Q3 2024 Lightspeed Commerce Inc Earnings Call

Operator: www.lightspeedpos.com Good morning, my name is Krista, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Lightspeed 3rd Quarter 2024 Earnings Conference. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, we will have a question and answer session. If you would like to ask a question at that time, simply press star followed by the number one on your telephone keypad.

Sure.

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Good morning, My name is Krista and I'll be your conference operator today at this time I would like to welcome everyone. Just a lightspeed third quarter 'twenty 'twenty four earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, we will have a question and answer session.

If you would like to ask a question at that time simply press star followed by the number one on your telephone keypad and if you would like to withdraw your question Press Star one. Thank you I would now like to turn the conference over to Gus Patrick Giorgio head of Investor Relations you may begin.

Operator: And if you would like to withdraw your question, again, press star one. Thank you. I would now like to turn the conference over to Gus Papageorgiou, Head of Investor Relations. You may begin.

Gus Papageorgiou: Thank you, Operator, and good morning, everyone. Welcome to Lightspeed's fiscal Q3 2024 conference call. Joining me today are J.P. Chauvet, Lightspeed's Chief Executive Officer, and Asaf Bakhshani, our Chief Financial Officer. After their prepared remarks, we will open the floor to your questions. We will make forward-looking statements on our call today that are subject to risks and uncertainties that could cause actual results to differ materially from those suggested. Certain material factors and assumptions have been applied in respect of conclusions, forecasts, and projections contained in these statements. We undertake no obligation to update these statements except as required by law.

Speaker Change: Thank you operator, and good morning, everyone.

Welcome to Lightspeed fiscal Q3, 2024 conference call. Joining me today are J P survey by speeds, Chief Executive Officer, and asset backed shiny our chief financial Officer. After prepared remarks, we will open it up for your questions.

Speaker Change: We will make forward looking statements on our call today that are subject to risks and uncertainties that could cause actual results to differ materially from those projected.

Certain material factors and assumptions were applied in respect of conclusions forecast and projections contained in these statements.

Speaker Change: We undertake no obligation to update these statements except as required by law.

Gus Papageorgiou: Please carefully review these factors, assumptions, risks, and uncertainties in our earnings press release issued earlier today, our third quarter 2024 results presentation available on our website, as well as in our filings with U.S. and Canadian securities regulators. Also, our comments today will include adjusted financial measures, which are non-IFRS measures and ratios. These should be considered as a supplement to, and not a substitute for, IFRS financial measures.

Speaker Change: Third quarter 2024 results presentation available on our website as well as in our filings with U S and Canadian Securities regulators.

Speaker Change: Our comments today will include adjusted financial measures, which are non <unk> measures and ratios. These should be considered as a supplement to and not a substitute for <unk> financial measures reconciliations between the two can be found in our earnings press release, which is available on our website.

Gus Papageorgiou: Reconciliations between the two can be found in our Earnings Plus release, which is available on our website, on CedarPlus, and on the FTC's EdGear. And finally, note that because we report in U.S. dollars, all amounts discussed today are in U.S. dollars unless otherwise specified. With that, I will now turn the call over to the guys. Thank you, guys, and welcome, everyone. Lightspeed continues to deliver on its key objectives for the year. Our Unified Payments Initiative helps us deliver revenue of $239.7 million, up 27% year-over-year, and above the high end of our previously established households of between $232 to $237 million, adjusted at the bottom of $3.6 million, also growing stronger than our outlook of $2 million. This is our second consecutive quarter of fatherhood-adjusted education.

<unk> plus and on the Sec's Edgar system, and finally note that because we report in U S. Dollars. All amounts discussed today are U S dollars unless otherwise indicated.

That I will now turn the call over to J P.

J P: Thank you and welcome everyone.

J P: <unk> continued to deliver on its key objectives for the year in Q3.

Unified payments initiative helped us deliver revenue of $239 7 million up 27% year over year and above the high end of our previously established outlook of between 230 to 237 days.

Adjusted EBITDA of $3 6 million also came in stronger than our outlook of $2 million. This is our second consecutive quarter of positive adjusted EBITDA performance.

Gus Papageorgiou: GCD has a percentage of GCD with just under 30% this quarter, which is a noteworthy improvement from 25% last quarter and puts us well on track to meet our goal of 30-35% by the end of our fiscal year. Given that we are in the final stretches of 2024, I feel very confident that we will meet all our key objectives. As a reminder, these objectives were 1. Rethink the benefits of one-night stands, 2.

<unk> as a percentage of G. T V was just under 30% this quarter, which is a noteworthy improvement from 25% last quarter and puts us well on track to meet our goal of 30% to 35% by the end of our fiscal year.

Given that we are in the final stretches of 'twenty 'twenty four I feel very confident that we will meet all of our key objectives for the year.

As a reminder, these objectives were one reaping the benefits of one might lead to accelerating revenue growth from financial services, including Lightspeed payments in Lightspeed capital three continuing to build products that solve our customers' problems and help them run their businesses, particularly with our supplier network and <unk>.

Gus Papageorgiou: Accelerating revenue growth from financial services, including Lightspeed Payments and Lightspeed Capital. 3. Continuing to build products that solve our customers' problems and help them run their businesses, particularly with our supplier network. And 4.

Gus Papageorgiou: Achieving adjusted EBITDA break-even or better for the full family. As Fiscal 24 is drawing to a close, we are beginning to turn our attention to... I will provide a more detailed outline of our goals for Fiscal 25 in our next Earnings Quote. However, I want to recap.

For achieving adjusted EBITDA breakeven or better for the full fiscal year.

As fiscal 'twenty four is drawing to a close we are beginning to turn our attention to next year.

J P: I will provide a more detailed outlook of our goals for fiscal 'twenty five in our next earnings call. However, I want to recap the tremendous achievements. Our organization has accomplished since completing our initial IPO five years ago.

Gus Papageorgiou: Tremendous achievements our organization has accomplished since completing our initial IGO five years ago. We consolidated our industry by acquiring and successfully integrating nine companies into two industry-leading platforms. We rolled out Lightspeed Payments for a global customer base. We grew revenue tenfold and GDP fivefold. And we undertook the necessary measures to achieve adjusted EBITDA profitability, having now emerged as a profitable company with strong organic revenue growth. These significant accomplishments took years of effort and a lot of hard work.

We consolidated our industry by acquiring and successfully integrating nine companies into two industry leading platforms.

We rolled out lightspeed payments towards the global customer base, we grew revenue over tenfold and GTD over fivefold.

And we undertook the necessary measures to achieve adjusted EBITDA profitability, having now emerged as a profitable company with strong organic revenue growth.

These significant accomplishments two years of effort and a lot of hard work.

Gus Papageorgiou: I want to thank everyone at Lightspeed for their dedication. Of course, there is still work to do, but going forward, Lightspeed may focus on growing its top line while maintaining a trusted habitat, POS. But I want to stress that growth will be our top priority. We intend to continue to generate positive and trusted editor reviews on an annualized basis. But as he found the prairie... of growth and possibilities to scale, Little Tips Toward Growth.

Speaker Change: Want to thank everyone at lightspeed for their dedication and commitment.

Speaker Change: Of course, there is still work to do but going forward Lightspeed main focus will be on growing its top line, while maintaining adjusted EBITDA positive performance.

But I want to stress that growth will be our top priority. We intend to continue to generate positive adjusted EBITDA on an annualized basis, but as we balance the priorities.

Growth and profitability scale will tip towards growth.

Gus Papageorgiou: We offer in this space with a massive..., and many of our target customers continue to use data like this. We believe the majority of these customers will adopt our Facebook offerings in the next few years. We are well positioned to benefit from this shift, and with payments now tightly integrated into the software platform and mandatory for all eligible customers, we believe our unit economics will only improve. Clearly, now is the time for us to keep our foot on the gas.

We upgraded the space with a massive opportunity.

And many of our target customers continue to use dated legacy system.

We believe the majority of these customers will adopt cloud based offerings in the next few years, we are well positioned to benefit from this shift and with payments now tightly integrated into the software platform and mandatory for all eligible customers. We believe our unit economics will only improve.

Clearly now is the time for us to keep our foot on the gas in terms of what Lightspeed. Our code complete platforms are now available in almost all of our target global markets.

Gus Papageorgiou: In terms of One Lightspeed, our code-complete platforms are now available in almost all of our target global markets. I want to stress again that these are the best products we've ever shipped, and we continue to believe that the competitive gap between us and others in the market continues to widen. Expanding and innovating our product offerings continues to be a priority for Lightspeed. And as we look at our product... We will continue to assess whether it's better to build or buy.

I want to stress again that these are the best products, we've ever shipped and we continue to believe that the competitive gap between us and others in the market continues to widen.

Expanding and innovating our product offerings continues to be a priority for light.

And as we look at our product Roadmaps, we will continuously assess whether it's better to build or buy.

Gus Papageorgiou: M&A is part of this company's DNA, and I believe our track record demonstrates that we know how to successfully identify aggregates and Integrate Meaningful Action. M&A was critical in our ability to deliver the most compelling platforms for both resellers and restaurateurs, allowing us to offer best-in-class features such as analytics, ingredient management, and e-commerce within a time frame that would not have been possible if we had developed these on our But at the same time, they did not enter our business.

M&A as part of this company DNA and I believe our track record demonstrates that we know how to successfully identify execute and integrate meaningful acquisitions.

M&A was critical in our ability to deliver the most compelling platforms for both retailers and restaurant tours, allowing us to offer best in class features such as analytics ingredient management and E Commerce.

In the timeframe that would not have been possible. If we have developed these on our own but.

But at the same time they.

Speaker Change: They did not hinder our business momentum, we continued to deliver very strong organic growth rates and achieved adjusted EBITDA profitability, all way of acquiring and integrating nine organizations.

Gus Papageorgiou: We continue to deliver a very strong, organic... and Achieve the Susceptibility, all while acquiring and integrating 9R. We also continue to focus on adding more high-definition... Let me share a few examples of our customer wins during. We are excited to announce the addition of three new Mission Star riders. First, The River Cafe in the UK, which is known to have trained some of the greatest chefs in the world.

Speaker Change: We also continue to focus on adding more hygiene TD customers.

Let me share a few examples of our customer wins during the quarter.

Speaker Change: We are excited to announce the addition of three new Michelin Star restaurants.

First the river cafe in the UK, which is known to have trained some of the greatest chefs in the world.

