Q1 2021 Lightspeed POS Inc Earnings Call
[music].
Ladies and gentlemen, thank you for standing by and welcome to the light speed first quarter at 2021 earnings call.
At this time, all participants are any listen only mode. After the speakers presentation, there will be a question and answer session.
To ask a question. During this session you want me to press Star then the number one on your telephone.
Please be advised that today's call is being recorded and at this time I would like to turn the conference over to our Speaker Mr., Chris Maloney. Please go ahead Sir.
Thank you operator, and good morning, everyone welcome to like be fiscal first quarter 2021 conference call. Joining me today, our gas that's over like these founder and CEO random nothing Chief Financial Officer, and JP job day President of Lightspeed.
After prepared remarks, well open it up to your questions. We will make forward looking statements on our call today that are based on assumptions and therefore subject to risks and uncertainties that could cause actual results to differ materially from those projected we undertake no obligation to update me statements, except as required by law you can read about these risks and uncertainties in our earnings press release.
Issued earlier today as well as in our filings with Canadian Securities Regulatory Authority also our commentary today will include adjusted financial measures, which are non I FRS measures you should be considered as a supplement to and not a substitute for IMF RF financial measures reconciliations between the two can be found in our earnings press.
Police, which is available on our website and at the bar Dotcom and finally note that because we report in US dollars. All amounts discussed today are in us dollars unless otherwise indicated with that I will now turn the call over today.
Thanks, Chris.
Solid execution this past quarter under historically challenging conditions worldwide helped to submit lights his position as a leading cloud based omnichannel solution in our second.
Nimble and innovative smbs rising to the occasion are abandoning inadequate legacy systems in both the merchant points of sale and payment spaces in favour of late speeds modern cloud based platforms getting these businesses the capability to run digital strategies alongside physical ones in a simple and integrated manner.
The global tend to make has altered consumer behavior in everlasting ways and accelerated the next three to five years' worth of adoption of on channel strategies for Smbs in both the retail and hospitality sectors.
The digital transformation force by Cobot 19 has become a permanent stated business retailers has doubled down on a shift to omnichannel they've already underway before the pandemic.
Punch to overhaul operations in the next few years for accelerated and businesses were brought online overnight.
Hospitality sector from quick serve to find I isn't the similar state of digital transformation driven by new consumer needs.
As new challenges and consumer behaviors emerge so does the opportunity for small and medium sized businesses worldwide to build truly end to end multichannel shopping and dining experiences with light speed.
It is a moment to be seized on facilitated only by the right technology.
Let's see there's been a clear beneficiary of these digitization Tailwinds total revenue grew by 51% compared to the same quarter, a year ago and top $36 million.
For the 90% of this base consists of recurring software and payments revenue, which grew 57% during the first quarter compared to the same quarter a year ago.
The scale and diversity of our customer base has served us well in light of the pace of recovery and reopening markets as let's use core business. The senior returned to levels ahead of last year, driven by strong merchant adoption of omni channel software and integrated payments.
According to our internal data like food retail merchants grew their GTV more than four to six times faster year over year than the industry average retail GTV in 2019.
All indications are that our merchants have continued to enjoy this level of success. During the pandemic. We've seen retail GTV continue to accelerate through June and our restaurant GTV has bounced back sharply.
Evidence that the resilience of our customer base remains strong.
Our customers are well established innovative industry leaders ready to evolve with the new commerce economy inspired to amplify the sales channels and eager to use technology to future proof their business for these increasingly digital and virtual reality.
Fortunately this inevitable shift is happening at a time when product innovation at Lightspeed is accelerating.
During that we have the right set of solutions in place as our customers rely on us more than ever to enable the digitalization journeys.
On the retail omni channel front, we rolled out major improvements towards digital checkout experience, including the availability of our new mobile top custom hardware and software mobile Pos solution.
Which extends the sales perimeter to anywhere inside the store as well as outside the curbside pickup.
And we're now offering digital wallet, which supports a broad range of payment methods globally in a secure and seamless one click ecommerce checkout experience driving improved conversion online.
Our retail Pos apps saw further upgrades to the analytics capability with the rollout of analytics core a slim down version of our analytics module at a lower price points for customers that for now don't require the full solution.
By offering a tiered product for reporting it gives our merchants greater options to growth lightspeed at the pace of their business.
This further builds upon the inventory management and points of sale upgrades, we rolled out throughout this past fiscal year solidify our status as the premier solution in cloud based retail Pos.
In this regard we believe no other retail system operates at the power depth and sophistication of features required by our segment of merchants further appealing also to merchants. They may have fewer requirements at the outset the wants to do more with technology to differentiate their business in this environment.
There's a ton happening also within restaurant.
