Q4 2024 Lightspeed Commerce Inc Earnings Call
Operator: Thank you for standing by, and welcome to the Lightspeed fourth quarter 2024 earnings conference call. All lines have been placed on mute to prevent any background noise.
Thank you for standing by and welcome to the Lightspeed fourth quarter 2024 earnings Conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you'd like to ask a question. During this time simply press star followed by the number one on your telephone keypad, if you would like to withdraw.
Operator: After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press the star followed by the number one on your telephone keypad. If you'd like to withdraw your question, again press the star one. Thank you. I'd now like to turn the call over to Gus Papageorgiou, head of investor relations. You may begin.
Speaker Change: Your question again Presti Starwood. Thank you I'd now like to turn the call over to Gus puppet Giorgio head of Investor Relations you may begin.
Gus Papageorgiou: Thank you, operator, and good morning, everyone. Welcome to Lightspeed's fiscal Q4 2024 conference call. Joining me today are Dax Dasilva, Lightspeed's founder and CEO, Asha Bakshani, our CFO, and J.D. Seymour-Dant, our president.
Speaker Change: Thank you operator, and good morning, everyone welcome to Lightspeed fiscal Q4 2024 conference call joining.
Gus Papageorgiou: Joining me today are Dax, Dasilva, <unk>, founder and CEO Ashok of shiny, our CFO and J D. K Mart that a president after prepared remarks from Dax nationally, we'll open it up for your questions.
Gus Papageorgiou: After prepared remarks from Dax and Asha, we will open the call up for 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 projected. Certain material factors and assumptions were applied in respect of conclusions, forecasts, and projections contained in these statements.
Gus Papageorgiou: We undertake no obligation to update these statements except as required by law. You should carefully review these factors, assumptions, risks, and uncertainties in our earnings press release issued earlier today, our fourth quarter 2024 results presentation available on our website, as well as in our filings with U.S. and Canadian securities regulators. Also, our commentary today will include adjusted financial measures, which are non-IFRS measures and ratios. These should be considered as Supplement 2 and not a Substitute 4 IFRS financial measure.
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 respective conclusions forecast and projections contained in these statements. We undertake no obligation to update these statements except as required by law.
Speaker Change: Carefully review these factors assumptions risks and uncertainties in our earnings press release issued earlier today, our fourth quarter 2024 results presentation available on our website as well as in our filings with U S and Canadian Securities regulators.
Speaker Change: Also our commentary 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 on SEDAR plus by the SEC.
Gus Papageorgiou: Reconciliations between the two can be found in our earnings press release, which is available on our website, on CedarPlus, on the SEC's Edgar system. And finally, note that because we report in U.S. dollars, all amounts discussed today are in U.S. dollars unless otherwise indicated. With that, I will now turn the call over to Dax.
Speaker Change: These echo system.
Speaker Change: And finally note that because we report in U S dollars. All amounts discussed today are in U S dollars unless otherwise indicated with that I will now turn the call over to Dax.
Dax Dasilva: Thanks Gus, and welcome everyone. As you are well aware, I have recently returned as Lightspeed's CEO. I'm excited and energized to be back in this role and look forward to guiding Lightspeed through the next phase of its evolution, a phase that will be defined by profitable growth. So far, we are off to a great start.
Thanks, Scott and welcome everyone. As you are well aware I have recently returned as Lightspeed CEO.
Dax: I am excited and energized to be back in this role and look forward to guiding light speed through the next phase of its evolution, a phase that will be defined by profitable growth.
Dax: So far we're off to a great start I am happy to announce that this past quarter, we delivered revenue of $230 2 million up 25% year over year ahead of previously established outlook and adjusted EBITDA of $4 4 million for.
Dax Dasilva: I'm happy to announce that this past quarter, we delivered revenue of $230.2 million, up 25% year-over-year, ahead of the previously established outlook, and adjusted EBITDA of $4.4 million. For the full fiscal year, we grew revenues by 24% to $909.3 million and delivered on our promise of break-even or better adjusted EBITDA. And I am very proud that payments penetration came in at 32% this past quarter, meeting our target of between 30% to 35% by the end of our fiscal year.
Dax: For the full fiscal year, we grew revenues by 24% to $909 3 million and delivered on our promise of breakeven or better adjusted EBITDA.
Dax: And I am very proud that the payments penetration came in at 32%. This past quarter meeting our target of between 30% to 35% by the end of our fiscal year our.
Dax Dasilva: Our Unified Payments Initiative has been a resounding success, and I want to thank everyone at Lightspeed that was involved in this effort. It highlights how effective this organization can be when we set goals and work together toward achieving them. I founded Lightspeed with the aim of helping independent businesses bring life to our cities and neighborhoods by helping them create exceptional customer experiences, to kind of stand out from the crowd. Our role is to empower these players with technology that was once available only to large enterprises.
Dax: Our unified payments initiative has been a resounding success and I want to thank everyone at light speed that was involved in this effort.
Dax: It highlights how effective this organization can be when we set goals and work together towards achieving them.
Dax: I founded light speed with the aim of helping independent businesses bring life into our cities and neighborhoods by helping them create exceptional customer experiences to kind of stand out from the crowd.
Dax: Our role is to empower these players with technology that was once available only to large enterprises.
Dax Dasilva: And this quarter, we were honored to add a host of compelling new customers, including... The five-star hotel Les Roches Blanches in Cassis on the southern coast of France, which adopted Lightspeed Restaurant to operate their four beautiful restaurants and luxury villas. Johnston Canyon Lodge and Bungalows in Banff National Park, which have chosen Lightspeed to power their restaurant and cafe.
Dax: And this quarter, we were honored to add a host of compelling new customers, including.
Dax: The five Star Hotel, we rush plush and CAD seats on the southern coast of France, which adopted lightspeed restaurant to operate there for beautiful restaurants and luxury Villa.
Dax: Johnston Canyon Lodge, and Buffalo's and Banff National Park, just chosen lightspeed to power their restaurants and cafes.
Dax Dasilva: NASA's Langley Research Center, which selected Lightspeed Retail to operate their retail outlet, with multiple locations across the United States; 5 Star Nutrition, a supplements and protein retailer that has started to adopt Lightspeed Retail to power many of their retail stores; Esther Restaurants and Bar in Sydney implemented Lightspeed Restaurants to run their highly regarded restaurant. And for our supplier network, we were delighted to add dozens of new brands, including Aldo Group, St. Owen, and 7 Till Midnight.
Dax: NASA Langley Research center, which selected lightspeed retail to operate their retail outlets.
With multiple locations across the United States five star nutrition supplements approaching retailer that has started to adopt lightspeed retail power many of their retail stores.
Speaker Change: <unk> restaurants in Barnes, Sydney implemented lengthy restaurants to run their highly regarded restaurants.
Speaker Change: And for our supplier network, we were delighted to add dozens of new brands, including Aldo group, St Owen and seven till midnight.
Dax Dasilva: Adding new customers is important, but equally important is helping our existing customers grow. I find few things more satisfying than watching our customers leverage our platforms to thrive and prosper. Their stories are inspiring, and I want to share a few with you here today. Mildred's, a vegetarian food restaurant that opened its first location in 1988 in Soho, has expanded to six locations using Lightspeed Restaurant's payment processing.
Speaker Change: Adding new customers is important but equally important is helping our existing customers grow.
Speaker Change: A few things more satisfying than watching our customers leverage our platforms to thrive and prosper.
Dax Dasilva: Like many of our customers, Miljus was using pen and paper to take orders and dated legacy terminals for payments. Lightspeed Restaurant moved them into the digital age and allowed staff to spend more time with their guests and less time placing and waiting for orders and taking payments. By eliminating the mundane administrative tasks that weighed down the staff and management team at Mildred's, they are now focused on opening their next location. Analog October Records has been a customer of ours since founder Craig Crane opened his doors in 2017.
Speaker Change: Their stories are inspiring and I want to share a few of you here today.
Speaker Change: Mildred a vegetarian food restaurant, which opened its first location in 1988, and Soho has extended to six locations using lightspeed restaurants of payments.
Like many of our customers millions was using pen and paper to take orders and David legacy terminals for payments.
Speaker Change: Lightspeed restaurant and moved them into the digital age and allows staff to spend more time with their guests and less time, placing and waiting for orders and taking payments.
Speaker Change: By eliminating the mundane administrative task that weighed down the staff and management team at <unk>. We are now focused on opening their next location.
Dax Dasilva: His vinyl record store, located in Chester, UK, has seen great success with Lightspeed retail and Lightspeed payments. More recently, Craig used an advance from Lightspeed Capital to help take his love for music to the next level and finance his very own record label. Craig's story demonstrates how the expansion of financial services in the Lightspeed platform can help entrepreneurs prosper and grow into entirely new ventures. On the supplier network side, Tribal Sportswear, a Montreal-based apparel brand available at over 2,000 boutiques and online shops across North America, wanted to expand its business. However, it lacked the data needed to make informed business decisions, such as how to improve sales forecasting, streamline their sales efforts, and enable broader buyer outreach.
Speaker Change: Analog October records has been a customer of ours since founded Craig Crane open his doors in 2017.
Speaker Change: Vinyl record store located in Chester U K has seen great success with lightspeed retail and lightspeed payments.
Speaker Change: More recently, Craig Houston advance from Lightspeed capital to help take US love for music to the next level and finance its very own record label.
Speaker Change: Craig story demonstrates how the expansion of financial services and the <unk> platform can help entrepreneurs prosper and grow into entirely new ventures.
Speaker Change: On the supplier network side travel sportswear, a Montreal based apparel brands available in over 2000 boutiques and online shops across North America wanted to expand their business, however, and locked the data needed to make informed business decisions such as how to improve sales forecasting streamline their sales efforts and enable broader.
Speaker Change: <unk> outreach.
Dax Dasilva: By leveraging New Order by Lightspeed, Tribal Sportswear gained access to trend reports to identify cost savings, enhance customer segmentation efforts, and expand outreach, leading to a 23% year-over-year increase in orders. Helping real businesses make an impact in their communities is the reason that I founded Lightspeed POS. The value we bring to the table is to enable businesses like Mildred's, Analog October Records, and Tribal Sportswear with solutions that allow them to scale and optimize their operations.
Speaker Change: By leveraging the order by Lightspeed travel sportswear gained access to trend reports to identify cost savings enhanced customer segmentation efforts and expanded outreach leading to a 23% year over year increase in orders.
Speaker Change: Helping real business is making an impact in their communities is the reason that I founded lightspeed.
Speaker Change: Ali we bring to the table is to enable businesses like <unk> analog October records, and tribal sportswear with solutions that allow them to scale and optimize their operations.
Dax Dasilva: One of the areas where I've spent a lot of my time since returning as CEO is on our product strategy, which is an area where we will continue to invest. Overall, I have never felt better about where we stand from a product perspective. As an industry leader, it's crucial that we continue to leverage new technologies to further differentiate our products. Lightspeed has leveraged AI to automate monthly tasks that free up time for our merchants to focus on their customers.
Speaker Change: One of the areas, where I have spent a lot of my time since returning as CEO is that our product strategy.
Speaker Change: As an area, where we will continue to invest.
Speaker Change: Overall, I have never felt better about where we stand from a product perspective.
As an industry leader it is crucial that we continue to leverage new technologies to further differentiate our products.
Speaker Change: <unk> leveraged AI to automate mundane tasks, then frees up time for our merchants to focus on their customers.
Dax Dasilva: We're constantly exploring new opportunities to leverage generative AI in our business and bring increased value to our merchants through smarter decisions and actionable insights. Through this initiative, we're committing to value-driven innovation for our merchants and focusing our teams on using Lightspeed AI to deliver against three core pillars, making recommendations to improve merchant sales and profits, forecasting future needs, and reducing the burden of operational tasks to save our merchants time and money. So far, we've released several AI-driven innovations, including AI-generated product and menu descriptions and AI-powered configuration recommendations for Lightspeed Restaurant. But this is just the beginning.
Speaker Change: We're constantly exploring new opportunities to leverage generative AI in our business and bring increased value to our merchants through smarter decisions and actionable insights.