Gus Papageorgiou: In Germany, we saw the iconic cable in downtown Hamburg and the prison in Berlin, all of whom showed light. Also, Attica, a regular on the World's 50 Best Restaurants list, has selected Lightspeed to operate their fine dine restaurant in Melbourne. On the retail front, we have in a number of locations for low-lay clothing the Canadian athletic apparel designer that switched to Lightspeed from one of our cloud-based locations. In the U.S., we signed FitMyFeet, a 6th location footwear retailer that was switching from their on-premise legacy tailors. In the UK, we signed two locations from the high-end bike brand Inarello. Family-owned and operated since 1952, Pinarello has one simple objective: to make the world better.

In Germany, we saw in the iconic cable and downtown Hamburg, and Prism in Berlin, all of whom chose Lightspeed restaurant.

Also antica irregular in the World 50, Best restaurants list has selected lightspeed to operate their fine dining restaurant in Melbourne.

On the retail front, we added a number of locations for lowly clothing, the Canadian Atlantic apparel designer that switched to lightspeed from one of our cloud based competitors.

In the U S. We signed to fit my feet, our sixth location footwear retailer does with switching from their on premise legacy system.

In the U K, we signed two locations from the high end bike brand in our railroad.

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Gus Papageorgiou: In the quarter, Lightspeed was proud to be the recap POS for TwitchCon, the annual conference for the widely popular livestream video gaming platform, Twitch, with over 60,000 attendees hosted in Latin America, and Fining signed up several new brands for its supplier network, including Casual Lifestyle brand, Tommy Bahama, Canadian footwear brand, Affen, and the Casual Men's Apparel Company, Untouchables. The list of high-value brands We remain focused on building an integrated supply chain that links high-value brands to retailers and end consumers. We continue to invest in our supplier network and remain highly confident it will be a significant differentiator for our retail platform as well as a valuable source of new revenue. Moving on to Unified Pain.

In the quarter Lightspeed was proud to be the retail Pos for Twitch called the annual conference for the widely popular Livestream video gaming platform Twitch with over 60000 attendees hosted in Las Vegas, and finding signed up several new brands to our supplier network, including casual lifestyle brands, Tommy Bahama Canadian footwear.

Our brand passion and the casual men's apparel company targets.

The list of high value brands on our supplier networks continues to expand.

We remain focused on building an integrated supply chain that links high value brands to retailers and consumers. We continue to invest in our supplier network and remain highly confident it'll be a significant differentiator for our retail platform as well as a valuable source of new revenue streams.

Moving on to unified payments at this stage I am confident we will meet our goal of GPP, representing 30% to 35% of GTP by our fiscal year end.

Gus Papageorgiou: At this stage, I am confident we will meet our goal of GTV representing 30-35% of GTV by our fiscal year-end and that our Unified Payments Initiative has proven to be effective. We continue to see ongoing progress in North America and have rolled out our efforts in Europe and APEC in China. As expected, converting customers to payments in Europe and Asia would likely take longer than in North America... We are one of the first players to unify software with payments in Europe, particularly in continental Europe, and so there is more effort involved in educating our customers. We remain very pro-business in Europe and Asia and face less competition in those countries.

Our unified payments initiative has proven to be a success.

We continue to see ongoing progress in North America, and rollout of our efforts in Europe and APAC in Q3.

As expected converting customers to payments in Europe, and APAC would likely take longer than in North America.

One of the first players unified software with payments in Europe, particularly in Continental Europe, and so there is more effort involved in educating our customer base.

We remain a very strong business in Europe, and APAC and face less competition in those markets.

Gus Papageorgiou: Getting these customers on to payments improves our unit decommissioning process, so despite a lengthier time to transact in each region, we are confident this is the right strategy and beneficial to our customers. The benefits of combining payment with software are undeniable.

Getting these customers onto payments improves our unit economics. So this time, a lengthier time to transact in these regions. We are confident this is the right strategy and beneficial to our customers the.

The benefits of combining payments with software are undeniable.

Gus Papageorgiou: These advantages are just as applicable to our customers in India and Asia as they are to customers in North America, and we will exit at fiscal 24. Our account management team in North America will gradually go back to upselling software and digital assets, but we expect to continue to make progress on expanding payments throughout fiscal 2020. So while we expect to end 2024 with GPV as a proportion of GTE at between 30 to 35 percent, we've heard Cedars-Dunbar continues to grow throughout fiscal 2020. On the product side, we continue to deliver innovative features that help our customers manage and scale their business. We have several exciting new product launches. In the U.S., we launched instant payouts, allowing retailers to access funds immediately, no matter the date or time. Although still in the early stages, his writing holds very strong initial respect.

It saves our customers time and delivers much greater insight into their business operations, while adding no cost the majority of the time.

These advantages are just as applicable to our customers in EMEA and APAC as they are to customers in North America.

As we exit our fiscal 'twenty four.

Our account management teams in North America will gradually go back to up selling software in addition to payments.

But we expect to continue to make progress on expanding payments throughout fiscal 'twenty five.

So while we expect to end 2024, with GPS proportionate GTD at between 30% to 35% we foresee this number continuing to grow throughout fiscal 'twenty five.

On the product side, we continue to deliver innovative features that help our customers manage and scale their businesses.

Had several exciting new product launches this quarter.

In the U S. We launched instant payouts, allowing retailers to access funds immediately no matter to date or time.

Although still in the early stages. This offering so very strong initial reception.

Gus Papageorgiou: We launched Lightspeed Capital in France, the Netherlands, and Belgium this quarter, and Germany shortly after. The Expanding of Global Footprint for this High Margin For our customers in the U.S., we launched Lightspeed TableSight, a compact, portable, and flexible POS and painless processing device for rest. Lightspeed table size, service can instantly process orders and accept payments on an iPhone, reducing wait times, increasing table turnover, and improving customer satisfaction, and we also launched Pap2Pay on iPhone in both the UK and the Netherlands, allowing customers in those regions to accept payments right on their iPhone. Maintaining High-Speed Retail and New Order Integration to the Flagstrip Retail Offering, allowing our retailers to order directly from thousands of brands through the New Order feature of the Lightspeed POS, giving our SMB customers the power of an advanced technology platform that was recently only available to enterprise customers, saving them several hours.

We launched lightspeed capital into France, the Netherlands, and Belgium, this quarter and Germany. Shortly after the quarter, expanding our global footprint, but it's high margin offerings.

For our customers in the U S. We launched Lightspeed, tableside compact portable and flexible and payments processing device for restaurants.

With Lightspeed Tableside service can instantly process orders and accept payments on an iPhone, reducing wait times, increasing table turnover and improving customer satisfaction.

And we also launched tap to pay on iPhone in both the UK and the Netherlands, allowing customers in those regions to accept payments right on their iPhone.

We introduced lightspeed retail and new order integration into the flagship retail offering, allowing our retailer customers to order directly from thousands of brand through the New York are aligned to be plentiful.

Given your SMB customers the power of an advanced technology platform that was recently only available to enterprise customers and saving them several hours per week.

Gus Papageorgiou: With Lightspeed Retail, we launched an offer to Atlantian, which will allow retailers to make even better decisions on what to stock, what to discount, and what to promote through new inventory and sales. Finally, on the topic of profitability. Again, we are committed to being adjusted at a downbreak even or better for fiscal 24 and believe we are well positioned to meet that. This will put us in a strong position of re-advancement next year, with greater or better adjusted equipment and growing competition. As I mentioned at the start of the call, we will balance the dual priorities of growth and profit, and our focus will be on... So we are focused on adjusted epitaph possibilities.

Within Lightspeed retail, we launched enhancements to advance insights, which will allow retailers to make even better decisions on what to stock what to discount and what to promote through new inventory and sales reports.

Finally on the topic of profitability again, we're committed to being adjusted EBITDA breakeven or better for fiscal 'twenty four it and believe we are well positioned to meet that goal.

This will put us in a strong position as we advance into next year with breakeven or better adjusted EBITDA and growing top line as.

As I mentioned at the start of the call, we will balance the dual priorities of growth and profitability and our focus will be on growth.

So we're focused on adjusted EBITDA profitability.

Gus Papageorgiou: As RTPE continues to grow, some of the incremental profits will be channeled towards expanding our event, Our Feet on the Street. We expect that the unit economics from Outbound will be better, as you sell people who are more efficient at targeting high... I believe expanding our bounds can improve our growth rate. However, I want to highlight that the investment year will precede the growth rate. It takes time to hire and train workers, and it generally takes 6-12 months for them to become HIV-prone. I will now turn Nicole over to Asha to take us through the courting results and provide answers.

<unk> continues to grow some of the incremental profits will be channeled towards expanding our outbound our feet on the street sales motion.

We expect that the unit economics, and outbound will be better as these salespeople are more efficient and targeting high GTD customers.

I believe expanding outbound can improve our growth rates. However, I want to highlight that the investment here will precede the growth. It takes time to hire and train salespeople and it generally takes six to 12 months for them to become highly productive.

I will now turn the call over to Asher to take us through the quarterly results and provide outlook.

Asaf Bakhshani: Lightspeed had another great quarter, with both revenue and adjusted EBITDA coming in ahead of our previously established output, and our unified payments efforts continuing to accelerate monetization of our trailing 12-month GTV of $90.2 billion. On today's call, I will provide a recap of the quarter to assess the progress of our unified team assessment, and then provide an outlook for the remainder of the year. We achieved positive audacity with them for the second quarter in a row, and our goal is to continue to generate positive audacity with them. In addition, we are pleased with the progress on our key performance indicators in the areas of revenue in both process roles remains strong. Our pools hit record highs, with 28% growth year-over-year.

Thanks J P.

<unk> had another great quarter with both revenue and adjusted EBITDA coming in ahead of our previously established outlook and our unified payments efforts continuing to accelerate monetization of our trailing 12 month GTD of 92 billion.

On today's call I will provide a recap of the quarter.

Speaker Change: First the progress of our unified payments efforts and then provide an outlook for the remainder of the year.

We achieved positive adjusted EBITDA in the second quarter in a row and our goal is to continue to generate positive adjusted EBITDA.

Speaker Change: In addition, we are pleased with the progress on our key performance indicators in the quarter.

Revenue and gross profit growth remains strong.

Our <unk> hit record highs this quarter with 28% growth year over year.

Asaf Bakhshani: KPG for 69. Thanks, in large part, to our unified team of monetising 29% of our GTD, our overall cash burn continues to decline. Excluding cash flow tied to our Merchant Cash Asset System, cash use in this quarter was under $5 million.

G. P. D grew 69% thanks in large part to our unified payments efforts monetizing 29% of our GTD.

Our overall cash burn continues to decline.

Excluding cash flow tied to a merchant cash advance business cash used in the quarter was under $5 million.

Asaf Bakhshani: On customer locations, we continue to shift our customer base toward higher-PPP customers. Although we are seeing positive initial traction with respect to this initiative, we are focused on accelerating this shift in fiscal 2025 through initiatives such as investments and outreach. In the quarter, revenue came in at $239.79, an increase of 27% year-over-year and ahead of our previously established outlook. Subscription revenue increased 9% year-over-year to $80.9 million.

