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 e-commerce 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 vice-president 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 0 Shopify Inc., Alphabet Inc., Amazon.com Inc. and Microsoft 00 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 US$814.8-million in its latest quarter.
The company, which keeps its books in U.S. dollars, said the loss of US$5.39 per diluted share compared with a net loss of US$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 US$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.
Its share price was up almost two per cent or 47 cents to $25.35 in morning trading.
Revenue for the quarter ended Dec. 31 totalled US$188.7 million, up from US$152.7 million in the same quarter a year earlier.
Lightspeed’s adjusted diluted earnings per share broke even for the quarter compared with an adjusted loss of seven cents per share a year earlier.
The company now expects an adjusted earnings before interest, taxes, depreciation and amortization loss of about US$37 million compared with its earlier forecast for a loss of about US$40 million.
It also foresees its annual revenue to come in at the low end of its forecast for between US$730 million and US$740 million.