Speaker Change: Through this initiative, we're committing to value driven innovation for our merchants and focusing our teams on using lightspeed AI to deliver against three core pillars.
Speaker Change: Recommendations to improve our merchant sales and profits forecasting future needs and reducing the burden of operational tasks to save our merchant's time and money.
Speaker Change: So far we've released several AI driven innovations, including AI generated product and menu descriptions and AI powered configuration recommendations for Lightspeed restaurant, but this is just the beginning.
Dax Dasilva: And, of course, we will continue to innovate our platform outside of AI. During this past quarter, we continued to deliver great new features. For retail, we launched improved forecasting on Lightspeed Retail. Our data shows that on average, the top 5% of any merchant's products are out of stock 21% of the time, leading to lost revenue and profit.
And of course, we will continue to innovate our platform outside of AI. During this past quarter, we continued to deliver great new features.
Speaker Change: In retail, we launched improved forecasting on lightspeed retail.
Speaker Change: Our data shows that on average the top 5% of any merchants products are out of stock 21% of the time, leading to lost revenue and profits are new forecasting abilities will take into account out of stock periods. So merchants can more accurately stock their inventory.
Dax Dasilva: Our new forecasting abilities will take into account out-of-stock periods so merchants can more accurately stock their inventory. We also released order tracking on Apple Wallet, allowing Lightspeed e-commerce consumers to track their orders through their Apple Wallet, eliminating the need for emails or third-party sites. In hospitality, we launched major enhancements to order anywhere, including order history and account management for Lightspeed restaurant guests. This new capability facilitates quick reordering, which helps improve repeat business for our restaurant customers.
Speaker Change: We also released order tracking on Apple wallet, allowing legacy e-commerce consumers to track their orders through their Apple wallet, eliminating the need for E. Mails are third party sites.
In hospitality, we launched major enhancements to order anywhere, including order history and account management for Lightspeed restaurant guests.
Speaker Change: This new capability facilitates quick reordering, which helps improve repeat business for our restaurant customers.
Dax Dasilva: Our success as a company is directly linked to how well our customers perform, so our product development focus is geared towards ensuring they succeed. Now, I would like to take some time to discuss the year ahead.
Speaker Change: Our success as a company is directly linked to how well our customers perform so our product development focus is geared towards ensuring they succeed.
Speaker Change: Now I would like to take some time to discuss the year ahead.
Dax Dasilva: I think the accomplishments of this past year place us in an excellent position to pursue our overarching goal of long-term profitable growth. Our go-to-market teams are now focused on our flagship offerings. Payments penetration continues its strong upward trajectory, and we now have positive adjusted EBITDA operations. For Fiscal 2025, we are focused on three key operational objectives aimed at achieving our goal of profitable growth, and these are: Accelerating software revenue growth and gaining market share.
Speaker Change: The accomplishments of this past year, placing us in an excellent position to procure or where arching goal of long term profitable growth.
Speaker Change: Our go to market teams are now focused on our flagship offerings payments penetration continues its strong upward trajectory and we now have positive adjusted EBITDA operations.
Speaker Change: For fiscal 2025, we are focused on three key operational objectives aimed at achieving our goal of profitable growth and these are.
Speaker Change: Accelerating software revenue growth and gaining market share.
Dax Dasilva: Continuing to advance adoption of our financial services and Controlling Costs and Finding Operational Value In terms of accelerating software revenue growth, we are pursuing this goal on two fronts. We're going to improve our go-to-market efforts and, as I already mentioned, continue to invest in product innovation. Having made significant strides with our unified payments efforts, our account managers will now start to return to their traditional role of upselling software, which we expect to gain momentum as we move through fiscal 2025.
Speaker Change: Continuing to advance adoption of our financial services.
Speaker Change: And controlling costs and finding operational efficiencies.
Speaker Change: In terms of accelerating software revenue growth. We are pursuing this goal on two fronts, we're going to improve our go to market efforts and as I already mentioned continue to invest in product innovation.
Speaker Change: Having made significant strides with our unified payments efforts our account managers will now start to return to their traditional role of Upselling software, which we expect to gain momentum as we move through fiscal 2025.
Dax Dasilva: We also have several other initiatives underway to improve our go-to-market efforts. These include... We are perfecting all aspects of our customer journey in terms of how we land, launch, manage, and support our customers. We want to focus our resources on our ideal customer profile to ensure they have a seamless experience with Lightspeed POS.
Speaker Change: We also have several other initiatives underway to improve our go to market efforts. These include <unk>.
Speaker Change: <unk> all aspects of our customer journey in terms of how we land launch manage and support our customers.
Speaker Change: Want to focus our resources on our ideal customer profile to ensure they have a seamless experience with lightspeed.
Dax Dasilva: Our efforts will remain focused on finding and catering to higher GDP customers that tend to adopt more software, generate more payments revenue, and have lower churn. Updating pricing across our portfolio of products. This will be a targeted effort, and we are looking at both existing and new customers across the organization by product and region.
Speaker Change: Our efforts will remain a focus on finding and catering to higher GDP customers that tend to adopt more software generate more payments revenue and have lowered churns.
Speaker Change: Updating pricing across our portfolio of products. This.
Speaker Change: This will be a targeted effort and we are looking at both existing and new customers across the organization by product and region.
Dax Dasilva: We want to ensure our pricing is representative of the immense value we provide to customers. By increasing our outbound sales motion, we find field reps are better at winning high-GDP customers.
Speaker Change: We want to ensure our pricing is representative of the immense value we provide to customers.
Speaker Change: Increasing our outbound sales motion, we find field reps are better than winning high GDP customers. We.
Dax Dasilva: We are repurposing some of our spend and expect to end fiscal 2025 with north of 100 outbound wraps. And finally, we will complement these go-to-market initiatives by investing in growing brand awareness across our retail verticals and in regions where our hospitality offering is strong. As I've already discussed, on the product side, we will accelerate innovation by increasing our investment in R&D. This will include expanding on our established advantages, such as industry-leading inventory management capabilities and supplier network, as well as leveraging new technologies, such as AI, to differentiate our products.
Speaker Change: We are repurposing some of our spend and expect to end fiscal 2025 with north of 100 outbound reps.
Speaker Change: And finally, we will complement these go to market initiatives by investing and growing brand awareness across our retail verticals and in regions, where our hospitality offering is strong.
Speaker Change: As I've already discussed on the product side, we will accelerate innovation by increasing our investment in R&D.
Speaker Change: This will include expanding on our established advantages such as industry, leading and inventory management capabilities and supplier network as well as leveraging new technologies, such as AI to differentiate our products are.
Dax Dasilva: Our second objective is to continue to advance adoption of our financial services, including payments, capital, and instant deposits. 2024 was a transformative year for payment adoption. Payments are now so deeply embedded into our software products that we no longer distinguish the two as separate offerings.
Speaker Change: Our second objective is to continue to advance adoption of our financial services, including payments capital and instant deposit.
Speaker Change: 2024 was a transformative year for payments adoption.
Speaker Change: <unk> is now so deeply embedded into our software products that we no longer distinguish the two separate offerings.
Dax Dasilva: Unified Payments improved our processes and technologies in terms of selling and onboarding payments to customers, and we will continue to recognize these benefits during fiscal 2025 and beyond. I expect payments penetration to continue its upward trajectory this year and next. We also had another good year for capital, which more than doubled revenue for the year. With the expansion of capital to EMEA and APAC, I expect to continue to see impressive growth from this offer.
Speaker Change: By payments improved our processes and technologies in terms of selling and on boarding payments customers and we will continue to recognize these benefits during fiscal 2025 and beyond.
Speaker Change: I expect payments penetration to continue its upward trajectory for this year indexed.
Speaker Change: We also had another good year for capital, which more than doubled revenue in the year.
Speaker Change: With the expansion of capital to EMEA and APAC I expect to continue to see impressive growth from this offering.
Dax Dasilva: The data we maintain for our POS and payments offerings allows us to mitigate our risk exposure on capital advances while helping to ensure healthy returns. And, although we only launched Instant Deposit last year, it is showing excellent potential for growth.
Speaker Change: The data we maintained for our Pos and payments offerings allows us to mitigate our risk exposure on capital advances, while helping to ensure healthy returns.
Speaker Change: And although we only launched instant deposit last year and is showing excellent potential for growth.
Dax Dasilva: Given the high margin impact of these products, capital and instant deposit have the potential to meaningfully improve our profitability. Our third objective for fiscal 2025 is to control costs and find operational efficiencies. Last month, we took the difficult but necessary decision to eliminate 280 roles, reducing our headcount-related operating expenses by approximately 10%. In addition, we have taken other actions to reduce costs, such as moving our sales summit to a virtual format and reducing our office footprint.
Given the high margin impact of these products capital and instant deposit have the potential to meaningfully improve our profitability.
Speaker Change: Our third objective for fiscal 2025% to control costs and find operational efficiencies.
Speaker Change: Last month, we took the difficult but necessary decision to eliminate 280 rules.
Speaker Change: Using our head count related to the operating expenses by approximately 10%.
Speaker Change: In addition, we have taken other actions to reduce costs, such as moving our sales summit to a virtual format and reducing our office footprint.
Dax Dasilva: And we will continue to look for opportunities to reduce costs across the organization and continue to invest in sales and R&D while expanding margins. I will let Asha discuss this topic in more detail and will now turn the call over to her to take us through the quarterly results and provide our outlook.
Speaker Change: And we will continue to look for opportunities to reduce costs across the organization and continue to invest in sales and R&D, while expanding margins.
Speaker Change: I will let Ashley discuss this topic in more detail and we will now turn the call over to her to take us through the quarterly results and provide our outlook.
Asha Bakshani: Thanks, Dax, and welcome, everyone. Lightspeed had another great quarter. I will walk you through our year and latest quarter's performance, then outline some of the cost reduction and margin expansion efforts for Fiscal 25, discuss our recently announced share repurchase program, and close with an outlook for the upcoming quarter and fiscal year. As far as results are concerned, most of my commentary will be focused on Q4, but first I'd like to highlight a few elements from our full fiscal 2024.
Speaker Change: Thanks, Doug and welcome everyone.
Ashley: <unk> had another great quarter I will walk you through our year and latest quarter's performance then outline some of the cost reduction and margin expansion efforts for fiscal 'twenty five to discuss our recently announced share repurchase program and close with an outlook for the upcoming quarter and fiscal year.
Ashley: On results most of my commentary will be focused on Q4, but first I'd like to highlight a few elements from our full fiscal 2024.
Asha Bakshani: We delivered on our key goals in 2024, we significantly improved payments penetration, and we achieved positive annual adjusted EBITDA for the first time. Total revenue of $909.3 million grew 24%, surpassing our outlook for the year of between $895 and $905 million. Subscription revenue was up 8%, and transaction-based revenue was up 37%. We had a net retention rate of approximately 110%.
Ashley: We delivered on our key goals in 2024, we significantly improved payments penetration and we achieved positive annual adjusted EBITDA for the first time.
Ashley: Total revenue of $909 3 million grew 24%, surpassing our outlook for the year of between 895 to 905 million subs.
Ashley: Subscription revenue was up 8% and transaction based revenue up 37%.
Ashley: We had a net retention rate of approximately 110%.
Asha Bakshani: Gross payments volume as a proportion of GTV ended the year at 32% versus 19% at the end of last year. Adjusted EBITDA improved by $35.1 million to $1.3 million. We ended the year with total cash and cash equivalents of $722.1 million, with our capital program using approximately $51.3 million in cash for the year. In terms of the quarter,
Ashley: Gross payments volume as a proportion of GTD ended the year at 32% versus 19% at the end of last year.
Adjusted EBITDA improved by $35 $1 million to $1 3 million.
Ashley: We ended the year with total cash and cash equivalents of $722 $1 million with our capital program using approximately $51 3 million in cash for the year.
Ashley: In terms of the quarter.
Asha Bakshani: Lightspeed had another great quarter with revenue coming in at $230.2 million, ahead of our previously established outlook and growing 25% year over year. Our positive adjusted EBITDA in the quarter was $4.4 million, and our unified payments efforts continue to increase the monetization of our trailing 12-month GTV of $90.7 billion. Subscription revenue increased 7% year-over-year to $81.3 million. Girls' margins on subscription revenue came in at 77%, an increase from 75% in the same quarter last year. When removing the impact of share-based compensation, the Gross Margin on Subscription Revenue was 78%.
