Lightspeed buys U.S. cloud-based commerce business ShopKeep for $440M US

Lightspeed POS Inc. is shelling out $440 million US in cash and shares to acquire a U.S. cloud-based commerce business and bolster its support for small- and medium-sized businesses struggling during the COVID-19 pandemic.

Montreal-based Lightspeed said Thursday that it will pay $145.2 million in cash and issue 9.5 million subordinate voting shares in a deal to buy ShopKeep Inc.

Lightspeed offers cloud-based commerce platforms to small- and medium-sized businesses, while ShopKeep helps its 20,000 U.S. restaurant and retail clients accept any type of payment and provides automatic inventory tracking, employee management and real time sales reporting.

"ShopKeep will help bring scale and seasoned management team to our U.S. presence, as well as a highly-developed capital business, which we hope to leverage," said Lightspeed chief executive Dax Dasilva on a morning earnings call with analysts.

"We are excited by the many synergies we see with this combination and think this will be a landmark combination in our space."

The deal comes as Lightspeed reported a loss of US$19.5 million or 20 cents per share for the quarter ended Sept. 30.

That compared with a loss of US$10.1 million or 12 cents per share in the same quarter last year.

Revenue in what was the digital payment technology firm's second quarter totalled US$45.5 million, up from US$28 million in the same quarter a year ago.

The results and deal caused Lightspeed's stock to jump by almost 14 per cent or $6.15 to reach $51.60 in afternoon trading.

Analysts have continued to watch companies like Lightspeed intently during the pandemic because COVID-19 has sparked a wave of interest in e-commerce solutions from brands like Shopify Inc. and Square.

With stores and restaurants across the globe in various states of closure, many have looked for solutions to help them recapture any of the food traffic and cash they'd earn during a normal year.

Delivery and online sales have been front and centre in keeping such businesses alive and Lightspeed has been taking advantage of the heightened attention.

"Independent businesses are increasingly abandoning legacy systems and embracing Lightspeed solutions, a trend that accelerated this quarter," said Dasilva.

The company rolled out an e-commerce solution for restaurants offering to help legacy businesses transition online with social media and delivery services. It also offered an order ahead platform to facilitate takeout.

Looking forward, Lightspeed is expected to focus on these offerings and begin to see the benefits of Gastrofix, a German hospitality software company it acquired in January for US$61 million in cash and about 1.4 million in subordinate voting shares.

Gastrofix had over 8,000 customer locations at the time of the purchase, while Lightspeed was up to 57,000 restaurant and retail partners.

ShopKeep will deepen Lightspeed's reach even more, Dasilva indicated on the call.

The ShopKeep purchase, he said, is subject to customary closing conditions, but is expected to be complete by the end of the year.