And customer locations, we continue to shift our customer base towards high GTD customers.

Speaker Change: Although we are seeing positive initial traction with respect to this initiative. We are focused on accelerating this shift in fiscal 2025 through initiatives such as investments on our balance.

Speaker Change: In the quarter revenue came in at $239 7 million, an increase of 27% year over year and ahead of our previously established outlook.

Subscription revenue increased 9% year over year to $80 9 million.

Asaf Bakhshani: Gross margins on subscription revenue came in at $76,000 and increased from 73% in the same quarter last year. When removing the impact of a shared-based compensation account, Gross Margin on Subscription Revenue was $0.77, consistent with last quarter, thanks to a dedicated effort to consolidating cloud vendors and improved overall efficiency. I want to reiterate that for this entire fiscal year, the vast majority of our account management team, which is usually focused on upselling our customers on software, has been temporarily assigned the job of on-boarding new payment systems. Our account management team historically accounts for approximately half of our new subscription revenue in any given quarter. This quarter, our account managers continue to focus on Unified Payments, with teams from North America, EMEA, and APOM all working on this initiative.

Margins on subscription revenue came in at 76% an increase from 73% in the same quarter last year.

When removing the impact of share based compensation expense gross margin on subscription revenue was 77% consistent with last quarter. Thanks to a dedicated effort to consolidate and cloud vendors and improve overall efficiencies.

Speaker Change: I want to reiterate that for this entire fiscal year.

Vast majority of our account management team, which is usually focused on upselling. Our customers on software has been temporarily assigned the job of Onboarding, new payments customers. Our account management team historically accounts for approximately half of our new subscription revenue in any given quarter.

This quarter, our account managers continue to focus on unified payments with teams from North America, EMEA and APAC all working on this initiatives.

Asaf Bakhshani: As we move into our fourth fiscal... Most of our North American teams will begin to return to upselling software as well as paper. We expect that by mid-Financial 2025, the majority of our account managers will return to their traditional roles of selling software modules to existing companies. And as a result, we expect software revenue growth to benefit in fiscal 2025. Transaction Vince Resnick, who's 38-years-old, for $147.8 million.

As we move into our fourth fiscal quarter most of our North American teams will begin to return to Upselling software as well as payments, we expect that by mid fiscal 2025.

40 of our account managers will return to their traditional roles are selling software modules to existing customers and as a result, we expect software revenue growth to benefit in fiscal 2025.

Transaction based revenue grew 38% to $147 8 million.

Asaf Bakhshani: In the quarter, we saw GPD increase 69% year-over-year to $6.6 billion as a greater portion of our GPD went through our Lightspeed Payments platform. We also saw strong growth in capital, with revenue more than doubling year-over-year. Referral fees continued to decline in the quarter as customers moved on to Lightspeed Payments.

In the quarter, we saw <unk> increased 69% year over year to $6 6 billion.

As a greater portion of our GTD went through our lightspeed payments part.

Speaker Change: We also saw strong growth in the capital business in the quarter with revenue more than doubling year over year.

Referral fees continued to decline in the quarter as customers moved onto lightspeed payments.

Asaf Bakhshani: Gross margins for transaction-based revenues came in at 30%, up from the previous order but down year-over-year, given declining referral fees as a proportion of the sales tax and partially offset by rising capital revenues. Lightspeed Payment's gross margin also improved, thanks to an increasing mix of revenue coming from international markets where gross margins are better. Total Adjusted Gross Margin, which excludes the impact of share-based compensation and related parenthood, came in at 43% compared to the previous quarter and down year over year.

Gross margins for transaction based revenue came in at 30% up from the previous quarter, but down year over year, given declining referral fees as a proportion of the sales mix and partially offset by rising capital revenue.

Lightspeed payments gross margin also improved thanks to an increasing mix of revenue coming from international markets, where gross margins are better.

Total adjusted gross margin, which excludes the impact of share based compensation and related payroll taxes came in at 43% flat to the previous quarter and down year over year.

Asaf Bakhshani: Adjusted gross project dollars came in at $103.2 million, an increase of 18% year-over-year. Adjusted EMSI in the quarter came in positive at 3.6 million adults. This is much improved from an adjusted EMSI loss of 5.4 million in the same quarter last year. This improvement is the result of our continued focus on crude expenses across our organization, including the efficiencies we identified and implemented through actions like our reorganization that was completed in our fourth fiscal quarter of last year. Total adjusted R&D, selling, and marketing, and G&A expenses were up 7% from the year before. Adjust your R&D expenses with Clark-Telazio.

Adjusted gross profit dollars came in at $103 2 million, an increase of 18% year over year.

Adjusted EBITDA in the quarter came in positive at $3 6 million.

Speaker Change: This is much improved from an adjusted EBITDA loss of $5 4 million in the same quarter last year.

This improvement is the result of our continued focus on prudent spend across our organization, including the efficiencies we identified and implemented through actions like our reorganization that was completed in our fourth fiscal quarter of last year.

Total adjusted R&D, selling and marketing and G&A expenses were up 7% from a year ago.

Adjusted R&D expenses were flat to last year.

Asaf Bakhshani: We increased investment in sales and marketing in order to capture more of our talent, although much of this is for outbound sales. Adjusted G&A costs were up largely due to increased operating expenses tied to the growth of our capital program. However, as a percentage of revenue and gross profit, total adjusted R&D, sales, and marketing, and G&A expenses declined year over year. We had an adjusted income of $11.8 million, versus an adjusted income of $0.4 million last year.

We increased investments in sales and marketing in order to capture more of our time.

Much of this is for outbound salespeople.

Speaker Change: Adjusted G&A costs were up largely due to increased operating expenses tied to the growth of our capital program.

As a percentage of revenue and gross profit total adjusted R&D sales and marketing and G&A expenses declined year over year.

We had an adjusted income of $11 8 million.

Versus an adjusted income of <unk> $4 million last year, thanks, largely to the improvement in the items driving our adjusted EBITDA performance and growing net interest income in the quarter, which increased by approximately $2 6 million from a year ago.

Asaf Bakhshani: Thanks largely to the improvement in the items driving our adjustment and growing net interest income in the quarter, which increased by approximately $2.6 million from the year before. We continue to actively manage our share-based compensation and related payroll taxes, which were $23.6 million, down from $34.5 million a year ago and approximately 10% of revenues, down from 18% in the same quarter last year. Overall GTV in the quarter came in at 23.1 billion, up 3% year-over-year. However, growing categories were partially offset by search and research, such as bike and home and garden, which declined year over year.

We continue to actively manage our share based compensation and related payroll taxes, which were $23 6 million down from $34 5 million a year ago, and approximately 10% of revenue down from 18% in the same quarter last year.

Speaker Change: Overall <unk> in the quarter came in at $23 1 billion up 3% year over year.

Growing categories were partially offset by certain retail categories, such as bike and home and garden that declined year over year.

Asaf Bakhshani: GCP growth was more modest this year, owing to a challenging macroenvironment and given management's attention was focused on Unified Pages. In fiscal 2025, however, increasing our high-GTV customer base and growing our GTV will be a major focus for both retail as well as hospitality, as you heard from JP. The good news is that GCE for my flashes is up 29%!

Speaker Change: CTV growth was more modest this year, owing to a challenging macro environment and given management's attention was focused on unified payments.

In fiscal 2025, however, increasing our high GTD customer base and growing our GTD will be a major focus for both retail as well as hospitality as you heard from J P.

Speaker Change: The good news is that GTD from our flagships is up 29% demonstrating that for our target customers and with our flagship products. We are seeing good success.

Asaf Bakhshani: demonstrating that for Atari customers and with our flagship products, we are seeing good success. This quarter, we also continue to grow our sophisticated, higher GTD customers. Customer allocations with GTV exceeding $1,500,000 a year both grew by 7% in the quarter, whereas those with GTV under $200,000 declined. As we focus on more complex, higher-ECU mergers, we expect the under $200,000 annual GCD cohort to continue to decline.

This quarter, we also continued to grow our sophisticated higher GTD customer base.

Customer locations with GTP exceeding $1 million and 500000, a year both grew by 7% in the quarter.

As those with GTD under 200000 declined.

As we focus on more complex higher GTD merchants, we expect to be under 200000 annual GTD cohorts to continue to decline.

Asaf Bakhshani: This current is Plan 4, and as a reminder, these customers represent only 5% of our overall... As we turn off these lower-value customers, we expect it will continue to impact our net loss. However, the overall health of our customers... We'll continue to improve. Total ARPU in the quarter came in at $447, up 28% year-over-year.

Speaker Change: This churn is planned for and as a reminder, these customers represent only 5% of our overall GTT.

As we turn off these lower value customers. We expect it will continue to impact our net location growth. However, the overall health of our customer base will continue to improve.

Speaker Change: Total <unk> in the quarter came in at $447 up 28% year over year.

Asaf Bakhshani: Unified Payments is helping increase overall... as we mandate payments for all eligible new and existing customers, and we are seeing healthy growth in software articles as well. Churn rates in the quarter are still below the levels we had anticipated for unified, And the vast majority of our overall customer churn is in the cohort of customers processing under 200,000 in annual GTV. We had prepared for churn to increase as we rolled out Unified, and Yes, it is encouraging to see that the majority of our customers recognize the benefits of an integrated software payment solution and the value of the Lightspeed Commerce platform. In terms of our balance sheet, Lightspeed closed the quarter with just under $750 million in cash and cash equivalents, down slightly from approximately $761 million in the previous. Merchant Cash Advances used $8.3 million of capital during the If we exclude the growing capital business, overall cash burn in the quarter was just under $5 million, down from under $10 million last year.

Unified payments is helping increase overall ARPA as.

As we mandate payments for all eligible new and existing customers and we are seeing healthy growth in software as well.

Churn rates in the quarter are still below the levels, we had anticipated for unified payments and the vast majority of our overall customer churn is in the cohort of customers processing under 200000 in annual G television.

We had prepared for churn to increase as we rolled out unified payments yet it is encouraging to see that the majority of our customers recognize the benefits of an integrated software payment solution and the value of the license ecommerce platform.

Speaker Change: In terms of our balance sheet slightly closed the quarter with just under $750 million in cash and cash equivalents down slightly from approximately $761 million in the previous quarter.

Merchant cash advances used $8 3 million of capital during the quarter.

If we exclude the growing capital business overall cash burn in the quarter was just under $5 million down from under $10 million last quarter.