Speaker Change: <unk> had another great quarter with revenue coming in at $230 2 million ahead of our previously established outlook and growing 25% year over year.
Positive adjusted EBITDA in the quarter was $4 4 million and our unified payments efforts continued to increase the monetization of our trailing 12 month GTT of $19 7 billion.
Subscription revenue increased 7% year over year to $81 3 million gross.
Speaker Change: Gross margins on subscription revenue came in at 77% an increase from 75% in the same quarter last year.
Speaker Change: Removing the impact of share based compensation expense gross margin on subscription revenue was 78% up slightly from last quarter. Thanks to a dedicated effort to consolidate cloud vendors and improved overall efficiency.
Asha Bakshani: Up slightly from last quarter, thanks to a dedicated effort to consolidate cloud vendors and improved overall efficiency. I am very happy with our progress on gross margins for our software revenue. I want to reiterate that for this fiscal year, the vast majority of our account management team, which is usually focused on upselling our customers on software, was temporarily assigned the job of onboarding new payments customers, as you heard from Dax. Our account management team historically accounts for approximately half of our new subscription revenue in any given quarter, and this temporary shift in focus impacted subscription revenue growth. We expect that by mid-fiscal 2025, the majority of our account managers will return to their traditional roles of selling software modules to existing customers, and as a result, we expect software revenue growth to benefit them.
Speaker Change: I'm very happy with our progress on gross margins for our software revenue.
Speaker Change: I want to reiterate that for this fiscal year. The vast majority of our account management team, which is usually focused on upselling. Our customers on software was temporarily assigned the job of Onboarding new payments customers as you heard from Dax.
Speaker Change: Our account management team historically accounts for approximately half of our new subscription revenue in any given quarter and the temporary shift in focus impacted subscription revenue growth.
Speaker Change: We expect that by mid fiscal 2025, the majority of our account managers will return to their traditional roles of selling software modules to existing customers and as a result, we expect software revenue growth to benefit <unk>.
Asha Bakshani: Transaction-based revenue grew 40% to $139 million. In the quarter, we saw gross payments volume increase 75% year over year to $6.6 billion as a greater portion of our GTV went through our Lightspeed Payments platform. Lightspeed Capital revenue grew 135% as the service continues to be popular with our customers. Lightspeed Capital offers fast access to capital and an automatic repayment method through Lightspeed Payments.
Speaker Change: Transaction based revenue grew 40% to $139 million.
Speaker Change: In the quarter, we saw gross payment volume increased 75% year over year to $6 6 billion as a greater portion of our GTD led through our lightspeed payments platform.
Speaker Change: Lighted capital revenue grew 135% as the service continues to be popular with our customers licensed capital offers fast access to capital and an automatic repayment method through lightspeed payments.
Asha Bakshani: Merchants are using this offering to finance inventory, to upgrade equipment, and to expand their overall business. Gross margins for transaction-based revenue came in at 29%, down slightly from the previous quarter, and declining referral fees were partially offset by rising high-margin capital revenue. As we convert referral customers to Lightspeed Payments, we increase our overall net gross profit dollars. Total adjusted gross margin, which excludes the impact of share-based compensation and related payroll taxes, came in at 44%, slightly up from the previous quarter and down year over year. Adjusted gross profit dollars came in at $100.7 million, an increase of 15% year-over-year. Adjusted EBITDA for the quarter came in positive at $4.4 million.
Speaker Change: Using this offering to finance inventory to upgrade equipment and to expand their overall business.
Speaker Change: Gross margins for transaction based revenue came in at 29% down slightly from the previous quarter and declining referral fees were partially offset by rising high margin capital revenue.
Speaker Change: As we convert referral customers to lightspeed payments, we increased our overall net gross profit dollars.
Speaker Change: Total adjusted gross margin, which excludes the impact of share based compensation and related payroll taxes came in at 44% slightly up from the previous quarter and down year over year.
Speaker Change: Adjusted gross profit dollars came in at $100 7 million, an increase of 15% year over year.
Speaker Change: Adjusted EBITDA in the quarter came in positive at $4 4 million. This.
Asha Bakshani: This is much improved from an adjusted EBITDA loss of $4.3 million in the same quarter last year. The improvement is the result of our growing gross profit and continued focus on prudent spending across our organization. Total adjusted R&D, sales, and marketing, and G&A expenses were up 4% from a year ago. This was partially due to increased operating expenses tied to the growth of our capital program and ensuring we have the right risk mitigation tools in place to scale that business. We have deployed several AI-based customer support tools that have helped us lower costs and improve customer satisfaction.
Speaker Change: This is much improved from an adjusted EBITDA loss of $4 3 million in the same quarter last year.
The improvement is the result of our growing gross profit and continued focus on prudent spend across our organization.
Speaker Change: Total adjusted R&D sales and marketing and G&A expenses were up 4% from a year ago.
This was partially due to increased operating expenses tied to the growth of our capital program and ensuring we have the right risk mitigation tools in place to scale that business.
Speaker Change: We have deployed several AI based customer support tools that have helped us lower costs, but also improved customer satisfaction. We will continue to leverage this technology in fiscal 2025.
Asha Bakshani: We will continue to leverage this technology in Fiscal 2025. 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 $8.5 million versus an adjusted income of $0.4 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 $0.9 million from a year ago.
Speaker Change: As a percentage of revenue and gross profit total adjusted R&D sales and marketing and G&A expenses declined year over year.
Speaker Change: We had an adjusted income of $8 5 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 0.9 million from a year ago.
Asha Bakshani: We continue to actively manage our share-based compensation and related payroll taxes, which were $8.1 million when excluding restructuring, down from $16 million a year ago and approximately 4% of revenue, down from 9% in the same quarter last year, due to the ongoing prudent management of our equity pool, as well as certain forfeitures this quarter. GTV, from our flagships, continues to be strong this..., up 29 percent, demonstrating that for our target customers and with our flagship products, we're seeing good success in attracting the right customer base. In retail, same-store sales were largely flat in the quarter on a year-over-year basis, and much like the rest of the industry, we had a challenging month of January.
Speaker Change: We can actively manage our share based compensation and related payroll taxes, which were $8 1 million when excluding restructuring down from $16 million a year ago, and approximately 4% of revenue down from 9% in the same quarter last year due to the ongoing prudent management of our <unk>.
Speaker Change: QWERTY pool as well as certain forfeitures this quarter.
Speaker Change: GTD from our flagships continued to be strong this quarter up 29%.
Speaker Change: Demonstrating that for our target customers and with our flagship products. We're seeing good success with attracting the right customer base.
In retail same store sales were largely flat in the quarter on a year over year basis and much like the rest of the industry. We had a challenging month of January.
Asha Bakshani: Total GTV growth was more modest this year, owing to a challenging macro environment and given management's attention was focused on unified payment. Overall, GTV in the quarter, including non-flagship offerings, came in at $20.7 billion, up 2% year-over-year. In fiscal 2025, increasing our high GTV customer base and growing our GTV will be a major focus for both retail as well as hospitality. As Dax mentioned, we're perfecting how we land, launch, manage, and support our. Increasing outbound sales efforts is part of this, but there are several other initiatives underway.
Speaker Change: Total GTD growth was more modest this year, owing to a challenging macro environment and given management's attention was focused on unified payments.
Speaker Change: Overall GTA V in the quarter, including non flagship offerings came in at $27 billion.
Speaker Change: Up 2% year over year.
Speaker Change: In fiscal 2025, increasing our hygiene TD customer base and growing our GTD will be a major focus for both retail as well as hospitality.
Speaker Change: <unk> mentioned, we are protecting how we land launch manage and support our customers increasing outbound sales efforts as part of this but there are several other initiatives underway. We're already seeing the positive impact of these efforts and expect these to continue to bear fruit throughout fiscal 2025.
Asha Bakshani: We're already seeing the positive impact of these efforts and expect these to continue to bear fruit throughout fiscal 2025. This quarter, we also continue to grow our sophisticated, higher-GTV customer... Customer locations with GTV exceeding $1,000,000 a year grew by 6%, and $500,000 a year grew by 5% in the quarter, whereas those with GTV under $200,000 a year continued to decline. Total ARPU in the quarter came in at $431, up 29% year-over-year.
Speaker Change: This quarter, we also continued to grow our sophisticated higher GTD customer base.
Speaker Change: Locations with GTP exceeding $1 million, a year grew by 6% and 500000, a year grew by 5% in the quarter, whereas those with GTP under $200000 a year continued to decline.
Speaker Change: Total <unk> in the quarter came in at $431 up 29% year over year unified payments and our flagship products are helping to increase overall are given that we're going to market exclusively with our flagships and mandating payments for all eligible new and existing customers.
Asha Bakshani: Unified payments and our flagship products are helping to increase overall ARPU, given that we are going to market exclusively with our flagships and mandating payments for all eligible new and existing customers. Churn rates in the quarter are still below the levels we had anticipated for unified payments, and the vast majority of our overall location churn is in the cohort processing under $200,000 in annual GTV, contributing to a net retention rate for the full year of approximately 110%.
Speaker Change: Churn rates in the quarter are still below the levels, we had anticipated for unified payments and the vast majority of our overall location churn is in the cohort processing under 200000 in annual GTD contributing to our net retention rate for the full year of approximately 110%.
Asha Bakshani: In terms of our balance sheet, Lightspeed closed the quarter with just over $722 million in cash and cash equivalents, down from approximately $749 million in the previous. Merchant Cash Advances used $18.5 million of capital during the quarter.
Speaker Change: In terms of our balance sheet likely closed the quarter with just over $722 million in cash and cash equivalents down from approximately $749 million in the previous quarter.
Speaker Change: Merchant cash advances used $18 5 million of capital during the quarter.
Asha Bakshani: For fiscal 2025, we expect to meaningfully improve overall cash flow after removing cash used in our Lightspeed Capital program. We continued our efforts with unified payments in the quarter, with GPV as a percentage of GTV coming in at 32%, achieving our goal of between 30-35% of GTV by the end of the year. Unified Payments has been a success for us. We have received very strong feedback from our customers.
Speaker Change: For fiscal 2025, we expect to meaningfully improve overall cash burn after removing cash used in our legacy capital program.
Speaker Change: We continued our efforts with unified payments in the quarter with <unk> as a percentage of GTD coming in at 32% achieving our goal of between 30% to 35% of GDP by the end of the year.
Speaker Change: Unified payments has been a success for US we have received very strong feedback from our customers the LTV to CAC of our customers improves when customers and payments.
Asha Bakshani: The LTD to CAC of our customers improves when customers add payments. Although the launch of Unified Payments is behind us, we will continue to focus on monetizing more of our GTV through Lightspeed Payments, which is inevitable given that today our software and payments are sold as one unified platform. Now on to our cost reduction and margin expansion. As many of you are aware, last month we announced a workforce reduction initiative that is expected to reduce our headcount-related operating expenses by 10% for fiscal 2025. These cuts were largely focused on non-revenue-generating roles.
Speaker Change: Although the launch of unified payments is behind US we will continue to focus on monetizing more of our GTD true license payments, which is inevitable given that today, our software and payments are sold as one unified platform.
Speaker Change: Now onto our cost reduction and margin expansion efforts.
Speaker Change: As many of you are aware last month, we announced a workforce reduction initiative that is expected to reduce our head count related operating expenses by 10% from fiscal 2025. These cuts were largely focused on non revenue generating roles in.
Asha Bakshani: In addition to the workforce reduction, we continue to assess other areas to cut costs. We're undertaking a thorough review of our global facilities to identify areas where we can rationalize our footprint. We're also examining contracts with partners and vendors to see where we could recognize greater savings. I believe that although we have done an excellent job at integrating our various acquisitions into two core flagship platforms, there is still room to optimize our operations and recognize synergy.
In addition to the workforce reduction we continue to assess other areas to cut costs.
Speaker Change: We're undertaking a thorough review of our global facilities to identify areas, where we can rationalize our footprint.
