Q3 2021 Lightspeed POS Inc Earnings Call
Okay.
Thank you for standing by and welcome to the Lightspeed and third quarter 2021 earnings call.
At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During the session you will need to press star one on your telephone.
If you require any further assistance. Please press star zero and I would now like to hand, the conference over to your speaker today Gus Papa George you. Thank you. Please go ahead.
Thank you operator, and good morning, everyone welcome to Lightspeed fiscal third quarter 2021 conference call. Joining me today, our deck, the silver Lightspeed, founder and CEO, Brendan and UC, Chief Financial Officer, and J P. <unk> President of Lightspeed. After the prepared remarks, we will open it up for 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 these statements except as required by law.
And read about these risks and uncertainties in our earnings press release issued earlier today as well as in our filings with U S and Canadian Securities regulators.
Also our commentary today will include adjusted financial measures, which are non <unk> measures. These should be considered as a supplement to and not a substitute for IRS financial measures reconcile.
Reconciliations between the two can be found on our earnings press release, which is available on our website on the senior dot com and on the SEC's Edgar system.
In addition, our commentary today will include key performance indicators that help us evaluate our business and measure our performance identify trends affecting our business formulate business plans and make strategic decisions such.
That's the key performance indicators may be calculated in a manner of different and similar key performance indicators used by other companies.
And finally note that because we report and U S dollars. All amounts discussed today are in U S dollars unless otherwise indicated.
With that I will now turn the call over to Dax.
Thank you guys and thank you everyone for joining us this morning.
We had another strong quarter as we continue to support the efforts of our customers to adopt the omni channel strategies that are helping them navigate the global pandemic and position themselves for eventual recovery.
For the dedication and tenacity of our remarkably committed employees of <unk>.
All of it and ever improving product offerings, our global footprint and the success of service offerings, such as payments like TD was able to deliver stronger than expected results. In addition, we were also able to complete two major acquisitions and accelerate our innovation initiatives.
Times the pressure on our people has been noticeable with our employees pushing themselves to the limit in order to deliver new solutions aimed at helping our customers.
This pressure our employees have risen to the challenge and I could not be prouder of them.
I believe that Theres strong dedication is largely due to the fact that we as an organization deeply believe in our mission of the company.
I see the scout and is on the belief that the resilience of the entrepreneurial spirit of small and medium sized businesses is fundamental to maintaining vibrant cities and communities and <unk>.
Difficult as the current situation has been we know the there has been non much harder on our customers.
For me the technology partner of choice for near the 115000 customer locations globally as the reinvent their business models and embrace of our cloud based platform.
Notable customer wins and the quarter included group of art for large with hotel restaurant and Spa properties and the all right.
Ski bound the legendary Canadian ski resort, where we will be supporting their for existing retail shops with plans for three more to open shortly.
And land quite fond group of household name and Asia with 21 restaurants and hotels in Hong Kong.
Our team's dedication and continues to pay off for our customers and the investors in Q3 as lightspeed on a year over year basis delivered revenue growth of 79% relocations by 74% and extended G television by 48%.
Although the addition of up sort of and Schottky boosted our performance for the quarter, even without the contribution Lightspeed delivered revenue ahead of our previously established guidance and reach software and payments of organic revenue growth of 47% year over year accelerating from the 42% we saw last quarter.
We had a very busy quarter, but I want the highlight some key themes to.
And the continued success of payments the official launch of our supplier network.
The completion and planned integration of our latest acquisitions and.
And finally, a view into what the post Covid World can look like for Lightspeed.
Payments had another stellar quarter with year over year revenue up almost four times the levels of the same quarter last year adoption of our payments offering amongst our customer base is growing rapidly both in terms of the number of customer locations and the proportion of G. T V.
The payments remains a priority for us and we expect to have the offering rolled out and all of our key geographies, including the U K, Australia, Germany, the Netherlands, Belgium, and France and calendar 2021.
Payments is a highly compelling service offering for our company can simultaneously increase the long term value of our customers and further entrench lightspeed into their operations and.
And can also act as a gateway to other financial services such as capital.
And although we have seen great success, so far the proportion of our total GDP that flows through payments is still in the single digit per cent range and as such we have a long runway and sizable opportunity ahead of us.
In mid January we announced the initial availability of the Lightspeed supplier network.
Excited about this initiative, we believe it will.
So smbs order and manage inventory interact with their suppliers populate the E Commerce site and eventually pay invoices.
This is the product years, and the making the placement of our independent merchants on the same strategic footing and enterprise retailers and E Commerce Giants and the offering the truly speaks to our mission as a company.
The supplier network will eliminate the time consuming and frustrating experience of managing multiple BTB supplier portals, a lot of smbs to more easily discover new products keep merchants of up to date on the latest product offerings and inventory levels and allow them to import high resolution images directly from the suppliers on to their own line.
Feed powered E commerce sites.
In short for our SMB customers. The supplier network offers a seamless supply chain that will save them time, and frustration and hopefully help increase sales through better inventory management and E commerce capabilities.
