Q3 2025 Lightspeed Commerce Inc Earnings Call
Please wait the conference will begin shortly.
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Yeah.
Gary: Thank you for standing by my name is Gary and I will be your conference operator today at this time I would like to welcome everyone to the Lightspeed third quiet, it's 175 earnings call.
Gary: All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.
Gary: You would like to ask a question. During this time simply press star followed by the number one on your telephone keypad.
Speaker Change: I would like to withdraw your question Press Star one again once again. Thank you I will now turn the call Richard Goss.
Speaker Change: Or are you head of Investor Relations.
Speaker Change: Please go ahead.
Speaker Change: Thank you operator, and good morning, everyone welcome to Lightspeed fiscal Q3 2025 conference call.
Dax Dasilva: These data are Dax, dasilva, <unk> founder and CEO.
Dax Dasilva: Josh about shiny, our CFO and <unk> <unk>, our president after prepared remarks from tax Nash that we will open it up for your questions.
Dax Dasilva: Before I provide important information and disclaimers. Please note that there will be a slide presentation that accompanies the initial portion of taxes comments. This morning, you can find the link to the webcast on our IR site.
Dax Dasilva: 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.
Dax Dasilva: Certain material factors and assumptions were applied in respect of conclusions forecast and projections contained in these statements. We undertake no obligation to update these statements except as required by law.
Dax Dasilva: You should carefully review these factors assumptions risks and uncertainties in our earnings press release issued earlier today, our third quarter fiscal 2025 results presentation available on our website as well as in our filings with U S and Canadian Securities regulators.
Dax Dasilva: Also our commentary today will include adjusted financial measures, which are non <unk> measures and ratios.
Dax Dasilva: These should be considered as a supplement to and not a substitute for <unk> financial measures.
Dax Dasilva: Reconciliations between the two can be found in our earnings press release, which is available on our website at Cedar plus and on the Sec's Edgar system.
Dax Dasilva: Note that because we report in U S dollars all amounts discussed today are in U S dollars unless otherwise indicated.
Dax Dasilva: With that I'd now turn the call over to Dax.
Thank you guys and welcome everyone.
Dax Dasilva: This month, we marked my one year anniversary of returning as CEO and I'm very proud of the team's achievements during this time.
Dax Dasilva: These accelerating software growth dramatically improved payments adoption establish a solid foundation for profitability maintained a very strong balance sheet accelerated our innovation and focus the business on the areas, where we have a proven right to win.
Dax Dasilva: Since our last earnings call in November we've been very active across our portfolio, particularly in our key markets of retail in North America and hospitality in Europe.
Dax Dasilva: We've delivered yet another strong quarter, achieving 17% year over year revenue growth in line with our previously established outlook and adjusted EBITDA ahead of our previously established outlook.
Dax Dasilva: At the same time I'm also aware that many of you are keen to learn more about our strategic review process and are very pleased to provide you with an update on that today.
Dax Dasilva: As you recall, we initiated a comprehensive strategic review of our business and operations to define the best path towards maximizing shareholder value in helping the company realize its full potential.
Dax Dasilva: The review included an in depth evaluation of our portfolio, including market attractiveness competitive dynamics and a right to win this.
Dax Dasilva: This resulted in our conclusion to double our focus on growth in retail in North America, and hospitality in Europe going forward as well as to embark on our focused transformation plans, which we've started executing.
Dax Dasilva: As part of this review, we also evaluated the best ownership structures navigate lightspeed through this transformation.
We received strong engagement from multiple participants over the last several months.
Dax Dasilva: To distribute our board of Directors, a committee of independent directors and our executive management team unanimously concluded and executing on our full transformation planets public company offers the best path to maximize value for the company and its shareholders.
Dax Dasilva: I want to take the opportunity today to share a few highlights from our strategy and the company wide transformation program, we launched before going into our quarterly results.
Dax Dasilva: First of all as mentioned earlier, we are doubling down on two key markets retail in North America hospitality in Europe.
Dax Dasilva: Retail in North America is the leading growth engine, our strategic focus is to expand locations and increased software and payments.
