Lightspeed reneges on boast to keep hiring, cuts 300 workers

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Montreal’s Lightspeed Commerce Inc. announced it would reduce its workforce by 10 per cent, as economic headwinds forced chief executive Jean-Paul Chauvet to renege on a boast that he would take advantage of layoffs at other tech companies to staff up.

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The company on Jan. 17 described the decision to cut 300 jobs as the “next deliberate step in executing Lightspeed’s strategy to unify all of its acquired companies and products.” In a note to staff, Chauvet said the announcement was the “most challenging day we’ve ever had at Lightspeed.”

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Lightspeed acquired several rivals in recent years, most recently NuORDER, a B2B e-commerce company, and Ecwid, which enables small business owners to set up online stores.

Chauvet told staff that Lightspeed had become “too complex, with overlapping roles and a top-heavy framework” that was weighing the company down and creating inefficiencies. He said that for a while it “really did feel possible” to maintain staffing levels even after the series of acquisitions. He calls the economy a “catalyst” for the restructuring.

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The announcement comes just two months after upper management said it would push through the economic forces that had prompted bigger tech companies such as Facebook’s parent, Meta Platforms Inc., and Shopify Inc. to fire thousands of workers.

Chauvet said during a November 2022 roundtable with journalists that hiring was the “number one priority,” and that the company was in fact picking up talented workers other large tech companies had left behind. “We’re spending a fortune on hiring,” Chauvet said at the roundtable. “Our recruiters spend their time saying: ‘Yeah! Facebook just downsized!’ … Let’s go and try and recruit the best people there.”

The company had 350 open positions in November, which has since dropped to 140. Now, the company will shed 300 roles, of which a quarter are managers.

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Lightspeed, like so many other technology companies, benefited from the era of low interest rates, which mean there was a glut of capital available for fast-growing companies that looked set to capitalize on the shift to a digital economy. The pandemic brought an extra boost, as e-commerce accelerated during lockdowns.

But the e-commerce boom fizzled as the pandemic receded, and interest rates have surged amid the fastest inflation since the 1980s. Those economic realities are bringing tech companies back to Earth. Layoffs.fyi, a layoff tracker, reports that 25,436 employees across 101 tech companies have been let go so far in 2023. This is on top of the 154,336 fired in 2022. Shopify laid off 1,000 employees in July. Twitter Inc. let 3,700 go, as well as 4,400 contract workers. Meta laid off 11,000 in November. Amazon.com Inc. will cut 18,000 this year.

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Lightspeed stock fell 1.32 per cent after the announcement.

The restructuring will likely result in a US$12 million to US$14 million charge for the company, said Thanos Moschopoulos, analyst at the Bank of Montreal, in a note. The restructuring might help the company return to profitability sooner than initially thought. Moschopoulous believes that the company will be able to “sustain a strong organic growth rate, even in a tougher macro climate.”

Chauvet and Jean-David Saint-Martin, president, declined to comment on the restructuring.

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Lightspeed wasn’t feeling the strain of the post-pandemic e-commerce contraction as acutely as “pure digital” players such as Meta, Chauvet had said, because Lightspeed serves brick-and-mortar companies.

Staff who have been let go will receive a minimum 12-weeks of severance and health care and will be able to keep their company laptop, phone, and monitor, the company said.

“I know this announcement may feel like it is in direct conflict with some of the statements you have heard from me around us growing, not shrinking,” Chauvet said in his note to staff. “Despite eliminating certain roles, we haven’t strayed from our ambitions.”

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