First I'm pleased to share that we've launched our order had capability featuring enhanced pickup and delivery tools and other integrations.
Also our new ecommerce for restaurant offering is now in beta and features a complete redesign to better fit the evolving needs of customers get another example of rapid innovation from lightspeed and the hospitality vertical.
Finally, the full convergence of our hospitality engineering teams globally to our flagship restaurant Pos products will be completed on schedule during the current quarter.
The fully redesign hospitality system delivering on the Lacey promise of greatly simplifying complex hospitality workflows will be rolled out to all of our regions methodically over the next several months.
Last quarter, we announced our new omni channel loyalty customer engagement tool to help lightspeed merchants across our entire landscape foster personalized targeted relationships cohesively within their clientele across channels in a moment, where this means more it's a business success than ever we've seen strong initial adoption of this new product.
As our customers begin to switch focus from stabilizing their operations today to optimizing their future growth.
We're very excited to be announcing the initial availability of lightspeed capital for our U.S. retail customer base, because those customers utilizing lightspeed payments, our new capital offering will assist these smbs with fast access to up to $50000 in funds per location that they can use to invest in their businesses much more quickly than they'd be.
Well to accomplish with traditional banks.
Like seed capital SMB is benefit from a much shorter application and the eligibility process versus all of the bureaucracy and people work they encounter with traditional financial institutions.
Our pre integration with these customers systems provides us with the data and comfort to offer frictionless approval standards.
This streamline process is very important during the pandemic as it gives smbs capacity to be nimble and strategic as the retail industry undergo significant transformation.
In addition to the foregoing we will continue investing through this period to ensure our technology remains at the cutting edge of the industry and that we remain the clear leader for our focused market segments.
The importance of her work has never been more crucial and as such the market opportunity for Lightspeed has never been bigger.
That said the importance of going to market globally as one lightspeed is paramount.
Does this end we've made great progress in terms of the major rebranding initiative, we've had underway to fold in the systems processes and feature sets of our acquired platforms as one lightspeed.
Offering all core products in all core markets.
At this stage, both the krona golf and I can two grams had been completely rebranded as lightspeed.
We expect to complete the same exercise for counter later this summer and for gas for fixtures achieved the status by the end of the calendar year.
I'd now like to highlight some recent successes within our partner strategy is yet another lever we are utilizing to bolster our go to market approach.
Let's see works with many great partners to help our complex SMB customers manage all aspects of commerce in their business.
We're thrilled to welcome Google into the Lightspeed ecosystem is one of our newest strategic partners with Google We're working on several broad based initiatives to make physical businesses more discoverable and the digital space.
The first of these initiatives is the Google My business advanced profile listing solution.
Currently in beta Google My business greatly enhances the speed to market the legacy customers.
Pressing the lead time, it takes to get a professional business listening set up and running online from what had been a multi week process down she just a few days.
Before I conclude my remarks, I would like to once again, thank the lightspeed family for the tenacity they've shown over the last few months.
We continued to deliver for our merchants every single day.
They live and breathe, our company mission of bringing cities and communities to life to the economic empowerment of Smbs.
They believe deeply that all communities and all entrepreneurs deserve to be successful.
That is why it sounded like 15 years ago.
The team I did so with was unique as we indentified entirely as members of the LGBTQ I am plus community.
We built the principles of diversity inclusion into the very DNA at this company.
This year, our inaugural global diversity and inclusion survey showed that nearly one in five lights Peters identify as LGBTQ I E plus.
Now I know that 10 lights theaters report that they felt comfortable talking about their culture and background with their colleagues, while 83% of lights Peters filled it they can either authentic cells in the workplace.
I'm exceptionally proud of the culture and family we have fostered here at lightspeed, especially during the last few challenging months.
In closing the krona virus pandemic has made it clear to our merchants the cloud based omni channel solution life's be provides is no longer simply a competitive advantage, but a business imperative as we move forward.
Merchants have demonstrated that they are the thought leaders that will redesign the retail and hospitality experiences of the future to shore up the economies and livelihoods, but the communities that love and appreciate them now more than ever.
With that I'll turn it over to Brandon to review the quarter and our recent business trends.
Thanks, Alex.
Overall, we've recorded another positive quarter in the face of the challenging macro environment.
Last quarter, we commented that the impacts of the coven 19 pandemic would accelerate to move away from legacy systems as Smbs adjusted their business priorities.
Excluding our recent acquisitions of gas to fix countdown Ike into software in payments revenue grew by 34% from the first quarter a year ago.
EBITDA loss for the quarter was 2.2 million compared to $5.1 million a year ago.
We ended the quarter with over 77000 customer locations in our GTV for the quarter was $5.4 billion up 17% from a year ago.
Over the past 12 months, our GTV was over 23 billion up almost 50% from the same period a year ago.
