What happened
Shares of Canadian financial technology (fintech) company Lightspeed Commerce (NYSE: LSPD) were up on Thursday after the company reported full-year financial results for its fiscal 2022. As of 3 p.m. ET, the stock was up 12%. This is a welcome reprieve for shareholders considering the stock is still down about 80% from its all-time high.
So what
Lightspeed Commerce offers hardware and software solutions for merchants. The company had its initial public offering (IPO) in the U.S. in 2020. During its fiscal 2022 (which went from April 2021 through March 2022), the company enjoyed increasing adoption, with its revenue jumping a whopping 147% year over year to $548 million.
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Few analysts follow Lightspeed Commerce. But a couple of the analysts that do follow the company lowered their price targets for Lightspeed stock, according to The Fly.
When analysts lower their price targets, it often causes a stock to fall. But investors seemed to be encouraged by Lightspeed Commerce's guidance regarding profitability. The company had negative adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) which was 7% of revenue. But for fiscal 2023, it's guiding for negative adjusted EBITDA of just 5% of revenue -- a meaningful improvement.
Now what
For fiscal 2023, Lightspeed Commerce is guiding for revenue of $740 million to $760 million, year-over-year growth of almost 37% at the midpoint. To be sure, that's a good growth rate. And it is encouraging to see its adjusted EBITDA profitability improve. Finally, with nearly $1 billion in cash and cash equivalents, the company is in a strong financial position to continue generating net losses in order to gain market share.
However, keep in mind that many of Lightspeed Commerce's customers are likely feeling some pressure as inflation causes costs to rise and impacts discretionary consumer spending. Therefore, while Lightspeed Commerce just finished a strong year and is still improving, there are things that could potentially slow down its progress and that of other fintech companies in the coming year.
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Jon Quast 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.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