Speaker Change: We're also extending contracts with partners and vendors to see where we could recognize greater savings.
Speaker Change: I believe that although we have done an excellent job at integrating our various acquisition into two core flagship platforms. There is still room to optimize our operations and recognize synergies.
Asha Bakshani: Offsetting these cost reductions in part, we will be making investments in product and go-to-market. As we have mentioned, we do plan to grow our outbound sales, as they are more effective at winning our Ideal Customer Program. And, as Dax mentioned, we will continue to invest in product innovation to ensure we maintain our lead for complex, high-GTV, brick-and-mortar merchandising. Overall, we expect our adjusted operating expenses to grow in the low to mid single-digit range in fiscal 2025. It will vary quarter by quarter, and remember, Q4 is generally the seasonally weakest quarter from a GTV perspective.
Speaker Change: Offsetting these cost reductions in part we will be making investments in product and go to market.
Speaker Change: As we have mentioned, we do plan to grow our outbound sales team.
Speaker Change: They are more effective at winning our ideal customer profile.
As Dax mentioned, we will continue to invest in product innovation to ensure we maintain our lead for complex high GTD brick and mortar merchants.
Speaker Change: Overall, we expect our adjusted operating expenses to grow in the low to mid single digit range in fiscal 2025.
Speaker Change: It will vary quarter by quarter, and remember Q4 is generally the seasonally weakest quarter from a GTD perspective.
Asha Bakshani: We expect adjusted EBITDA margins to expand meaningfully in fiscal 2025 and 2026. As for our stock buyback, which we announced concurrently with our cost reduction, Our board has authorized a share repurchase program, allowing us to buy back up to 10% of our public float, valued at approximately $140 million at the time of our announcement. This program demonstrates our confidence in the financial momentum of our business. We have added the share repurchase program to our overall capital allocations, as we believe the current share price does not accurately reflect Lightspeed's value, our market opportunity, or our long-term growth rate.
Speaker Change: We expect adjusted EBITDA margin to expand meaningfully in fiscal 2025 and 2026.
Speaker Change: In terms of our stock buyback, we announced concurrently with our cost reduction our board has authorized a share repurchase program.
Speaker Change: Allowing us to buyback up to 10% of our public float valued at approximately $140 million at the time of our announcement.
Speaker Change: This program demonstrates our confidence in the financial momentum of our business.
Speaker Change: We have added the share repurchase program to our overall capital allocation strategy as we believe the current share price does not accurately reflect light feeds value or market opportunity or our long term growth prospects.
Asha Bakshani: Our plan is to execute the program opportunistically, aiming to deliver maximum value for our shareholders. With a strong balance sheet and improving profitability, we are well-positioned from a capital perspective to repurchase shares while continuing to execute our long-term strategy. Now onto our, In 2025, we anticipate significant improvements in our adjusted EBITDA performance. From an operational standpoint, the restructuring we announced last month has been substantially completed, benefiting both this quarter and the remainder of the fiscal year.
Speaker Change: Our plan is to execute the program opportunistically aiming to deliver maximum value for our shareholders.
Speaker Change: With a strong balance sheet and improving profitability, we are well positioned from a capital perspective to repurchase shares while continuing to execute our long term strategy.
Asha Bakshani: Additionally, we will continue to identify operational efficiencies throughout the year. Regarding growth, we have implemented several initiatives aimed at boosting software adoption and customer growth. These efforts will be rolled out at various stages during the fiscal year.
Speaker Change: Now onto our outlook in 2025, we anticipate significant improvement in our adjusted EBITDA performance.
Speaker Change: From an operational standpoint, the restructuring we announced last month has been substantially completed benefiting both this quarter and the remainder of the fiscal year.
Speaker Change: Additionally, we will continue to identify operational efficiencies throughout the year.
Speaker Change: Regarding growth we have implemented several initiatives aimed at boosting software adoption and customer growth. These efforts will be rolled out at various stages during the fiscal year.
Asha Bakshani: As a result, subscription-based revenue growth will be more pronounced in the second half of the fiscal year compared to the first half, and we remain confident that we will continue monetizing more of our gross transaction volume through our payments platform. Given our deliberate focus on expanding Adjusted EBITDA profitability in fiscal 2025, we anticipate overall revenue growth of at least 20%, accompanied by an Adjusted EBITDA of no less than $40 million. This will put us at over a billion dollars in revenue, an exciting milestone for the company.
Speaker Change: As a result subscription based revenue growth will be more pronounced in the second half of the fiscal year compared to the first half and we remain confident that we will continue monetizing more of our gross transaction volume through our payments platform.
Speaker Change: Given our deliberate focus on expanding adjusted EBITDA profitability in fiscal 2025, we anticipate overall revenue growth of at least 20% accompanied by an adjusted EBITDA of no less than $40 million.
Speaker Change: This will put us at over $1 billion in revenue and exciting milestone for the company.
Asha Bakshani: For the first quarter, our revenue projection falls within the range of approximately $255 to $260 million, representing year-over-year growth of approximately 23%. Additionally, we expect adjusted EBITDA to reach approximately $7 million, an improvement of $14 million compared to the same period last year. As we move forward, we anticipate that software growth for the first quarter will remain at levels similar to what we observed in the previous quarter, with quarterly subscription revenue growth gradually ramping up throughout the year to 10 to 15 percent. With that, I will hand the call back to the operator to take your questions.
Speaker Change: For the first quarter, our revenue protection falls within the range of approximately $255 million to $260 million.
Speaker Change: Presenting year over year growth of approximately 23%.
Speaker Change: Additionally, we expect adjusted EBITDA to reach approximately $7 million.
Speaker Change: An improvement of $14 million compared to the same period last year.
Speaker Change: As we move forward, we anticipate that software growth for the first quarter will remain at levels similar to what we observed in the previous quarter with quarterly subscription revenue growth gradually ramping up throughout the year to 10% to 15% growth.
Speaker Change: With that I will hand, the call back to the operator to take your questions.
Operator: Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again. Your first question comes from the line of Dan Perlin from RBC. Your line is open.
Speaker Change: Thank you we will now begin the question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad to raise your hand and joined the queue. If you would like to withdraw your question simply press Star one again.
Speaker Change: Your first question comes from the line of Dan Perlin from RBC. Your line is open.
Daniel Rock Perlin: Thanks, good morning, and nice results here. I just wanted to touch on the pivot of the sales force going back to subscription-based revenues away from payments a little bit. And just the question there is, obviously, it's got a ramp into the second half, as you were just describing. Is there any expected fallout in terms of payments penetration as a result of that? I know you're saying it's gonna continue to climb throughout the year, but I'm just wondering how that interplay is gonna work since when you pivoted to payments, it obviously drove an enormous, and if you're pivoting away, I'm just wondering how you're thinking about that penetration rate throughout the year. Or are you just suggesting that because now it's so unified that if you're just selling subscriptions, payments So, thanks.
Daniel Rock Perlin: Thanks, Good morning, a nice nice nice results here.
Daniel Rock Perlin: I just wanted to touch on the pivot of the Salesforce going back to subscription based.
Revenues away from payments, a little bit and just the question. There is obviously got a ramp into the second half as you were just describing.
Speaker Change: Is there any expected fallout in terms of payments penetration as a result of that I know, you're saying, it's going to continue to climb throughout the year, but I'm just wondering how that interplay is going to work since when you pivoted to payments. It obviously drove an enormous and if youre putting away I'm just I'm just wondering how youre.
Speaker Change: Thinking about that penetration rate throughout the year or are you just suggesting that because now it's so unified that if you're just selling subscription payments will follow up so thanks.
J.D. Seymour-Dant: Yeah, thank you for the question, J.D., St. Martin here. Maybe I should start just by saying that when Lightspeeders focus on something, we get it done. And to your point last year, the focus was really on flight payments, and you can see the results on the top line and bottom line. That said, what I'm most excited about is all the foundational work behind the scenes that we did that sets us up for the future. And we don't always get credit for that.
Dominic Ball: Yes. Thank you for the question <unk> San Martin here.
Speaker Change: Maybe let me start just by saying when late Peter's focus on something we get it done.
Speaker Change: And to your point last year, the focus was really in flight payments.
Speaker Change: And you can see the results in topline and bottom line.
Speaker Change: That said what I'm. Most excited about is all the foundational work behind the scene that we did that sets us up for the future and we don't always get credit for that after all of our acquisitions, we've moved to a single flagship for industry moving to a single tech stack of systems and tools.
J.D. Seymour-Dant: After all our acquisitions, we've moved to a single flagship for the industry, moving to a single tech stack of systems and tools that will really set us up incredibly well to drive innovation for our customers and, ultimately, also run the playbooks that allow us to continue to gain market share in the segments that we focus on. As far as the AM motion is concerned, you know, from a go forward perspective, as we come out of Unified Payments and that program, our AM team is rotating back to a balanced approach of cross-selling payments as well as upselling software and mitigating churn.
Speaker Change: That will really set us up incredibly well to drive innovation to our customers and ultimately also run the playbook that allows us to continue to gain market share in.
Speaker Change: And the segments that we that we focus on.
Speaker Change: As far as the air motion is concerned from a go forward perspective, as we come out of a unified payments and that program. Our EM team is rotating back to a balanced approach of.
Speaker Change: Cross selling payments as well as up selling software and mitigating churn.
J.D. Seymour-Dant: As you know, our AM team is a driving force here at Lightspeed and typically accounts for about 50% of our software bookings. So you can expect substantial improvements throughout the year as we drum up pipeline and it makes its way through to revenue from a subscription perspective. It's worth highlighting that beyond AM as well on the new customer front, we have various initiatives that will drive more sales in the 500k plus segments, and ultimately, that will have a positive impact on subscriptions and payments.
Speaker Change: As you know our EM team as a driving force here at light speed typically accounts for about 50% of our software bookings.
Speaker Change: So you can expect substantial improvements throughout the year as we drove up pipeline and it makes its way through to revenue from a subscription perspective.
Speaker Change: It's worth highlighting beyond beyond the M as well on the new customer front, we have various initiatives that will drive more sales in the 500, K plus segments and ultimately that will have a positive impact on subscription and payments.
J.D. Seymour-Dant: You know, worth highlighting that our flagship products have a higher ARPU, and that's going to make its way through. But that said, payments are still a focus. It's one of our OKRs this year, and we're going to continue to make progress on payment penetration. 32% is a step forward, but there's a lot more coming. Asha, maybe you want to touch on that? Yeah, sure.
Speaker Change: Worth highlighting that our flagship products have a higher <unk> and that's going to make its way through.
Speaker Change: And but that said.
Speaker Change: Payments is still a focus it's one of our old charge. This year and we're going to continue to make progress on payment penetration, 32% is a step forward, but there's a lot more coming actually maybe you want to touch on that yes sure. Thanks. Thanks for the question Dan with respect to payments penetration J D. Can you just touch on the subscription but from a P.
Asha Bakshani: Yes, sure. So thanks for the question, Dan.
Speaker Change: Penetration perspective, as I said in the opening remarks, it's inevitable that we continue to monetize more and more of our GTD through payments because now we're selling our software as one unified platform with payments. So that you know ultimately means that the majority of any new GTD coming in will be monetize on payments right away and.
Speaker Change: We've said in the past that we expect to end fiscal 'twenty five in the 40% to 45% range range on payments penetration.
Asha Bakshani: With respect to payments penetration, JD just touched on subscriptions, but from a payment penetration perspective, as I said in my opening remarks, it's inevitable that we continue to monetize more and more of our GTV through payments because now we're selling our software as one unified platform with payments. So that, you know, ultimately means that the majority of any new GTV coming in will be monetized through payments right away. And, you know, we've said in the past that we expect to end fiscal 25 in the 40 to 45 percent range on payments penetration, and, you know, we're still confident with that trajectory.
Speaker Change: We're still confident with that trajectory.
Asha Bakshani: That's great! That's great!
That's great. That's great can I just ask one quick follow up on transaction gross margins and you hear the question really is the interplay between like Lightspeed capital and now you've got I guess its deposit.
