Q4 2021 Lightspeed POS Inc Earnings Call
Yes.
[music].
Good day, and thank you for standby, what kind of feed of Lightspeed fourth quarter, 2 chasms and on earnings call at the.
This time, all participants are in a listen only mode of.
2 of the speaker's presentation, there will be a question and answer session to ask the question during the session of when you press the star 1 on your telephone.
The wife in Wisconsin, the Newco.
And if you look bar and for the system esports as far as Dan and I would now like to hand, the conference over to day to day Gulf of Georgia. Please go ahead.
Thank you operator, and good morning, everyone welcome to Lightspeed fiscal fourth quarter and full year 2021 conference call.
Joining me today are taxed the silver line speeds founder and CEO, Eric <unk>, Chief Financial Officer, and JP <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 and we undertake no obligation to update these 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 the 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 <unk> financial measures.
Reconciliations between the 2 can be found in our earnings press release, which is available on our website on SEDAR 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 measure of performance identify trends affecting our business and formulate business plan.
<unk> and make strategic decisions.
Such key performance indicators may be calculated in a manner different than the 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 stacks.
Thanks, Gus good morning, everyone and thank you for joining us today.
Before I get started I just wanted to welcome everyone from bad from the Lightspeed team.
We are thrilled to have Anna and her colleagues join lightspeed as we seek to transform the retail experience for our customers and consumers alike.
This past quarter closes off our 2021 fiscal year and I think it is safe to say that it has been the most transformative year and the Companys history.
Despite the global pandemic, there was particularly hard on our customer base of small and medium sized businesses.
The <unk> vantage to deliver some of the strongest performance and the Companys history.
Undertake 3 landmark acquisitions, which greatly improves our presence and the key U S market.
List on the New York Stock Exchange.
And released a series of new offerings, including Lightspeed capital Curbside pickup E Commerce for restaurant order ahead and subscriptions.
And lunch 2 major strategic initiatives with supplier network, and our recently announced global partnership with Google.
Our transformation was definitely by design, but also highly influenced by our environments.
I believe that every 1 of our customers we will look back on the past year as the moment, where they realized that and the Omnichannel strategy was the lager optional and it has become an absolute necessity.
Never has our goal of arming our customers with the technologies they need to operate and scale their business felt so relevant.
And we are proud of what they've chosen lightspeed as their technology partner of choice.
We were happy to end the year on the high note with Lightspeed delivering quarterly revenues that exceeded previously established guidance and street expectations.
We grew revenue of 127% year over year with the organic software and transaction based revenue growth of 48 per cent.
The <unk> payments had another record quarter and grew revenues both year on year and from the previous quarter.
And we are now present in over 140000 customer locations. When we include the recent acquisition of debt.
Some notable customer wins in the quarter included <unk>.
Jeans, this premier denim and net warehouse chose lightspeed modern cloud based platform to upgrade from the legacy system.
<unk> will be using a series of lightspeed offerings, including payments in the 18 locations across the U S.
Tommy John this husband and wife backed venture designs and manufactures and sells quality under gardens for men and women and their 6 locations throughout the U S using lightspeed retail and payments.
The Street Creek focuses on high quality and consciously sourced ingredients do Street Creek maintains 20 quick serve restaurants throughout Australia, and keep the lightspeed to improve their operations through features like better inventory management.
And usual lightspeed fashion. It was a very busy quarter. In addition to announcing and more recently closing the acquisition of then we launched payments and the United Kingdom undertook a very successful offering of $620 million and more recently announce our strategic partnership with Google to improve the discover ability of smbs on that part.
The other search engine.
And it will take you through the numbers in greater detail I would like to focus on some key topics, including the recent announcement of our partnership with Google.
Some of the initial success, we are experiencing with the integration of our latest acquisitions.
And some of the more recent trends, we're seeing and our business.
Earlier this month, we announced the partnership with Google.
The goal of this joint initiative is to improve price discovery for small merchants and Google's popular search engine.
To the Lightspeed platform, our merchants will be able to display lives of inventory levels and Google search results.
Rather than ordering online consumers of all know they can walk down the street and find what they're looking for out of local merchant.
Our rich Google integration and also allows merchants to easily manage AD spend and and improve the discovery of the locations truly unlocking the omnichannel potential of businesses powered by Lightspeed.
We believe this initiative will help small merchants compete with large online marketplaces. However, when combined with the capabilities of supplier network. We think the 2 are even more powerful for.
Our player network allows merchants to pull of high quality images directly from the suppliers catalogs.
The enabling our merchants to display both live inventory and compelling images, we believe the consumer experience well easily rival anything from big box competitors.
I think initiatives such as fees illustrate the lightspeed does evolve beyond being a simple point solution for the payments offering our scale and technology allow us to go beyond helping smbs simply manage inventory and transact.
We're helping them solve a greater variety of challenges from online discovery, the optimizing their supply chains.
