Why Lightspeed Commerce Stock Dropped Today

Shares of Lightspeed Commerce (LSPD -24.37%) are down 24.6% as of 3:45 p.m. ET Thursday after cautious forward guidance overshadowed an otherwise strong quarterly report from the Canada-based, point-of-sale and e-commerce software company.

On Lightspeed Commerce’s solid quarter

For its fiscal third-quarter 2024 ended Dec. 31, 2023, Lightspeed’s revenue grew 27% year over year to $239.7 million, translating to adjusted (non-GAAP) net income of $11.8 million, or $0.08 per share (up from a modest profit of $0.4 million in the same year-ago period). Analysts, on average, were only modeling earnings of $0.05 per share on revenue closer to $236 million.

Trending toward the bottom line, Lightspeed’s adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) swung to positive $3.6 million, well above guidance for positive $2 million and swinging from a loss of $5.4 million in the same year-ago period.

Lightspeed CEO JP Chauvet called the company’s Unified Payments initiative “a resounding success,” noting customers adopted the Lightspeed Payments product without meaningfully increasing churn as previously expected.

What’s next for Lightspeed Commerce stock?

Lightspeed CFO Asha Bakshani credited the company’s relative-earnings outperformance to their “disciplined approach on costs.” But Bakshani also noted that, going forward, the company “will focus on growing our top line without sacrificing the progress we have made on adjusted EBITDA profitability.”

In the meantime, Lightspeed revised its full fiscal-year 2024 outlook to call for revenue of $895 million to $905 million — an increase of $5 million from the lower end of its previous guidance — with “break even or better” adjusted EBITDA.

The company also warned, however, that it “remains cautious on near term prospects due to a still uncertain macroeconomic environment and the pace of Unified Payments adoption in international markets.”

On one hand, with shares having already rallied nearly 60% leading into this report since the end of October, that caution appears to be driving some skittish investors to take profits off the table. On the other hand, if Lightspeed manages to prove its caution was unwarranted when all is said and done in the coming quarters, this pullback could prove to be short lived.

Steve Symington has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Lightspeed Commerce. The Motley Fool has a disclosure policy.

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