We ended the quarter with unrestricted cash on hand of approximately $204 million.
So as a great quarter for us all things considered.
Looking at some of the specific business trends, we saw in the quarter I'll start with the most encouraging which was the pace of new business.
As mentioned earlier, we feel the long term outlook for new customer wins will be accelerated it given the pushed omnichannel cloud solutions and see the pace of new business be a strong as it was in the quarter I view as very positive sign over.
Overall, despite the challenges faced by our end markets. We grew our customer base in the quarter over 77000 customer locations up from 75500.
At the end of April.
This was driven by accelerated new customer ads through the quarter with each month stronger than the month of for it I.
By June we had added 23% more locations in June of last year, and 63% more than we added in April.
Of course, partially offsetting this was higher levels of churn.
While churn has improved each month from the levels. We saw in March and April we expect tightened churn to continue for the foreseeable future as the industry grapples with social distancing mandates.
Well business failure, and our SMB customer base is outside of our control as tax mentioned earlier.
The lightspeed customer base overall is proving to be resilient and generally outperforming the broader industry.
We saw this center GTV trends.
In aggregate GTV rebounded nicely in the corner for the lows. We saw in late March in early April and by June.
We're seeing organic growth return.
On the back a strong performance in some of our verticals such as bike home and garden sporting goods and golf, our retail segment globally saw growth in GTV over 30% in June compared to June of the prior year quarter overall growth was 13% overcoming the initial slowness we saw in April.
Within retail we saw ecommerce growth of close to 100% in the quarter versus the prior year and by the end of the quarter. We are seeing a strong resurgence in volumes and our physical spaces as well.
A restaurant segment also bounce back sharply as mentioned last quarter, our restaurant volumes are down by 80% or more than the last week of March and April.
However by the end of June we saw overall restaurant GTV, you get back to its pretty covenant levels.
Minder, the majority of our restaurant customers, our international markets outside of North America, and this diversity is proving to be an asset is countries of economies around the world recover at deferring rates.
And finally last quarter, I noted that less than 5% of our customers around paused subscription plans.
Those are now reduced to a negligible amount as customers have become transactional again.
So all told the health of our customer base continues to be encouraging as these businesses leverage our Omnichannel solutions a retail segment is growing at a restaurant segment is recovering.
She leaves us to payments.
Let's be payments continued its rapid growth trajectory in the corner.
As mentioned last quarter. Despite overall lower GTV in April we saw record month for Lightspeed payments in April we saw that not only continue but accelerate further as the quarter progressed.
Overall payments volumes grew significantly on the back of strong customer demand from both new and existing customers.
In industry wide move to electronic payments and away from cash.
And outstanding performance from some of our end markets like golf and bike.
We saw attach rates that is the portion of new customers contracting for lightspeed payments alongside their course subscription remain at similar levels to the prior quarter in us retail.
Payments for Canada for retail and U.S. hospitality is off to a good start also and despite these new markets being in early stages of rollout. The overall portion of customers contracting for lightspeed payments was strong at over 50% in the quarter.
Well, we do expect some of this payments volume to wane as the seasonal aspect of these verticals starts to settle out in the fall.
We are still only monetizing a small portion of our GTV through lightspeed payments and significant runway continues to exist here for future growth.
Dax mentioned, we're also now ready with the initial rollout of Lightspeed capital for us payments customers.
This is something we think will be met with good long term demand from our customer base.
Lightspeed and straight put partner to create this offering whereby we will utilize our deep customer insights and new stripes existing infrastructure to create tailored capital offers to our eligible merchants.
Stripe and Lightspeed will share in the net profit from these cash advances and lights people leverage stripes capacity for capital keeping our on balance sheet strong to continue to pursue our growth strategies.
Offers are already being served to initial set of customer prospects that we'll be expanding this program throughout the balance of the year.
Now transitioning to our outlook for Q2 and beyond our near term visibility as improved owing in part to our recurring software first business model.
We are assuming that heightened levels of churn remained for the foreseeable future are being cautious on both the anticipated new business volumes and customer GTV level as all the pandemic remains ongoing.
All told we expect Q2 revenue in the range of 38 $40 million.
We expect Q2 EBITDA to be in the range, a seven day million dollar loss.
Moving to the ongoing uncertainty regarding the duration the magnitude of the coven 19, pandemic and any possibility of a resurgence light speed will not be providing full year guidance at this time.
With that we'll turn it back to the operator for your questions.
And ladies and gentlemen, as a reminder, if you would like to ask an audio question. Please press star one on your telephone keypad.
Well pause for a moment compile the Q and a roster.
And our first question comes from the line of Daniel Chan.
Okay.
With TD Securities. Please go ahead.
Good morning, congratulations by the quarter.