As we continue to evolve I believe our value proposition can go beyond the merchant and the supplier and onto the entire industries by.
By acting as the common thread amongst merchants suppliers and consumers. We believe lightspeed can help make products more available merchants for successful and consumers more engaged with local retailers I think this will be especially true and our focus verticals.
Part of the reason, we were able to extend our ambitions attract partners such as Google and invest and new technologies is our scale.
That scale has been the result of our considerable organic growth, but also thanks to our M&A efforts M&A.
M&A has always been a part of our strategy and then the last 6 months and has been the front and center.
Over time, we should continue to recognize the benefits of our M&A strategy across our entire business.
But I believe it is important to highlight that we are already seeing some of these benefits.
As many of you know when we acquired shopkeeper and observe both of those companies maintained high levels of payments penetration within their customer base.
However, the economics, they were recognizing where inferior to our own.
Since joining lightspeed, we have had success leveraging our combined scale to recognize more favorable terms from 1 of our payments providers and <unk>.
Moving the payment economics for these acquisitions was always the priority, but in this case, we achieved our goals much earlier than anticipated.
1 of the reasons, we had such strong results and this quarter.
And in addition to improving the top line our greater scale is also helping on the cost side as well, notably on our customer acquisition costs are.
Our increased scale and brand recognition and the U S market is resulting in increased traffic to our own site with U S. Pegged visits up 50% of and this quarter versus the same quarter last year, which generally leads to more cost effective lead generation for lightspeed.
And then the industry your customer acquisition costs are increasing we are happy to see our costs remained relatively flat.
I think these 2 examples illustrate that the benefits of our M&A strategy are not distant of a qualitative but rather immediate and real.
Overtime, we will continue to recognize more and more benefits as we harmonize our go to market teams for the best of all technologies and to 1 might see platform and continue to use our scale and technological depth to deliver more solutions for our customers.
Before I hand, it over to Brandon I, just wanted to highlight some key trends in the quarter.
Overall as we entered Q4, we were seeing increased lockdowns, which negatively impacted our business, but as we exited we saw some regions begin to lift those restrictions and March proved to be of very strong months.
We saw new business really advance, especially in India and in hospitality.
And that's again had a very strong quarter of both in terms of revenue and new customer wins.
We added more payments customers, then and any other quarter, so far by a wide margin.
I think we are experiencing strong trends for various reasons.
Firstly, I think lightspeed is benefiting from economies reopening globally.
And we maintained strong footprints and the U S UK and Australia, all of which are in advanced stages of their COVID-19 recovery, but the.
EBIT and regions, where lockdowns are still present like central Europe, we are seeing signs of their customers are beginning to prepare for an eventual reopening and France. For example has been showing very promising signs in recent weeks.
Secondly, as payments becomes more widely available we are seeing net offering continue to boost our overall growth rate payments is the only been made available and our hospitality business more recently.
Hospitality G TV improves when the economies reopen and we should see payments continue to be of strong contributor to growth.
Finally, and I think most importantly, we believe our customers are recognizing that and Omnichannel approach is no longer optional.
Before COVID-19 many of our potential customers understood the inherent benefits of of cloud based Omnichannel commerce platform, but were perhaps too distracted by just running their business to undertake the effort to change the challenges of the COVID-19 pandemic has made it quite evident that business as usual is no longer possible.
Merchants need to be able to conduct business on their customers' terms b and in store online or through curbside pickup.
And we believe lightspeed is becoming the platform of choice as these smbs adopt omnichannel strategies.
As I said at the beginning of my comments. This past year has been the most transformative our company has ever seen.
There is no shortage of challenges ahead of us, but it is the company, we have never been stronger or more confident than we are today.
And I'm very proud of what we have accomplished in the past year, but I'm even more excited about what lies ahead.
And with that I will pass it off the branded.
Thanks, Dax and.
Other good quarter across the board as you heard from Docs, we continue to be encouraged by the trends we are seeing as economies around the world reopen along with the benefits we're seeing from our increased scale as customers seek upgrade of technology to help them run their businesses.
Looking at the building blocks of our business everything starts with customer locations, which grew to approximately 119000 at March 31, and is now over 140000 and on a pro forma of pesos, including our recent acquisition of event.
This is up from the 115000, a quarter ago and from 76005 hundred last year as.
As we anticipated lockdowns around the world and the first part of the quarter impacted new customer and location additions and January and February, particularly in Europe. However.
However by March we had our best customer location of addition month ever with strong demand coming from all markets and a resurgence in the hospitality and Europe.
As those markets began to prep for reopening.
And I was told for the quarter gross location additions were up 51% from the year ago, and 27% organically a strong result, all things considered.
The gross customer location of editions were terrific as we mentioned last quarter, we did face ongoing heightened churn and particularly in the hospitality, reflecting the total of the lockdown some of them are customers of face.