But the benefits of this initiative are not only limited to our existing customers in order to create a network effect, we need to offer value to all the participants in this ecosystem.
And launch we had signed over 100 suppliers to the network and key verticals.
The motivation for the suppliers to join the network is clear.
The only this is simplified product discovery and ordering for their customers. It also provides them with real time sell through data.
The benefits of this data should not be underestimated as suppliers to now see almost instantly what products are selling at what prices and where.
This data should grants and far superior supply chain agility, ensuring that they are manufacturing the products. The consumers are demanding so that they can maximize the revenue and profitability, while minimizing working capital requirements.
I know many of you have and asking how we plan to monetize this initiative for.
For now access to the supplier network is free for our customers and that is unlikely to change, but it is already having an impact for example, it is already helping to generate new customer leads and suppliers of recommending the lightspeed solution as the.
The system of choice.
However, we are also developing plans to further capitalize on this initiative and what.
So we believe we'll minimize the overall cost of sourcing ordering and paying for products for SMB customers and their suppliers.
Connecting F&B is directly to their suppliers is one way lightspeed innovative offerings can help level, the playing field for our customers.
And we also want to help them connect consumers to spend much of their time searching for products online Pos.
Of the challenges our customers have is displaying real time inventory within search engine results and delivering high resolution images for those searches.
And these are issues that large retailers of already solved but its still lacking for S. N B's.
Player network will solve the issue of high resolution images and in the months ahead, we hope to deliver solutions that will display of real time inventory availability by location within popular search engines.
And we think this will go a long way and helping level, the playing field for SMB customers and highly differentiate the lightspeed offering.
Moving onto our recent acquisitions of shop, keeping up serve.
And as of the acquisitions are complete the teams are actively integrating into our operations and sharing best practices.
As we mentioned before shop keep maintained and the desk capital business and we are working with that team to help develop the roadmap for lightspeed capital. The observe we are actively looking to integrate their advanced hospitality analytic solution and to the broader lightspeed platform.
On our M&A strategy I want to make certain things clear firstly lightspeed look for companies that have similar operations to our own that is they are cloud based of similar go to market approaches and are well run.
Because they share a similar approach and structure integrating these companies into our operations is considerably easier.
And given that we have some experience here I believe we are developing and expertise and integrating acquisitions.
Secondly, I want to make serious and we have no interest of maintaining a portfolio of brands and solutions.
The goal is to integrate all of our acquisitions and beat and market with one light fleet solution for retail and one for hospitality all under one lightspeed brand the.
The pace at which we integrate the acquisitions will vary depending on several factors, but for sure for keeping ups or the integration is well underway for the operations expected to be fully integrated by April and product by end of summer.
Finally, our approach to M&A is to look for companies that can expand or solidify our geographic footprint such as gas for fixed up serving shopkeeper sneakers and think of telling verticals, such as kroner golf or advance our technology offerings.
These three goals market expansion vertical expansion and technology will continue to drive our strategy going forward.
Before I and I want to discuss our prospects as we eventually put COVID-19 and the rearview mirror and the.
The immediate term things remain challenging as lockdowns remain in place and in some circumstances are worsening, which negatively impacts our GTA V churn and new customer additions.
And our global footprint allows us we believe a greater degree of visibility into the potential of a recovery.
And if we look at markets with limited Covid restrictions in place such as Australia, where they recently reopened the Sydney Opera House, and you see very promising signs our overall hospitality business saw declines and GTA V. This quarter, but in Australia, we saw double digit growth overall, Australia had the best quarter. It has ever had.
And our two main influences behind these strong results. The first is the positive impact from ending locked down for the allowing consumers to flush the fact of restaurants bars and the retail but the second is the ongoing migration of the small businesses from legacy to cloud based commerce solutions.
Covid is highlighting the cloud based commerce solutions of moved from being a nice to have to an absolute necessity.
We believe we will see similar trends in Europe, and North America once of vaccines and distributed and these markets emerge from the shadow of Covid.
I don't know how long the pandemic will continue to impact us, but we are optimistic not only about our prospects and and eventual recovery, but the role of our resilient merchants will play and driving a reopening the economy.
Finally, before I pass it over to Brandon I want to highlight the addition of mono and for yet to our board of directors mono bring solid strategic and operational experience with her as the former CEO of Videotron, and there's also and experienced board member.
Kurdish and clearly strengthens our board and I look forward to working with her and.
And now I will pass it over to Brandon.
Thanks, Dax today, we reported another terrific quarter, once again, and a very challenging macro environment.
Given the many moving pieces this quarter as the result of our recent acquisitions.
Encourage you to refer to our investor presentation on our website, our MD&A as well as the appendix of our press release, where we have added several summary charts to show a more normalized view of certain figures.
All told as Youll see.
And we had a great quarter across the board.
The strength of the quarter was led by the for primary drivers and of our business model.
First continued growth of our customer base, which is of you've heard is now just under 115000 total locations at December 31.
We saw another strong quarter of organic customer location ads, which I believe is one of the most important metrics for us.
