This tech stock soared 211 per cent in the past year. Should you buy it?

Canada's technology industry witnessed an unprecedented surge since 2020 as dependence on tech products or services soared. However, this sector was already in boom phase before the arrival of the pandemic.

According to the Government of Canada, the information and communications technology sector had outpaced the overall Canadian economy in output and employment in 2019. The sector contributed 4.8 per cent or roughly C$ 94 billion to the gross domestic product (GDP) and the revenue from this sector was C$ 210 billion.

The S&P/TSX Information Technology Index surged about 14 per cent month-to-date and its adjusted market cap stands at C$ 311.99 billion.

After the breakout of the COVID-19 pandemic, our world has been running on technology-based things. People working remotely are dependent on online services for both essential and non-essential needs.

According to a report by research firm Markets and Markets, the global digital transformation market size is estimated to reach US$ 1009.8 billion by 2025. The report suggests that the market size will grow at a compound annual growth rate (CAGR) of 16.5 per cent. Notably, in 2020, the market size of this sector was US$ 469.8 billion.

In Canada, there are many big technology companies, of which one company stands out as its share prices skyrocketed by 211.5 per cent in the past year and outperformed the Toronto Stock Exchange 300 Composite Index's growth of 135.7 per cent.

We are talking about Lightspeed POS Inc. (TSX:LSPD), which provides commerce-enabling software as a service (SaaS) platform. The company has major operations in the US, Canada, Australia, and Netherlands among other countries.

The LSPD stock attracts investors' attention, and its average daily trading volume was approximately 1.05 million shares in the last 30 days. On that note, let's dive deeper into this stock and find out why it is worthy of your time:

Lightspeed’s stock performance

During the trading session on Thursday, June 24, the LSPD share prices climbed about three per cent and closed at C$ 104.39 apiece. The stock also breached its previous 52-week high of 104.98 on February 4, 2021, as it clocked C$ 105.48 apiece during the intraday trading.

One-year chart of stock performance, volume and moving average multiple of Lightspeed (Source: EODHD/Others)

LSPD stock grew 16 per cent year-to-date (YTD) and 36 per cent in the last three months. As per the TMX data, Lightspeed’s market cap is C$ 13.7 billion and its debt-to-equity (D/E) ratio is 0.03.

Financial highlights

In the fourth quarter results for the period ended March 31, 2021, Lightspeed recorded total revenues of US$ 82.4 million, reflecting an increase of 127 per cent year-over-year (YoY). The surge in revenues was majorly due to the acquisitions of Upserve and ShopKeep.

In Q4 2021, revenues from subscription and transaction-based services represented 91 per cent of the total revenue and this was an increase of 137 per cent YoY. In the same period, the gross profit amounted to US$ 43.95 million compared to US$ 23.7 million in Q4 2020.

Lightspeed also strengthened its balance sheet as its cash and cash equivalents grew from US$ 210.96 million in Q4 2020 to US$ 807.2 million in Q4 2021.

In its full-year guidance for fiscal 2022, the technology company estimates to record revenues between US$ 430 to US$ 450 million. For the first quarter of fiscal 2022, the estimated revenues will be approximately US$94 million.

Latest details of Lightspeed

On June 7, 2021, Lightspeed, the commerce platform for merchants announced it will acquire two global leaders in digital commerce. Lightspeed will acquire US-based Ecwid, an e-commerce platform that allows users to build standalone businesses in minutes. According to the company's statement, Ecwid has a client base of over 130,000 users and has a presence in over 100 countries.

In addition, Lightspeed will acquire NuORDER, a company that brings together businesses and suppliers. NuORDER serves 3,000 brands and in twelve months (ended March 31, 2021), at least 100,000 retailers made over US$ 11.5 billion through its platform.

Once Lightspeed completes the acquisition, the company's customers will get new entry points to the digital economy and will likely maximize its revenues.

Meanwhile, data platform Ascent360 will integrate with Lightspeed in the app store to offer combined solutions to retailers. Ascent360 and Lightspeed will allow retailers to categorize customers and send personalized omnichannel messages for engagement.

The above constitutes a preliminary view and any interest in stocks should be evaluated further from an investment point of view. The reference data in this article has been partly sourced from EODHD/Others.