We've seen that moderate in the April however.
But so long as the pandemic remains we will continue to be cautious and our outlook to reflect the increased churn and pulling the business failure and our customer base.
The great news is that we're seeing plenty of reasons for optimism and our customer base and which customers find success using our omnichannel solutions to reach their consumers.
This shows up and our GTA V, which was almost 11 billion in the quarter of 76% from a year ago.
Excluding shop, keeping up service contribution overall GTA V..7 6 billion of 25% versus a year ago.
From the channel retail continues to perform exceptionally well for us with Ptv up 65% from a year ago organically.
Within retail and e-commerce volumes were up almost 100 per cent per year ago.
Hospitality was down 15% year over year organically, that's a solid resurgence in March which continued into April.
March grew approximately 10% sequentially from February and April grew by approximately of further 15% from March.
We're quite bullish on how these trends continue and as economies reopen around the world.
And look to our Australia and market is the bellwether here, which GTA V gross of over 75% year over year and the quarter.
<unk> per location was up to $215, representing an increase of approximately 50% from a year ago.
Descriptions of our apparel, which excludes our transaction based revenue stream increased by over 10% as more and more customers adopt functionality beyond the basic pls.
And our true increase as a result of payments grew significantly given the success, we've had with driving payments revenue.
The payments continues to be and exceptional performer for us we.
We had our best quarter ever for customers contracting for Lightspeed payments alongside the core software subscription.
And the overall payments revenue was up by well over 300% from the year ago.
And the last month of the quarter, our overall penetration of GTA V was approaching 10%.
Excluding up sort of and choppy.
Showing the runway, we still have the head of us.
All of this led to overall revenue of $82.4 million off of 127% from $36.3 million a year ago.
For the full year revenue was $222 million up 84% from $121 million a year ago.
Excluding the impact of shock keeping up serve revenue was $51.2 million and the quarter.
And within our total revenue.
Our software and payments revenue for the quarter was $75.3 million up 137% from $31.8 million a year ago.
When excluding shock keeping up serve organic software and payments revenue grew by 48%.
And for the full year of software and payments was 202 million up from the 107 million from a year ago.
Youll see in our filings that we have provided supplemental disclosure and of our subscription revenue and transaction based revenue.
<unk> revenue for the year was 119 million of our 54% of our total revenue.
This represents growth of 51% from the prior year.
Transaction based revenue, representing our payments business plus our legacy payment for referral based revenues was 83 million of 37% of total revenue and.
And was up by 195% over last year.
Included in transaction revenues was the impact of the newly negotiated contract with their payments partner and observe and shocking.
This new contracted 2 things provide us with better economics, and the businesses, we're achieving on their own.
And it also brought us better control over the and customer relationships.
As a result of this we were able to realize an uplift in revenue of approximately $7 million and the quarter and <unk>.
Greater gross margins as well.
This is of Great news story, the reflective of how our scale has improved and our negotiating power.
But it is worthwhile, noting that even without the revenue performance for the quarter handily beat our previous guidance of $68 million to $70 million.
While we will continue to work on bringing all customers from the acquisitions for lightspeed core offerings over time.
This contract Amendment does put us closer to the economic outcome, we expect in the meantime.
Earlier than we otherwise the plant.
Gross margin for the quarter was 53% and was 57% for the year.
Overall gross profit grew by 85% of in the quarter and 57% of for the year.
The decline in gross margin year over year reflects the growing impact of our payments business and lower hardware margins achieved this year due to various incentives we extended 2 of our customers to encourage adoption of our solutions as economies reopen.
Adjusted EBITDA loss for the quarter was $9.6 million ahead of our guidance of $12 million to $14 million.
And who was $21.2 million for the year.
And adjusted EPS was <unk> <unk>, a share and the quarter and 23 a share for the year.
As a percentage of revenue adjusted EBITDA loss declined from 17% of year ago to 11, 7 this quarter.
And the ongoing leverage we are seeing better business model.
You'll note the new item on the income statement of restructuring charge, we booked in the quarter.
Following our most recent acquisitions of shock keeping up sort of we reorganized the leadership layer of the business to ensure we maintain the organizational agility and.
And the capture of certain synergies as the result of these actions, we anticipate annual savings of approximately $8.4 million and.
The recorded of $1.8 billion salaries cost charge and the quarter.
All told and really great quarter.
Great year for the business as Dax mentioned this year was the transformative 1 for us the I'm really encouraged by the positioning of the business and our markets.
Which brings me to our outlook for fiscal 'twenty 2.
Is the reason for plenty of optimism as we look at the.
Trends, we are seeing and markets that are reopening the ongoing benefits of our increased scale and the tremendous opportunities that still lie ahead and payments and financial services for some other contributors to this optimism.
For the first quarter, we expect to achieve revenue and the range of $90 million to $94 million.
And adjusted EBITDA loss of approximately $10 million.