Second <unk> expansion as we grow our customer base, our land and expand strategy kicks in and we saw continued success there.
<unk> for the quarter was our highest ever as more and more customers adopt the broader portion of the solution side.
Third Lightspeed payments was 29 billion an overhaul of the GTP, we have a tremendous opportunity for lightspeed payments.
<unk> of customers contracting for payments of alongside the of course subscription were an all time high this quarter.
And lastly, acquisitions, we believe that smart acquisitions will accelerate our leadership position and unlock many revenue expense and technology synergies, our past acquisitions of proven to be highly successful and our recent acquisitions of shop, keeping up server landmark deals and significantly alter our scale and market presence.
We believe all four of these drivers have substantial runway still ahead of us our market is large fragmented and we're working hard to build a category leader.
It's worth noting at this point the challenging macroeconomic factors continue to face us increased lockdown measures and many of our core markets of muted new customer adds and reduced our customers CTV and led to higher churn and our customer base.
Fortunately the growth drivers of the business of more than offset these headwinds to date and as I will speak to later, we will continue to take a cautious stance on our near term financial results.
For the longer term, though our optimism continues to grow and today's results reinforce that.
Looking at the quarter and more detail.
Total revenues of $57 6 million were up 79% year over year and were $49 3 million when excluding the recent acquisitions of shopkeeper and observed the succeeded our previously issued guidance of $44 million to $47 million.
Software and payments revenue represented 91% of total revenue in the quarter of $52 5 million, which was up 85% year over year.
Excluding the impact of all acquisitions that were not and the Companys results from a year ago software and payments revenue grew 47% compared to the same quarter a year ago and.
And increase from 42% gross reported last quarter.
Adjusted EBITDA loss for the quarter was $6 6 million compared to $5 $2 million loss from a year ago as.
As a percentage of revenue EBITDA loss was 11% of <unk>.
And five percentage point improvement from 16% of year ago, as we continue to see the leverage of the business model, even while investing for growth.
This quarter, we are introducing and adjusted net loss and adjusted net loss per share of metric to further align our investor community on the net income loss measure that excludes the impact of acquisition accounting and stock based compensation, which is largely noncash in nature. The.
Adjusted net loss for the quarter was $7 1 million or <unk> per share up from a loss of $5 9 million a year ago.
You'll find the summary table of the calculations for both adjusted EBITDA and adjusted net loss and our press release MD&A and the <unk>.
<unk> presentation on our website.
We ended the quarter very well capitalized with unrestricted cash on hand of over $230 million.
We have also shown and adjusted cash from operations metric and our press release.
And DNA and the Investor presentation to give a more normalized view of the cash flow of of the ongoing business.
Metric, primarily adjusts for the impact of transaction related expenses and liabilities retained at closing from our recent acquisitions that would otherwise have been cash earmarked for the sellers.
For accounting purposes settlement of these retained liabilities shows up as operating cash flow. Despite this being the downward adjustments of the amounts we paid the sellers on these transactions.
Adjusted cash flow from operations was negative $19 million on the corner.
This figure includes the payment for D&O insurance of approximately $10 million on the back of our recent NYSE listing when excluding that adjusted cash flow from operations was negative $9 3 million as compared to negative $7 9 million a year ago.
While we are acquisitive and I expect there to continue to be of lack of consistency coming through on our financials associated with the accounting treatment of the components of our purchase price and I'm hopeful that some of the incremental disclosure and will help normalize some of these accounting conclusions.
Looking deeper at some of the specific business trends, we saw on the corner.
As I mentioned earlier customer locations grew to 115000 of total <unk>.
Excluding shopkeeper and up served our customer locations, where almost 84000 at December 31 up from 83 months earlier.
This growth was achieved despite the ongoing impacts of the the pandemic and various lockdown restrictions and our markets around the world.
And I view this as highly encouraging progress.
Also as mentioned overall GCB grew 48% versus the same quarter, a year ago, and 29% when excluding shopkeeper and ups there.
Within this we continue to see strength from our retail customers, where overall retail CTV grew 41% versus the prior year.
Retail GTA V was aided by continued success of E Commerce, where <unk> was up by approximately 100% versus the prior year.
After a recovery last quarter, our hospitality G television showed weakness and the corner as government Lockdowns returned to many of our markets around the world overall organic hospitality GTA V fell by 19% and the corner largely owing to a soft December.
Last but not least payments continues to be and outstanding performer for us.
We now are of processing, 15% of U S retail GTD with lightspeed payments and more than 10% of Canadian GTA V and retail with our U S restaurant payments business still on early stages.
Our view of this is great progress, but we have so much runway still to go and not only in existing markets, but with Europe and Australia of approaching launch later this calendar year.
So turning now to our Q4 outlook. The performance achieved in Q3 leaves us very confident and our business and the long term.
However, our near term outlook reflects the realities, we are now facing and the core markets, where government lockdowns and many of which of hers. The restrictive as they were in the spring are once again impacting our end markets we serve.
Specter of these lockdowns will increase customer churn.
