(Bloomberg) — Lightspeed Commerce Inc.’s attempt to dispel concerns raised by a short seller was washed away by a soft earnings outlook and concerns about supply chain problems. The shares fell by almost a third.
The Montreal-based company, which sells point-of-sale and payments software to retailers and other sectors, defended its fast-paced acquisition strategy and the way it measures performance at the start of a conference call with analysts on its fiscal second quarter results.
But the stock plunged on the outlook for the rest of the fiscal year, which was weaker analysts expected, and concerns about the impact of supply-chain woes on customers ahead of the holiday season. Low inventories could translate into smaller transaction volumes for some Lightspeed clients, affecting the company’s revenue.
Lightspeed fell as much as 32% in Toronto, the most in the company’s history. It was down 29% to C$87.49 as of 11:09 a.m.
The company has been attacked by Spruce Point Capital Management, which issued a 125-page report in September alleging Lightspeed had inflated its numbers before getting publicly listed. Spruce Point said at the time it sees as much as 80% downside risk to the shares, citing evidence that the company has been exaggerating its growth prospects.
Chief Executive Officer Dax Dasilva addressed the report at the beginning of Thursday’s call with analysts, saying Lightspeed has been consistent in how it accounts for revenue and transparent in how it defines other business metrics. Any claim that the company lacks organic growth “is categorically false,” he said.
“We firmly believe that our key performance indicators allow investors to measure our operating performance and identify trends in our core business that may not otherwise be apparent” with international accounting standards, Dasilva said.
Acquisitions, which have been key to the company’s growth, have added talent, leading technology and scale to negotiate with and attract bigger partners, such as Google, he said. He called the Spruce Point report “misleading and clearly intended to benefit the author.”
Still, investors on Thursday focused on financial guidance.
Chief Financial Officer Brandon Nussey flagged the lingering impact of the pandemic, as well as ongoing supply-chain disruptions that may prevent retailers from meeting customer demands. Lightspeed itself may have a harder time securing hardware for its clients, he said.
Third-quarter guidance was “slightly below consensus” and implied “a more meaningful miss” in the fourth quarter that ends March 31 next year, BMO Capital Markets analyst Thanos Moschopoulos said in a note to investors.
Still, Lightspeed “has a well-established track record of guiding conservatively, and we believe the stock is overreacting to the guidance miss — particularly in light of the revenue beat and strong organic growth in the quarter.”
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