For the full year of fiscal 'twenty, 2 we expect revenues to be and the range of $430 million to $450 million with adjusted EBITDA of approximately $30 million loss or 7% of revenue, which is improved from the approximately 10% this year.
With that we'd like to open it up for questions.
Thank you and give a reminder, that's a question you will need the press star 1 on your telephone to withdraw your question that's the plan.
Please standby.
The PMO of Boston.
Our first call sort of comes from the line of and you Jessie the truth.
Keith Your line is open.
Hi, Good morning, everybody I appreciate you taking the question.
Nice job on renegotiating payment terms.
And so on and recent acquisitions and and brand and you mentioned that you now have more control over the the merchant relationship can you elaborate on what you think that the.
Needs for potential penetration of the back book those recently acquired companies.
Yeah.
Thanks for the question.
All good news.
And we're quite pleased with the.
Our ability to get this done at the pace, we got it done and that there's some.
And it does as.
And most importantly allow.
The balance to achieve better economics, but.
And not too far behind that and of course is just getting better control of them over the and customer relationship which is important to.
To your question I think it really opens the door for us to continue to and <unk>.
Great and the backup.
Book as he called it and.
And a good pace this year alongside what we do with the rest of the Lightspeed core business.
This really kind of opens the door and I'll, let that happen.
Okay looking forward to seeing that and I think encourage your comments to 1.
Customer acquisition cost can you provide and update on what LTV to CAC looks like today and for what the sort of breakeven time by cohort and it sounds like that's improving pretty nicely.
Yes.
Yeah. It is I think is all strength with the some of the ARPA of the stats of <unk> gains.
And that growth.
50% year over year Orange.
It's pretty cold and the thesis.
We just think there is a lot more economics to capture per customer.
And of course lead them too.
And ever improving the LTV to CAC ratio for us which has been.
You know also pretty pretty fundamental of of the model.
Hum.
And really encouraged by what we're seeing in terms of leverage sales and marketing as a percentage of revenues coming down significantly year over year.
And and all of that kind of comes together and allows us to continue to invest for growth, which is what we're privileged and right now.
Given the given the position we feel we're in and the market that.
And this is only accelerating right now and our view.
And our ability to capture more dollars per customer of course and allows us to keep that investment.
And the level that makes sense for the overall business with the.
The non into long term.
And as being a really profitable business.
I appreciate it thank you.
Yes.
Your next question is from Danielle <unk> from TD Securities. Your line is open.
Oh, hi, good morning, and congrats on a strong quarter.
You talked about the Youre seeing the benefits of the reopening have you seen the the mix of e-commerce versus brick and mortar GTD regions. The reopening have you seen the mix of that change.
JP are on mute sorry.
And I can see youre talking about.
Yeah.
Current can you hear me now.
And that's all right.
Yes.
Very quickly and so we're going to lose too much time, but the.
We've seen when you look at our business E. Commerce continues to be very strong, but we've seen growth year over year.
And about 100%.
Retail and physical brick and mortar has rebounded and we've seen growth up to 65% year over year.
And hospitality of course with the <unk>.
Curfews and and <unk>.
Covid have continued to remain low where they are still on your year over year, but what we've seen in the last quarter and if we look at the month of March we see kind of a real rebound there so.
For us what's important to and we've always said omnichannel and core.
And I think the value, but we can we can help our merchants service their customer of them any channel.
And here with the now we're seeing the reopening which youre seeing revenues go back into strong growth on physical and.
So it makes us very well.
The positive about the future.
Okay. Thanks.
Can you remind us if there is a difference and economic between online payments versus brick and mortar payments transactions.
Slightly better online I'm not.
And Oh.
It really materially different but we do get slightly better on line.
Okay and then just 1 final 1 for me how are the early days of payments doing and Europe and agents from slow launched at the.
Adoption rate comparable to what you saw for the first launched in the U S.
Early early days and so.
And more to say and the feature on that but yes.
We're optimistic that will be of great market for us it's just.
Early early on at the moment.
The next question and some of the I know 1 sales.
Barclays. Your line is open.
Hey, Thanks for squeezing me in.
Last quarter, you talked about Australia out of my comp for <unk>.
The region country and of the 3 openings can you just kind of maybe kind of continued there like how did that kind of evolved from.
The opening Pos quarter and then the follow up to that is then if you look at March being the strongest quarter and does that kind of pent up demand or do you think that's the new normal. Thank you.
So the Australia continues to be very strong and actually what we've seen and Australia were starting from the U K with all of the reopening so again our thesis here is as markets reopen.
This is going to be a strong positive for lightspeed.
Our JV in Australia, the growing 75% year over year, and I think that's a great number of considering last year. They were not and the same position we were with Covid. So what we're seeing as the as markets reopen there's a lot of the concepts that are created there's a lot of.
The drop of investment going in and into a market and.
And this creates a higher G television and a lot of the macro for us.