Asha Bakshani: Can I just ask one quick follow-up on transaction gross margins? And here the question really is the interplay between, like, Lightspeed Capital and I guess it's deposit and payments gross margin, obviously, which is lower. But the transaction margin held in pretty good this quarter on a sequential basis. And I'm wondering, as we think about the cadence for next year, is it possible that we could have kind of flat, up margins? Maybe not for the full year, but, you know, just in any one of those sequential quarters.
Speaker Change: The payments gross margin, obviously, which is which is lower but the transaction margin held in pretty good.
Speaker Change: This quarter on a sequential basis and I'm wondering as we think about the cadence for next year.
Speaker Change: Is it is it possible that we could have kind of flat to up margins, maybe not for the full year, but.
Speaker Change: And any one of those sequential quarters. Thanks.
Asha Bakshani: Yeah, sure. You've heard us say this before, there are lots of puts and takes in the transaction gross margin, but you're absolutely right. We expect it to be stable or even higher than what you're seeing today, and I'll give you the pluses and the minuses that are driving that. On the residuals piece, as payment residuals come down as we move these customers over to Lightspeed Payments, we get more gross profit dollars, so it's great for Lightspeed, but it does put downward pressure on the transaction-based gross margin. On the other hand, however, we're growing our capital business. It's still a nascent business. We did under $20 million in revenue in fiscal 24.
Speaker Change: Yes sure.
You've heard that you've heard us say this before there's lots of puts and takes in the transaction gross margin, but youre absolutely right, we expect it to be stable or even higher than what youre seeing today and I'll give you the.
Speaker Change: The pluses and minuses that are driving that on the residuals piece.
Speaker Change: Payment residuals come down as we move these customers over to lightspeed payments.
We get more gross profit dollars. So it's great for lightspeed, but it does put downward pressure on the transaction base gross margin on the other side. However, we're growing our capital business, it's still a nascent business.
Speaker Change: Did under $20 million in revenue in fiscal 'twenty, four we're expecting to grow that quite nicely that comes in at 95% gross margins. So that pushes up the transaction based gross margins and last but not least is the international expansion unlikely payments.
Asha Bakshani: We're expecting to grow that quite nicely. That comes in at 95% gross margin, so that pushes up the transaction-based gross margins. And last but not least is the international expansion of Lightspeed Payments. As you've heard from us, the gross take rates are lower in Europe and APAC. They're in the 1% to 1.5% range, but the net take rates are in the 35% to 40% range. And so from a gross margin perspective, Europe and APAC actually have higher gross margins than what we see in North America. They're in the 30% to 35% range. And so, all told, all of those factors together result in pushing up the overall transaction-based gross margins for Lightspeed.
Speaker Change: You heard from US the growth take rates are lower in Europe, and APAC there in the 1% to one 5% range, but the net take rates are in the 35% to 40%, 35% to 40 bps range and so from a gross margin perspective, Europe and APAC actually has higher gross margins than what we see in North America. They are in the 30% 35% range.
Speaker Change: And so all told all of those factors together does result in pushing up the overall transaction base gross margins for Lightspeed.
Asha Bakshani: That's great. Thanks so much.
Speaker Change: That's great. Thanks, so much.
Andrew Thomas Bauch: Your next question comes from the line of Andrew Bauch from Wells Fargo Securities. Your line is open.
Speaker Change: Sure.
Speaker Change: Comes from the line of Andrew Baum from Wells Fargo Securities. Your line is open.
Andrew Thomas Bauch: Hey, good morning, guys. Dax, great to hear from you back.
Andrew William Jeffrey: Hey, good morning, guys.
Speaker Change: That's great to hear you back maybe we just start there.
Dax Dasilva: Maybe we just start there. You know, you've been involved with the company over the last few years, but not, you know, at the helm. So maybe just taking a step back and how you think you're thinking about the business going forward now, relative to the last time you were in the driver's seat.
Speaker Change: You've been involved with the company over the last few years, but not.
Speaker Change: At the helm, so maybe just taking a step back and how you think youre thinking about the business going forward now relative to the last time you were in the seat.
Dax Dasilva: Yeah, so excited, super excited to be back. It's been a great 90 days working with the team. We're in a new phase.
Speaker Change: Yeah. So excited super excited to be back it's been a been a great 90 days working with the team. We're in a new phase. This is this is the profitable growth phase of lightspeed. So.
Dax Dasilva: This is the profitable growth phase of Lightspeed. I am so thrilled to be leading this period of the company. I think for me, how that breaks down is that, in fiscal 25, we want to accelerate software revenue growth. JD outlined very well how we're going to go about that. I think we have very compelling products that are tailored for our ICP customers, and we have a very compelling customer journey that we're also tailoring across a land launch, management, and support for that ICP.
Speaker Change: Thrilled to be leading this.
Speaker Change: This period of the company.
Speaker Change: I think for me.
Speaker Change: How that breaks down is.
Speaker Change: In fiscal 'twenty, five we want to accelerate software revenue growth.
A D: A D outlined very well how how we're going to go about that I think we have very compelling products that are tailored for our ICP customer.
A D: And we have a very compelling customer journey that were also tailoring across a land.
A D: Launch manage and support for that ICP, I think we're going to be.
A D: The software vendor that meets their needs better than anyone else. We can serve this customer better than anyone else. So very excited about seeing software revenue grow.
Dax Dasilva: I think we're going to be the software vendor that meets their needs better than anyone else. We can serve this customer better than anyone else. So, very excited about seeing software revenue grow in fiscal 25. The second part of the profitable growth strategy is continuing payments penetration, as Asha just mentioned, ending the year between 40% and 45%. And then finally, operational efficiency. This has been our laser focus for the last 90 days. And we will continue to find operational efficiencies throughout the company. And I think we have our marching orders for the year. And you'll see that we're balancing growth and profitability in our guide for fiscal 25.
Dax Dasilva: [inaudible]
Speaker Change: In fiscal 'twenty five the second part of the profitable growth strategy is continuing payments penetration as Ashley just mentioned ending.
Ending the year between 40% and 45% and then finally operational efficiency. This has been our laser focused for the last 90 days and we will continue to find operational efficiencies throughout the company and I think I think we we have our marching orders for the year.
Speaker Change: And you'll see that we're balancing growth and profitability in our guide for fiscal 'twenty five.
Asha Bakshani: Got it. And then maybe I'll just ask the macro question. A lot of your verticals that you play in have a lot of sensitivity to the macro. So maybe anything that you've seen through May at this point that's worth calling out, be it from points of strength or places that are maybe under a little bit more pressure?
Speaker Change: Got it and then maybe I'll just ask the macro question then a lot of your your verticals that you play and you don't have a lot of sensitivity to the macro so maybe anything that you've seen.
Speaker Change: Through may at this point.
Speaker Change: Worth calling out be it from a point of strength or places that are maybe in a little bit more pressure.
Speaker Change: Thanks.
Asha Bakshani: Hey, Andrew, I'll take that one. So with respect to the macro, you know, what's contemplated in our guide is very much what we saw in fiscal 2024. You know, you've heard us say throughout fiscal 2024 that there are certain retail verticals that still haven't come back to pre-COVID levels, bike and home and garden in particular. Their same store sales are flat or slightly down in those verticals. And you know, we're continuing to assume those same numbers when we look to fiscal 2025.
Andrew William Jeffrey: Hi, Andrew I'll take that one.
Andrew William Jeffrey: So with respect to the macro you know what's contemplated in our guide is very much what we've seen in fiscal 2024.
Andrew William Jeffrey: You heard us say throughout fiscal 2024 that there are certain retail verticals that still haven't come back.
Andrew William Jeffrey: To pre COVID-19 levels bike and home and garden in particular are there.
Andrew William Jeffrey: Our same store sales are flat or slightly down in those verticals and we're continuing to to assume those same numbers. When we look to fiscal 2025 and despite that we're confident that we can grow the top line at least 20%. So what that means for lightspeed is when those verticals do come back to growing same store sales there.
Asha Bakshani: And despite that, we're confident that we could grow the top line by at least 20%. So what that means for Lightspeed is, when those verticals do come back to growing same-store sales year over year, it's a much better outcome for us.
Andrew William Jeffrey: Over a year, it's a much better outcome for us.
Asha Bakshani: Great. Thank you, Asha.
Speaker Change: Great. Thank you Asher.
Trevor Williams: Your next question comes from a line from Trevor Williams from Jeffries.
Speaker Change: Your next question comes from the line of Trevor Williams from Jefferies. Your line. Please.
Trevor Williams: Great. Thanks. Good morning.
Trevor Williams: Great. Thanks. Good morning. Appreciate you taking the questions and this is kind of a follow up to what Andrew was just asking just on GTA V growth. So the up 2%. This quarter. If you could unpack some of the moving pieces within that I mean, it sounds like there's still some macro pressure in some of those retail verticals.
Asha Bakshani: Appreciate you taking the questions. And this is kind of a follow-up to what Andrew was just asking about GTV growth, so the up 2% this quarter. If you could unpack some of the moving pieces within that, I mean, it sounds like there's still some macro pressure in some of those retail verticals, location churn kind of at the low end, but anything else worth calling out there? And I know you guys don't guide GTV growth, but if you could just give us a sense for how quickly you think GTV growth can start to re-accelerate, thanks.
Speaker Change: Location churn kind of at the low end, but anything else worth calling out there and I know you guys don't guide GTD growth, but if you could just give us a sense for how quickly you think GTA V growth can start to reaccelerate.
Asha Bakshani: Yeah, sure. I'll talk about Q4 first. So I think the first thing that we want to highlight is that GTV growth in our flagships has grown 29% year over year, and that's really encouraging for us. Even when we look at same-store sales, when we look at the cohort of customers that are on our flagships, that's grown year over year, which is not what we're seeing overall in our portfolio, which includes non-flagships.
Speaker Change: Yeah sure I'll I'll I'll talk about Q4 first.
Speaker Change: So I think the first thing that we want to highlight is that GDP growth in our flagship has grown 29% year over year, and that's really encouraging for us even when we look at same store sales. When we look at the same store sales in the cohort of customers that are on our flagship that's grown year over year.
Speaker Change: As you know, which is not what we're seeing overall in our portfolio, which includes non flagships and so that tells us that we're targeting the right customer base and that we are you know.
Asha Bakshani: And so that tells us that we're targeting the right customer base and that we are increasing our overall base of customers with the right mix. For Q4, overall, GTV was about 2% year over year, and that was heavily influenced by two things. One was the non-flagships that I just talked about, and second was the weather-related issues that we saw in January. You heard that from several others in the industry as well.
Speaker Change: Increasing our overall base of customers with the right mix.
Speaker Change: For Q4 overall GTA V was about 2% up 2% year over year and that was heavily influenced by two things. One is the non flagship that I just talked about and second was the weather related issues that we saw in January you heard that from several others in the industry as well in particular it have impact.
Asha Bakshani: In particular, it impacted North America hospitality, and because North America hospitality is a big portfolio for us, that did impact the overall GTV growth by 2%. As we look forward into fiscal 2025, you heard from JD earlier that we've got a very aggressive plan for growing software revenue, which we're really excited about, and more customer locations, more customer locations in our ICP, more customer locations on our flagships, all mean better GTV growth.
North America hospitality.
Speaker Change: And because North America hospitality is a is a big portfolio for us that did impact the overall GTD growth at 2% as we look forward into fiscal 2025, you heard from J D earlier.
Speaker Change: We've got a very aggressive plan on growing software revenue, which we're really excited about and more customer locations more customer locations and ICP more customer locations on our flagship all mean better GTD growth. So even though we're not guiding GTD growth.
Asha Bakshani: So even though we're not guiding GTV growth, we are assuming GTV growth at healthier rates than we saw in fiscal 2024, because as you know, fiscal 2024 was all about unified payments for us, and with fiscal 2025 being focused on increasing our ICPs, increasing our location count in that cohort, we expect GTV growth as well.
Speaker Change: We are assuming CTV growing.
Speaker Change: Healthier clip than we saw in fiscal 'twenty four it because as you know fiscal 'twenty four was all about unified payments for us and with fiscal 'twenty five being focused on increasing our ICP is increasing our location count in that cohort.
Speaker Change: We expect <unk> to grow as well.