I just wonder if you guys can give us a little bit more detailed out.
To be capital maybe provide a your thoughts on the timing of its rollout.
And how the economics.
Sure Hey, Dan.
Yes, so as a as you heard we flush. This initially lewis with stripe through a partnership with them, we will leverage stripes capital infrastructure and light speed to knowledge of the customer to.
Just to get this out the door and see.
Customer demand goes we're we're pretty optimistic longer term. This initial launch phase though.
We really are taking kind of.
Like we did with payments a measured approach as we as we launch this.
Got the customer workflows and generally test overall demand.
So.
Kinda next quarter to don't expect huge results from this as we do that but longer term and we think we think this will be met with good long term demand.
Okay. That's good.
Then you also mentioned starting from last quarter, but you also mentioned it in this quarter that you'd see a lot of opportunity displacing some of the legacy on Prem Pos systems, how many of your new wins would you say our competitive displacements for legacy systems. They are you seeing any opportunities for displacing some of the newer cloud based.
Yes.
Yes, maybe I'll take the phone.
So so generally speaking the bulk of the market roughly 80% of the market is legacy systems and added to global fragmented market. So I think that's the good opportunity and we think of with coated.
Anyone who's on the legacy system now want to move to platforms like ours, because obviously you need to sell across channels you need the online and the offline world Sneaker lead to merge so that is really the bulk of the efforts for us and with that in mind. The majority of our new customers come from legacy systems.
Did the second part of the question the.
Other cloud based platform is that there's a clear differentiator between lightspeed and.
And all the other cloud based POS is we have a very deep functionalities that so it does happen that customers would start on on the smaller platforms and then need functionality that that only lightspeed can provide and I think a good example of that is a lot of the cloud based systems do not have E commerce or or loyalty or.
Or curbside pickup and we're seeing a lot of traction there because you can't have a point solution and then integrate everything manually you need to have one vendor that have the integrated solutions.
It makes sense. That's one for me now that you have greater visibility into the market looks like things are stabilizing going again.
Balance sheet remains really strong what what's your view on a on M&A at this stage and what are the opportunities looking like and likely thanks.
So yeah we're.
Going to handle [laughter] sure.
Yeah, we continue to be active there. We've always we've always said that M&A is important part of the long term strategy and we.
We continue to be active for sure.
Let's see in lots of good opportunities.
Brian lesson and.
We.
We'll continue to make this a priority for the business.
Maybe one one point out is we it's as we said it or you know every country has a sub.
Our subscale point of sale platform and hear what we're seeing is that there's probably.
Some good opportunity for four or consolidation as we move forward.
Great. Thank you.
And our next question comes from a line of business My thought those please from BMO capital markets. Please go ahead.
Hi, Good morning, I can you update us on your payments economics, and then how that's been trending on one hand, yeah smart card not present, presumably on your hands you didn't see initial promotions. So net net has has that shaking out.
Yeah, no not too dissimilar from what we've always said sales you're right. There is a you know a slight mix change.
Line versus off line and that carry slightly different economics for us.
Likewise, you know in Canada, the economics are slightly different than the U.S., but overall, you know kind of our 2.6% and 65 to 70 basis point net.
That's been holding for us.
Okay, and then looking at your guidance for next quarter. It implies a significant step up in Opex I'm I'm gonna gas that a lot of that is is a step up in sales and marketing just getting encrypt environments more investment I mean, thats an acquisition the air.
Yeah for sure I mean, when this thing all started we we.
We went into cost containment mode for sure not knowing what we would necessarily expect from.
New business demand and so on and as you've seen today I need to the demand has been.
Uh-huh has been good over the.
Last couple of months and into July.
So yeah ramping ramping back up on some of that discretionary spend around sales and marketing to meet the demand and.
That's what you're seeing in the Opex guidance.
Great I can you expand on the Google partnership should we be anticipating some associated revenue from this and you kind of alluded to this maybe being the first step in a broader relationship I don't know he can comment on on that but any color would be helpful.
Yeah, I mean in terms of the the broader relationship I think it's a it's a series of initiatives that will help physical businesses be more discoverable online or in terms of you know in terms of revenue expectations, we feel that.
Being integrated into our retail platform for now I think it will increase the appeal of our our retail platform as as do you know many of the other feature additions, but you know where we're very excited to partner with Google to make our businesses more omni channel through debt free Discoverability.
Great. Thanks, guys clock data recovery in the business that's why.
And our next question comes from the line of Richard piece with National Bank Financial. Please go ahead.
Yes. Thank you.
Just wondering if you guys are maybe adding that to rethink the development roadmap given the backdrop.
And my guess is that some of these changes in their permanent here and.
Well I guess Thats the case, what will be the changes from the former path from adult perspective.