Thank you F&B and.
Think about the you had the strongest the new customer quarter, you mentioned or amongst the March is that like do you think that the pent up demand or is just like the idea of what's going to come and thank you.
I think the results of <unk>.
Having a good offering for the market and the results of a very dynamic market and the reopening.
So we have always felt good around the after Covid world.
And everything we see now confirmed our thoughts have been which is after COVID-19 lightspeed is even more relevant given how strong our platform's north of the physical world.
And so I think March and March is a reflection of what the youre going to look like we're very happy.
Alright, perfect productivity.
Your next question and Santana and scalpels.
The Buck with BMO Your line is open.
Hi, good morning, guys.
With respect to the new payment agreements.
For the shock keeping up share just to clarify I think you moved us from a referral relationships.
Lightspeed payments are now pay cash for those customers.
For the confirm that.
And we didn't.
So think of as we've mentioned is going to be a period of technical integration with these newly acquired businesses that was going to take us some quarters.
So we haven't completed that.
All of that work still remains ahead of us and that's my earlier comments.
Fully reflected and our intention is to obviously not just with payments, but what's what's the.
And with everything we do as the to get all of these customers on the Lightspeed core offerings.
But recognizing that that was going to take some time, what we did and this approach payments partners and say look we've got this infrastructure, we're happy to take on more of the obligation to historically had been and.
And.
And that.
And then also leveraged kind of the the scale of the business too.
Encourage folks to give us.
And our economics on the on the overall.
Transactions as well so.
And just allows us better customer control.
And it got us better economics, which which is really important that the.
And we were able to do it all and a much quicker pace than we otherwise would have.
It makes sense just sort of.
Yes, just to clarify then that means that maybe over the next year as you there could be further upside and economics that you actually with some of those customers to sort of like the payments that the takeaway.
Yes, yes.
Great.
The ex if you could give us an update in terms of just integration of the various platforms and and where that stands and it's obviously early days for events, but just in terms of the prior acquisitions and what remains to be done together with the amount of cost.
Sure.
Yes, So I think we're highly encouraged by what we're seeing on the hospitality convergence of platforms.
We use the we've got our flagship product now being sold in the.
And in EMEA churn when you call the K series.
And that will be making its way to the U S.
And by summer.
But we also have amazing assets analytics from observed.
The other other functionality around inventory management for for restaurants from a from the from counts of that will all make it and the reference platform and so on the hospitality side, where things are things are really rolling.
And we would expect of extremely competitive products worldwide. This year.
And the retail side, the retail E comm side.
We're also.
Barreling forward on the on.
And that convergence plan and.
We're going to go from what I think is the best retail cloud platform to a truly a beautiful 1 with with the combo of of Schottky for them and and all of the Lightspeed technology assets.
Great.
Thanks.
Your next question is from Josh <unk> of your line is open.
Thank you team for the update I wanted to go back to the Google integration that seems quite notable so I am just curious once this is fully fleshed out and rolled out.
Will the consumer be shopping online and.
Maybe whatever the category is say a bicycle and see okay. This is for example, what I could buy from an online only merchant and the right next to it like here is the image from the supplier of the <unk>.
Like shop down the street. So you may not know at this point, but I'm just kind of curious how this is going to be presented.
From a consumer perspective.
Yes, the local inventory ads.
The Google yet that is 1 part of our integration of Google will.
And we will show.
Schumer, where they can buy that items nearby.
As a business now and Lightspeed you can set of radius that shows where your locations are and and what the what what radius they serve and.
And so.
Serving of high and high quality images of potentially from our supplier network allows them to be prioritized and the Google search engine and its discovery ability for for local merchant. Those merchants may also have an online presence. So it will serve to drive traffic to both channels and.
And that's really the idea here is how do we help our businesses succeeded omnichannel merchants, how do we drive traffic to them and I think Google is the perfect partner for this and if they want to go further and they want to go further than than these local inventory ads, which are free as part of our system.
They can set up the smart shopping campaigns.
Which is also a part of this integration which allows them to 2.
The more proactively market.
And to customers and the area.
Very helpful Index.
Go ahead.
And it's just kind of figure I mean, all of the part of our strategy.
Actually how the physical business and have the same strategies of digital businesses, so, giving giving the ability for somewhat the spending and add on line of Google to actually measure of the real return on investment and physical sales and I think that's really exciting and again the value of our platform and the cloud is we can now do this.
But the mix that makes total sense.
Also the death.
And the new customer front, you had some pretty high profile well.
Well recognized brands.
When you look maybe just across the composition of of the growth that you bring it in and do you feel like there's the notable shifts up market taking place or maybe that's just more.
Natural evolution that you've seen and the types of customers you're bringing up.
Yeah.
So starting from the location of the New York multi location and.
What we've seen across time.
The bigger and bigger customers.
I think it is just the natural growth.
