Lightspeed Exploring Strategic Alternatives: It Will Have Options

Lightspeed, a major POS player and serial acquirer of a number of smaller retail-oriented startups announced it's exploring strategic alternatives for the company. Meaning, it's generally looking to get acquired and trying to solicit interest and ideas.

While Lightspeed does not get a lot of industry press, it looks to me this company will have serious options. Let's start at the beginning from their last financial report.

* Growing > 25% y/y, revenue should cross $1B this year. Just to use a comparable many might be familiar with, they are about 3x BigCommerce and growing about 2x faster.

This is the biggest reason options will exist.

* $45M adjusted EBITDA expected for 2024.

This is the second biggest reason. Combine these two, and there will be multiple bidders.

What does Lightspeed have? The biggest items are:

* POS that works across industries.

* NuOrder which is the exclusive wholesale buying platform for Nordstrom, and works with others like Macy's, The Bay, Saks (I'm not certain if they are exclusive outside of Nordstrom).

* ECWID which is a long-running smaller market eCom platform. Not sure what the value of this would be in a transaction.

* Shopkeep (likely went into their POS stack)

* Vend (APAC-based omnichannel operations)

Yes, a little bit of a dog's breakfast, but there are major assets here with important retailers and brands involved. The right partner could have a lot to work with here.

What options?

* Take private by private equity. Vista Equity and others could be likely. Vista Equity owns Kibo Commerce which seems like an interesting fit.

* Merge with another player.

Salesforce with its recent acquisition of Predict Spring is off the table, but it's possible they could merge with someone like a BigCommerce as part of a larger transaction who potentially now needs a core POS partner. Adobe could use it to expand into POS. Intuit also might be interested in the POS (currently partnered with Shopify).

Bigcommerce has indicated they are not selling, but everything is for sale at the right price. If Vista Equity + another capital partner is involved, you would have:

* Kibo (PIM/OMS/mid-Enterprise ecom)

* Avalara

* Bigcommerce (low-mid ecom)

* Lightspeed

* Vista is also invested in Klarna, which gives it advertising/affiliate/payment assets

Combining assets does not yield success and personally do not believe it would change the fundamental dynamics of Shopify/BigC/Salesforce, but private equity would make money here.

The reality is, even the biggest Shopify boosters must admit that Shopify needs great competition to move it to new heights, and there is a lack of great competition out there. With the right operator, this could be a serious player in the mid-market, if not Enterprise.