Impact purchase decisions by our prospects will affect our customers' transaction volumes we have.
<unk> seen the softness and our hospitality segment continue into January as our customers deal with these government restrictions.
Our outlook also incorporates the seasonal impact on our business January and February in particular of slow months and retail and hospitality even in normal years, and we expect this year to be worse and by the lockdowns around the world.
These drivers of lower volumes on a larger portion of the revenue now given the acquisitions of shopkeeper and observed along with our own ongoing success of lightspeed payments.
So with all of that in mind, we expect Q4 revenue and the range of $68 million to $70 million. This represents growth of approximately 90% from a year ago.
We expect Q4 EBITDA to be of loss of approximately of the $14 million. This estimate reflects the seasonally weak quarter on customer volumes.
On a cautious stance on the impacts of COVID-19 Lockdowns.
And the ongoing weakness of the U S dollar compared to the Canadian dollar, which is leading to higher overall expenses.
So while we will continue to take a cautious view of the near term results given the many uncertainties right now we feel very good about the company is positioned for the long term. This quarter's results once again demonstrate the power of the business model and with that I will turn it back to the operator for your questions.
Thank you as a reminder to ask a question.
Thats Star one on your telephone to withdraw your question press, the pound or hash key current.
And by the we compile the Q&A Ross day.
And your first question here comes from the line of Ritchie and Keith from National Bank Financial. Please go ahead. Your line is now open.
Yes. Thank you.
As we look on the other side of this pandemic what would you say is sort of the most lacking or most demand of the.
These incremental services the bad lately capital of for instance.
And kind of just curious and see what the uptake currently is across that base for the services.
Yes, and maybe.
Start with this one in the line.
And I think.
Really nothing has changed overall, we're hearing on the demand for omni channel and.
As we said many times our customers went from requesting a point solution for their stores and the restaurants and now there's a ton of demand from the channel the <unk>.
Second thing, we're seeing a lot of its payments.
We are bundling more and more payments with our software and our core core offering and this is creating a lot of demand and as you know we've launched capital and capital now is.
Is ramping up and we're seeing a lot of demand for that also.
Okay, and then and the supplier network sounds like a pretty interesting development and can you maybe share with us.
Some of that early feedback from the current base and the you're going to be targeting specific markets to start off with or are you just going to pretty much try and take a broad across the base here.
Yeah. So we're very bullish about the players. We think this is a very big differentiator for us and the market and as you understand what suppliers enables us to do is the really.
Compete the integrate the ordering process and the supply.
And of the capital and so.
Lightspeed and and.
And it really creates this.
And the incredible sly wheel of value between supplier of stores and consumers.
As you know we the first test case, we had was on bikes and that proved to be very very good for us and when we look at metrics and data on bikes. What's interesting is everybody within the ecosystem is recommending lightspeed, so and how they're really good impact on cost of acquisition and lifetime value of customers.
We're going to we've now launched is that there are the real product and service. So that means now we can have on.
All of the suppliers within the verticals that makes sense for us fully integrate their catalog and their supply level for lightspeed and we already have 100 suppliers now on the platform and we're going to be focusing on the core verticals, where lightspeed has a lot of has a lot of customers and and penetration and.
And as we go into the year of there'll be we'll be expanding to others, but there's there's a few verticals right. Now that we are we are focusing on and those are the verticals, where we have the at the highest concentration.
That's perfect. Okay. Thank you.
Your next question comes from the line of Ryan and I was I'm sure with Barclays. Please go ahead. Your line is now open.
Thank you and congrats from me on these Craig Amazing numbers.
Can I stay on that supply and network haystacks.
So if you look I mean, there are some guys I'll turn it to have kind of created these networks like Aruba and coupon on.
On the clean up the procurement side and.
Do I need to think about this like for like now that you're just kind of basically yeah.
Centralized hold of the whole thing and then the second question is like and there was always had the big debate about how to how to monetize that and.
A rebound Cooper had like some very different views of how to monetize the how are you. How do you think about that that's on the supplier side and then the second question I had was on <unk>.
The reopening of if you look at Australia and compare the the run rate post COVID-19 versus pre Covid, how has that been any learning any experience that you can share so far as we're looking out for this year with vaccination is getting better and everyone else kind of opening up as well. Thank you.
All right I'll take the first question on J P will take the second and so.
And regarding supplier network I think the big advantage. Here is you have you had this youre opening discovery ability and for suppliers right within the POS system. So it's not a separate system. Another set of <unk> portals, where combining all of that functionality directly into lightspeed and connecting.
More than one hundreds of players today, and we hope to expand that rapidly and the future and.
And so it's an integral part of the system, where they are already managing inventory and there are already managing their E. Commerce E commerce of assets and site. So that's that I think is a huge advantage here and.
And I think that the big benefit.
To us is that the eventually that we're gonna be the system of choice suppliers are already recommending lightspeed to their independent.
The to the independent merchants that sell their goods because theyre going on over time, they'll hub of aggregate the real time selling data. So there's benefits for the suppliers and that in that regard the benefits for the stores.