What we did if you remember last year as we said we put in place the team in charge of mid market.
Structure of the company to support the mid market and a better way and I think it's just the results of of that strategies are paying off net.
Really good to hear and pricing.
Your next question is from Tim <unk> with Credit Suisse. Your line is open.
Yes.
Great. Good morning, Thanks for taking the question I wanted to dig in a little bit on the location adds and that was a real highlight of the quarter of top leading indicator.
Future results so in terms of the mix.
If we think about any group of new locations coming in and just stay there for 10 or 100, just to make the math simple can you just talk about what portion of those would be newly formed businesses just being created a new retailer of new restaurant versus existing businesses that might have switched over to lightspeed and maybe just talk about how that.
It might have evolved what that percentage of those mix percentages might've looked like the <unk>.
Year or 2 ago and.
What it might look like now and how it might look ahead as more and more new businesses are formed coming out of Covid.
Yes, so I think.
So we haven't seen and evolution of the blend.
And so we've always had kind of of.
Give or take the same blend of.
The new creation people, creating new concepts vs.
Vs switches, so we have the logic of starters and switchers and.
For the blend hasnt changed.
However, what we've seen.
Is that.
During the pandemic, we have more and more digital demand.
Where we had a lot of demand for clarified the pick up and we had a lot of demand for e-commerce.
And we're seeing and the market that of reopening is that the demand goes back the other side, where there's a lot of demand for.
For physical platforms, and and actually for new concept. So I think for me what we're seeing is.
As markets reopen the blend.
In terms of digital versus physical go back to what they were of pre pandemic, but we haven't seen any kind of visible shift from these are only people and opening new vs. Quicker I think we've already got a good blend of each and.
And what we see also is that.
The different geographies, we have very different demand.
And the markets that are completely reopened like now of the UK or or or for Australia. We see a lot of demand that goes back to the physical world.
Okay, Great. That's really good context, I really appreciate that.
Second question or a follow up somewhat unrelated actually but back to the payments business.
Within some of the revenue share agreements that you have either with your existing within lightspeed revenue share agreements, so not lightspeed payments more of the sort of traditional ISP Rev share business. That's more of a legacy for you guys and then maybe and some of the acquired properties as well I understand there's some non solicit agreements and there and then there's sort of a timeframe where you can't.
And maybe approach all of those customers as quickly as you would like and maybe put a little bit of of governor, but that should be opening up at some point and maybe you can just put a little bit of context around the mechanics of how that works and how that presents a nice opportunity ahead.
Yes.
I think it's pretty standard practice.
And in this industry, where youre getting.
And.
The kind of a referral based revenue stream from our from 1 of the payment processing partners.
The coincident with that Youre, signing a non solicit.
These contracts also will have terms on them.
Will expire.
<unk> points.
So and of course were for Warner.
And these are partners of ours, and we won for contractual.
Contractual obligation we have.
Longer run longer term, we just believe and the customer experience being a lot stronger, bringing together software and payments from the single provider and.
And of course, the that's the reason we exist is to make our customers happy so and.
And the long run.
And we do expect to continue the wheelhouse of these.
Referral based relationships.
But working working well with our partners as we do so.
And so there's various opportunities, Tim and I and I'm not answering your question directly.
But the.
And there's various windows, where we can.
Ill take on net.
And that activity and little more directly then.
And then when.
And we can currently do and some of those Windows will open kind of challenge of this fiscal year for us.
And.
Yeah and in the <unk>.
Long run we expect all of.
We really believe the value prop of bringing these things together is the strong customers will.
1 of the alone.
We will be coming our way as much as we want them to anyway.
Great now, Brian and that was really helpful. I really appreciate it thanks for taking both of those.
The problem.
Your next question is from toward for with National Bank financial onto the lines open and yes. Thank you on the.
Shopkeeper and ups or payment of the amendments I just wanted to clarify is it sort of the largely the scale now of Lightspeed that allows you to sort of kind of get that bargaining power or is it kind of from there.
And the relative operating prowess of the sort of recognize that opportunity and parcel of acquisitions that lots of those amendments.
Thanks for all of those things.
You think about how this naturally would play out and you've got.
Our partner of those businesses.
And who you know now the gets the deal with a much larger entity where the the.
And the greater opportunities and aggregating all of these things together.
So that creates opportunity for them slash leverage for us and.
And then the conversation and then and Susan to what's important to lightspeed and what's important to our customers and how quickly do this in the way that.
Puts our current customer at the forefront.
And because we have the infrastructure and we become a trusted and to be and the processing relationships.
And those partners are.
Willing to.
Help us in that regard and help our customers in that regard so I think it's the.
And it starts of scale or you know like we have a much more compelling.
Opportunity for these partners.
And then from there.
And just our capabilities and the infrastructure a lot of that conversation and we're allowing that conversation to progress.
Pretty quickly, which which allowed us to.
