Small businesses that adapted will emerge from pandemic stronger: Lightspeed CEO
Small businesses that had long thrived on in-person sales from local shoppers experienced a complete disruption as lockdowns swept the globe
The COVID-19 pandemic has helped small- and medium-sized businesses better position themselves in their fight against e-commerce giants like Amazon.com Inc., the chief executive of Lightspeed POS Inc. says.
Dax Dasilva, who is at the helm of the Montreal software company, said that many independent businesses have been helped by their move away from brick-and-mortar locations only to a combination of physical and e-commerce offerings.
“The businesses that did adapt…are going to emerge as much stronger businesses,” he said.
“That makes for stronger local businesses that are more resilient, and that are more responsive to consumer behaviour.”
Lightspeed, which sells software for small- and medium-sized retailers and restaurants, spent much of the last year helping its clients adopt e-commerce offerings to deal with the pandemic and a soaring interest in online shopping.
“(The shift) is something that we’ve been talking about for five years, but COVID accelerated it by five years,” said Dasilva.
Big box chains, department stores and online goliaths were well prepared for the shift, but small businesses that had long thrived on in-person sales from local shoppers experienced a complete disruption as lockdowns swept the globe.
Lightspeed’s products helped them move online, but the lockdowns still weighed on the company’s earnings.
Its fourth quarter included a US$42 million net loss, more than double the US$18.6 million loss it reported in the same quarter a year.
But Dasilva is seeing promising signs. As vaccination efforts gained ground and stay-at-home orders lifted in many regions Lightspeed operates in during March, sales rebounded.
He sees Australia as a bellwether for Canada, especially when it comes to the hospitality industry.
“Fine dining might have might have slowed or was pretty dormant, but like for Australia now we’re seeing 75 per cent growth in transaction volume in this last quarter,” he said.
“That’s an early indicator of how we see hospitality really starting to come back.”
When it returns, Dasilva expects to see the affinity for small businesses many consumers adopted during the pandemic materialize in sales.
In a survey Lightspeed conducted in December in the U.K., 55 per cent of consumers said they wanted to prioritize shopping locally in 2021.
“We almost had a moment here where we realized we might lose all our local businesses and if we don’t support them, our cities are going to not have the local colour, flavour, texture, and be interesting,” Dasilva said.
“Supporting them has become top of mind.”
Lightspeed will focus on bolstering this trend even as the company deals with integrating several companies it acquired during the health crisis.
Last month, it closed its deal to buy New Zealand-based Vend Ltd., a cloud-based retail management software company.
The deal followed the US$440-million acquisition of ShopKeep, which helps restaurants and retailers accept payment and manage their business, as well as the purchase of restaurant software company Upserve.
Asked whether the company will slow down on acquisitions, Dasilva said in an interview that “we always have an active pipeline.”
His remarks came as Lightspeed, which keeps its books in U.S. dollars, said its fourth quarter loss amounted to 34 cents per diluted share for the quarter ended March 31, compared with a loss of 21 cents per diluted share a year earlier when it had fewer shares outstanding.
Its revenue doubled to US$82.4 million, up from US$36.3 million. It attributed US$31.2 million of the increase in revenue to ShopKeep and UpServe.
On an adjusted basis, Lightspeed reported a loss of US$11.2 million or nine cents per diluted share for its most recent quarter compared with an adjusted loss of US$5.6 million or six cents per diluted share a year ago.