Asaf Bakhshani: Turning now to our unified team, at this stage, I believe that Unified Payments has been a success, and we are on track to end the year with GPE between 30 to 35% of GTE. Although we are happy with how Unified Payments has progressed, we will continue to focus on monetizing more of our GCD through our payments offering in the next. I am very proud of everyone involved in Unified Payments. It has been a significant initiative for Lightspeed, and our employees continue to exist. It demonstrates how effectively this organization can achieve its goals once we've set our minds to it. Now, our 12. In the quarter ahead, most of our payments efforts will be focused on international markets, which, as expected, are taking longer than North America to convert. It is also worth noting that fiscal Q4 is our seasonally slowest quarter from a GCD perspective.

Turning now to our unified payments efforts.

At this stage I believe that unified payments has been a success and we are on track to end the year with G. P. D between 30% to 35% of G. T D.

Speaker Change: Although we are happy with our unified payments is progress we will continue to focus on monetizing more of Archie television through our payments offering in the next year.

I am very proud of everyone involved in unified payments. It has been a significant initiative for lightspeed and our employees continue to execute it demonstrates how effectively this organization can achieve its goals once we set our mind to it.

Now on to outlook.

In the quarter ahead, most of our payments efforts will be focused on international markets, which as expected are taking longer than north America to convert.

It is also worth noting that our fiscal Q4 is our seasonally slowest quarter from a GTD perspective.

Asaf Bakhshani: Given transaction-based revenue is over 60% of total revenue and highly dependent on GTV growth, we remain conservative on our GTV growth assumptions given a still-subdued map, and we have not seen any signs of improvement in the first month of the calendar year. We're increasing the lower ends of our out, and Narwen LaRue, to total revenues of between $895,000 and $905,000,000, with breaking even or better at just $80,000. With that, I will pass the call back to JPMorgan. Thanks, Asha. At this stage, I'm highly confident that we will accomplish the goals we set ourselves at the beginning of the year, and particularly in the area of unified payment. Our attention is now turning to Nick.

Given transaction based revenue is over 60% of total revenue and highly dependent on GDP growth. We remain conservative on our DTC growth assumption given are still subdued macro and we have not seen any signs of improvement in the first month of the calendar year.

For the full year of fiscal 2024.

We are increasing the lower end of our outlook and narrowing the range to total revenues of between 895 and $905 million with breakeven or better adjusted EBITDA.

With that I will pass the call back to J P.

J P: Thanks Asher.

At this stage I'm highly confident that we will accomplish the goals we set ourselves at the beginning of the year and particularly in the area of unified payments and profitability.

Gus Papageorgiou: As I stand back and look at our prospects, a few things stand out. One, our population is very large, numbering in the millions, and we maintain only a few hundred thousand. 2. Our products are in 3D printing, especially for the more complex ITTD components. 3, Our global reach for complex retailers and restaurateurs is unmatched. And four, our scale allows us to invest in our business without sacrificing profit. It is very clear to me and the senior management team that the metrics we must focus on in Fiscal 25 are GCV growth and increasing the number of high-GCV loans. We will approach this challenge with the same level of commitment and execution as with Unified Payments, and I am confident that we will deliver a similar level of success.

Stand back and look at our prospects a few things stand out for me one our Tam is very large numbering in the millions and we maintain only a few hundred thousand customer locations.

Our products are industry, leading especially for the more complex high GTD customers.

Three are.

Our global reach for complex retailers and restaurant tours is unmatched and for our scale allows us to invest in our business without sacrificing profitability.

It is very clear to myself and the senior management team that the metrics, we must focus on in fiscal 'twenty, five or G TV growth and increasing the number of hydrogen relocations.

We will approach this challenge with the same level of commitment and execution as we've unified payments and I am confident that we will deliver similar levels of success.

Gus Papageorgiou: With that, I will turn it over to the operator to take your questions. Thank you. As a reminder, if you would like to ask a question, please press star followed by the number one on your telephone keypad. We also ask that you limit yourself to one question and one follow-up. For any additional questions, please reach out. Your first question comes from the line of Dan Perlin from RBC. Please go ahead. Thanks, good morning.

With that I will turn it over to the operator to take your questions.

Speaker Change: Thank you as a reminder, if you would like to ask a question. Please press star followed by the number one on your telephone keypad.

Also ask that you limit yourself to one question and one follow up and for any additional questions. Please re queue.

First question comes from the line of Dan Perlin from RBC. Please go ahead.

Dan Perlin: I wanted to spend a second stacking on Unified Payments for a second. You know, you've mentioned several times, and I know you have in prior quarters, that the international market needs a lot more education. It's going to be slower to adopt. I guess I have two questions there. One is, does the pace of payment adoption in the international market in any way, shape, or form act as a gating? kind of mechanism to slow your software growth?

Thanks, Good morning, I wanted to spend a second just back on on unified payments for a second.

Dan Perlin: You've mentioned several times and as you have in prior quarters that the international market needs a lot more education has been slower to adopt.

Dan Perlin: I guess the two questions there one is.

Does the pace of payment adoption in the international market in any way shape or form active the gating kind of mechanism to slow your software growth or where you're willing to sell software first and then come back and get payments later, so that's kind of first question here.

Gus Papageorgiou: Or were you willing to sell software first and then come back and get payments later? So that's kind of the first question. Yeah, so good morning. I'll take this one.

Yes, so good morning, I'll take this one I think when we think about our unified payments in Europe. There are two sequences the first sequence with new customers.

Gus Papageorgiou: I think when we think about unified payments in Europe, there are two sequences. The first sequence is new customers. So, new customers are buying our software. And on that front, you know, we bundle both. So, you know, you could not buy software without payments.

So new customers buying our software on on that front.

We bundled both so you could not buy software without payments.

Gus Papageorgiou: And on that front, we're seeing close rates that are strong, and adoption that's strong. So there's a – I think that's the first good news is that we are seeing on the new customer front that they are buying payments. And the second big block here is existing customers and upselling existing customers to payments. And here, as you know, we have planned for a slower adoption because it's simply put more conservative markets. So, but again, I just want to point out one data point here that's very interesting is planned floor growth, but still, at Lightspeed, it's up about 250% year-over-year when you look at European GDP. So there is strong adoption, and it is very much in line with what we had planned. Okay, you know, that's super helpful to kind of, I guess, bifurcate those two pieces into it.

And on that front, we're seeing close rates that are strong adoption that strong. So there is I think that's the first good news is we are seeing on the new customer front.

We are buying payments and then the second big block here is existing customers and upselling existing customers to payments.

And here as you know we have planned for a slower adoption because it's just simply puts more conservative market. So, but again I just want to point out one data point here, that's very interesting is.

Planned slower growth, but still.

I'd like to beat its up about 250% year over year. When you look at our European GPP. So there is strong adoption.

Dan Perlin: And it is very much in line with what we have planned.

Okay, that's super helpful.

Bifurcate those two pieces to it the second just a quick follow up question is is the idea around expanding outbound sales to go after higher GTD locations and it sounded like.

Dan Perlin: The second, just a quick follow-up question is, is the idea around expanding outbound sales to go after higher GTD locations? And it sounded like... with pretty clear investments and outpaced revenue growth. And so the question I have there is, I know you're not giving guidance for 25, but is there a risk, or maybe not a risk, is there just a cadence that we should be mindful of that either DA could be negative in the first half and maybe in the back get expounded, and then it re-accelerates material in the back half, or should we be expecting more of a positive cadence throughout the next year Thanks, Dana; I'll take that.

It was pretty clear investments are going to outpace revenue growth and so the question I have there is there I know youre not giving guidance for 'twenty five but is there.

Is it a risk.

And maybe not a risk because they're just.

Dan Perlin: Our cadence that we should be mindful of that EBITDA.

It could be negative in the first half and maybe as that gets expanded and then it reaccelerate materially in the back half where should we be expecting more kind of a positive cadence throughout next year. Thank you.

Thanks, Dan I'll take that you're absolutely right. You know, we we did talk about outbound we are planning to make some significant investment in our field outbound.

Gus Papageorgiou: You're absolutely right. You know, we did talk about outbound. We are planning to make some significant investments in our field outbound. You know, we found because we have field reps today that the unit economics on a field, the customers that they find are much better because they're much more efficient in going after our ideal customer profile. So, you know, while we do expect that the investment will precede revenue growth, we're very confident that, you know, we're still going to be adjusting EBITDA, generating adjusted EBITDA profitability next year. And, you know, we do expect to pivot a little bit more towards growth and profitability, as you heard from our prepared remarks, but still very confident that we'll be generating EBITDA margins next year. That's great. Thank you so much. Your next question comes from the line of Andrew Bausch from Wells Fargo Securities. Please go ahead. Andrew, your line is open. Sorry about that.

We found because we have field reps today and found that the unit economics on a field the field drops customer that they signed are much better because they're much more efficient and going after our ideal customer profile.

So you know while we do expect that the investment will precede revenue growth. We're very confident that you know we're still gonna be adjusted EBITDA generating adjusted EBITDA profitability next year and you know, we do expect to pivot a little bit more towards growth and profitability as you heard from our prepared remarks.

But still very confident that we'll be generating EBITDA margins next year.

That's great. Thank you so much.

Dan Perlin: Okay.

Your next question comes from the line of Andrew <unk> from Wells Fargo Securities. Please go ahead.

Okay.

Andrew Your line is open.

Andrew Bausch: Thanks for taking the question. I just wanted to dig into the GTV trend. In the quarter and what you've seen thus far in the first couple of months here, and I know you've called out some weakness relative to macro, but maybe I could clarify your comments, Asha. I think you said that the trends haven't improved this quarter. Does that mean that there's further deterioration you've seen? But any additional color there would be helpful.

Sorry about that thanks for taking the question.

Just wanted to dig into the G TV trends in.

In the quarter and what you've seen thus far off in the first couple of months here and I know you called out some weakness relative to macro.

But maybe if I could clarify your comments Akshay I think you said that.

The trends haven't improved into the into this quarter does that mean that there is further deterioration that you've seen but any additional color there would be would be helpful.

Andrew Bausch: Yeah, absolutely. Thanks for the question, Andrew. GTV was really a mixed bag.

Akshay: Yeah, absolutely. Thanks for the question Andrew.

So <unk> was really a mixed bag I'll talk about the performance in Q3, and then I'll talk about January in a minute.

Asaf Bakhshani: I'll talk about the performance in Q3 and then I'll talk about January in a minute. The overall GTV, as you heard from us, was up 3%, and that was largely driven by the macro in retail North America. Even though the holiday season was better than we had forecasted for last year, it was still year-over-year growth was lower than we've seen historically at Lightspeed for the busy holiday season.

Overall GTA V. As you heard from US was up 3% and that was largely driven by the macro and retail North America, even though the holiday season was better than we had forecasted.