Like some of the improvements you saw in the quarter.
Okay, Great and my other question and I had to do with the.
You've talked about the subscription revenue of up to 10%.
And it's tied into sort of the supplier network, which sounds like it's actually.
A bit more of increasingly more meaningful, especially with that sort of connection of Google.
The pilot and that we're gonna be sort of a module that merchants have to pay and incremental fee for or will it be part of Lightspeed Pos.
For him and dental.
And so I'll take this 1 day.
The.
But the way we look at it is the supplier network is the module is going to become if we go for the module of the the commerce platform.
And we said, we really want to go deep into vertical that matter for us and within those verticals, we really want to triangulate supplier.
And the consumer because they're the kind of value for everybody and the ecosystem.
So I think here.
We've had an incredible reception from from from low to our suppliers and actually what we realize from this that they want to go faster than we can and we can go today, so we need to invest the lock and those capabilities to build faster from here as the go forward the integration and the visibility we get the suppliers and see what is the real cash.
Throughout the store level and vice versa, the ability to get the stores to order directly from suppliers and the inventory levels of supplier and we think it's Keith of the success and the verticals, where we operate so because of the losses as we go forward debt up we're going to be investing.
Okay, great and that supplier network and is available across the board now.
All of merchants.
And it is okay.
And we've been onboarding them very slowly and there is a lot of the.
Again, we're very early and the.
Setting up the whole structure for every every vertical but within the within <unk> progress and the rock within the key industries, but there's still a lot for the.
Okay, great. Thank you.
And Richard just to clarify 1 thing and maybe I misheard it.
The average revenue per customer of ours pool, and the subscription side was up 10% revenue obviously ahead of that.
Yes.
Okay. Thanks.
Your next question and from Paul Chambers with RBC capital. Your line is open.
Hello, and thanks, very much and good morning.
And I get it down a little bit more and to the Google partnership.
And that we're getting into specifics can you speak to the general economic model with partners like Google You mentioned, it's free for the merchant is it coming up and they say pretty organic search and not part of Google ads or is it <unk>.
<unk> effectively Google for it and continuing.
Elaborated a bit there please.
Yes, I think the basic.
Inventory ads.
Total local inventory ads that is a part of the part of the lightspeed retail offerings.
And that is that is inc.
That will publish and make discoverable, the local inventory within a radius for that store.
Beyond that.
The retailers can set of smart shopping campaigns that day.
The other part of the integration and that is paid for.
But it is 8 times, we've and we've calculated of it it's 8 times more efficient to use of smart shopping campaigns because.
Google and Nike to leverage data to make to make that AD spend even more efficient 8 times more efficient than the if that retailer with doing that on their own with their own their own buys and the idea of there as to is to make sure that we're democratizing.
This kind of this kind of capability. So that it's accessible to all all of Smbs and not just big box retailer of big lots of income that can afford to client and such a campaign or optimize such of campaign.
1 is 1 is.
And free and 1 is a part of.
Part of a highly optimized.
Paid campaigns.
Thanks.
Sure.
Sorry, sorry go ahead of you.
Ultimately if the merchant is doing well there is a lot of transaction volume and that's how we get there.
The payback is we'd like things so our goal again and just get all of our customers to be more successful than the average when they're unlikely to vessel.
That makes sense.
The community to expand that out into additional AD networks, and then can you also surface and the ability for your own merchants.
And so chose pay for higher visibility.
Pay per click of pay per conversion.
Yes.
I think we've gone from helping the business managed and operated store.
2 interfacing with consumer and now I think we're driving traffic to the consumer and.
And so I think debt. This is a list and the big I think partnership that shows what lightspeed can do at scale and which is the which is partnered with the largest.
The largest companies out there in order to benefit our customers and I think theres lots of opportunities to continue to drive traffic to our customers and there's many channels.
And we want our customers to be on as many channels as possible.
Okay, great. Thanks, that's really interesting.
Okay.
Yeah.
The next question is from.
Josh <unk> with Morgan Stanley Your line's open.
Great. Thanks for the question.
Couple of on M&A. It seems to me even outside of the contribution from the renegotiated payment terms and some of the commentary around efficient customer acquisition and bike shopkeeper and observe together have outperformed on your ownership and I'm wondering if for your degree of any context for what's driving that at this point or.
And those acquired customers adopting more software and more lightspeed modules from you.
Yes.
Hey, Josh Yes, so I think 1 of the things we're encouraged across our business and certainly what we see and absurd and and chunky is low.
Is just the benefits of.
Of the reopening.
And do you think about the upstairs business in particular.
You know we've seen the.
The the GTA V gross which which in turn in terms of into payments revenue for that business.
Coincident with the reopening of the U S.
You gave some stats, 10% March over February and for the 2014% up and April over March and.
And and that's been really encouraging.
The whole of hospitality segment of our business of which I'm sure and the beneficiary.
And.