Well from a development perspective perspective, we've seen an acceleration of omni channel, which we've been.
Talking about for at least five years.
So you know theres, an acceleration of that roadmap and as you've seen in the last even just the last week you know we've rolled out more and more tools for for merchants deal to pivot to the new consumer reality things like our mobile top solution, which allows curbside pickup in contact list digital wallet.
More analytics tools that are more accessible so things along those themes of being able to help.
Merchants, a you know adapt digitally and a and for their their physical businesses and and we're seeing a blend of those.
Solutions that address the blend of those be more and more requested in demanded and you'll see our road map I continue to accelerate both retail and hospitality in those directions.
Okay.
And like the new win rates is really impressive in a batch out, especially given the churn.
On.
And maybe give us a bit more color I'll answer that types and margins, you're drawing and I get that you know you're offering is sort of broad us or omnichannel offering, but obviously those are really positive number. So is it sort of the typical complex merchants or is it a geography that stronger than others, maybe just a touch on color on that.
Yeah, So I'll take this one for them so.
So fundamentally 80% of the market is legacy systems, and when you think about legacy systems.
The even though they're not connected online they're very rich functionally speaking.
So when you look at the type of customers that are moving towards lightspeed, they're really the typically like to be customer that need inventory that need to understand their cost structure and so it's a more let's say the more advanced merchants that could not.
I think that weren't using legacy systems in need of platform in the cloud that supports not only the kind of physical requirements for legacy, but also supports omni channel. So.
Regardless of its restaurants or retail these are the more sophisticated and those are there are those who need to really understand their inventory an ingredient when you about restaurant and most of them or have a you know obviously you have a physical presence I need to sell across channels. So the good news here nothing has changed its we didnt segment in which were strong and we're seeing more demand than ever.
And so that's why going back to what back from saying, we're accelerating our roadmap because we feel that there's going to be acceleration of adoption on the marketing.
Want to be sure that were ahead of the game and we're always the best solution for these types of interest.
Okay, and just so lots of me with respect to the or their question on M&A would you guys be thinking about focusing more on sort of expand the channel like Yodlee speed success wonder are side of business that way or as opposed to service and technology Tuck ins.
Which one are you calling towards.
We're going to pursue as we said and we've always said there are three.
Three big gig buckets. The first one is really looking out a geographical expansion. So looking at vendors that are.
Regarding point solutions within verticals and industries, where we have no presence.
The second one is really looking at consolidating markets, where we already have a presence and then the third one is really looking at expanding our capabilities and I think you can expect.
A mix of all of these as we go forward.
Okay, great. Thanks.
And our next question comes from the line of Paul Treiber with RBC capital. Please go ahead.
Okay. Thanks, very much and good morning, this hoping that you could delve a bit more into the growth that you've seen in E. Commerce I commented, 100% Yearoveryear growth in E. Commerce GTV can you put some perspective around that you know how much sense or total GTV in the quarter relates to E Commerce, maybe how that compares versus maybe.
Last quarter or last year.
Yeah.
Hey, Paul.
So we saw.
Unsurprisingly.
Pretty significant spike in E commerce volumes and.
In April and into May and then what we saw happen in to into June and carrying through into July is that settled down a bit.
And the resurgence of you know the physical so we sort of see this you know initial bubble lot of E commerce when that becomes.
Much more significant portion of our overall GTV.
And then that Wayne as a quarter noise on it and.
The volume return to the physical space I think from our perspective, I'm, just kind of what being omni channel is all about.
However that volume comes to our merchants, making sure there they're able to.
Catch it and but yeah, that's what we've seen in terms of the the trends in the quarter. So starting with a lot more online obviously and by the end was getting back towards a more traditional mix, albeit a little more tilted to digital.
But on a really strong recursion resurgence of both the.
Physical retail as long as dine in on the rest are outside.
And when we think about what that mix longer term and the transition to omni channel do you see a like a natural equilibrium or our target where I don't forget that 50, 50, or you know a certain if you wanted thrown a certain number where you could see that getting too.
You know over over the next several years.
I just I think though the first natural answer is it depends on the type of retailer in the type of Restauranteur. So they find a fine dining.
Restaurants or.
Hopefully the bulk of my business with a will always be a when people come to my restaurants and the same thing is a lot of our retailers if I'm a bike store if I'm not they do need service repair. So you'll you'll always have a I would say the majority of the transactions be done into physical world and these cases, however, if I'm a coffee shop or fund.
You know quick serve take away obviously, there the volumes are going to be much stronger now as we move forward with with anything around online online ordering and delivery.
I think generally speaking going back to what Brendan was saying is.
And then make hit fourth everyone to stay home. So we saw a huge spike.
