Lightspeed Bets $925 Million on M&A to Beef Up E-Commerce Wares

Lightspeed POS Inc., a software company catering to the retail and hospitality industries that has emerged as one of Canada’s large tech successes, will spend $925 million on two acquisitions to beef up its e-commerce offerings.

The Montreal-based company said Monday that it would pay about $500 million in cash and shares to acquire Ecwid Inc., which helps small companies set up an e-commerce site in a few clicks. Its purchase of NuOrder Inc., for about $425 million, half of it in cash, will let it offer sales analytics and a simpler interface for merchants to place orders with suppliers.

Lightspeed, which went public in 2019 in Canada and began trading in New York last year, has been on an acquisition spree, with five announcements in the last seven months alone, including Monday’s deals. In contrast to earlier purchases of direct competitors that mostly helped the company add to its market share and geographic coverage, the latest ones will also improve its products, Founder and Chief Executive Officer Dax Dasilva said.

The deals allow Lightspeed to be “a one-stop commerce solution for all of these merchants that are igniting new businesses,” Dasilva said in an interview on BNN Bloomberg Television.

Lightspeed’s shares were up 1.4% at 12:42 p.m. in Toronto. They’ve gained more than 450% from the initial share offering price of C$16.

Execution Risk

In a note to clients, Truist Securities Inc. analyst Andrew Jeffrey said the deals come with some “execution risk” but added that “we believe management’s long-term share and revenue growth vision outweighs this concern.”

The company’s original focus was making point-of-sale software for retailers. It has added services over the years, including payments and inventory management. Its clients tend to be small or mid-size businesses.

The acquisition of Ecwid takes Lightspeed a step closer to a direct rivalry with Shopify Inc., the e-commerce giant that’s grown into Canada’s largest company by market value. With a market capitalization of about $152 billion, Shopify is still more than 15 times as large as Lightspeed.

The NuOrder purchase adds prominent customers including Bloomingdale’s, Canada Goose and Converse.

“On an e-commerce standalone, yes, we could say that we have an offering now that’s getting closer to Shopify,” Lightspeed President Jean-Paul Chauvet said on a call with analysts. “But what’s important for us is the verticals in which we operate.”

Those verticals include bikes, apparel and footwear, the company said.

©2021 Bloomberg L.P.

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