And of course of the benefit for us as we become the system of choice and.
And eventually there'll be other opportunities for us to facilitate the <unk> invoices et cetera.
Yeah, Okay that makes sense.
Yeah.
And J P. We're running Australia.
Sure.
Your next question here comes from the line of Andrew Jeffrey from Kim. Please go ahead. Your line is now open.
Hi, guys. Good morning, Thank you for taking the question.
I also have a.
The reopening question I Wonder about Tonight your views of the.
Net growth and mix and and I guess, what I'm, what I'm thinking about it.
You mentioned E com doubled this quarter you're.
Are you seeing good uptake and some relatively protected.
Verticals like golf as well as.
And in Australia.
Are there any tradeoffs as hospitality comes back.
And and consumers return, perhaps more of a card present or is reopening of net positive of any way we look at it.
I'll take that one yeah I think it's the net positive of anyway, we look at it.
And what we're seeing is.
And Australia, I think we mentioned the best quarter ever.
To get back to Ramos question.
And we saw hospitality decline, obviously and many of our markets but.
We saw that segment come back and that led to just a wonderful quarter in terms of new customer additions and <unk> and revenue growth for <unk> for our business there.
I think the reopening process not only drives better volumes across the board, which will help and our ongoing rollout of payments.
And just Spurs, new business creation, as well I think and.
You know as you well know with the majority of this market and and.
And the legacy systems and.
The more new business creation.
We think as the only.
The beneficial of the lightspeed, given our position as the as a modern cloud advanced platform here. So.
We see nothing of the positives and.
And I really look forward to the year ahead.
Okay. That's helpful. Thank you and and just as a quick follow up.
No.
Obviously, the value proposition and that Lightspeed brings us.
Stark compared to legacy providers.
Assume theres still some merchants that are reluctant to do a rip and replace it anytime let alone during the pandemic are you seeing any changes in.
And merchants' willingness to perhaps take the leap and move to a cloud.
Solution, just sort of culturally in the market has have attitudes changed.
Yes, I'll take this one so I think it's a very good question and I think that's why we're very excited about the the.
Most of pandemic.
World I think we're seeing quite the opposite so think about it.
The one who has the legacy system and now the majority of their business. If I'm. The restaurant is going to be on line is going to be through delivery platform that is going to be true order ahead, and if you don't have the platform like lightspeed Youre basically stuck with the silos and trying to manage the ton of different applications. So the view here is that it's become way more complex for the traditional platforms.
To operate and actually we're seeing more demand from.
From actually more established vendors, who maybe would've never move and now we're looking at the and they understand that they have to do something about it. So I think that's why we're very excited about.
The next few years because the harsh reality is the majority of the platforms on the market on the legacy system. They are complete the under serving their merchants and then their platforms like lightspeed and integrate everything and make it much easier for our customers and we're seeing a ton of the mandate.
Thank you.
Your next question comes from the line of sign of my supplement from BMO Capital markets. Please go ahead. Your line is now open.
In terms of of the current weakness, you're seeing and hospitality, where there has been more lockdowns and maybe just qualitatively can you characterize it is it similar to what you are seeing kind of see it back in April or.
Is it any different this time around maybe because of the survivorship bias and have.
Have you gone back and to maintain any positive and payment plans or.
Not the same amount.
Yeah. It does.
To me and so it does feel different this time around.
You know certainly in person dining is suffering as hard as of yet.
And as of March I think the difference now is.
Our customers of adapted those debt.
And we've taken advantage of things like order ahead and home delivery of those business models and play.
From our standpoint, we feel better instrumented.
And I want to know what to expect going through with some of the things we can do to help customers.
Certainly you don't have to go back to March April on this.
First started there's a whole lot of uncertainty and on non and.
We do feel differently.
About it just go around that.
Better visibility and and no more of what to expect and just by virtue of that.
And are positioned to give the guidance that we gave this quarter.
Okay, Great and then.
With respect the shop keep and up sort of I realize it's still early days, but now that you've got on the assets for <unk>.
Few weeks can.
Can you update us on your thinking as far as the lightspeed payments opportunity within those customer bases and maybe the timeframe for being able to start to capture some of that.
Well underway.
Those are up near the top of the to do list for sure.
And the teams from.
From both of those.
Both of those businesses are actively working on on that rollout and now so we're we're we're.
And those teams of settled in nicely already.
And already driving significant value and of Lightspeed. So all good so far.
Yeah, and maybe Brandon just to add by the end of April we will have the the go to market teams fully integrated.
And focusing on on selling one product.
And the goal and also by the end of summer we will have.
Observed and advanced analytics platform fully integrated with our restaurant on with one more one product going to market and the U S.
So very happy with the progress there.
Great. Thanks, guys I'll pass the line.
Yeah.
Your next question here comes from the line of Daniel Chan from TD Securities. Please go ahead of your line is now open.
Thanks, Good morning, just.
The question on the supplier network with Anheuser Busch relationship you did announce that they would be devoting some resources to selling your product are these new suppliers of John boarding now.