Asha Bakshani: Okay, great. And then on GPV, could you just give us an update today on where we sit on the mix between US and international and then within that 40 to 45% target for this year and how you see the mix changing as part of that? Thanks.
Speaker Change: Okay, Great and then on <unk>.
Could you just give us an update today on where we sit on the mix between U S and international and then within that 40% to 45% target for this year and how you see the mix changing as part of that.
Asha Bakshani: Yeah, for sure, Trevor. So we don't actually disclose the overall portfolio or GPV between US and international, but what we have said in the past, and I'll reiterate, is that today the majority of the GPV is still from the US portfolio, but that is changing. From about a year ago, I would say in fiscal 2024, the international portfolio has pretty much doubled because of the unified payments effort. So even though it's lower than in the US, the international portfolio is growing, and I alluded to that earlier when I talked about expanding margins and transaction-based revenue.
Speaker Change: Yeah Fisher Trevor So we don't disclose actually the overall portfolio or <unk> between U S and international but what we have said in the past and I'll reiterate is.
Speaker Change: Today, the majority of the GP V is still from the U S portfolio, but that is you know that is changing.
Speaker Change: From about a year ago I would say in fiscal 2020 for the international portfolio has pretty much doubled because of the unified payments effort, so even though it's lower than it.
Speaker Change: It's lower than the in the U S International portfolio is growing and I alluded to that earlier when I talked about expanding margins in the transaction based revenue.
Speaker Change: Thanks.
Raimo Lenschow: Your next question comes from the line of Raimo Lenschow from Berkley's. Your line is open. Pete, thanks.
Speaker Change: Your next question comes from the line of Raimo <unk> from Barclays. Your line is open.
Raimo Lenschow: Two questions. One is, on the re-acceleration of the software part, obviously, there's going to be a benefit from the sales guys refocusing and then like the other initiative. Can you split that? And two, is the bigger effort coming more from just kind of refocusing the sales guys, or is it more like the product go-to-market changes there? And then I have one follow-up for Asha.
Raimo Lenschow: Hey, thanks. Congratulations from me as well.
Speaker Change: Thanks, Congrats from me as well two questions. One is on the Reacceleration of the software part, obviously, you guys going to be benefit from the sales guys refocusing and like the other initiatives can you split that into as it is the bigger.
Speaker Change: Efforts coming more from just kind of refocus.
Speaker Change: Refocusing the Felix guys or is it more like the protocol to market changes there and then I had one follow caution.
J.D. Seymour-Dant: Yeah, I mean, as I said earlier, JD here. Thank you for the question.
J D: Yes, I mean, as I said earlier J D. Here. Thank you for the question.
J.D. Seymour-Dant: So, if you look at our go-to-market motion, historically, our AM team represents about 50% of our software bookings. So, you know, going forward in our land and expand model, we're expecting to go back to that healthy balance. And so, you know, to your point, you can expect the subscription line to accelerate going forward. It's probably worth highlighting, too, that we have opportunities from a pricing and packaging perspective that will create additional opportunities for our subscription line, and that will play out throughout the year.
If you look at our go to market motion historically, our EM team represents about 50% of our software bookings.
J D: So going forward in our land and expand model, we're expecting to go back to that.
J D: That healthy balance.
J D: And so to your point you can expect the subscription line to two accelerates.
J D: Forward.
J D: Probably worth highlighting two that we know we have opportunities from a pricing and packaging perspective that will create additional.
J D: Unfortunate.
J D: For a subscription line.
J D: And that will play out throughout the throughout the year.
Asha Bakshani: And then, thank you. And then, Asha, if you think about the cost actions you took last year and this year, there's usually a lag effect. Can you talk a little bit about how you see this kind of feeding into your P&L this year? And then, are we done with those efforts now, or how do you see this going forward in terms of optimizing the business? Thank you.
Speaker Change: Okay and then thank you and then also if you think about the cost.
J D: <unk>.
Speaker Change: Last year and this year, there's usually a lag effect. So can you talk a little bit about like.
Speaker Change: Like how you see this kind of teething into your P&L. This year and then we plan with those efforts now or like how do you see this going forward in terms of optimization.
Speaker Change: Thank you.
Asha Bakshani: Sure, thanks for the question, Raimo. So, with respect to the restructuring that we announced early this quarter, so April 3rd, we do expect to see the benefit of that for the majority of fiscal 2025. The restructuring will be substantially complete in this quarter, so it definitely benefits the full year from a cost perspective. In addition to that, and we said that in the opening remarks, we're looking outside of headcount. We're trying to rationalize our footprint in different offices. We're looking at our IT licenses, and we continue to find cost synergies and expect that we will continue to do so as we move forward quarter by quarter.
Speaker Change: Sure thing thanks for the question Raimo, So with respect to the restructuring that we announced early this quarter. So April 3rd we do expect to see the benefit of that for the majority of fiscal 2025, the restructuring will be substantially complete in this quarter.
Speaker Change: So definitely benefit benefits the full year from a cost perspective.
Speaker Change: In addition to that and we said that in the opening remarks, we're looking outside of head count.
We're trying to rationalize our footprint in different offices, we're looking at our IP licenses and we continue to find cost synergies and expect that we will continue to do so as we move forward quarter by quarter.
Asha Bakshani: Perfect. Thank you. Well done.
Speaker Change: Perfect. Thank you well done.
Matthew Coad: Your next question comes from the line of Matt Cove from Autonomous Research. Your line is open.
Speaker Change: Your next question comes from the line of Matt <unk> from Autonomous Research. Your line is open.
Matthew Coad: Hey, good morning guys. Thanks for taking the time to answer the question. I wanted to touch on the One Lightspeed Initiative. It's great that you kind of have a 100% attach rate of flagship products for new merchants. I kind of wanted to go back to the topic of converting your back book of merchants over to the flagship products, though. I'm curious if you could give us any numbers on, like, what percentage of locations are on your flagship products or what percentage of your volume comes from your flagship products, and then like, what is the path forward to getting more of your customers over to those flagships?
Speaker Change: Hi, Hey, good morning, guys. Thanks for taking my question.
Speaker Change: I wanted to touch the one Lightspeed initiative, it's great that you kind of have 100% attach rate of our flagship products for new merchants I kind of wanted to go back to the topic of converting your back book of merchants over to the flagship product stuff.
Speaker Change: Curious if you could give us like any numbers maybe on like what percentage of locations are on your flagship products have what percentage of your volume.
Speaker Change: Comes from your flagship products have been like what is the path forward to getting more of your customers over to those flagship products.
Dax Dasilva: Yeah, thanks for the question. First of all, the non-flagship platforms are profitable for Lightspeed, with very little in the way of R&D costs and low support costs. But we are focused on creating an easy upgrade path to the flagships. So right now, we're focused on having migration tools that easily transfer data and configuration because people do, our customers will want, some segments of them will want access to the product innovation that's happening on our flagship products.
Speaker Change: Yeah. Thanks, Thanks for the question.
Speaker Change: First of all the non flagship platforms are profitable for lightspeed.
Speaker Change: Very little in the way of R&D costs, and lower support costs, but we are focused on creating an easy upgrade path to the flagships.
Speaker Change: So right now we're focused on having migration tools that easily transfer data.
Speaker Change: And configuration.
Speaker Change: Because people are customers will want some segment of them will want access to the product innovation that's happening on our flagship products. So the upgrade program that it is a retention play for customers that have reached the limits of our non flagship products and are looking for more functionality and of course, our RP was higher on the on our flagship products and creates revenue.
Dax Dasilva: So the upgrade program is a retention play for customers that have reached the limits of their non-flagship products and are looking for more functionality. And, of course, ARPU is higher on the flagship products and creates revenue expansion opportunities. So it's an opportunistic sort of upgrade path. And we're creating that path right now with the tooling. And that will happen as the year goes on.
Speaker Change: Expansion opportunities so it's.
Speaker Change: It's a opportunistic sort of upgrade path and we're creating that path right now with the tooling and that will that will happen.
Speaker Change: As the.
Speaker Change: The year goes on.
Okay.
Asha Bakshani: Awesome, thank you. And then, for my second question, I wanted to go back to Lightspeed Capital. Like you mentioned, revenue growth there has been robust. Curious if you guys could kind of like touch on your game plan for this business, maybe three years out, like how big this revenue line can get for you. And then as the business scales, do you plan to only utilize your balance sheet? Or do you plan to kind of pursue more of a forward flow model?
Speaker Change: Hi.
Speaker Change: Awesome. Thank you and then just for my second question I wanted to go back to Lightspeed capital.
Speaker Change: You mentioned revenue growth there I spend robust.
Speaker Change: I'm curious if you guys could kind of like touch on your game plan for this business, maybe three years out like how big can this revenue line gift for you.
Speaker Change: Then as the business scales do you plan to only utilize your balance sheet or do you plan to kind of pursue more of like a forward flow model.
Asha Bakshani: From a Lightspeed Capital perspective, there is a huge opportunity. When we look at our peers that are doing capital and have been doing, you know, having capital for a long time as a part of their business, they're giving out about 1% of their GTV in merchant cash advance. If we were to do 1% of our GTV, that's, you know, almost a billion dollars in merchant cash advances.
Speaker Change: Yes, sure I'll take that thanks, Matt.
Speaker Change: From a lightspeed capital perspective, there is.
Speaker Change: A huge opportunity I'll start by saying that.
Speaker Change: When we look at our peers that are doing capital and have been doing you know having capital for a long time as a part of their business, they're giving out about 1% of their GC GTC in merchant cash advance. If we were to do 1% of our GTA V that almost $1 billion in merchant cash advance.
Speaker Change: So definitely a ton of growth potential for this business.
Speaker Change: What we plan on doing is growing this business.
Asha Bakshani: So, definitely, there is a ton of growth potential for this business. What we plan on doing is growing this business very cautiously, given the macro. As we've said before, we are in the perfect position to underwrite our customers for capital, determine the creditworthiness of our customers, and how much they should be underwritten for. And we've had great success with the business so far, but again, growing it, you know, in a very steady and cautious manner.
Speaker Change: Very cautiously given the macro as we said before we are in the perfect position to underwrite our customers for capital determined the creditworthiness of our customers and how much they should be underwritten for.
Speaker Change: We've had great success with the business, so far but again growing at.
Speaker Change: In a very steady and cautious manner.
Speaker Change: We don't expect that we would use our balance sheet for you know.
Asha Bakshani: We don't expect that we would use our balance sheet for, you know, several hundred million merchant cash advances underwritten. We're already in talks with partners. There are lots of interested parties because they recognize that, you know, Lightspeed is in a great spot to underwrite customers. So, we're already in talks with partners. Today, you know, we have, at any given point in time, $50 to $60 million outstanding from this merchant cash advance business. And, you know, that may go up to $100 million, but we're not planning to leverage our balance sheet for much more than that.
Speaker Change: Several hundred million dollars of merchant cash advances under written we're already in talks with partners.
Speaker Change: There are lots of interested parties because they recognize that license and are in a great spot to underwrite customers. So we're already in talks with partners today.
Speaker Change: We have from at any given point in time $50 million to $60 million outstanding.
Speaker Change: From merchant from this merchant cash advance business and.
Speaker Change: That may go up to $100 million, but we're not planning to you to leverage our balance sheet for much more than that.
Asha Bakshani: Really helpful. Thanks, Asha.
Really helpful. Thanks Ashwin.
Joshua Phillip Baer: Your next question comes from the line of Josh Baer from Morgan Stanley. Your line is open.
Speaker Change: Your next question comes from the line of Josh Baer from Morgan Stanley. Your line is open.
Joshua Phillip Baer: Great, thank you for the question. I wanted to come back to software and just think about the ramp to 10-15% growth. You mentioned land, expanding, and pricing. I was hoping you could give some color on the contribution, the breakdown, how much growth is coming from pricing, what's really driving that, how much from customer growth? Wondering if the non-equid customer count can grow in Fiscal 25. And on the expand side, what's the contribution, and which modules are driving that? Thank you.
Joshua Phillip Baer: Great. Thank you for the question I wanted to come back to software and just thinking about the the ramp to 10% to 15% growth.