Akshay: You know for last year. It was still year over year growth was lower than we've seen historically at lightspeed for for the busy holiday season, we did have strong GTD growth all across Europe, and we had double digit DTC growth in APAC hospitality as well, but that again was muted by the declines we saw in several retail vertical.

Asaf Bakhshani: We did have strong GTV growth all across Europe, and we had double-digit GTV growth in APAC hospitality as well, but that again was muted by the declines we saw in several retail verticals, such as bike and home, in North America. In January, we actually saw similar levels in the retail side, but we saw, you know, larger declines when it comes to our US hospitality portfolio. I don't think that's a Lightspeed specific stat, but, you know, at Lightspeed, we did see US hospitality declines year-over-year. And so, you know, when all that is said and done, and we look forward to our Q4 guide, we want to remain prudent and conservative to make sure that we put out a commitment that we're confident that we can meet. Yeah, I'm sure the weather probably had something to do with that.

Such as bike and home in North America in January we actually saw similar levels in the retail side, but we saw you know.

Larger declines when it comes to our U S hospitality portfolio I don't think that's a lightspeed specific stat, but you know at Lightspeed, we did see in U S hospitality declines year over year and so you know when we when we when all told we put that together and we look towards forward to our Q4 guide we want to remain.

Akshay: And prudent and conservative to make sure that we put out a commitment that we're confident that we can meet.

Yeah, and I am sure that weather, probably had something to do with that.

Asaf Bakhshani: Yes, our hospitality North American portfolio remained very much impacted by the weather in January. I guess my follow-up question is, you know, the disclosure that you guys give around the customer locations by GCD Peer, you know, isolating the smaller merchants, the sub-200,000. Remind me, have we gotten that data point on a percentage of volume of overall GPV? Meaning, and if we have one, can you remind us what it was and if it's changed over the last year?

Yes, and in our retail North America, sorry, our hospitality in North American portfolio.

<unk> remained you know it.

Got it I guess my follow up is.

The disclosure that you guys gave around the customer locations by Gtt's tier.

Akshay: Isolating the the smaller merchants the sub 200000.

Speaker Change: Remind me if we gotten that data point on a percentage of volume of overall GTD, meaning if we have if you remind us what that was and if it's changed over the last year or so.

Asaf Bakhshani: Yeah, absolutely. The under 200k annual GTV customer cohorts represent about 5% of the overall company GTV. And that, you know, it hovers between 5% and 4%, it goes down to 4%, but it's always in that range. So again, from a customer location standpoint, it's a larger percent for sure, about 30%. But overall, you know, it represents 5% of our GTV. And as you've heard from us, this is a cohort of customers that we expect will turn over time. They don't represent a large monetization opportunity for us.

Yeah, absolutely the the under 200 K, a annual GTD customer cohorts represent about 5% of the overall company G television and and that you know it hovers between 5% and it goes down to 4%, but it's always in that range.

Speaker Change: So again from a customer location standpoint.

It's a larger percent for sure about 30%, but overall you know it represents 5% of our GTD end and as you've heard from US. This is a cohort of customers that we expect will turn over time. They don't represent a large monetization opportunity for us. So these are again customers that we acquired through.

Asaf Bakhshani: So these are, again, customers that we acquired through the nine acquisitions that we did over the past few years. It's good to hear that if they do churn, it's not a major GCD headwind. All right, I'll jump back in with you.

Through the nine acquisitions that we did over the past few years.

Speaker Change: Yeah, that's good to hear that if they do churn.

A major GTD headwinds all right I'll jump back in the queue. Thank you.

Andrew Jeffrey: Thank you. Your next question comes from the line of Andrew Jeffrey from Truist Security. Please go ahead. I, uh, good morning.

Your next question comes from the line of Andrew Jeffrey from <unk> Securities. Please go ahead.

Andrew Jeffrey: Appreciate you taking the question. I just, I want to try to dimensionize long-term or just reconfirm maybe... Do you think that GPV can be a 50% attach? Is that still a reasonable long-term goal? What would the timing be for achieving that? And what does the geomix look like?

Andrew Jeffrey: Hi, Good morning, I appreciate you taking the questions.

Andrew Jeffrey: I, just I want to try to Dimensionalize long term or just reconfirm maybe.

<unk> payments aspirations.

J P. Do you think that the GTD can be a 50% attach is that still a reasonable long term goal what would be the timing for achieving that and whats. The geo mix look like maybe you could help us by talking about where GPP attaches in North America versus Europe today, and where you think that could go.

Gus Papageorgiou: Maybe you could help us by talking about where GPV is installed in North America versus Europe today and where you think that could be. Yeah, absolutely, you know, as we always said, our next step and our ambition is to get to 50%. As we said, this year we'll get from 30 to 35, and we're fairly confident we'll get that number. And what we said is that the following year we'd go between 40 and 45.

Yes, so absolutely.

As we always said our next step in our ambition is to get to 50% as.

Gus Papageorgiou: So we are very much on track for that, and we believe that there's nothing stopping us. And even going back to the question we had about Europe earlier on, we had planned for a slower adoption in Europe, but adoption is happening. And just when you look at the attached rates on new customers, you know, almost 100, you know, get very close to 100%, that just over time, when you look at the churn and how it works, will bring us to 50%. So there's no doubt in our minds.

As we said this year, we'll get to 30 from 30 to 35, and we're fairly fairly confident we're going to get that number and what we said is the following year would go between 40 and 45. So we are very much.

On track for that and we believe that there is no there's nothing stopping us and even going back to the question. We had on Europe earlier on we have planned for a slower adoption in Europe, but the adoption is happening and just when you look at the attach rates on new customers, which is almost a 110 or get very close to 100% that just over time when you look at the churn and how it works well.

Gus Papageorgiou: I think maybe just answering the second question: of course, we're way more advanced than the U.S. We started unified payments before. I think it's a, you know, less conservative market. And now we are actually working hard at Lightspeed to actually, you know, unleash all the verticals that we couldn't unleash before, you know, because of high risk. And so we're really working hard now at expanding the TAM in the U.S. so we can continue having very strong penetration. Okay, that's helpful. Thank you.

Bringing us to 50% so there's no doubt in our mind I think maybe just answering the second question of course, we're way more advanced than the U S. We started unified payments before.

Andrew Jeffrey: I think it is.

Andrew Jeffrey: Less conservative market.

Andrew Jeffrey: And they are now we are actually working hard at lightspeed to actually unlock.

Lease all the verticals that we couldn't unleash.

Like high risk and so we're really working hard now with expanding the Tam in the U S. So we can continue having very strong penetration.

Okay. That's helpful. Thank you and then and then and I appreciate the emphasis on.

Gus Papageorgiou: And then, and I appreciate the emphasis on revenue growth, especially given your size and the TAM, and also the outbound sales efforts. But, you know, and again, I recognize you're not guiding 25, but as you think out over the next couple quarters. Did we expect kind of a hockey stick at some point in software revenue growth? Because pre the subscription revenues, pre your unified payments efforts, you were growing really fast. So I wonder if you could just maybe qualitatively talk about whether or not we see a real kind of hockey stick, www.lightspeedpos.com, to point them in the right direction.

On revenue growth, especially given your size and the Tam and also the outbound sales efforts, but and again I recognize you're not guiding 25, but as we think out over the next several quarters.

Andrew Jeffrey: Should we expect kind of a hockey stick at some point in software revenue growth because pre the subscription revenue of this pre your unified payments efforts, you're growing really fast. So I wonder if you could just maybe qualitatively talk about whether or not we see a real kind of hockey stick tight.

The inflection in your subscription revenue growth when you get.

Sort of pointed in right direction.

Gus Papageorgiou: Yeah, so again, just setting the table here is that we said that this year we would focus on unified payments. And so when we say that, that means that all the account managers that traditionally are upselling customers on software, that are traditionally expanding the capabilities of our customers with software, they have been almost 100% focused just on selling payments. So that's why what happened this year is penetration rates on payments went up, revenue on payments, you know, as I said, even in Europe, up 250% year over year. But that means that software growth is not as strong as it would traditionally be because people are just focusing on software, sorry, payments. As we exit this year and we start now, especially in North America, because it's, you know, getting close to the job done, we are now going to have our account managers who are going to go back into, hey, here are all the modules in software that our customers are not using and expanding that.

Yes, so again just.

Andrew Jeffrey: Just setting setting the table here is we said that this year, we would focus on unified payments and so when we say that that means that all the account manager that traditionally or upselling customers on software that are traditionally expanding the capabilities of our customers with software they have been almost 100% focused just on selling payments.

Andrew Jeffrey: So that's why what happened this year penetration rates on payments went up revenue on payments.

As I said, even in Europe up 250% year over year.

Andrew Jeffrey: But that means that the the software growth is not as strong as they would traditionally be because people are just focusing on software on sorry on payments as we exit this year and we start now, especially in North America because it's.

Andrew Jeffrey: Getting close to job done we are now going to have our account managers that are going to go back into hey here all the modules and software that our customers are not using and expanding that and I think maybe the last piece that I think is very interesting as lightspeed capital, where we are with.

Gus Papageorgiou: And I think maybe the last piece that I think is very interesting is Lightspeed Capital, where we are, which commands a very strong growth margin. That's also going to be kind of one of the focus points for next year. So there is, what you will see is as we go into next year, you'll start seeing software growth go up again and go back to historical levels. I appreciate that. Your next question comes from the line of Thanos Moskopoulos from BMO Capital Markets. Please go ahead. Hi, good morning.

Andrew Jeffrey: Command is a very strong gross margin. That's also going to be kind of one of the focus points for next year. So there is a what you will see is as we go into next year, you'll start seeing software growth go up again and go back to historical levels.

Speaker Change: Great I appreciate that thank you.

Speaker Change: Your next question comes from the line of San OS Ms Coppola from BMO capital markets. Please go ahead.

Thanos Moskopoulos: Can you provide some color on your current experience in Europe as you're ramping up unified payment? Is that consistent with what you've seen in North America or any regional nuances there? Yeah, I mean, churn has been consistent, so it's under what we expected, and we haven't seen much movement in churn, you know, from after unified payments versus before. And the same thing is happening in Europe.

Speaker Change: Hi, good morning.

Speaker Change: Can you provide some color on your churn experienced in Europe, as you're ramping up unified payments is that consistent with what you've seen in North America or at any regional nuances there.

Speaker Change: Yeah, I mean churn has been consistent so it's under what we expected and we haven't seen much movement in churn.

Speaker Change: From after unified payments versus before and the same same thing is happening in Europe, we are.

