Investors react favourably as Lightspeed’s share price has risen over 17 percent.
In response to recent media reports that the company is exploring a sale, Montréal-based Lightspeed Commerce has confirmed that it is currently conducting “a strategic review of its business and operations.”
The payments technology company announced that it periodically undertakes such reviews “with a view to realizing its full potential.” As part of this process, Lightspeed said it “has engaged, and may continue to engage, in discussions relating to a range of potential strategic alternatives” but did not elaborate on what those options might include.
Lightspeed’s Sept. 25 statement came hours after Reuters and then The Globe and Mail reported that Lightspeed is working with a financial advisor to explore options including a potential sale, citing anonymous sources familiar with the matter. Both publications have reported that this process remains in the early stages, noting that a deal is not guaranteed.
Lightspeed has reportedly enlisted JPMorgan to explore options including a potential sale.
Reportedly, Lightspeed has hired American investment bank JPMorgan Chase to lead this review, evaluate the company’s options, and solicit interest from potential buyers that may include a rival tech company or private equity (PE) fund.
Lightspeed and JPMorgan Chase declined to comment on these reports to BetaKit.
In an analyst note shared with BetaKit, ATB Capital Markets director of institutional research Martin Toner wrote that he believes Lightspeed may have strategic value to legacy merchant acquirers like Fiserv or Global Payments, and select tech and software companies, including those involved in payments, such as Apple, Amazon, Square owner Block, PayPal, or Shopify.
As for PE firms, Toner thinks some might be interested given Lightspeed’s gross transaction volume, balance sheet, and “hidden assets,” and could look to split up the company, selling its hospitality business to a player like Toast while keeping its retail business.
Investors have reacted favourably to the news: Lightspeed’s shares are currently trading at $22.11 apiece on the Toronto Stock Exchange (TSX), up more than 17 percent since before Reuters’ initial story was published yesterday.
RELATED: Lightspeed beats revenue forecast in first full quarter under Dax Dasilva’s renewed reign
Founded back in 2005, Lightspeed sells point-of-sale and commerce software and hardware to restaurants, retailers, and hospitality providers. The company is dual-listed on the TSX and the New York Stock Exchange under the symbol ‘LSPD.’
Lightspeed’s stock has fallen more than 86 percent from its COVID-19 pandemic high in September 2021 amid the broader tech downturn, a drop fuelled at least in part by a short-seller report critical of some of Lightspeed’s metrics.
This year, Lightspeed has vowed to focus on growing its top-line revenue without sacrificing the progress it has made in becoming earnings before income, taxes, depreciation, and amortization-positive, as the company aims to strike the right balance between revenue growth and profitability to woo investors.
In February, after investors expressed disappointment with Lightspeed’s fiscal third-quarter earnings, Lightspeed’s board replaced CEO Jean Paul Chauvet with founder and former CEO Dax Dasilva, who has prioritized “profitable growth.”
RELATED: How Dax Dasilva plans to get Lightspeed to $1 billion in revenue
Dasilva joined the BetaKit Podcast in June to discuss why he stepped down as CEO in 2022, why he came back this year, and how he plans to get Lightspeed to $1 billion in revenue.
He did not rule out the potential for Lightspeed to go private, a path that many other publicly traded Canadian tech firms have pursued as tech valuations have fallen. When asked whether he was considering the possibility of taking Lightspeed private, Dasilva emphasized at the time that his current goal was to make Lightspeed “a great public company,” but also acknowledged that the company “can’t close the door to other strategic options.”
Earlier this year, fellow publicly traded Montréal payments tech company Nuvei reached a $6.3-billion USD deal to be acquired and taken private by United States private equity firm Advent International. Nuvei is not alone: other public Canadian tech firms have also recently gone private, including Absolute Software, BBTV Holdings, Dialogue Health Technologies, Magnet Forensics, MDF Commerce, Q4 Inc, and TrueContext.
Whether Lightspeed ultimately takes the same route remains to be seen, but in the meantime, BetaKit editor-in-chief Douglas Soltys will be speaking with Dasilva once more next week at the Elevate Festival tech conference in Toronto next week on Wed. Oct. 1.
Feature image courtesy Lightspeed Commerce.