Joshua Phillip Baer: You mentioned land expand and pricing I was hoping you could give some color on the contribution the breakdown how much growth is coming from pricing, what's really driving that how much from customer growth wondering if the non a quick customer count can grow in fiscal 'twenty five.
Joshua Phillip Baer: On the expand what's the contribution on which modules are driving that.
Joshua Phillip Baer: Yeah.
Joshua Phillip Baer: Yes.
J.D. Seymour-Dant: Yeah, thank you for your question, Josh. I don't think we would disclose the breakdown per se, but I mean, obviously, what you can expect is that as our AM team is rotating back to a balanced approach. You know, historically, that team was focused on selling software, focused on selling and cross-selling payments, but also mitigating churn. So that's going to be a big part of our story this year. And that's going to have an impact on subscription revenue.
Joshua Phillip Baer: Yes. Thank you for your question Josh I don't think we are we would disclose the breakdown per se, but I mean, obviously.
Speaker Change: What you can expect us as a M team is rotating back to a balanced approach.
Speaker Change: Historically that team was focused on selling software focus on selling and cross selling payments, but also mitigating churn. So that's going to be a big part of our story this year.
Speaker Change: And that's going to have an impact on subscription revenue.
Speaker Change: And then on the new customer fronts, we have we have a lot of initiatives.
J.D. Seymour-Dant: And then on the new customer front, we have a lot of initiatives, you know, it's been touched on by Dax earlier, but we're really evolving our approach as far as how we lend customers that are in that 500k cohort. We're going to do more account-based marketing. We're up leveling our outbound efforts. We're up leveling our partnerships. And so that's bringing in not only customers that have bigger GTVs, which is great for payments, but these are customers that have more registers, and more locations, and so they have needs for more software. And so you can see the impact on the software ARPU as well.
Speaker Change: It's been touched on by by Docs earlier, but we're really.
Speaker Change: Evolving our approach as far as how we.
Speaker Change: We land.
Speaker Change: Customers that are in that 500, K cohort, we're going to do more account based marketing.
Speaker Change: We're up leveling our outbound efforts were up leveling our partnerships and so that's bringing in not only customers that have bigger GTA V, which is great for payments, but.
Speaker Change: These are customers that have more registers more locations and so they have needs for more software and so you can see the impact on the softer RP as.
As well and then lastly on pricing and packaging, you'll hear more from us.
J.D. Seymour-Dant: And then, you know, lastly, on pricing and packaging. You'll hear more from us in the coming months. Obviously, this is an effort that we have to roll out across our portfolio. We have multiple products, multiple regions, and we want to start by communicating with our customers first and foremost. But, you know, we haven't touched pricing and packaging in a long time, especially as we drive more innovation. There's an opportunity to look at how we bundle software modules, and so that's also going to impact this year in a positive way and also in a sustainable way for future years to come.
Speaker Change: In the coming months.
Speaker Change: Obviously this is an effort that we have to rollout across our portfolio, we have multiple products multiple regions and.
Speaker Change: And we want to start by communicating with our customers first and foremost.
Speaker Change: But we havent touch pricing and packaging in a long time.
Speaker Change: Especially as we drive more innovation there is unfortunately need to look at how we bundle software modules.
Speaker Change: And so that that's also going to impact this year in a positive way.
Speaker Change: And also in a sustainable way for future years to come.
J.D. Seymour-Dant: Thank you. That's a helpful context. And just on the modules, like you know, not specific contribution, but what are some of the key modules that customers are adopting?
Speaker Change: Thank you that's helpful context.
Speaker Change: Just on the module side.
Speaker Change: Not specific contribution, but what what are some of the key modules that are there.
Speaker Change: Customers are adopting.
Speaker Change: Okay.
J.D. Seymour-Dant: Yeah, so on the retail side, our customers come to us because they have complex omni-channel requirements, right? So from a module perspective, you know, already you can see a very strong attach rate for e-commerce, and we continue to invest in that product, and there's a great opportunity to really, you know, improve that. And then, you know, once they're leveraging our platform for front of the house from a retail perspective, then on the back of the house side, we're driving a lot of innovation around analytics and insights, and some of those insights are now leveraging payments as well, which adds another layer of information, which is critical and crucial and ties into customer loyalty.
Speaker Change: Yes, so on the retail side, our customers come to us because they have complex omnichannel requirements right. So from a module perspective.
Speaker Change: Already you can see a very strong attach rate on ecommerce and we continue to invest in that product and theres a great opportunity it's really.
Speaker Change: Improve that and then once they are.
Leveraging our platform for front of the house from a retail perspective, then on the back of the house side.
Speaker Change: We're driving a lot of innovation around analytics.
Speaker Change: And insights.
Speaker Change: And.
Speaker Change: Some of those insights are now leveraging pay.
Speaker Change: Payments as well, which adds another layer of of information, which is which is critical and crucial and.
Speaker Change: And ties into also customer loyalty.
J.D. Seymour-Dant: So on the retail side, you know, we've made a ton of progress with our X-Series flagship, and there's a lot more coming up in the coming weeks that I don't want to share a spoiler alert about, but that we're very excited about.
Speaker Change: So on the retail side.
Speaker Change: Made a ton of progress with our X series.
Speaker Change: <unk> flagship.
Speaker Change: And and Theres, a lot more coming up in the coming weeks that I don't want to.
Speaker Change: Spoiler alert, but so that we're very excited about and then on the hospitality side. As you know are we are.
J.D. Seymour-Dant: And then on the hospitality side, as you know, we're known for our insights module. It's probably the gold standard in the industry as far as the type of insights and analytics that we can provide. And so we've added LightSuite Insights to our flagship offering on the hospitality front, starting with North America and more recently in EMEA and both the UK and now continental Europe, and we're seeing strong attach rates there, which drives ARPU upward.
Speaker Change: Known for insights module.
Speaker Change: It's.
Speaker Change: Probably the the gold standard in the industry as far as the type of insights and analytics that we can provide.
Speaker Change: And so we've added a lightweight insights to our flagship offering on the on hospitality fronts, starting with North America and more recently.
Speaker Change: In EMEA in both U K and now Continental Europe, and we're seeing strong attach rates, there, which drives the <unk> upward.
J.D. Seymour-Dant: And then, you know, the way our pricing works on both sides is also based on register count. And so as we sign bigger customers, they, by default, add more registers, which in turn drives subscriptions upward. So kind of another halo effect on top of the modules that we benefit from as we sign bigger customers. Great. Thank you. Our next question comes from the line of Chen Hsin-Huang from JP Morgan.
Speaker Change: And then the way our pricing works on both sides.
Speaker Change: Also based on registered accounts.
And so as we sign bigger customers.
Speaker Change: By default.
Speaker Change: Add more registers, which in turn drives subscription upward so I'm kind of another halo effect on top of the modules that we benefit from as we signed to your customers.
Speaker Change: Great. Thank you.
Chen Hsin-Huang: Your next question comes from the line of Chen Hsin-Huang from J.P. Morgan. Your line is open. Thanks a lot. Hey, Dax, good to have you back. I wanted to ask you about product strategy being a focus, of course, just the big picture question of depth versus breadth as you think about the goal.
Speaker Change: Your next question comes from the line of Tien Tsin Huang from Jpmorgan. Your line is open.
Thanks, a lot hey, thanks, good to have you back I wanted to ask you you mentioned product strategy being a focus of course just a.
Speaker Change: Big picture question that depth versus breadth.
Speaker Change: As you think about the go forward on the product side.
Speaker Change: What's your priority.
Dax Dasilva: It's depth. It's depth for the ICP customer. And as I was saying before, we want to be able to serve this customer. We already serve this customer better than any other player. This is the complex segment, the merchant that's got complex inventory, or, in the case of hospitality, complex workflows. And we go deep.
Speaker Change: I think it steps it steps for the ICP customer.
Speaker Change: And as I was saying before we want to be able to serve this customer we already do serve this customer better better than any other player. This is the complex segment.
Speaker Change: The merchant that Scott complex inventory or in the case of hospitality complex workflows and we go deep we go deep and and not only on the product innovation side, but also on the on the customer journey side, how we land launch manage and support that customer.
Dax Dasilva: We go deep, and not only on the product innovation side, but also on the customer journey side, how we land, launch, manage, and support that customer. We're going to be leveraging AI to help merchants to give them recommendations, to help them forecast, and to remove mundane tasks. So we're already delivering value on that front. On retail, continuing to build our competitive advantage, that complex inventory management need is served better by us than anybody else. Managing multiple physical locations
Speaker Change: We're using eight we're gonna be leveraging AI to help merchants to give them recommendations.
Speaker Change: To help them forecast to remove mundane tasks. So we are already delivering value on that front.
Speaker Change: On retail continuing to build our competitive advantage.
Speaker Change: Complex inventory management needs to serve better than us and anybody else managing multiple physical locations.
Speaker Change: Restaurant, we want to continue to improve the capabilities of our flagship restaurant product analytics as J D pointed out is a real strength of that product nobody does insights better than us.
Dax Dasilva: In restaurants, we want to continue to improve the capabilities of our flagship restaurant product. Analytics, as J.D. pointed out, is a real strength of that product. Nobody does insights better than us.
Speaker Change: On <unk>, we want to continue to build out that product, making it more seamless for retailers and brands to do business with each other.
Dax Dasilva: On B2B, we want to continue to build out that product, making it more seamless for retailers and brands to do business with each other. Capital, that's being built into the retail software, and that has more than doubled in this last year. And of course, another financial service that's come out this year is Instant Payout, which launched in U.S. retail stores this past year, and we're going to expand on that. Thanks for going through that.
Speaker Change: Capital, that's being built into the retail software.
Speaker Change: And that's.
Speaker Change: That's more than doubled in this last year and of course, another financial service.
Speaker Change: That's come out this year is the infant payout launched in the U S. Retail this past year, and we're going to expand on that.
Dax Dasilva: Just my quick follow-up then, just in your view, North America restaurant, I know gets a lot of attention on the stock side, as do you. Take a look at that product and how it's performed. What's your assessment there and your outlook for investing in the product? Yeah, you know, a lot of our base is in Europe, where we're very strong on fiscalization. But I think in the U.S. hospitality market, we have strengths on the insight side and the analytics side.
Speaker Change: Perfect. Thanks for going through that just my quick follow up then just in your view North America restaurant I know gets a lot of attention on the stock side as you've.
Taking a look at that that product has performed.
Speaker Change: What's your assessment, there and in your outlook.
Speaker Change: Outlook for investing in the product I've seen it certainly more my personal.
Speaker Change: Sure.
Speaker Change: Yeah.
Speaker Change: Lot of our a lot of our base is in Europe, where we're very strong in <unk>, but I think in the U S. Hospitality market. We are we have strengths.
Speaker Change: On the insight side on the analytics side, we have a large base in the U S.
Dax Dasilva: We have a large base in the U.S., and we believe that we're going to compete hard for ICP customers in this market. You know, restaurants integrated with hotels, table service, fine dining, resorts, this is where Lightspeed really excels in terms of its feature set.
Speaker Change: We believe that we're going to compete hard for ICP customers in this market.
Speaker Change: Restaurants integrated with hotels table service Fine Dine resorts. This is where lightspeed really excels in terms of its feature set.
Speaker Change: Perfect.
Speaker Change: Thank you.
Dominic Ball: Your next question comes from the line of Dominic Ball from Redburn. Your line is open.
Speaker Change: Your next question comes from the line of Dominic Ball from Redburn. Your line is open.
Dominic Ball: Hello Dax, Asha, and Martin. Thanks for your question. So some of your competitors have announced or enacted price rises. I think you mentioned it in your opening remarks as well about updating pricing across some of your products. Can we get a bit more color on that?
Speaker Change: Hello, Docs Usher Martin Thanks for the question. So if somebody else can processes have announced or not good price rises.
Speaker Change: And in your opening remarks, as well about updates in price.
Speaker Change: Somebody else products, we got a bit more color on this and has a possibility to increase.
J.D. Seymour-Dant: And is there a possibility to increase prices on payment rates as well? And any timeline associated with this would be great. Thank you.
