Lightspeed Commerce Inc.鈥檚 chief financial officer says reduced consumer spending has the software company being 鈥渃autious鈥� ahead of the typically busy holiday season.
"These are challenging times for our end-markets and for our merchants," said Asha Bakshani, on a Thursday call with analysts.
"There is a lot happening in the macro environment."
Bakshani and Montreal-based Lightspeed, which sells commerce and inventory management software, have noticed the size of transactions shrinking from prior years as consumers adopt new spending habits to deal with increasing interest rates.
"This is out of our control but something we are mindful of as we look ahead," she said.
Bakshani鈥檚 remarks come as consumers and the companies serving them are continuing to feel the effects of inflation, which hit a near 40-year high earlier this year.
Though inflation has been easing in recent months, it remained elevated in September at 6.9 per cent and those frequenting food businesses, which represent a large segment of Lightspeed鈥檚 clients, have seen little relief.聽
The most recent numbers show food prices alone are up 11.4 per cent compared with a year ago. They increased at the fastest rate since August 1981 in September and have been rising at a faster rate than all the items the consumer price index encompasses for 10 consecutive months.
Despite the headwinds, Lightspeed鈥檚 chief executive thinks the company is facing a 鈥渦nique moment," even as its customers are facing "unprecedented conditions."
"Inflation is putting pressure on prices and squeezing profit margins. Staff shortages are making it harder to operate a business and promptly serve customers and the threat of a recession is making consumers more cautious about their spending habits," he said.
"Meanwhile, many small and medium-sized businesses are still stuck with dated, legacy systems incapable of addressing the challenges they face."
Lightspeed stands to benefit because Chauvet feels "the only way out is to leverage technology."
As the company adjusts to the current economic conditions, its chief executive said it is focusing more closely on "larger, more established" clients.
"I believe that the results for the quarter show that the strategy of focusing on quality over quantity is working," said Chauvet.
His company reported a loss of US$79.9 million in its latest quarter as its revenue rose 38 per cent.
The company, which keeps its books in U.S. dollars, said its loss amounted to 53 cents per diluted share for the quarter ended Sept. 30 compared with a loss of US$59.1 million or 43 cents per share in the same quarter last year.
Revenue in what was the second quarter of the company's financial year totalled US$183.7 million, up from US$133.2 million a year earlier.
The increase came as subscription revenue rose to US$74.5 million compared with US$59.4 million a year ago, while transaction based revenue totalled US$101.3 million, up from US$65.0 million in the same quarter a year earlier.聽
Hardware and other revenue was US$7.9 million, down from US$8.8 million.
On an adjusted basis, Lightspeed says it lost five cents per share in its latest quarter compared with an adjusted loss of eight cents per share in the same quarter last year.
The results pushed Lightspeed's share price down by 11 per cent or $2.71 to $21.91 in afternoon trading.
This report by The Canadian Press was first published Nov. 3, 2022.
Companies in this story: (TSX:LSPD)
Tara Deschamps, The Canadian Press