Gus Papageorgiou: We are, you know, again, at the end. We want to keep the customers, so we are going to sequence them to ensure that we use as few customers as possible. And I think maybe just going back to one of the comments Ash had said, where we're seeing more emotional decisions in the low GMB bucket, and those are the ones that, you know, could potentially share, but they're not really important to us, given that it's only 5% of our GMV. So, we are not seeing any movement, not seeing any changes, and we are actually kind of putting the motion in place to ensure that we don't lose our good customers. Great

Speaker Change: That'd be able to keep up with the customers. So we are going to sequence. It to ensure that we lose a few customers as possible and I think maybe just going back to one of the comments Asher said.

Speaker Change: Where we're seeing a more emotional decision isn't this in the low <unk> bucket and those are the ones that you know.

Speaker Change: Could potentially churn, but they're not really important to us given that it's only 5% of our <unk>.

Speaker Change: So not seeing any movement and not seeing any changes and we are actually kind of putting the motion in place to ensure that we don't lose our good customers.

Thanos Moskopoulos: And then on the supplier network, can you update us on which verticals you now have critical mass in and for which it's proving to be a strong differentiator? I mean, clearly, I would assume that's the case for bikes and for high-end apparel, but are some of the other verticals ramping up in that regard? Yeah, we, you're right, apparel and bikes, you know, the strong ones, we're now going out to sport and outdoors, but I think for me, again, it's... Just if you look at the number of customers at retail, the largest segment for Lightspeed at retail is apparel. So we're actually working really hard to make that experience even better for all the customers in apparel. As you know, we hired John Shapiro, who came from Wayfair, who's now really focused on driving a better experience for our customers. And then, as you know, we historically have bikes, but now we're expanding, and the next one is outdoors and sports. Proud of F1, thank you.

Speaker Change: Great and then on the supplier network.

Speaker Change: Can you update us on which verticals, we now have critical mass and for which it is proving to be a strong differentiator I mean, so clearly.

Speaker Change: I would assume application for bikes and for high end apparel, but are some of the other verticals.

Speaker Change: <unk> up in that regard.

Speaker Change: Yes, we are.

Speaker Change: Youre right apparel and bikes the strong ones, we now going out to support an outdoors.

Speaker Change: But I think for me again.

Speaker Change: So just if you look at the number of customers on retail that the largest segment for lightspeed in retail is apparel.

Speaker Change: So we're actually working really hard to make that experience even better for all the customers in apparel as you know we hired John Shapiro, who came from wafer who is now really focused on driving.

Speaker Change: A better experience for our customers so.

Speaker Change: And then as you know, we historically had bikes, but now we're expanding in our next next one is outdoors and sports.

Speaker Change: Great Best of luck. Thanks.

Josh Barrow: Your next question comes from the line of Josh Barrow from Morgan Stanley. Please go ahead. Great, thank you, and congrats on hitting the high 20s, payments attached, setting up for $30, $35 next quarter. Questions on subscriptions, the prior three quarters we saw really nice sequential subscription growth, and this quarter was pretty much flat, very slightly down. I'm just wondering if there's any commentary around that change in trajectory this quarter. Hey, Doc. Thanks for your question.

Speaker Change: Your next question comes from the line of Josh Baer from Morgan Stanley. Please go ahead.

Speaker Change: Yeah.

Josh Baer: Great. Thank you and congrats on hitting the high Twenty's.

Josh Baer: Payments attach setting up for $30 35 next quarter.

Josh Baer: Question is on subscription.

Josh Baer: They were the prior three quarters, we saw really nice sequential subscription growth and this quarter it was pretty much flat slightly down.

Josh Baer: Wondering if there's any commentary for around that change in trajectory this quarter.

Speaker Change: Hey, Josh Thanks for your question.

Asaf Bakhshani: The subscription revenue, you know, being flat to last quarter is very much again driven by the account management team and the unified payments motion. You know, as you've heard from us, Europe and ATAC were in the third quarter at the peak of the unified payments launch. We launched Europe and ATAC at the end of the summer in early Q3.

Speaker Change: <unk> subscription revenue being flat to last quarter is very much again, driven by the account management team and the unified payments motion.

Speaker Change: <unk>.

Speaker Change: As you've heard from Us Europe, and APAC, where in the third quarter at the peak of.

Speaker Change: The unified payments launch because we launched Europe and APAC are at the end of the summer and early Q3, and so you know.

Asaf Bakhshani: And so, you know, in that quarter, more than in previous quarters, we had the international account management teams now also fully focused on unified payments. And that's really all you're seeing in the quarterly flatness in subscription revenue. As JP mentioned, you know, with the unified payments launch behind us at the end of this fiscal year, we do expect our account management teams, for the most part, to go back to selling software, with all of them going back to selling software by mid-fiscal 25. And we're absolutely expecting subscription revenue to accelerate. Okay, got it. So even in like North America, retail where The Unified Payments Strategy, I guess, for a while, they're still focused on unified payments. Yes, it's a loose number at this point in time.

Speaker Change: That quarter more than in previous quarters, We had the international account management teams now also fully focused on unified payments and that's really all you're seeing in the quarter to quarter flatness in subscription revenue as JP mentioned.

Speaker Change: Unified payments launched behind us at the end of this fiscal year.

Speaker Change: Okay got it so even in North America retail were.

Speaker Change: Yes.

Speaker Change: Payments the.

Speaker Change: Unified payments strategy I guess for a while they are still focused on unified payments versus.

Speaker Change: Yes.

Josh Barrow: Yes, absolutely. Because Unified Payments launched in North America in May. But we launched in May in retail, and then we launched a bit later in hospitality. And as you heard from us on our last call, depending on the size of the customer, we're giving some customers two, three, four, four months to get live and transactional. And so the account management team in North America is still, in large part, focused on Unified Payments, and that's what you're seeing impacting software revenue. Okay, perfect.

Speaker Change: At this point in time.

Speaker Change: Yes, absolutely because unified payments launched in North America in May.

Speaker Change: But we launched in May and retail and then we launched a bit later in hospitality and as you heard from us on our last call depending on the size of the customer we're giving some customers 234.

Speaker Change: Four months to get live in transactional and so the account management team in North America are still in large part focused on unified payments and Thats, what youre seeing impacting software revenue.

Josh Barrow: And then, the small customers, only 5% of GTV. I'm just wondering what percent of the software subscription does that cohort represent? That's not something that we have disclosed, but what we have said in the past is, at the end of the day, GTV for us represents the monetization opportunity that we get from these customers. And so I think, you know, 5% of GTV, although that's not representative of the overall revenue, it is representative of the potential of this cohort of customers. Maybe I'll just add that, you know, the smaller customers have, you know, normally one terminal instead of 3, 4, 5, they have fewer users. So, you know, even on the softer front, the subscription is much lower with the smaller customers than it is with the larger ones. That's great!

Speaker Change: Okay, perfect and then the small customers.

Speaker Change: Only 5% of G TV.

Speaker Change: Just wondering what percent of the software subscription does that cohort represents.

Speaker Change: Thank you.

Speaker Change: Thanks, Josh that's not something that we have disclosed but you know what we have said in the past is at the end of the day GTA V for US represents the monetization opportunity ultimately that we get from these customers and so I think 5% of the GTD, Although that's not representative of the overall <unk>.

Speaker Change: Revenue. It is representative of the potential of this this cohort of customers.

Speaker Change: Maybe I'll just add that the smaller customers have.

Speaker Change: Normally one terminal instead of 345 fewer users so.

Speaker Change: Even on the software front subscription is much lower with the smaller customers than it is on the larger ones.

Speaker Change: Great that's helpful. Thanks.

Dominic Ball: That's helpful. Your next question comes from the line of Dominic Ball from Redburn. Please go ahead. Oh, hello guys, hello Asha, Gus, and JP.

Speaker Change: Your next question comes from the line of Dominic Ball from Redburn. Please go ahead.

Dominic Ball: Hello, John Hello, I'll show, Josh J P.

Gus Papageorgiou: On software ARPUs, obviously, the higher the better makes your merchants a lot more sticky. What sort of level can we expect as you transition merchants more onto the flagship products? Any numbers that you can help us with, especially as you onboard much larger merchants as well? Thank you.

Dominic Ball: On software all so obviously the hard Bucksaw makes you a merchants a lot more sticky what sort of level can we expect as you transition much more onto the flagship products any numbers.

Dominic Ball: But if you'd help us with especially as you onboard much larger merchants as well. Thank you.

Speaker Change: Yes, maybe I'll start I mean of course, the larger merchants have a much stronger are they buy more modules.

Dominic Ball: I mean, of course, the larger merchants are much stronger. They buy more modules. And really, when you look at it, there's a lot of green fields.

Speaker Change: And really when you look at it.

Gus Papageorgiou: There's a ton of room for growth inside our customer base. I don't know, Ashley, if you want to comment on this, or... Yeah, we have been growing software. And that's really the result of the new modules that you know we've been building. But to answer your question very simply, there is a large opportunity for software to be free. So you can buy it back from what it is today. Let me tell you that that is the reality. We've got customers that you can pay us $400 plus for just software approval, and as we continue to innovate and build more software modules, there are lots of opportunities for growth. When I think about the flagships in particular, our pool uplifts can even be up to a tiny 30% when we're migrating customers from a legacy to a flagship, and so there's lots of uplift opportunities for us Just from migrating customers to the flagships and then on top of that are all the other software modules that we continue to build. That's great, that looks really good, thank you. And just one more quick one.

Speaker Change: Inside of our customer base I don't know if you want to comment on this or.

Dominic Ball: We have been growing software are.

Speaker Change: And that's really the result of <unk>.

Speaker Change: Software attach new modules that we've been building but.

Speaker Change: But to answer your question very simply there is a there's a large opportunity for soft towards the industry.

Speaker Change: Buybacks from where it is eight.

Speaker Change: We know that that is the reality, we've got customers that.

Speaker Change: Pay US 400 plots and just software are approved and as we continue to innovate and deals with more software module, there's lots of opportunity for growth when I think about the flagships in particular.

Speaker Change: Our pool uplift.

Speaker Change: And be up in the high.

Speaker Change: 30% when we're migrating customers from our legacy Intuit flagship and so there's lots of uplift opportunity for us to just for migraine.

Speaker Change: And then on top of that is all the other software modules that we concluded.

Speaker Change: Okay.

Speaker Change: That's great. That's very good. Thank you and just one more quick one is there any difference you see in so far approved between your retail merchants on your hospitality motions.

Tianxing Huang: Is there any difference you see in the software approved between your retail merchants and your hospitality? Today, because we have several products in our portfolio, there's quite a difference depending on how many modules each of these products has to offer, but when we think about our flagship product, the ARB Plus, it is quite significant for retail and hospitality. Cool. Thanks, guys. Your next question comes from the line of Tianxing Huang from JPMorgan. Please go ahead.

Speaker Change: Today, because we have several products in our portfolio others quite quite a different depending on pumping.

