Pomerantz Appointed Lead Counsel in Lightspeed Commerce Securities Litigation

On February 22, 2022, U.S. District Judge Brian M. Cogan of the Eastern District of New York appointed Pomerantz LLP as Lead Counsel on behalf of Debrob Investments Limited, the Lead Plaintiff in Lightspeed Commerce Inc., 21-cv-6365 (E.D.N.Y.), a securities action brought on behalf of a class of defrauded investors concerning allegations that Lightspeed Commerce Inc. (“Lightspeed” or the “Company”) overstated the strength of its business while concealing the Company’s declining organic growth and the deterioration of its business.

Lightspeed is a commerce software provider that offers a cloud-based platform to small and midsize businesses that enables omni-channel consumer experiences, including payment processing, accounting, point of sale capabilities, order-ahead and curbside pickup options, product and menu management, employee and inventory management, analytics and reporting, multi-location connectivity, loyalty programs and customer management.

Allegations against Lightspeed include that: (i) the Company had misrepresented the strength of its business by overstating its customer count, gross transaction volume ("GTV"), and increase in Average Revenue Per User ("ARPU"), while concealing its declining organic growth and the overall deterioration of its business; (ii) Lightspeed had overstated the benefits and value of its various acquisitions; and (iii) as a result, the Company had overstated its financial position and prospects.

On September 10, 2020, Lightspeed issued its IPO based on Offering Documents that touted the strength of its business, including its strong track-record of growing revenue per customer over time, and its ability to accelerate ARPU, and its strategy to grow GTV through acquisitions.

On November 5, 2020, Lightspeed announced its second quarter 2021 financial results, including a 56% year-over-year increase in GTV and a 62% year-over-year increase in software and payments revenue, aided by increased ARPU and a growing customer base that now included 100,000 customer locations globally. CFO Mussey touted that it was “one of the most exceptional quarters in the history of Lightspeed.”

Throughout 2021, Lightspeed reported three quarterly financial results that included year-over-year increases in GTV, revenue and ARPU. The Company’s quarterly GTV increased 48%, 76% and 203% year-over-year, respectively, and software and payments revenue increased 47%, 137% and 78% year-over-year, respectively. Lightspeed also reported an increase in global customer locations from 100,000 to 150,000.

Throughout the class period, Lightspeed also touted several acquisitions, including Upserve, Vend, Ecwid and NuORDER, that built on its strategic vision to transform its commerce platform expand its customer base and retail footprint.

The truth began to emerge on September 29, 2021, when market analyst Spruce Point Capital Management (“Spruce Point”) published a report in which it alleged that Lightspeed had massively inflated its business performance and financial results by overstating its customer count and GTV by 85% and 10%, respectively, and that ARPU was actually declining, not increasing as claimed by the Company. Spruce Point also stated that Lightspeed’s acquisitions had come at “escalating costs with no clear path to profitability.”

On this news, Lightspeed’s share price fell $13.73 per share, or 12.2%, to close at $98.77 per share on September 29, 2021.

Then, on November 4, 2021, Lightspeed announced its Q2, 2021 financial results in which it revealed that half of its revenue came from new business acquisitions while organic revenue in its core segments – subscriptions and transcriptions – had only grown 58%, below the 78% growth the Company had touted in its rebuttal to Spruce Point’s report in September 2021.

On this news, Lightspeed’s share price fell a further $27.61 per share, or 27.9%, to close at $71.36 per share on November 4, 2021.