This TSX Tech Stock Has Been Soaring in the Face of COVID-19

The COVID-19 pandemic has seen stock markets around the world crash in a manner never seen before. But through this crisis, some company stocks have risen high, incurring massive gains.

One such Canadian tech company has been soaring like an eagle through the tumultuous times of COVID-19. After a dip in sales during the market crash in March 2020, its stocks have made a V-shaped recovery in the following six months. At the same time, in its first quarter financial results of 2020, this company has gained a 51 per cent increase year-over-year.

We are, of course, talking about Lightspeed POS (TSX:LSPD), whose stocks have popped by nearly 250 per cent at the Toronto Stock Exchange (TSX) between its lowest point in March and September.

Lightspeed POS is an omnichannel software provider based in Montreal, founded by Dax Dasilva in 2005. It majorly deals in providing software support to small and medium-sized businesses. Most recently, the company announced its initial public offering (IPO) of subordinate voting shares in the United States for listing at US stock markets.

Lightspeed’s Remarkable Performance Amid COVID-19

Since its debut on the TSX in October last year, Lightspeed POS stocks have seen a nearly 122 per cent increase in their price. Come COVID-19 outbreak, its shares, like many others, plunged during the market crash, but made a quick recovery. This recovery was a result of the increasing demand of e-commerce software providers in a pandemic-inflicted world.

Lightspeed stock price has seen a 60 per cent rise in the last six months, and a nearly 24 per cent rise quarter-over-quarter.

Source: Lightspeed

As the spread of the coronavirus forced people to stay indoors, small and medium entrepreneurs sought out ways to run their businesses remotely. This necessity carved Lightspeed’s success as more and more businesses reached out for its omnichannel solutions. Riding on the new sales highs, Lightspeed’s gross transaction value (GTV) saw a 53 per cent year-over-year growth in Q1 2020. By the end of June, the company had also expanded its customer locations to over 77,000.

This boost in its demand and product sales reflected on its stock market performance too, pumping up its trading volume and price over the last six months.

Let us breakdown Lightspeed’s fundamentals to understand its stock position better:

• The company’s market cap stands at C$ 3.2 billion (US$ 2.4 billion).
• Lightspeed’s stocks relative per cent change is as follows:
• -11.8 per cent in five days
• +4.86 per cent in one month
• +27.4 per cent in three months
• +16 per cent year-to-date
• +15.9 per cent in a year
• Its relative per cent change in its TSX 300 Composite Index was:
• (minus) -9 per cent in five days
• (plus) +7.5 per cent in one month
• +23.6 per cent in three months
• +22.38 per cent year-to-date
• +18.4 per cent in a year
• Its relative per cent change in its S&P TSX Application Software (Sub Industry) Index was:
• (minus) -5.58 per cent in five days
• (plus) +8 per cent in one month
• +27 per cent in three months
• -1.79 per cent year-to-date
• -6.2 per cent in a year

• Lightspeed’s 52-week high (recorded on September 2, 2020) was C$ 48.3, and the percentage change relative to 52-week high was 13.3 per cent. Its 52-week low (recorded on March 19, 2020) was C$ 10.5, and the percentage change relative to 52-week low was 298.7 per cent.
• In terms of trading volume, Lightspeed recorded a 5-day average of 0.99 million, a 30-day average of 0.73 million, a 90-day average of 0.77 million, and a 5-day vs 30-day change of +35 per cent.
• Lightspeed’s valuation metrics in the last twelve months (LTM) have been as follows:
  
  

Lightspeed’s Q1 2020 Financial Results Show Growth

Lightspeed POS has also reported healthy financial results for its first quarter of 2020 (ending on June 31). This Montreal-based company raked up a total revenue of more than US$ 36 million, a 51 per cent increase year-over-year. It also saw a gross margin of 60 per cent, with its gross profit surging by 39 percent year-over-year. Its recurring software and payments revenue stood at over US$ 33 million, which was an increase of 57 per cent.

Source: Lightspeed

The Q1 2020 report recorded an adjusted EBITDA of US$ 2.2 million, as compared to an adjusted EBITDA of US$ 5.1 million in Q1 2019. At the end of its first quarter (June 30, 2020), Lightspeed’s unrestricted cash and cash equivalents amounted to over US$ 203 million.

Lightspeed’s Forecasts

Keeping in mind the COVID-19 times and the shift it has caused in the business paradigm, Lightspeed expects revenues ranging between US$ 38 to US$ 40 million in the second quarter of 2021. Its expected adjusted EBITDA is approximately US$ 7 to US$ 8 million.

Bottomline

Lightspeed POS raised C$ 240 million in March last year, earning the crown of the largest tech IPO in Canadian markets till date. Its latest stock performance shows a remarkable growth of 4.8 per cent in one month, 27.4 per cent in three months and nearly 16 per cent in a year.

In a July 2020 study, Gartner predicted that the Software as a Service (SaaS) industry is likely to grow to nearly US$ 121 billion in 2021, and to US$ 140.6 billion in 2022. As one of the power houses in the SaaS sector, Lightspeed POS is poised for further growth, even through the difficult times of the pandemic.