As the.
Showing signs of of good life.
And as we go through the reopening and and.
All of our markets and that's what led to some of the outstanding numbers, we saw in March.
And I think that's not the main contributor.
And I think there's other things we're doing inside of these customer bases to make sure of that.
They know they of migration paths and.
And the things that they can do and the long run with Lightspeed and I think that's helping overall and as well, but I'd say the primary factor system.
And how the collective business, including those acquisitions have benefited from the reopening.
That's helpful and more.
More broadly on the M&A.
I'm wondering if the strategy looking forward is the same as in the past and really focusing on the I think on the pace of M&A.
Meaning you have done a lot of acquisitions recently is that pace sustainable or should we expect a period of digestion at this point and Thats.
Is it from me thanks.
So maybe I'll take the fund.
Look at the M&A.
First of 2 things.
And if you look and hospitality.
And the U S and you look at officer.
And they are now fully integrated with like the actually the CEO of up service out of the GM of global hospitality you'd like to be true share out of.
And then if you look at Schottky Trump keeps fully integrated offer with Lightspeed, and Mike Simone and being the head of global retail I'd light.
So I think we feel good about the acquisition we are seeing the returns we've set up the account management teams.
And the upsell and also to cross sell when customers are outgrowing the platforms we've acquired.
<unk>.
And even the <unk>.
For the Paragon charge of what the capital. So I think we're a good company and acquiring I think we understand of what we need to do and I think we feel very good about the returns and as you mentioned the companies where they might be doing better than outside of IP.
So with that in mind, we want to.
And I think we will continue to be active with M&A.
I think maybe the slight change.
And until now.
The increased geographical penetration and concentration by acquiring <unk>.
Companies that were in our sector I think of the go forward, we're more thinking now about how do we scale and and how do we combine more technology to help accelerate the growth of these companies and for.
So when we think about that we think about Omnichannel, which is key we think about suppliers, but I think you can expect.
Active M&A.
And not within the same category that we've had and the last few years.
Thank you.
Your next question and from Todd Coupland CIBC. Your line is open.
Yeah, good morning, everyone.
1 quick follow up on the location count.
Has the shock keeping up service started to benefit from.
The location growth as the U S has been opening.
Certainly and <unk>.
And the observed business has.
I think we've been as.
As you may recall, the tone of the with sharp teeth itself.
We very quickly moved that product into more of the nurture mode.
And the.
The lightspeed retail being the core product, we're taking the market.
And North America.
So that's that customer bases, and a little bit of different but with ups or for share of the reopening.
And then Ah.
And really nice contributor to that business.
And then a follow up we didn't talk too much about.
But could you just.
Give us an update on how that's building and some of the milestones for the coming fiscal year. Thanks a lot.
You broke up there Todd just join you.
On the subject of nuts.
Question and.
And you hear me now Brandon yes.
Yes.
Yes, yes, and the question was on Lightspeed capital, we didn't talk too much about it today you could you just get an update and what we should expect in the coming fiscal year.
And that's been more encouraging signs of their.
And we've rekindled the what was the sharp peak capital.
Product.
J P mentioned, the former CFO of <unk>.
Of the sharp teeth businesses and Oh.
And that's been helping to drive that for us So we're seeing them.
And lots of encouraging signs, we're seeing lots of good momentum.
And if anything our optimism the brighter than ever on the on that product line.
And as we head into this fiscal year and it's still early still amount of huge a huge contributor.
But.
From what we're seeing both with our.
And the rekindling of the shop keep program and taking that along that line or across our customer base and the.
And then we'll proceed with our ongoing relationship with stripe.
And in that respect.
And good momentum across both of those right now so pretty pretty encouraged though it is still early days.
Mary I think will take we have time for 1 last question.
Your next question and it sounds Tien Tsin Huang from Jpmorgan. Your line is open.
Hey, thanks, so much and I'll keep it quick I'm curious the did you give what the vend revenue contribution would be for.
For the fiscal 'twenty 2.
Yes.
And that.
Acquisitions totaled $34 million and revenues.
Yeah.
Right and so I wasn't sure if there was the name.
Assumed the growth.
On debt, but happy to start with that and then just my quick follow up.
And just the gross profit contribution from the payment contract change.
And you said 7 million of revenue Brennan, So whats the gross profit impact from that just help us understand the.
The P&L impact.
Yes, we didn't give a specific number there but it was.
The following through winter.
And then our typical margin is on.
On that line of business.
Wasn't quite to that extent, but.
We got a nice from a bump from that and as well.
Got it thank you guys.
Okay.
And there are no for any questions at the phone now like to turn the call back of Inc.
Yes.
Okay and thanks for joining us this morning on the call. If anyone has follow up questions. Please feel free to reach out to me and we are around all day to day. Thanks, again, everyone and have a great day.
That concludes today's conference call and thank everyone for joining you may now disconnect.
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