Lightspeed CEO: Hiring is ‘the biggest issue in our industry’

Lightspeed CEO JP Chauvet joins Yahoo Finance Live to discuss earnings, growth, hiring in tech, and economic challenges.

Video transcript

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JULIE HYMAN: Software company Lightspeed took a hit this quarter from macro forces, including reduced customer spend at businesses and forex swings hitting transaction revenue. But with Lightspeed banking on a move upmarket after seeing increased spend, can it close the sale? The shares are higher today after slumping yesterday following the numbers. And joining us with more is JP Chauvet. He is Lightspeed chief executive officer.

JP, it's good to see you. Thanks for being here. What are you seeing amongst your clients? And we should tell viewers, clients are restaurants but other types of smaller side businesses as well. What are you hearing from them right now?

JP CHUAVET: Yeah, so the majority of our customers are restaurateurs and retailers in the SMB space. And really what we're hearing from them, it's a unique moment in time. The post-pandemic world, with the return to physical, has created much more complexity for their businesses because you have the physical world meets the digital world.

And also what we're seeing is that it's-- the cost of labor has gone up, scarcity in terms of trying to hire people, and now a looming recession. So it's a really difficult time for our customers and for the market. And here, the only way forward for our customers is to adopt technologies like ours that can help them do more with less and automate a lot of the manual tasks.

JULIE HYMAN: And are they convinced of that, JP? Because as I mentioned, you all had a pretty tough quarter last quarter. You're not just selling software technology to folks, you're also selling hardware in the form of a point of sale system. And are you seeing people retrench, or is it just a matter of seeing slower growth?

JP CHUAVET: No, so it depends on what you call slower growth. We had a 38% growth year over year. And if you look at the segment of the customers above $500,000, there was 25% growth in store count, and above $1,000,000 we had 30% growth. So we are a strong growth player.

On what we can control, it was a really good quarter. We beat also on EBITDA. And we beat on the outlook. So for us, it was a very good quarter. What hurt us is what we are planning for in the future, where we think there'll be a bit of softness not in terms of our customers and demand but in terms of the GMV of our customers. And because we are rewarded as a percentage of their revenues, of course that's going to impact. But still, we are planning very strong growth for the second half of the year.

BRAD SMITH: What is the most difficult thing about operating through this particular environment from the CEO perspective?

JP CHUAVET: Yeah, well, I mean, there's short-term versus long-term. At Lightspeed, we are a great business. We're building a business that's going to last forever. And then you have the daily fluctuations of investor feelings.

But I think for us, the way we look at it, we've outlined the plan. We're ahead of this plan. And we're doing really well. Now, there are things we can't control, currency exchange rates. We do 40% of our business outside of the US. And then the other thing we can't control is consumer buying. But on what we can control, this has been a really good quarter. And the business is doing really well.

BRIAN SOZZI: JP, have you followed-- your colleagues-- [CLEARS THROAT] excuse me-- and peers in tech have implemented hiring freezes or layoffs--

JP CHUAVET: Well, most of the companies that are hiring freezes or doing these are not companies that are growing the way we. These are companies that were pure digital. Lightspeed, the majority of our businesses have physical presences. And as you know, the markets-- or the consumers have returned to shopping and dining in person.

So we are a strong growth story. So we are actually looking today for-- I think we have 360 positions open on our website because the company is going to be growing. Now, this being said, we have a path to profitability. Next fiscal year, we want to be EBITDA-positive. And we plan on doing that. But we have to hire enough people to sustain the growth that we are currently having.

JULIE HYMAN: And JP, I'm curious what you're hearing from your clients on the hiring front as well, as you mentioned, restaurants, small retailers, et cetera. We just got the jobs report today that showed there's still growth in things like hospitality jobs, for example. Has it gotten easier for these businesses to find people to hire?

JP CHUAVET: That is actually the biggest issue in our industry is that it's very difficult to hire people right now. Most of the people who are working in the hospitality and the retail space found other jobs during COVID and left the industry. And they're having a hard time getting them back into the industry. So I think that's really what's hurting our customers right now.

And that's why we think it's probably a moment in time and a unique moment in time for Lightspeed because the only way out for our customers, because they can't hire enough people, is to have platforms that help them automate. And unfortunately for the market, the majority of the systems out there right now are legacy platforms that are really not really efficient in terms of helping them operate in this environment.

BRAD SMITH: Have you seen in the data that you're able to kind of glean insights into, for all of the businesses that leverage your platform or leverage your service, that there is any major pullback-- or pullback, or shift at least, in the way that businesses are being able to conduct different services, whether that be on the food front or whether that be on wherever the platform may be if the consumers are actually pulling back on their spend or shifting dramatically how they're spending?

JP CHUAVET: So for now we haven't. Well, we see-- the big shift we've seen with consumers, because we do have also delivery platforms, and we also connect with all of the order ahead platforms. What we have seen very clearly is, from the end of the pandemic to today, there's a very-- there's a massive return into physical.

So that means our customers are selling more and more in their physical spaces. So I think-- and that's really the complexity right now is that the consumers are still consuming online. They're still using delivery and order ahead. But they're also consuming in the physical space, which means that for the customers, it's more difficult than ever to manage these.

And so you often see it when you go into restaurants, and they have four or five iPads. And each of-- every iPad is for a different delivery network. And that's where we can help them. We can go in and integrate those platforms and make it much simpler for them to run their businesses. So we have seen this big shift.

And then on a consumer basis, what we've seen is summer was very strong for hospitality. We've seen a lot of people just return to restaurants. And we're starting to see a slight slowdown in terms of consuming. But we are still in very healthy volumes.

BRAD SMITH: JP, great to have you here with us this morning. JP Chauvet, who is the Lightspeed chief executive officer here with us on Yahoo Finance. Appreciate the time.

JP CHUAVET: Thanks for having me.