Lightspeed to hire 200 while luring more premium clients
Contributor roles to help boost profitability as tech industry grows gloomy
Less than a month after laying off 300 workers, Lightspeed Commerce Inc.’s chief executive says his company has plans to hire between 150 and 200 more staff.
The new additions will likely begin by the end of the Montreal ecommerce company’s fiscal year and will fill “contributor” roles rather than management positions, which made up 50 per cent of Lightspeed’s last cut, JP Chauvet said.
Moving laid-off staff into these new roles wasn’t really an option because many of the fresh positions were in different locations and roles and the swaps could be seen as demotions, he said.
“You cannot go and tell the vicepresident you’re going to become a contributor,” he said. “That’s why it’s not musical chairs.”
Chauvet’s staffing strategy comes exactly a year into his tenure as Lightspeed’s chief executive and as the outlook for tech companies is becoming increasingly gloomy.
Investor exuberance is fading, valuations have been slashed dramatically and even the most prominent businesses in the sector — Shopify Inc., Alphabet Inc., Amazon.com Inc. and Microsoft — have completed layoffs in recent months.
The sector’s struggles are compounded for consumer-facing businesses like Lightspeed, which are watching consumers readjust to pre-pandemic shopping habits and cope with stubbornly high inflation and interest rates hiked eight times in less than a year.
“It’s touching everyone,” Chauvet said, of the economic conditions.
The realities of the industry are part of why he sees now as the ideal time to double down on Lightspeed’s quest to reach profitability based on adjusted earnings before interest, taxes, depreciation and amortization by the end of 2024.
He believes the company will get there by focusing on larger, more premium clients, which can be counted on to spend more, drive sales and deliver high gross merchandise value — a metric measuring a company’s total value of sales over a certain period of time.
“Not all stores are equal,” he said. “You can’t compare a Rolex reseller that does $10 million a year to a coffee shop.”
Falling by the wayside in the bid for “fine dining, table service and Michelin stars” will be quick-serve restaurants and other small merchants. If these businesses approach Lightspeed, Chauvet said staff will tell them other companies have offerings more suited to their size.
These smaller businesses will still be allowed to purchase Lightspeed products, but the process will involve more self-onboarding and support.
“Historically, we would have onboarded every single customer and, and when you look at that, there’s an indirect costs, especially when you look at business failure within the first year,” he said. “For small merchants, it’s very, very high, and I’m not saying it’s a bad business. I’m just saying it’s not our business.”
That decision is a reversal for Lightspeed, which long felt market pressure for “growth at all cost.”
“Every time we would say, ‘well, we’re going to focus on profitability’ and they would say, ‘no, no, no, no, just double down on growing,’ ” Chauvet said. His remarks came as Lightspeed announced its most recent quarter delivered a loss of $814.8 million (U.S.) in its latest quarter.
The company, which keeps its books in U.S. dollars, said the loss of $5.39 per diluted share compared with a net loss of $65.5 million, or 44 cents per diluted share, a year earlier. Weighing on what was the third quarter was a non-cash goodwill impairment charge of $748.7 million that Lightspeed took.
The charge stemmed from accounting rules, which require annual testing of goodwill. When Lightspeed ran this testing in late December, it said certain assumptions in the test were impacted by the tech downturn and Lightspeed’s lower share price.
Revenue for the quarter ended Dec. 31 totalled $188.7 million, up from $152.7 million in the same quarter a year earlier.