from organic adoption to mandated adoption for its in-house payments solution across both new and existing customers over H1, setting the stage for stronger GPV growth over H2 and beyond, which should support greater value capture (payments customers have double the average LTV/CAV of 3 times) to help offset headwinds from a slowdown in consumer spend. “While LSPD’s F24 guide was in-line and reaffirmed positive EBITDA this year (see first-look note here), expectations for H2-weighted strength suggests little room for error in execution amidst growing macro uncertainty,” said Mr. * Stifel’s Suthan Sukumar to US$16 from US$18 with a “hold” rating. The average target on the Street is US$20.75, according to Refinitiv data. Perlin cut his target to US$21 from US$24. Maintaining an “outperform” recommendation for Lightspeed shares, Mr. “Another consideration is the impact to margins, as Payments does create a drag, which management believes it can offset by increasing its penetration of Lightspeed Capital.”
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“Management highlighted that it will focus its account management team away from Software sales to Payments in the near-term, which will impact Software performance, but potentially result in favorable conversion of customers to Payments,” he said. Perlin expects adjusted EBITDA to remain negative, “inclusive of management’s $12-million expected cost associated with the strategy across contract buyouts and implementation support, which has potential to pay off in F2H23 as Payments penetration accelerates and drives adj. EBITDA breakeven management is targetting for FY24.”Īs it implements its new initiative, Mr. “We view the success of this strategy as a key function to achieve the adj. “Results came in as expected however, management provided F1Q24 guidance that was below Street expectations but in-line with ours, that contemplates both challenged retail verticals, and management’s announced unified payments strategy, which indicates an aggressive shift towards converting new and existing customers to attach Lightspeed Payments,” said Mr.
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