Speaker Change: Alright.

Speaker Change: Sure.

Speaker Change: When we think about our flagship product.

Speaker Change: It's quite significant retail and hospitality.

Speaker Change: Thanks, guys.

Speaker Change: Your next question comes from the line of Tien Tsing Huang from Jpmorgan. Please go ahead.

Tianxing Huang: The question here, I just wanted to ask on the gross margin outlook. I should maybe get some help on the outlook there, given some of the puts and takes. Some of the transaction-based gross margins have been on the decline given the lower referral fees. Should we see that stabilize with the focus shifting back towards growing GDP and locations ahead? Hey, Timzin, thanks for the question.

Speaker Change: Thanks for the.

Speaker Change: The question here just wanted to ask on the gross margin outlook. So maybe you can get some help on.

Speaker Change: On the outlook there given some of the puts and takes on a transaction basis gross margins have been on the decline given the lower referral fees should we see that stabilize with the focus shifting back towards growing GDP and locations ahead.

Asaf Bakhshani: Yes, absolutely. We expect, and you know you've heard this from us before, that overall gross margins will remain in the 40-plus percent range, despite transaction-based revenue, or payments revenue, in particular, becoming a bigger and bigger part of the revenue portfolio. And, you know, there are a couple of competing forces in there. First, on the negative side, there's a decline in residuals that come in at 100 percent margin. But on the flip side, what we have is increasing international payments penetration, and even though international take rates are lower than North American, gross margins are higher.

Speaker Change: Hey, Tien tsin. Thanks for the question, Yes, absolutely we expect and you know you've heard this from US before that overall gross margin will remain in the 40 plus percent range. Despite transaction based revenue our payments revenue in particular, becoming a bigger and bigger part of the revenue portfolio and there are a couple of.

Speaker Change: Competing forces in there first as you know on the negative side, there's the declining residuals that come in at a 100% margin, but on the flip side, what we what we have is increasing international payments penetration than even though international take rates are lower than north American gross margins are higher they are about 36%.

Asaf Bakhshani: They're about 36 percent, and that's what we're seeing, you know, in the gross margins from APAC and Europe. So, as we increase international penetration, we expect payments gross margins to improve. And last but not least is the growth of our capital business. Our capital business has, you know, grown, it's doubled from over a year ago, and we expect that trajectory to continue. And capital revenue comes in at a 95 percent gross margin. And so, all told, we expect transaction-based gross margins to, you know, pretty stabilize. So, the declining residuals will be offset, more than offset, by increasing capital revenue and better margins internationally. And what that means is that overall margin should remain over 40 percent. www.lightspeedpos.com. You may be being a little more specific on the type of locations, whether it's the geography or the vertical. Thank you.

Speaker Change: What we're seeing.

Speaker Change: And the gross margins from APAC and Europe. So as we increase international penetration, we expect payments gross margin to improve and then last but not least is the growth of our capital business. Our capital business has you know.

Speaker Change: It's growing it's doubled for over a year ago, and we expect that trajectory to continue.

Speaker Change: And capital revenue comes in at a 95% gross margin and so all told we expect transaction based gross margin too.

Speaker Change: <unk> stabilized the declining residuals will be offset more than offset by increase in capital revenue and better margins internationally and what that means is that overall margin should remain over 40%.

Speaker Change: Perfect. That's what I was looking for and just my quick follow up just with the focus again back on on GDP growth and high GDP unit growth.

Speaker Change: Can you maybe being a little more specific on the.

Speaker Change: Type of locations, whether it be geography, or the or the vertical.

Asaf Bakhshani: So, you know, from a high-GTB growth perspective or customer perspective, our ideal customer at Lightspeed is retailers and restauranteurs that process half a million and more in annual GSTB. And, you know, those are complex merchants, complex retailers that need, you know, inventory management, kitchen display, ingredient management, the full suite of technology that Lightspeed has to offer. And so we consider those merchants our ideal customer profile.

Speaker Change: Just curious on that thank you.

Speaker Change: So what we've said.

Speaker Change: From a <unk> growth perspective, or customer perspective, our ideal customer at lightspeed, our retailers at the restaurant <unk> that process half a million dollars and more in annual GTP and those are complex merchants complex retailers that need.

Speaker Change: Inventory management kitchen display ingredient management, the full suite of technology that <unk> has to offer and so we consider those merchants our ideal customer profile. So when we think about investing in outbound. What we found is our outbound field reps are most efficient in signing these hygiene.

Asaf Bakhshani: So when we think about investing in outbound, what we've found is our outbound field reps are most efficient in signing these high-GTB customers because it's much easier for them to target the ideal customer of Lightspeed. And so, you know, the focus for Lightspeed in fiscal 25, as you heard from JP, is to double down on growing software revenue through an increase in our high-GTB merchant base through software attacks. And the best way to do that is through, you know, heavy investments in our outbound, which is our absolute focus for next year. Got it, so no geographic biases; this is going out to the larger retailers. Absolutely, absolutely. Your next question comes from the line of Richard Tse from the National Bank of Financial Markets. Please go ahead.

Speaker Change: TD customers, because it's much easier for them to target the ideal customer of lightspeed and so.

Speaker Change: The focus for Lightspeed in fiscal 'twenty five as you heard from J P is to double down on growing software revenue through increase in our high GTD merchant base through software attach and the best way to do that is through heavy investment in our outbound, which is which is our absolute focus for next year.

Speaker Change: Got it so no geographic bias is going after the larger retailer restaurants understood absolutely absolutely.

Speaker Change: Your next question comes from the line of Richard Tse from National Bank Financial markets. Please go ahead.

Richard Tse: Yes, thank you, www.lightspeedPOS.com. Do you have a sense of the order of magnitude of how your LTE to CAC... The LTD to CAC is not a step that we have disclosed publicly in this past year.

Richard Tse: Yes. Thank you obviously you gain a lot of.

Richard Tse: Fishing season over the course of the past here do you have a sense of the order of magnitude of how your LTV to CAC has kind of changed on a year over year basis.

Richard Tse: So the LTV to CAC is not a stat that we have disclosed publicly in this past year. However.

Asaf Bakhshani: However, you know, what you have heard from us and then the reality is that with the increase in payment penetration, our unit economics have increased significantly. And what we've seen is for a customer that takes only software versus a customer that takes software, payments, and maybe even capital, the LTD to CAC is more than double. And so, you know, this was a part of why we went down this unified payment strategy. Obviously, the unit economics are much better for Lightspeed.

Richard Tse: You know what you have heard from US and then the reality is that with the increase in payments penetration. Our unit economics is has increased significantly and what we've seen is for a customer that takes only software versus a customer that takes software payments and maybe even capital the LTV to CAC is more.

Richard Tse: And then double and so this was a part of why we went down this unified payment strategy. Obviously the unit economics are much better for Lightspeed and then from a customer perspective, there's a ton of benefits that our customers are unlocking from having a fully integrated payment solution and our customers are seeing that as well and you know.

Asaf Bakhshani: And then from a customer perspective, there are a ton of benefits that our customers are unlocking from having a fully integrated payment solution, and our customers are seeing that as well. And you know, that is the result of why churn hasn't picked up like we had forecasted because the customers are really seeing the benefit of having a full integrated payment solution, and JP, in your opening remarks, you talked about... www.lightspeedpos.com. If that's the case, what are your thoughts? What?

Richard Tse: That is that is the result of wide churn hasnt picked up like we had forecasted because the customers are really seeing the benefit of having a full integrated payments solution.

Speaker Change: Okay, Thanks, and JP in your opening remarks, you talked a little bit about acquisitions and your success in terms of the integration so.

Gus Papageorgiou: Yeah, thanks for the question. I think that the statement we wanted to make clearly is that these acquisitions have been very good for Lightspeed, and I know because we did a lot, we had a lot of questions around, hey, how are these doing? And so for me, I'm very pleased that, you know, it's been many quarters now of true organic growth with, you know, easy-to-read organic growth.

Speaker Change: I'm not sure if I'm reading this right, but it seems like Youre positioning that you may be restarting acquisitions again like.

JP: If that's the case what is what are your thoughts from an acquisition standpoint in terms of what you need verticals or geographies that you would pursue thanks.

Speaker Change: Yeah. Thanks for the question I think that the statement. We wanted to make clearly is that these acquisitions have been very good for lightspeed and I know because we did a lot to lot. We had a lot of questions around hey, how these doing and so for me I'm very pleased that it's been many quarters now of true organic growth with easy to read organic growth and so.

Timothy Chiodo: And so, I just wanted to make this statement that we are really good at doing M&A, and they've helped us tremendously over the years, and we now have really strong platforms that we couldn't have had without the M&A. So now, this being said, I think a lot of the questions actually around this call were around how do we grow software, how do we expand our pool, and when we look at our portfolio, there's still a number of functionalities and big blocks that we do not offer. And I think I've been very transparent over the years, but there are categories that our customers want to buy from us that we do not have, and I think as we go through these with our product teams, we always have the same question: do we want to build it, or do we want to buy it?

Speaker Change: Just wanted to make the statement that we are really good at doing M&A and they've helped us tremendously over the years and we now have really strong platforms that we couldnt have had without the M&A. So.

Speaker Change: Now this being said.

Speaker Change: I think a lot of the questions actually around this call. We're around how do we grow software how do we expand our <unk> and when we look at our portfolio. There are still a number of functionalities in big blocks that we do not offer.

Speaker Change: I think I've been very transparent over the years, but there are categories.

Speaker Change: You know that our customers want to buy from us that we do not have and I think as we go through these with our product teams. We always have the same question do we want to build do we want to buy.

Timothy Chiodo: And in most cases, we build, and we've launched so many products this year, and a few examples, Kitchen Display, or even our Advanced Insights on Retail, we've built all of those, but there are categories that I don't think we should be building in, and that are a much better fit for an acquisition. Now, the question always remains, we have to be very prudent when we do these things because we need to be sure that, of course, we buy them at very reasonable multiples, and we need to be sure that, as we acquire them, they are really going to create a good hockey stick inside of Lightspeed.

Speaker Change: And in some in most cases, we build and we've launched so many products this year.

Speaker Change: A few examples kitchen display or even our.

Speaker Change: Advanced insights on retail as we built all of those but there are categories that I don't think we should be building.

JP: That are a much better fit for an acquisition now the question always remains we have to be very prudent when we do these because we need to be sure.

JP: Yes.

JP: Of course, we buy them at very reasonable multiples and we need to be sure that as we acquire them, but they are really going to create a good hockey stick inside of lightspeed.

Gus Papageorgiou: So that's really my commentary on this. Your next question comes from the line of Timothy Chiodo from UBS. Please go ahead. Great.

JP: That's really my commentary on this.