Speaker Change: Prices on payment rates as well on any timeline associated with this would be great. Thank you.
Speaker Change: Yeah.
Speaker Change: Okay.
J.D. Seymour-Dant: Yeah, thank you for your question. J.D. St. Martin here.
Speaker Change: Yeah. Thank you for your question J D. St Martin here.
J.D. Seymour-Dant: Yeah, so as I said earlier, right, we haven't touched packaging much, and, you know, there's a real opportunity on that front. So, you know, part of your question is more on the subscription side. We see that there's an opportunity there. I want to be conscious of what we announce on this call, like we want to first communicate with our customers, and it's a rollout that will take time, and will roll out throughout the year across different regions, across different product lines, but there's absolutely an opportunity to rethink our packaging on the front book side from a new customer perspective, and then opportunities on the back book for existing customers to align existing customers with our new packaging on the front side.
Speaker Change: Yes, so as I said earlier right, we haven't touched a lot packaging.
Speaker Change: And.
Speaker Change: There is a real opportunity.
Speaker Change: On that front. So part of your question is more on the subscription side.
Speaker Change: We see there is unfortunately T. There.
Speaker Change: I want to be conscious of what we announced on this call like we want to first communicate to our customers and its a rollout that.
Speaker Change: That will take time, and we will rollout throughout the year across different regions across different product lines.
Speaker Change: But there is absolutely an unfortunate to rethink or packaging on the front book side from a new customer perspective, and then.
Speaker Change: <unk> on the back book for existing customers to align existing customers with our with our new packaging on the on the front side.
J.D. Seymour-Dant: You touched on payments. Yes, there are also opportunities on that front. You know, as our portfolio grows, we continue to see opportunities there, and that's also part of that journey. We want to make sure when we touch pricing and packaging that we look at it from a holistic point of view now that we're both a software and a payments offering. And so, you know, a simple answer or a quick answer to your question is that there are opportunities on that front.
Speaker Change: You touched on payments, yes, there are also opportunities on that front.
J.D. Seymour-Dant: Thank you, super useful. And just one more.
Speaker Change: As our portfolio grows we we continue to see unfortunately, he's there.
Speaker Change: And that's also part of that journey, we want to make sure when we touch pricing and packaging that we look at it from a holistic point of view.
Speaker Change: Now that we're both a software and payments.
Speaker Change: Our payments offering.
Speaker Change: So simple answer a quick answer to your question is that there is there are there are putting <unk> on that front as well.
Speaker Change: If I use would be useful and just one more any further details on the transition from <unk>.
Asha Bakshani: Any further details on the transition from legacy products to the flagship products? And last time we heard, it was 30% of merchants. Can we get an update on this?
Speaker Change: C products to the flagship put us in the last one we thought it was 30% of merchants can we get an update on this.
Speaker Change: Okay.
Speaker Change: Okay.
Asha Bakshani: Thanks for the question, Dominic. We have about one-third or actually a little more of our overall base that's on our flagships today. With respect to the non-flagship products, Dax talked about it a little bit earlier, but these platforms are profitable today. There's very little R&D cost associated with them.
Speaker Change: Thanks, Thanks for the question Dominic.
Speaker Change: The we have about one third are actually a little more of our overall base that's on our flagships today.
Speaker Change: With respect to the non flagship products Jack talked about it a little bit earlier, but these these platforms are profitable today, there's very little R&D cost associated with them Theres very low support costs associated with them because the customers are familiar with those products and have been using them for several years.
Asha Bakshani: There are very low support costs associated with them because customers are familiar with those products and have been using them for several years. What we are focused on now is creating an easy upgrade path to the flagships. We want to make sure that migrating to the flagships is not disruptive for our customers, that we've got the right migration tools to transfer the data and configure their systems overnight. That upgrade program, for us, is a retention play for customers that have really reached the extent of how they could use the non-flagships and are actually looking for more functionality because the new functionality is obviously being built on the flagships.
Speaker Change: What we're focused on now is creating an easy upgrade path to the flagships, we want to make sure that our.
Speaker Change: Migrating to the flagships does not disruptive for our customers that we've got the right migration tools to transfer the data to configure their systems overnight.
Speaker Change: And so that upgrade program for US is a retention play for customers that have really reached the extent of how they could use the non flagships and are actually looking for more functionality because the new functionality is obviously being built on the flagships.
Asha Bakshani: Last but not least, ARPU is much higher on our flagship products, so that creates nice revenue expansion opportunities as we do that migration. You'll hear more from us on the sunset of non-flagships, and we plan to go product by product.
Speaker Change: And then last but not least the <unk> is much higher on our flagship products and so that creates nice revenue expansion opportunities as we do that migration. So you'll hear more from us on the sunsetting of non flagships and we plan to go product by product.
Asha Bakshani: Cool, sounds good. Thank you. Your next question comes from the line of Richard Tse from National Bank Financial. Your line is open.
Speaker Change: Sounds good thank you.
Richard Tse: Your next question comes from the line of Richard C. from National Bank Financial. Your line is open. Yes, thank you. This is James sitting in for Richard.
Speaker Change: Your next question comes from the line of Richard Tse from National Bank Financial Your line is open.
Richard Tse: Could you just give us an update on the B2B opportunity and whether you've figured out what the revenue model will be?
James: Yes. Thank you this is james filling in for Richard.
Speaker Change: Could you just give us an update on the <unk> opportunity and whether you've figured out what the revenue model will look like.
Dax Dasilva: Yeah, we're excited about this product. We've got it integrated into retail. For example, we have customers that can browse catalogs now from within our retail product on uOrder and can also import purchase orders back into Lightspeed so that those POS can be received. For example, we have a customer that we've spoken about called CSVS, and they're basically able to save 40 hours a week in basically very repetitive tasks by being able to enable this workflow.
Speaker Change: Yes, we're excited about this product we've got it integrated.
Speaker Change: Into retail.
Speaker Change: For example, we have customers that are that can.
Speaker Change: Can browse catalogs now firm within our retail product on new order.
Speaker Change: And Ken also import purchase orders back into light suite. So that those so that those can be can be received this for example, we have a we have a customer.
Speaker Change: That we've that we've spoken about CSP, CBS and they're basically able to save 40 hours a week.
Speaker Change: In.
Speaker Change: It basically very repetitive tasks by being able to enable this this workflow.
Speaker Change: We're certainly looking forward to being able to monetize this.
Dax Dasilva: We're certainly looking forward to being able to monetize this further. We'll have more news on how we monetize that payments flow. For now, we've got a number of customers that are piloting the functionality of the purchase order functionality, and we hope to give more of an update at the Capital Markets Okay, and then just one.
Speaker Change: Further we will have more news on how we monetize that payments flow for now we've got we've.
Speaker Change: <unk> got a number of customers that are piloting.
Speaker Change: The functionality of the purchase order functionality and we hope to give more of an update at the capital markets day.
Speaker Change: Okay, and then just one follow up here with respect to the investments you talked about could you just elaborate a bit on what those investments would be when it comes to sales and marketing marketing sorry.
Speaker Change #100: Is it adding new salespeople and then on the marketing side like what do you think you need to do to scalable Lightspeed brand.
J.D. Seymour-Dant: Yeah, thank you for the question, JD here. So, I think Dax and Asha touched on that too, but really, the investments are across the customer experience. You know, as we said last year, our focus last year was unified payments. Our focus this year and beyond is going to be really our ideal customer profile and landing and retaining more of these customers. So, in order to do that, we're investing across all the steps of our customer experience. On the land front, as we land customers, Lightspeed has been historically known for a very strong inbound performance marketing campaign, and we've really perfected that, and we'll continue to do that.
J D: Yes. Thank you for the question J D here.
Speaker Change #101: So I think <unk> touched on that too, but really the investments as across to the customer experience.
Speaker Change #101: You know as we said.
Our focus last year was unified payments our focus this year and beyond is going to be really our ideal customer profile.
Speaker Change #101: And landing in retaining more of these customers. So in order to do that we're investing across all of the steps of our customer experience on the land front as we land customers <unk> been historically known for a very strong inbound performance marketing motion.
J.D. Seymour-Dant: We also want to balance that with more outbound and more partnerships. If you look at last year, outbound represented about 10% of our bookings from a new business perspective, and we want to double that this year, and we want to continue to raise that bar as the years progress. Partnerships are also a strong move for us, and we want to continue to raise the bar on that front to get to about 25% of our bookings from a new business perspective that's coming from partnerships.
Speaker Change #101: And we've really perfected that and we'll continue to do that.
Speaker Change #101: We also want to balance that with more outbound.
And more partnerships. If you look at last year outbound represented about 10% of our bookings from a new business perspective.
Speaker Change #101: And we want to double that.
Speaker Change #101: This year and we want to continue to raise that bar as the years progress.
Speaker Change #101: Partnerships has also a strong motion for us.
Speaker Change #101: We want to continue to raise the bar on that front to get to about 25% of our bookings and new business perspective, thats coming from partnerships.
J.D. Seymour-Dant: From an onboarding and launch perspective for ICP customers, we want to increase our coverage of one-to-one launch specialists per customer to make sure that our customers are having a great experience going from signing up with us to being transactional and live and using the full suite. And then on the managed side, we touched on AM quite a bit on this call, but we want to increase our density of account managers and really improve our book coverage for customers that are in high GTV segments.
Speaker Change #101: From an onboarding and launch perspective for ICP customers, we want to increase our coverage of one to one.
Speaker Change #101: Launch specialists per customer to make sure that our customers are having.
Speaker Change #102: Uh huh.
Speaker Change #102: Great experience going from signing up with us to being transactional and live in and using the full suite.
Speaker Change #102: And then on the managed side.
Speaker Change #102: We touched on I am quite a bit on this call, but we want to increase our density of account managers and really improve our book coverage for customers that are in the <unk> segment.
J.D. Seymour-Dant: So, adding account managers where it makes sense and where we can really build a strong relationship with these customers, and that's going to set us up nicely for more expansion down the road. And then lastly, on the support side, we're really evolving the way we provide technical support to our customers, and specifically for ICP customers, we're launching new white-glove service offerings for the 500k+, the 2 million+, and the 5 million-plus GTV cohorts.
Speaker Change #102: So, adding account managers, where where it makes sense and where we can really build a strong relationship with these customers and that's going to set us up nicely for more expansion down the road and then lastly on the support side, we're really evolving the way, we we provide technical support to our customers and then specifically for ICP customers were launching new white glove.
Speaker Change #102: Service offerings for the foundry key plus the 2 million plus the $5 million plus G television cohorts. So it's really an evolution of our customer experience across all of these all of these steps.
J.D. Seymour-Dant: So it's really an evolution of our customer experience across all these steps. And obviously, that's a cohort of customers where the LTV over CAC is very strong for us, the unit economics are very strong for us, and so we feel confident that making those investments will generate the right ROI for the business.
Speaker Change #102: And and obviously, that's a cohort of customers where the LTV over CAC is.
It's very strong for us the unit economics are very strong for us.
Speaker Change #102: And so we feel confident in making those investments will generate the right ROI for the business.
Speaker Change #103: Okay, great. Thanks, I'll pass the line.
Gus Papageorgiou: That concludes our question and answer session. I'll now turn the call back over to Gus Papageorgiou for closing remarks.
Speaker Change #104: That concludes our question and answer session.
Speaker Change #105: Turn the call back over to Gus Papa George Hill for closing remarks.
Gus Papageorgiou: Okay, everyone. Thanks for joining us this morning. If anyone has any follow-up questions, we will be around for the rest of the day, so please feel free to reach out. And we look forward to speaking to everyone when we report our next quarter. Thanks again, everyone, and have a great day.
Speaker Change #106: Okay, everyone. Thanks for joining us. This morning, if anyone has any follow up questions. We will be around for the rest of the day. So please feel free to reach out and we look forward to speaking to everyone. When we report our next quarter. Thanks, again and wanted to have a great day.
Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect.
Speaker Change #107: This concludes today's conference call. Thank you for your participation you may now disconnect.
Operator: Please wait; the conference will begin shortly.
Speaker Change #108: Please wait the conference will begin shortly.
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Speaker Change #108: Yeah.
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Speaker Change #108:
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