And also committing any resources to this.
So this engagement.
Yes, so super excited it's all of the contracts that we are putting in place and the context of the suppliers or have exactly the same logic.
As you know there's benefits for the supplier and then the benefits for the stores and.
So the the value proposition here is for suppliers that the sell through and as soon as you've connected your catalogs and your inventories of Lightspeed, what we will do it for the stores that are ordering directly and lightspeed. We will give you the sell through which is very unique and small business and vice versa. We enabled all of the stores the actually see.
And have visibility on the inventory levels at the supplier.
And that whole relationship is really around basically suppliers and stores and promoting lightspeed within their network.
Okay.
There are some metrics that you're tracking to help guide you on how this new venture is doing.
Yeah. So number of metrics, we're looking at the number of suppliers that we're on boarding we're looking at and the number of Skus and we're looking at obviously of transaction volumes on.
And on ordering and front of the platform.
Okay.
And then Brian and one for you the guidance for next quarter suggests that EBITDA margin comes off can you just give some color on that.
And it's really just a couple of things.
One and the nausea as you heard from our comments.
It's a it's a seasonally.
Down quarter, and with an increasing portion of the revenues coming through payments.
And especially with the addition of shop keeping up served now on part as well.
And you kind of take on a seasonally low.
Lower quarter on the transaction volumes against you know and largely fixed cost base that is.
The technology company and and that's one contributor of the just the sequential change.
Secondly, the integration of shopkeeper and observe.
And we are expecting a slight downward.
The impact in the first quarter again, mainly due to the seasonal nature of those businesses, which is very comparable to our own.
And the last thing, though none of them.
Some of the main thing is.
If the FX environment and helping us at the moment, it's not.
It's not.
Two big on the Grand scheme of things, but that's also playing a role and it.
Great. Thank you.
Your next question comes from the line of cash back with KBC and please go ahead. Your line is now open.
Okay.
Thanks for taking the question and I also wanted to ask about the supplier network, obviously really unique that you have a b to C.
Software and payments business and now you're certainly getting more into the the b to B realm.
So I'm just kind of curious like.
What's the time frame that we should be thinking about you know what I think about two and you went public and you started to and.
Bark on Lightspeed payments, you, obviously have given us a lot of of color and and updates since then but certainly the journey I mean is this a multi year initiative and what milestones should we be really focus on and certainly the size of the supplier network you gave us the.
And update with which I think is the really important indicator, but just what other metrics should we be focused on and in the coming quarters and years tied to this initiative.
Okay. Great question. So it is a journey.
The flight payments, but I think I think maybe on I'll try and share our mindset with the steps and where we where we see this heading so I think step number one for us.
And this was listening to our customers actually we need to make it easier for customers to order directly through the supplier network the REIT.
And the harsh reality and small businesses is everything of pen and paper, there's a lot of back and forth, it's manual and inefficient and it also inefficient for the suppliers. So step one for us was to make automation and possible within the network within the software and go vertical by vertical to try and go inside of the verticals, where we have a lot of penetration.
And here the.
There's really two advantages we see one is operational efficiency for our stores and the other advantage is really for the suppliers, having visibility on sell through and helping them adjust manufacturing. So that we can get through the model. That's fully integrated so here. What you can expect in the coming quarters is expect to see more and more virtu.
Where we have concentration where we will just the onboarding more and more suppliers within the platform and with the goal of efficiently.
I think one.
That's one track the second track and our mine is payment.
Lightspeed payments right now, we're using lightspeed payments from store to consumer we should be using like the payments from store the supplier and this means that when.
And once they've collected the items they want to order once they've had visibility on the stock and the inventory level of the supplier and once they pass of the order we expect them to use like the payments to actually pay for that order and then for us the value here as we monetize both ways.
And we monetize on the on the sales side, but also on the buy side.
And then I think as we go into all of it.
I think the last piece for us to think about all the acquisitions, we've done and we acquire normally companies that have.
And how basically source within the same vertical just like we want to make all of this available to all of the stores within the network and here you can imagine that as I don't know you know we put all of these you know you put shop keep and lightspeed together and the U S. There's a ton of commonalities and the and the verticals, where where we both operate and I think there we can gain.
<unk> and then I think the last piece for US is really to look at commerce at large and figure out.
On how we're going to use data.
To actually help suppliers identified new stores that should be selling their supplies that are not selling their supplies and here you can think about this with us looking at the data analyzing the data and really fingerprinting.
Suppliers to stores by looking at commonalities of inventory and outlier that should be sold by those stores. So I think profit their journey at the very exciting journey and it's just the first step but.
But I think when you when you when you think about this once you're in the core of all of it and you're providing value to the entire flywheel from suppliers of the stores. The consumers you really become a very sticky.
Nicky talked for them and I think the last pieces think about cost of acquisition and lifetime value and as soon as you have the network and you have the entire ecosystem promoting lightspeed the cost of acquisition goes down and lifetime value goes up so it's a journey, but we're very excited about the journey and and and really excited about the product is finally out and we can we can.
