On Friday, Piper Sandler adjusted its outlook on Lightspeed Commerce (NYSE: LSPD), reducing the price target to $15.00 from the previous $17.00, while maintaining a Neutral rating on the stock.
The adjustment comes after Lightspeed's focused efforts on Unified Payments over the past year, which saw a significant increase in Gross Payment Volume (GPV) penetration, rising from approximately 20% of Gross Transaction Volume (GTV) at the end of Fiscal Year 2023 to 36% currently.
Lightspeed is now shifting its attention back to growing its subscription base, planning a renewed outbound sales strategy, and implementing some price increases. Management is optimistic that these initiatives can propel the company back to a subscription revenue growth rate of over 10%, with subscription gross margins having reached 79% in the most recent quarter.
The company is also making strategic adjustments to address investor expectations, such as focusing on profitability, engaging in share repurchases with its $675 million in net cash, considering pricing actions for its customer base, and aiming to resume double-digit subscription growth.
Lightspeed reported impressive financial results for Q1 of Fiscal 2025, with a 27% year-on-year increase in revenue to $266.1 million, and outperforming projections. Additionally, Lightspeed's adjusted EBITDA turned positive, totaling $10.2 million, compared to a $7 million loss in the same period last year.
The company's focus on Unified Payments has resulted in significant growth, with Gross Payment Volume penetration rising from 20% to 36%. Lightspeed has also successfully added new customers across various sectors and continues to repurchase shares, demonstrating confidence in its business model.
InvestingPro Insights
In the wake of Piper Sandler's revised outlook on Lightspeed Commerce (NYSE:LSPD), investors may find additional context in real-time data and insights from InvestingPro. Lightspeed's current market capitalization stands at approximately $2 billion, reflecting investor sentiment and market positioning. Notably, the company's price-to-book ratio over the last twelve months as of Q1 2025 is 0.83, indicating that the stock may be undervalued relative to its assets. This is further supported by a robust revenue growth of 26.19% in the same period, showcasing the company's expanding financial scale.
Turning to InvestingPro Tips, it's noteworthy that Lightspeed holds more cash than debt on its balance sheet, which aligns with the company's strategic adjustments mentioned by Piper Sandler, including the potential for share repurchases. Moreover, analysts have revised their earnings upwards for the upcoming period, indicating a potentially brighter financial outlook. However, it's important to consider that the stock has experienced significant volatility and has taken a considerable hit over the last six months, which may influence risk assessments.
For investors seeking a more in-depth analysis, InvestingPro offers additional tips, including the prediction that Lightspeed will become profitable this year and the fact that the company does not pay dividends, which may be relevant for those focused on income-generating investments. To explore these insights further, visit https://www.investing.com/pro/LSPD, where you can discover a total of 8 additional InvestingPro Tips to help inform your investment decisions.
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