Lightspeed Commerce: A Turnaround Story with Momentum to Spare

The tech sector has been a rollercoaster in recent years, but few companies have demonstrated the kind of strategic discipline and execution that Lightspeed Commerce Inc. (LDSP) has showcased in its latest earnings report. After years of aggressive growth fueled by acquisitions and innovation, Lightspeed is now proving it can scale profitability while maintaining its revenue trajectory. For investors, this is a critical inflection point: a company once dismissed as overvalued is now delivering on its promises, and its stock offers a compelling entry point.

The Revenue Engine: Sustaining Growth Through Payments and Retention
Lightspeed’s Q4 2024 results ($230.2M in revenue, up 25% YoY) were not just about top-line growth but the composition of that growth. Transaction-based revenue surged 40% to $139M, driven by its unified POS and payments strategy—a move that has quietly reshaped its business model. By processing more transactions in-house via Lightspeed Payments, the company is reducing reliance on third-party fees and capturing higher margins over time. While transaction margins dipped slightly (to 29% from 33%), the shift has turbocharged GPV (Gross Payment Volume) to $6.6B, up 75% YoY.

This is a sustainable flywheel: as merchants adopt Lightspeed’s integrated payments, their spending on subscriptions rises too. Subscription revenue grew 7% to $81.3M, but the real story is retention. Net retention stayed at 110%, meaning existing customers are spending more each year. The company’s high-GTV customers—those with annual sales over $500K—grew by 5-6%, a critical mass of clients who generate disproportionate revenue.

Margin Expansion: The Proof in the Profitability
Lightspeed’s Q4 marked its first quarter with positive Adjusted EBITDA ($4.4M), a milestone that management called “the culmination of years of hard work.” The full-year 2024 EBITDA turned positive ($1.3M) after a staggering $33.9M loss in 2023—a testament to cost discipline. The 10% headcount reduction and cloud vendor consolidation have cut costs without sacrificing innovation. Meanwhile, Lightspeed Capital (its merchant cash advance arm) grew 135% YoY, contributing high-margin revenue.

The company’s focus on profitability isn’t just about cutting expenses. It’s about redefining its value proposition. New AI tools like automated inventory forecasting and order tracking have reduced churn among high-GTV clients. For example, Tribal Sportswear saw a 23% sales boost after adopting Lightspeed’s NuORDER platform—a case study in how software can directly drive merchant success.

Valuation: A Discounted Growth Story
At current levels, Lightspeed trades at just 3.7x trailing sales—a fraction of its peers like Shopify (SHOP: 6.8x) or Square (SQ: 12.3x). Yet Lightspeed’s growth profile is stronger: 24% revenue growth in 2024 vs. Shopify’s 13%. This disconnect suggests the market has yet to fully price in Lightspeed’s transition from a high-growth disruptor to a profitable scale-up.

Consider this: If Lightspeed achieves its $1B revenue target for 2025 (a 20% jump from 2024), and hits $40M in EBITDA, its valuation multiples could compress even further—or the stock could rise sharply. The $140M share repurchase program announced in Q4 is a clear signal that management believes shares are undervalued.

Risks and the Case for Caution
No investment is without risks. Lightspeed’s margin expansion hinges on continued payments penetration, which management aims to raise to 40-45% by 2025. Competitors like Shopify and Toast are aggressively pushing their own integrated solutions, and customer churn—particularly among smaller merchants—remains a vulnerability.

Yet Lightspeed’s strategic focus is narrowing its scope to high-GTV clients, where it can command higher ARPU and retention. The recent customer wins—like NASA’s Langley Research Center and Michelin-starred restaurants—are proof that Lightspeed is targeting enterprises with deeper pockets and longer lifecycles.

The Bottom Line: A Buy at This Price
Lightspeed’s Q4 results are more than a snapshot of success—they’re evidence of a company rewriting its playbook. With a path to $1B in revenue, EBITDA turning consistently positive, and a stock price that still underappreciates its progress, this is a rare opportunity. For investors looking for a tech stock with tangible growth and a margin story, Lightspeed is a buy now.

The question isn’t whether Lightspeed can sustain its growth—it’s whether investors will act before the market catches on.