And at the market.
Thanks for sharing those thoughts of J P C.
Super helpful.
Follow up for your brand and on the payments opportunity you have the very helpful. Slide that shows the adoption and some of the the Geos and verticals.
Certainly seems to be going in and the right direction I'm just kind of curious once we think about what this is going to look like maybe after we've incorporated the shop keep and up serve which I believe have higher rps and part because they've been successful of payments.
If we should be expecting that to pick up or just curious on how the incorporation of those companies will impact.
These dynamics.
Yes for sure it will tick up.
On the upstream business in particular.
The vast majority of their customers.
Using up sort of payments kind of thing of the really nice elegant solution.
The beds payments right end of the product itself.
<unk>.
They were further along as well on the payments journey from a.
The customer adoption perspective.
So as we've talked about and.
And largely through the referral model, but a good percentage of their customers.
And to use of payment solution there.
And as we talked about earlier and the teams are working hard to low dose or Florida.
To build the infrastructure.
And make sure of that lightspeed payments as available to those customers. So all told we expect those things to really positively impact.
Our overall penetration on a global level and.
And of course such.
That's core to what we're trying to do around here is to make sure that the the.
And as majority of our customers worldwide.
Take payments so all.
All these things I think are helpful.
Great. Thanks Brendan.
Your next question comes from the line of Ken Nicky Chiyoda from Credit Suisse. Please go ahead of your line is now open.
Great. Thanks, a lot for taking the question one of the digging in a little bit more about the path ahead for embedding additional financial services beyond payments and capital, So and we've talked a little bit and the past about how instant payouts could be a logical next step for you guys and maybe you could just talk a little bit about how you would see the demand for that offering what the penetration.
And of the payments volume that would sort of be able to be recycled and go out that path.
And maybe some simple use cases and also how the monetization of that might work.
Yeah, Hey, so look I think our I think we're in the early stages here for Lightspeed the.
And now we're on an exciting stage, where we're seeing obviously payments uptake accelerate and and all of that is good and that puts us in the position to start to launch some of these things.
On.
And we're probably the best example of what we're doing right now is the capital offering itself.
And we're a couple of quarters and working with larger the strike right now too.
And to kind of test that and we're seeing we're seeing a lot of good customer receptivity to this we're still.
As I mentioned in prior quarters, and we expect of the first.
The first goal is to be a little bit of getting used to each other and a little bit on.
Working out some of the workflows and processes, but we're seeing good customer interest and.
And we're seeing good initial progress with capital and and you know under.
Under the day I think it's too early to say exactly what percentage of our customer base is going to take advantage of some of these.
Opportunities our financial opportunities.
On.
But we're excited about it and there is enough there and I kind of suggests that day and these are going to be good contributors to the business and the.
And the mid to long term for sure.
Great. Thanks, a lot and just since you mentioned, it's the quick follow up on capital and are there any metrics you can share around just average loan sizes or repeat rates or any metrics that I know, it's very early but anything you might be able to share.
So with stripe loans.
And we're up to 100, K largely sitting on top of their infrastructure.
As you know.
Still early days, so certainly too early to be measuring repeat rates and.
And that sort of thing.
On average loan size is obviously.
A lot less than the 100 K number of that that's a that the the.
The offer right now.
Shopkeeper.
Shopkeeper and tax mentioned and the call.
The shopkeeper out of them.
And much more advanced capital product and.
Then we did as well and the way we started the leverage and out of their expertise.
The press pause a little bit of at the outset of Covid here and.
Ramping that back up now.
So we'll have some more things to share of their.
Because we we learned from their experience and we can start to share some of the metrics, we're seeing there but.
Suffice it to say they are.
And they were out on a couple of years, but out of us in terms of this offering and had some really nice returns and really nice success with it.
Which gives us optimism for the overall business.
Excellent Yeah, that's a great point on the shop keep capital Okay. Thanks, a lot for taking the questions.
And.
Your next question comes from the line of Todd Coupland from CIBC. Please go ahead. Your line is now open.
Yes, good morning, everyone I wanted to ask about competition.
A number of cloud players seem to have the <unk>.
And some stable flooding during the second half of 2020 and I'm just wondering if you.
You see any risk of pressure on pricing, whether subscription rates or payments rates or is it still.
On a features and functionality of omni channel supplier network and that kind of thing Thats driving decisions could you just talk about the landscape and the last six months. Thanks a lot.
Yeah, So I'll take this one.
And old transparency I think we've never had a better model. So we don't feel pressure from.
From from competitors, we if you look at our organic if you look at our close rates if you look at.
The <unk>.
We're not feeling that pressure, we're actually seeing more and more customers wanting to buy of full package from one vendor versus buying from multiple vendors, we see we see our customers one thing.
Solutions like ours, because they need to integrate all of the delivery networks on the restaurant from.
They need to have true omni channel when you think about physical retailers with Multilocation support so I think.
I think the offering is very strong and I think that the the market is stronger than it's ever been and.
And we do not feel any pressure right now on pricing for many of our competitors.