JP: Your next question comes from the line of Timothy Chiodo from UBS. Please go ahead.

Timothy Chiodo: Thanks for taking questions. I know we knew this a little bit earlier and some of the questions around the expanding of the direct sales force, but you started doing this, I believe, in the fall of 2021.

Timothy Chiodo: Great. Thanks for taking the question I know you hit on this a little bit earlier than in some of the questions around the <unk>.

Timothy Chiodo: Expanding of the direct sales force, but you started doing this I believe in the fall of 2021 and I was just hoping you could give an update on the number of salespeople that you have today in the U S. And then in terms of the expanded efforts. This year a rough number on how many that might ramp too.

Gus Papageorgiou: And I was just hoping you could give an update on the number of salespeople that you have today in the U.S. and then, in terms of the expanded efforts this year, a rough number on how many that might ramp up. And then I have a brief follow-up. Yeah, so look, maybe just going back in time, we really only did that primarily in the US until now, and really around hospitality, where we had a competitor that had a lot of feet on the ground. So we have to ensure that within the categories that worked for us in the high GMB, we have people with feet on the ground. Now, this being said, at the time, it wasn't a significant number.

Speaker Change: And then I have a brief follow up.

Speaker Change: Yes, so look.

Speaker Change: Maybe just going back in time, we really.

Speaker Change: Only did that primarily in the U S until now and really around the hospitality.

Speaker Change: Where we had a competitor that had a lot of foot on the ground. So we have to ensure that within the categories that worked for us in the <unk> that we have people also with foot on the ground now this being said.

Speaker Change: At the time it wasn't a significant number.

Gus Papageorgiou: And even today, you know, you're talking about maybe 30, 30 people. But now we have enough time under our belts to know that these are really very good for Lightspeed, and the unit economics are very good. And I think maybe the last comment I want to make is there is nobody in the retail space that has a foot on the ground, and there is nobody in the retail space that has the depth of our solution for a high GMB merchant. So I think there also, when we look at foot on the ground, we're going to heavily invest in retail in the US, where you will start seeing people with feet on the ground pretty much in every big metropolitan area in the US

Speaker Change: Even today, you're talking about maybe 30% 30 people.

Speaker Change: But.

Speaker Change: Now we have enough kind of.

Speaker Change: Enough enough time under our belt to know that these are really very good for lightspeed in the unit economics are very good and I think maybe the last comment I want to make is there is nobody on the retail space that has put on the ground and there is nobody in the retail space that has the depth of our solution for hygiene <unk> merchants. So I think there also.

Speaker Change: When we look at foot on the ground, we're going to heavily invest in retail in the U S where you were.

Speaker Change: We'll start seeing people with foot on the ground pretty much in every big Metropolitan area in the U S. And then the other piece for US is outside of the U S for hospitality.

Gus Papageorgiou: And then the other piece for us is outside of the US for hospitality. You know, if you go across Europe now, we're starting to have a lot of concentration and, you know, very common to go into a restaurant where you see Lightspeed. And I think there we now want to double down, you know, in Canada, in Australia, New Zealand, and in Europe, double down in the hospitality space also and ensure that we can accelerate our growth. JP, thank you so much; I really appreciate that.

Speaker Change: If you go across Europe now, we're starting to have a lot of concentration in it's very frequent to go into restaurants, where you see lightspeed and I think there we now want to double down.

Speaker Change: In Canada, and Australia, and New Zealand and in Europe double down on the hospitality space also and ensure that we can accelerate our growth.

Speaker Change: J P. Thank you so much really appreciate that I follow up is kind of related so one way to go at it is to build a direct sales force higher people have feet on the street.

Timothy Chiodo: My follow-up is kind of related, so one way to go out is to build a direct sales force, hire people, have people on the street. But another way is to work with third-party ISOs, agents, retail ISOs, wholesale ISOs, bank partners, et cetera. So, more of a strategy that Clover has taken, sort of a multi-pronged distribution approach. Have you given it any thought, or what do you think about the pros and cons?

Speaker Change: But another is to work with third party Isos agents retail wholesale those bank partners et cetera. So more of a strategy that clover has taken sort of a multi pronged distribution approach have you given any thought or how do you think about the pros and cons of using a third party distribution that might give you a more immediate.

Gus Papageorgiou: using a third-party distribution that might give you a more immediate result in terms of that coverage that you were talking about nationwide. I think the high-end answer is that we do have a partner network, and we do use both, and about 25% of our deals are touched by a partner, so it's always been something really important to us. And you mentioned a few categories. I just want to make a comment with regard to Clover. Clover is a micro-merchant. It's a very simple coffee shop.

Speaker Change: Result in terms of that that coverage that you were talking about nationwide.

Speaker Change: Alright, yes, I think the.

Speaker Change: The high end answer is we do have a partner network and we do use both in about 25% of our deals are touched by a partner so it's always been.

Speaker Change: Really really important to US and then you mentioned a few categories I just wanted to make a comment with.

Speaker Change: With regards to cover Clover is micro merchants, it's a very simple coffee shop.

Gus Papageorgiou: When we deal with restaurants, and we cited quite a few here, these are very well-established restaurants, mission stars, and they're very complex, you know, in essence, on how to adopt the platforms because there's so many workflows, and so I think it's going to be a very different strategy from the Clover strategy, just being very clear, but we do believe in the partner ecosystem and partner networks and installation partners and all kinds of referral So I think to answer your question very clearly, we believe that the blend of both is the most important. We believe that having people that are put on the ground to go and read, you know, convince the more traditional customer base that we are the right platform, in parallel to having a lot of referral customers or referral partners that are bringing us the deals. Thank you, J.C. Your next question comes from the line of Raymo Lentzschau from Berkley. Please go ahead. Great, thank you. This is Jeremy Ontarimo.

Speaker Change: When we deal with restaurants, and we cited quite a few here. These are very well established restaurants Michelin stars and they are very complex in essence on how to adopt the platform because there's so many workflows.

Speaker Change: I think it's going to be a very different strategy from the clover strategy, just being very clear, but we do believe in the partner ecosystem and partner networks and installation partners in all kinds of referral deals that we could have with banks and real estate agents. So.

Speaker Change: I think to answer your question very clearly we believe that the blend of both is the most important is having people would put on the ground to go and really.

Speaker Change: Convinced the more traditional customer base that we are the right platform in parallel to having a lot of referral customers are referral partners that are bringing us deals.

Speaker Change: Your next question comes from the line of Raimo <unk> from Barclays. Please go ahead.

Speaker Change: Great. Thank you. This is Jeremy on for Raimo I, just wanted to ask in terms of verticals.

Jeremy Ontarimo: I just wanted to ask, in terms of verticals that are eligible for Lightspeed payments, is there still more work to be done there? And if so, could you talk about what percent of overall GTV would be in some of these verticals that can dock in at the moment? Thank you. Yeah, I think, first of all, you need to, when you look at GTV, there's a portion of cash. So let's start there. So just a portion of cash brings you to roughly 80%. So that's then the monetizable. And then, I think, within the 18, I would say probably 15 to 20% are still in industries that we can't underwrite. And or in industries where we don't yet have a presence, or even in countries where we don't yet have payments for Lightspeed. So for us, it's always the same thing. It's like the 80-20 rule; you start by going after the low-hanging fruit.

Jeremy: FERC calls that are eligible for lightspeed payments is there still more work to be done there and if so.

Jeremy: Could you talk to what percent of overall G television.

Jeremy: Would be in some of these verticals that can drop payments at the moment. Thank you.

Speaker Change: Yes, So I think first of all you need to when you look at GTA V. Theres a portion of cash so let's start there. So just a portion of cash brings you to a roughly 80%.

Speaker Change: So that's been the monetize well and then I think within the 18.

Speaker Change: I would say probably 15% to 20% are still in.

Speaker Change: In industries that we can underwrite and at or where industries, where we don't yet have a presence or even countries, where we don't yet have payments for lightspeed. So for us. It's always the same thing. It's like the 80 20 rule you start by going after the low hanging fruit and then after that.

Gus Papageorgiou: And then after that, you compensate for all of that. So just being clear, we are looking at solutions right now for high risk, which is a big category, roughly 10%. And that we are hoping to make some announcements in the, you know, in the foreseeable future on that. And then I think it's all around expanding. So as an example, I'll just give you an, you know, in Singapore, we have a lot of Michelin star and fine dining restaurants that are on Lightspeed. Yet today, we don't, you know, Lightspeed payment is not supported in Singapore or in Malaysia or Indonesia. And these are all markets that are strong for us, but we don't have a presence in Dubai, where we're only selling software. So that's why when you look at next year, it's going to be a mix of we're going to compound all the industries with new underwriting players to go into those, and then the second thing is we're just going to expand Lightspeed Payments into new countries.

Speaker Change: Compensate for all the rest so just being clear we are looking at solutions right now for high risk, which is a big category roughly 10%.

Speaker Change: And that we are we are hoping to make some announcements in the foreseeable future on that and then I think it's all around expanding so as an example, I'll just give you a.

Jeremy: In Singapore, we have a lot of Michelin star and fine dining restaurants that are on lightspeed, yet today, we don't lightspeed payments has not supported in Singapore or in Malaysia, or Indonesia in and these are all markets that are strong for us, but we don't have a presence of our Dubai.

Jeremy: Where were only selling software. So that's why when you. When you look at next year, it's going to be a mix of we're going to compound now all the industries with new underwriting players.

Jeremy: To go into those and then the second thing is we're just going to expand lightspeed payments into new countries.

Speaker Change: Got it thank you.

Speaker Change: That's all the time, we have for questions today, I will now turn the call back over to Gus <unk> for closing remarks.

Gus: Thanks, and thanks, everybody for joining us today, and we look forward to speaking to you on our next conference call. After our for our Q4 results and we will be around if anybody has any follow up questions have a great day everyone.

Speaker Change: This concludes today's conference call. Thank you for your participation and you may now disconnect.

Operator: Got it. Thank you. That's all the time we have for questions today.

Gus Papageorgiou: I will now turn the call back over to Judge Papageorgiou for closing remarks. Thank you, everybody, for joining us today. We look forward to speaking to you on our next conference call regarding our Q4 results, and we will be around if anybody has any follow-up questions. Have a great day, everyone! This concludes today's conference call. Thank you for your participation, and you may now disconnect. www.lightspeedpos.com Thank you for watching. I'm alone right now, it's so cold on the side. I'm so alone, I'm so sad on my own. Such an easy thing, we used to have one thing in common Now I need to think, for anyone like you.

Jeremy: [music].

Jeremy: Mhm.

Jeremy: Yeah.

Jeremy: Yeah.

Jeremy: Yes.

Jeremy: Yes.

Jeremy: Okay.

Jeremy: Yes.