How small businesses are coping amid the COVID-19 pandemic
Canadian technology firm Lightspeed POS Inc. said it expects its financial performance to come under pressure as its customers get hammered by the COVID-19 pandemic amid ongoing social distancing measures.
The Montreal-based company's latest statement offers investors a glimpse into the state of small- and medium-sized retail, restaurant and hospitality businesses which comprise a significant portion of the company’s customer base.
“The current global crisis clearly continues to impact Lightspeed’s retail and hospitality customers,” Lightspeed said in a business update to investors. “As long as social distancing measures persist, we expect this to have a negative impact on Lightspeed’s financial performance.”
Small- and medium-sized businesses, which employ millions of Canadians and make up about half of the country's gross domestic product, have been devastated by the COVID-19 pandemic. Social distancing rules and non-essential closure orders have forced restaurants and retail owners across the country to close up shop and temporarily furlough staff.
Lightspeed noted the crisis is resulting in lower "overall demand for [its] services" from existing retail and hospitality customers, lower customer sales volumes, and an expected higher rate of businesses moving off its platform.
While the company declined to provide a longer-term outlook, it expects fourth-quarter revenue to come in at the top end of the $35 million to $35.7 million outlook it provided in February. The company reports its fourth-quarter results before markets open on May 21.
A spokesperson for Lightspeed confirmed to BNN Bloomberg in an email that the tech company has not laid off any of its staff.
National Bank Financial analyst Richard Tse said in a note to clients that it's obvious Lightspeed's clients have been impacted by the coronavirus, but "it’s unclear at this point when commerce will flow – and if so – at what scale."
Some analysts say Lightspeed is well-positioned for growth when the crisis abates.
“While [Lightspeed’s] focus on the small- and medium-sized restaurant and retail verticals … puts it squarely in the path of the coronavirus pandemic, we believe the company’s liquidity will be sufficient to withstand a severe slowdown in the business,” wrote BTIG analyst Mark Palmer in a research report.
TD Bank analyst Daniel Chan also sees post-pandemic upside for Lightspeed, despite a lack of clarity about when government-mandated business closures and social distancing rules will end.
“[We believe Lightspeed will] potentially gain market share either organically or through acquisitions when things stabilize,” wrote Chan, pointing to Lightspeed’s “comprehensive” services and the fact that it has so far retained all its employees, unlike its competitors.