At the beginning of the quarter with all the online and and at that point. The you know that's a big portion of the sales were done online, but I think here. What we're seeing is we're going back to normal levels, you know and a normal levels being you know, 85% to 90% of transactions being done in the physical world.
Oh, and they think forgot the M.
And it sounds like I somehow.
Instead of a line.
In terms of the growth in customer locations and yeah, what see quote like attach rate of E. Commerce website to you know versus physical.
Locations, you know how did that grow compare versus last quarter last year.
So I'll, let the brand and talk about the numbers, but I can tell you that the demand is very strong. So you know docs mentioned, we we'd been praising omni channel for five years and before covert everybody was like yeah. Let the strategy, we have time overtime and I think what happened since covidien and I think that the exciting part is most of the customers.
You are talking to us they have omni channel in mind set inox looking at this has a long term strategy there like okay I need a vendor that can provide all the abilities that I need for my back office and all the physical but that can enabled me to sell across channels and so here and I think the conversation is changing quite a bit where most of the merchants now need.
Oh, the omni channel or see it as a short to medium term solution, whereas before it was very aspirationally. So I think it makes us more relevant than ever in a sense that we don't have to explain now the need to sell across channels. We have a strong them out of people coming to us, saying, Hey, I'm on my legacy system, It's very difficult for me to sell online without having side.
Those can you provide me one holistic view when a holistic solution that can help me kind of run my business in the new way of Oh transacting.
But if I'm answering your questions a brand and maybe you have the a more details on.
Probably Patrick.
No I think youve, a events or while him really specifically broken that out Paul.
But as GDP mentioned.
Obviously seeing a lot more E commerce attach rates.
He's been a.
The product that sold well for us, but a good significantly better than light up the current environment for sure.
Alright, thanks for taking my questions.
And our next question comes from the line of Gus Papageorgiou, what Pete <unk> financial. Please go ahead.
Hi, Good morning pack, congrats on great quarter, and thanks for taking my question I, just a couple of questions and I am assuming a lot of the new customers that come on board I have come on that reduce plans. Since you did offer some promotions to get new customers.
I would tell us if they were to be paying full price went without a material impact in the quarter.
And what do you think the odds are that they'll renew their subscription ones there and a one year term is over and then secondly, just on capital I can you talk to you do you plan to to finance. This from here on balance sheet or are you going to looking for partners and how you're going to be ensuring some of the loans like using partner like partners like export.
Thanks.
Hey, guys. So.
Yeah and terms. Your first question was it significant in terms of Oh, Oh paraphrase, but some of the pause subscriptions and concessions. We made a you know for sure that was on those and impact on subscription revenue.
We said last quarter.
Under 5% of our customers had a pause subscription plans.
And do you know that comes right out of the revenue line along with the discounts that we offer to new customers to to join them to adopt new tools. That's obviously.
Has an impact on revenue.
And so forth for sure we saw that we're pretty optimistic I mean, we monitor the health of the customer base and you know what percentage are getting transactional and so on but we're pretty optimistic on you know the types of merchants, we attract aren't really.
Tire Kickers.
So we're pretty optimistic that the ER the conversions will happen as a as really they always have for or customer base, but.
You know well keep a close eye on that as the as is your plays out.
And then on capital as we mentioned, we're starting with stripe leveraging stripes infrastructure in there.
So the to do capital meaning.
This isn't coming off her on balance sheet here to start.
So.
So it won't be an impact from our standpoint on that therefore, no need for for insurance I think there's this program matures you know, we'll see where it goes you know where we're excited because this and market offer it to our merchants train helped during this difficult time for many of them.
And and we're really excited about the future of it to start a this is a simple will be offering alongside a are great partner strike.
Great. Thanks.
And our next question comes from the line I see phone So Kumar with eight capital. Please go ahead.
Good morning, guys and congrats on a on a strong quarter.
First question needs on.
Some product going on on module adoption trends I'm kind of when looking at your broader portfolio of add ons available tier two merchant base I'm curious what you're seeing in terms of demand from your existing base over the course of the pandemic compared to what.
The new merchants have been adding to the core platform right out of the gate.
Yep.
So I think.
Well again everything adoption of digital solutions is really what we've seen throughout the quarter and this is where existing customers are getting tough though.
The simplest of example that if I'm a restauranteur and you know my restaurants closed we had a lot of customers come to us with their requirement for our delivery platform and curbside pickup platforms.
So we sold quite a few of those and then when you're when you look at our retail customers. Obviously all of those we didnt have.
Who didnt have ecommerce came to us asking for the omni channel package, we saw so a lot of adoption on payments because.
What's happening is as people are trying to save costs, they're trying to buy more from one vendor, hoping that the bundled cost will will be lower until we see quite a bit of that and finally omni channel. A loyalty you know we launched our loyalty platform that enables customers to redeem points and reengage across different channels and so that also.