Okay. Thanks very much appreciate it.
Your next question comes from the line of Paul cheaper from RBC. Please go ahead of your line is now open.
Oh, thanks, very much and good morning, I was just hoping could you bridge between the strong growth in revenues this quarter I think.
Screening shop, keeping up sort of south of 3% and then G. T V.
On an organic basis and as the faster growth of revenue is that predominantly due to payments and perhaps additional software modules.
And that's driving the strong growth there.
Yeah. So.
And kind of have to deconstruct that a little bit.
Yeah.
So within the GTA V.
And some of these were in my prepared comments I think there, we'll find them and the press release as well.
Retail had a wonderful quarter.
And up 41% year over year within that E Commerce volume was up 100% year over year.
Overall GT the organic growth dragged down now by the hospitality, which was down 19% organically.
And.
And so that's that's what's happening inside of the GTA V and when you convert that into revenue and you'll see and the payments kind of penetration slide.
Most of our payments around and it comes from a retail space right now.
And so we're.
And we're sort of benefiting on the payments uptake, primarily sort of retail which is performing exceptionally well.
And on the hospitality side of the tracks down GTA V but.
And really doesn't have a huge impact on on.
On revenue.
Until we kind of look at the additions of the.
Ups or which.
Which is gonna be a next quarter thing more than that and this quarter thing as they wrestle with the the impact of Lockdowns and.
Makes sense.
Yeah, No that's helpful and and connect the dots there when you look at it longer term and those two segments of retail versus hospitality should the correlation between revenue and G. T V overtime, a line or do you think that they'll always be fairly and independent of each other.
No and it'll start to the line.
We're just we launched and U S retail for payments first.
Canadian retail is the second market, we launched mainly because thats, where the majority of our own GTA V and why.
So, we're just newer and to the hospitality space with payments.
I think we launched it kind of.
Oh, maybe march of of.
Of this past year.
And of course that hospitality segment as it's been.
And it's been dealing with some things all year long. So once we get back to a more normalized environment and we're going to see Pos.
Fatality uptake of payments, a rival or exceed I think for retail and those things will start to the line.
Okay, great. Thanks for taking my questions.
Operator, we'll take one last one of them.
Great. Thank you. Your next question here comes from content Guang from J P. M. C. Please go ahead of your line is now open.
And thanks, so much really great results I wanted to ask on the location growth being very very strong how broad based was what's the location of strength any additional color you can share on where you were positively surprised the other say geographically or vertically or by size of our type of client.
Question on nutrition, too and if you have anything to share there.
So retail we continue the really really well on the retail right now and it's the omni channel solution and I think is resonating really well.
And the retail it's really been a great performer.
By the end of the challenging overall environment and in that space.
Europe are you now and has had a tougher goal of late just the.
And because of the you know the Lockdowns and Europe, they've been fairly strict and perm and and that tends to mute the.
The new customer adds.
And of.
And we shine a light on Australia.
Just having.
On a wonderful quarter.
And they've kind of emerged a little more quickly from.
From this virus situation and I suppose and we saw really good performance there the law.
Last area, we want us and we wanted to highlight what we're seeing.
And really really strong momentum and kudos to the lightspeed team behind all of this is the golf segment.
We're seeing triple digit revenue was almost and that gross and that space right now.
Golf has kind of had a rejuvenated.
Experienced globally, I, suppose and and golf courses around the world and upgrade their own infrastructure, where we're really benefiting right now.
Great for social distancing golf I wanted to ask one more just on the sales and marketing.
And that did step up quite a bit sequentially on a dollar basis spend and is this a new baseline to consider and.
Are you seeing better returns on the efforts here and is that related to my first question on on the location growth. For example, just just curious on on anything else you can share on that.
And I think that's one of the more encouraging things you know not that we are laser focused on the on.
EBITDA positivity at the moment, given all of the growth opportunities, but if you look at sales and marketing as a percentage of revenue year over year.
And I encourage you to look at the last table in our press release, where we sort of normalize all of this.
I think we're really starting to see the the leverage and the model and we're seeing the benefits of just the momentum and the.
The increased brand worldwide.
We're adding more stores than ever.
Sales and marketing as a percentage of revenues going down significantly.
So the uptick in dollars. This is mainly the addition of <unk> of the acquisitions.
And just taking in their own sales and marketing, but the.
The overall percentage of revenue for us.
And it's really starting to see some nice leverage.
Understood. Thanks for taking my question.
And there are no further questions at this time I will turn the call back over to Guy for Papa George Hill for any closing comments.
Great. Thanks, everybody for joining us today and not just a reminder, on February 17th we are going to be having a webinar on the supplier network.
And will be joining us along with Peter Doherty, our VP of partnerships and we will have speakers there from the giant bicycles as well. So if you haven't registered please go to our to the IR portion of our website to register and we look forward to speaking to everybody there at that and thanks, everybody for joining us and have a great day.
And ladies and gentlemen. This concludes today's conference call. Thank you for the dealer participation and you may now disconnect.
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