Lightspeed’s stock has been on a dive, falling 75 per cent since hitting a high in September
Lightspeed Commerce Inc. chief executive Dax Dasilva is stepping down from his role at the e-commerce company he founded. Photo by Christinne Muschi/Bloomberg Shares in Lightspeed Commerce Inc., one of Canada’s digital technology darlings, plunged in the wake of the company’s first significant leadership shuffle.
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Lightspeed said after markets closed on Feb. 2 that founder Dax Dasilva was stepping down as chief executive, effective immediately, and would be replaced by president Jean Paul Chauvet, who originally joined the company as chief revenue officer in 2012.
Dasilva will become executive chair of the board of directors, and Patrick Pichette, the Montreal native who served as Google’s chief financial officer from 2008 to 2015, will become lead independent director.
The board of directors began succession planning last spring, and it’s not unusual for founders of fast-growing technology companies to eventually step aside. Still, investors received the news negatively, perhaps because Lightspeed hadn’t telegraphed that a management change was in the works. The stock price dropped more than 18 per cent when markets opened in Toronto, and then recovered somewhat as the day wore on. Shares were trading at about $39 at midday on the S&P/TSX composite index, compared with an inter-day high of about $45 on Feb. 2.
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“Timing isn’t great,” Andrew Jeffrey, an analyst at Truist Securities, said in a note to clients, as Lightspeed still is in the middle of integrating the companies it acquired during a buying spree last year, while also rolling out new products and fending off attacks from a short-seller. Nevertheless, Jeffrey reiterated that he thinks Lightspeed is a good long-term bet, adding that resolving any leadership uncertainty should make the company that much stronger. “We think making the move now clears the decks for cleaner (fiscal 2023) financials strategic focus,” he said.
Dax Dasilva, left, with Jean Paul Chauvet in 2015. Photo by Damon van der Linde/National Post files Dasilva, 44, said he wanted to step away from day-to-day management to focus on personal projects, including an environmental charity he founded last year that funds conservation projects. Dasilva, who was was one of the few openly gay leaders of a big Canadian company, said he would also continue to work on inclusivity, including at Lightspeed, which specializes in software that helps smaller companies process payments and manage inventories.
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“We’re all humble enough to know that we want what’s best for the company and that sometimes the roles have to be looked at and succession has to happen in order for evolution to occur,” Dasilva said in a joint interview with Chauvet.
The company also reported its third-quarter earnings. Revenue grew 165 per cent from a year earlier, reaching US$152.7 million in the period ended Dec. 31, 2021. That beat analyst expectations and the US$140 million to US$145 million range the company projected. Lightspeed, which has yet to turn a profit, posted a net loss of US$65.5 million. Subscription growth climbed 175 per cent with organic growth up 74 per cent from a year earlier.
“In what has been a very contentious stock over the past several months, we believe the current quarter and guidance suggests (Lightspeed) is regaining its footing,” analysts at RBC Capital Markets said in a note. “Although there remain several moving parts to both the model and the story, we see a pathway to greater clarity emerging this quarter, which we believe is necessary for investors to re-engage with the name.”
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Employees at Lightspeed’s Montreal offices in 2019. Photo by Christinne Muschi/Bloomberg files Dasilva’s departure comes as Lightspeed’s stock has been on a dive, losing as much as 75 per cent of its value since its shares hit a high of $158.93 on Sept. 22. Three factors have contributed to the spiral.
At the end of September, short-seller Spruce Point Capital Management published a report that claimed the company was inflating many of its performance metrics, a charge the company said was false. In November, the stock dipped further after Lightspeed downgraded its forecast for revenue growth. And then more generally, Lightspeed has been caught up in the broader retreat from technology stocks in recents weeks, as high-growth, but ultimately unprofitable, companies have fallen out of favour with many investors.
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Lightspeed initially started out in point-of-sale software for small and independent businesses, primarily hospitality, retail and restaurants. More recently, its been moving into e-commerce, where it bumps up against larger companies such as Amazon.com Inc. and Ottawa-based Shopify Inc. That strategy has been based largely on acquisitions. Five years ago, it bought Amsterdam-based SEOShop, an e-commerce software developer; since going public in 2019, Lightspeed has acquired nine companies to gain toeholds in the United States, Asia and Europe.
Chauvet said his focus will be on integrating newly purchased software, speeding up hiring and boosting organic growth, the latter of which has been a main point for analysts. “This growth will be stratospheric,” he said.
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More On This Topic The long and short of Lightspeed’s Spruce Point spat Telesat files to go public ahead of US$5 billion Lightspeed plan Lightspeed founder Dax Dasilva’s conservation efforts court next generation of talent and cynicism alike Meet the tech company that grew fivefold in just over a year — and stayed in Canada The new CEO said in the interview with Dasilva that he’s unworried about the stock price. He said he was especially excited about the integration of Ecwid, a former rival that Lightspeed purchased last year that will expand Lightspeed’s reach in the retail and hospitality space.
“With Ecwid now, we can embed commerce everywhere. We can embed it on social media. We can embed it on TikTok. We can embed it on Instagram,” Chauvet said. “We really believe that we can be digital first, which means that we can compete with the pure e-commerce players.”
For his part, Dasilva said he is excited for the opportunity to be more involved in guiding the strategic and people-focused ventures at the company he created.
“Lightspeed has grown to a point where we must be all hands on deck and that means reinventing our roles and how we serve the company,” he said. “That’s what you’re seeing here is we’re finding the roles where we can best serve the company and ultimately serve our people and our customers and our current stakeholders in the best way.”
• Email: bbharti@postmedia.com | Twitter: biancabharti
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