Had a lot of adoption. So I think again the way we're looking at this is.
We have built this kind of this very sophisticated solution.
Thanks, and I'm, just with respect to the competitive landscape. How are you guys seeing your your peers I'm, especially your cloud based peers.
That this strategy with respect to go to market or product and a and secondly.
Detecting opportunity enhance your go to market approach even further.
[noise] Ah so obviously the in home for thinking about that every day trying to make it better.
I'll address that one and then I'll talk about competition.
The way we enhanced our go to market is by looking at units economic and trying to figure out or you know how can we do better at the same or with the same rates until here a good example is.
Because I have a strong attach rates on payments I can now obviously spend a little bit more money to keep the same unit economics and so that's how we see acceleration it's pretty by deploying.
All of our new platforms, especially on the financial platforms globally until we as you know we started in the U.S. then we move to Canada than we moved to restaurants U.S. in Canada and now we're working hard to deploy this here hopefully by the end the year to deploy our payments globally, because that's how we're going to accelerate adoption is by having a.
Better LTV because of the attach rates and a better economics on payments until we can hopefully spend more and attract more new customers by keeping the phasing in its economic.
So talking about competition I mean, we've always had competition I'm just gonna go back to the market. It's a very big fragmented market and we operate in a in many different countries in many different continents, and we do not see the same competition everywhere.
Now this being said.
We understand or segment of the market very well and we have the best solution on the market for our segment, So where we do see competition is in the customers that are maybe not a perfect fit for us or maybe customers that are not as.
Maybe slightly smaller or slightly bigger, but we haven't seen a lot of change and the into competitive dynamics.
Our close rates have gone up so we're very excited about that and I think maybe the other point just to add on competition is I think there's a lot of vendors out there that offer point solutions that are maybe not offering ecommerce, they're not offering loyalty and we think it's going to give it a bit more difficult to the vendors that have point solutions because of the market dynamic.
And as I said, a lot of the customers are coming to US now not just for a point of sale, but they're coming to us where folks out of the of Commerce solutions and I think it's good it's probably going to be more difficult if you're a cloud based vendor and you're offering a point solution versus the lightspeed that offers true omni channel.
Great. Thank you for the color guys I'll pass the line. Thank you.
And ladies and gentlemen, as a reminder, if he would like to ask an audio question you. Please press star one on your telephone.
And our next question comes from the line of Josh back with KBC <unk>. Please go ahead.
Hi, all this is Alex microphone for Josh This is more of an extension of.
If you earlier questions, but just as it relates to the new customers you see coming onto the platform or are you seeing customers that are kind of online first and more secondarily adopting point of sale solutions or is it still kind of largely no point of sale first and then good E com attach rates.
So we do we do see a bit of both but the vast majority or customers that have a physical presence and need to shift from selling across one channel to selling online and adapting to the new models, but we do have a b was also we do always and we've always had customers who were.
Digital first then also and also selling in store just going back to what brand and let's say for US what's important is not so much where they sell but it's to provide the full solution to it to enable any kind of model to work and if if your model is pure digital and Dan you want to do pop ups. It. It does work with Lightspeed and vice versa. If your model is I've always.
Be telling in store all my life or are you know serving customers in my mind on restaurant and now I need to sell online weekends varies the adapter anymore.
Okay, Great very helpful. And then just last question you know as it relates to.
The payments offering any can you just kind of talk about the progress with the stripe partnership and are there any offerings that your rolled out recently that are kind of directly attributable to attributable to that relationship that maybe you weren't able to rollout with other payments partners.
Yes, we you know in this believe it's been a quarter to where we rolled out a strike and then extended from U.S. retail to Canada retail and U.S. resto sort of seen progress an uptake a in all of those.
All of those markets and a and and are excited with a with the solution that we've been able to provide a you know just last week, we released a mobile top a which allows for curbside pickup and there's an integrated ipod custom solution.
Hardware solutions that are probably only possible.
Given strides hardware that we're able to.
The we're able to integrate into our custom solution. So that's a good example of a contact those payments in curbside pickup enabled by enabled by a devices that we that we have worked on with strike.
Perfect. Thank you very much in that I guess, just maybe maybe one extension of that yeah. That's the comment about you know ruling out payments more globally. I mean is that something that you would attribute to expanded relationships on the downside as well.
Yeah, we will have to expand relationships to to cover other no other regions, a and we'd like to our ambition is to be or be able to serve our European in a and b pack customers Oh by the end of the fiscal year without Lacey payments.
Okay, great. Thanks very much.
And our next question comes from the line of Todd Coplin When C.I.B.C. Please go ahead.
Yeah good morning.
I wanted to ask about God the guidance in a seasonality when we shouldn't expect a I guess like in golf and garden too slow a bit just talk about that I will we see that in the September quarter or will it take to the December quarter for that to flow and.
Yeah we're.
I think it's been the an extraordinary period of time for bike shops and ER.
Home and garden and some of these verticals that we serve very well.
So we're planning on that.
You know as you said today almost into.
Starting to wane in the fall we think.
We're planning for to continue through the second quarter to the most part and then into the fall start to see that way in a little bit.
Well, if any luck offsetting that will be you know a good holiday season for retailers and restaurants.
But of course, we'll have to monitor how [noise].
The whole pandemic plays out by then and what impact that may have a into the fall and winter periods, but that's or.
Our best no best.
Pinsight right now into the seasonality that we're seeing.
Okay.
And then just on restaurant you know, obviously restaurants that have opened up in the regions that a year focused and then you're seeing a good good in room dining.
I'm, just wondering though how you're thinking about the delayed the of the pandemic versus government support and churn rates and all of that over the next few quarters have you learned learned enough about the restaurant market to get any insight into that thanks a lot.
Yeah, I mean, I think we what worse, what we're seeing and the customer bases. The resiliency that we hope to see you know that we do think we had about a merchant base that is.
Is.
Well equipped to to weather periods of hardship and.
And certainly we're testing that at the moment, but I think just how that's that's played out as we watch kind of the first wave goes through has reinforced that.
But you know looking forwards are there certainly is.
Uh huh.
Uncertainty it's a.
We'll have to watch it closely as a disease peaks and troughs happen through throughout the world but.
I think what we've seen at least through this first wave is there's a customer base, that's better equipped to kind of get through these.
At least moments in time.
And maybe the biggest indicator there is a transaction volume.
Until we're keeping a close on that but we're happy to see that's a transaction volumes have gone back up or very close to put the pre pandemic, especially in the restaurant. So it isn't indicated that you know the businesses are getting healthier, but as background and said.
We need to we need to keep our eye on long term.
A JV just one quick follow up on that so with curbside starting to fill in and help restaurant.
Is that you know a 10% lift for restaurants that are operating at a third capacity or 50% like what are you seeing across the platform for for curb site and and delivery.
It depends on the restaurants and again, so and if you think about quick serve we even have quick serve restaurants that are doing much better I'm, just with curbside pickup now than they were before.
So I think it's really the the dynamics when you're when you're selling online are very different so you need to have a different mindset and and b connected to the right marketplaces and be visible, but it really depends on the types of restaurants, but those who have adopted it well we've seen a very significant pickup.
And they're in their digital revenues just put it that way.
Oh, thanks for the call.
Thanks.
And our final question comes from the line opinion Jan along with JP Morgan. Please go ahead.
Hey, Thanks, so much good morning, really encouraging results just thinking about somebody answers you guys gave.
Oh around me and the roadmap there is the end goal.
To to be.
You know, let's say in different between a digital first the end a physical world first retailer I'm just curious if that's even in in the opportunity set of things that you're you're considering.
In terms of road map product roadmap.
Yeah, I think that's our perspective, you know I think with it or the businesses will starts.
Different starting points and they think that our vision has always been to the have strong digital and physical tools, where that are that service as different entry points.
And a you know we've seen businesses a that started just before the pandemic and move completely to delivery.
As the pandemic set in you know within a few weeks of them opening.
And a and B largely a digital business you know in these end use for first months to the degree that they've opened second locations from which a they're doing they're doing delivery and now as as dining rooms are reopening they're doing both you know and so that's the kind of business that we that we for the foresee you know really helping to light up both.
Physical and digital strategies, and so yeah, and I think that lightspeed solution is or has that depth.
Indefinitely has that ER has those entry points for people to to start on or whatever makes sense for their business model.
And maybe if I could be.
Go ahead, sorry, maybe if I can just added it's always been I'm.
For us it's always been kind of the core of everything we've done with selling across channels and we want to be sure. We'll continue doing that.
For sure understood and then even if we just thinking about you know.
With me and more card not present them and things like that on the payment side you gene have you seen any.
Change in fraud or.
Some charge backs or need to reserved for that I'm, just curious what what's been what's been going on the underwriting decide we will you ought to payments so dinner.
We haven't we haven't seen any meaningful.
Front that we haven't detected are recovered or helped her merchant Sir.
We have seen a greater incident rate of it.
But again the types of merchants we serve just.
This isn't the this isn't a huge huge.
Huge category risk for us.
So yeah, we've seen that we have seen an uptick in Canada.
Potential incidents, but it's often stuff, we've we've managed through and hope to merchants.
This morning's somewhat.
That's not going with good results guys. Thanks.
And ladies and gentlemen, we have reached the end of our allotted time. Thank you for your participation and you may now disconnect.
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