Dax Dasilva: We've built a strong track record with merchants that face operational complexities in their day to day business.
Dax Dasilva: Our market leadership status, many of our focused verticals, which positions us to capture a much larger share of a thriving market, where we are well equipped to succeed.
Dax Dasilva: As examples in the sports and outdoor vertical we pioneered the software the bikes Schwartz who used to run their retail and service operations and for golf course operators are offering as a clear market leader in North America.
Dax Dasilva: With our integrated supplier network legacy retail is uniquely positioned to save our customers considerable time and resources, while providing a key differentiator and fashion apparel and footwear.
Dax Dasilva: Hospitality in Europe is another leading growth engine or <unk>.
Dax Dasilva: Leadership is bolstered by local presence across major geographies, such as Germany, U K, France, Switzerland and Benelux.
Dax Dasilva: We enable our customers to comply with a broad range of <unk> rules, a key differentiator for legacy software offering.
Dax Dasilva: We've recently rolled out table side, our handheld Pos and our kitchen display system and are already seeing strong merchant adoption.
Dax Dasilva: Just as with retail in North America, our strategy centers on expanding locations and driving software and payments ARPA growth.
Dax Dasilva: I see it as a set of other strong assets across the globe that show immense potential to drive profitability for our company.
Dax Dasilva: With best in class account management and top tier customer support our remaining markets will maximize profitability for the whole business, resulting in meaningful growth in adjusted EBITDA.
Dax Dasilva: To support doubling down on our two leading growth engines, we aligned our organizational structure to our new legacy strategy with the reorganization last December and plan to use these savings to higher growth markets.
Dax Dasilva: Initiatives across pricing packaging and cost optimization are showing results and have freed up resources to invest into our leading growth engines.
Dax Dasilva: From a go to market perspective, we continue to roll out our new sales motion designed to drive growth by focusing on targeted outbound strategies and sales efficiency.
Dax Dasilva: Across retail in North America, we are optimizing outbound marketing deepening supplier integration and focus verticals and deploying AI driven customer acquisition all to accelerate location growth.
Dax Dasilva: In hospitality in Europe, we are scaling field sales teams and local marketing to support growing lead volume.
Dax Dasilva: Moving forward, we are prioritizing product and technology investments and our two leading growth engines for retail in North America. We are responding to the needs of our focus verticals by delivering enhanced capabilities across inventory management forecasting and insights online channels and supplier network integration.
Dax Dasilva: Hospitality in Europe, we are optimizing front and back of house operations, including mobile reporting enhanced guest experience insights and analytics and payroll solutions.
Dax Dasilva: We've continued to grow the company since announcing the strategic review.
Dax Dasilva: We launched several new key initiatives, which have already made significant impact on our results such as our software revenue growth of 9% year over year, the highest in the last nine quarters and raising our adjusted EBITDA outlook for this fiscal year to over 53 million more than 30% higher than the initial outlook of a minimum of $40 million at the start of the fiscal year.
Dax Dasilva: We continue to accelerate towards positive free cash flow and plan to allocate capital strategically to achieve desired returns.
Dax Dasilva: As part of this I am announcing a share repurchase program to return up to $400 million in cash to shareholders.
Dax Dasilva: We intend to immediately execute on all of the remaining capacity of our current share repurchase authorization, approximately $100 million and yesterdays closing share price plus an additional $300 million under our further authorization in each case subject to market conditions.
Dax Dasilva: I'm also excited to announce that our capital markets day will be held on March 26th where our management team will provide you with a comprehensive update on our transformation strategy.
Dax Dasilva: Operational and financial impact products go to market efforts and provide a long term financial outlook.
Dax Dasilva: As founder CEO, and third largest shareholder I've never been more excited about <unk> future.
Dax Dasilva: Yes.
Dax Dasilva: Now onto some of the specific quarterly highlights as mentioned earlier revenue grew 17% year over year to approximately $280 million. This was driven by year over year software revenue growth of 9%.
Dax Dasilva: Additionally, we increased payments penetration across our base of merchants from 29% to 38% as compared to the same quarter last year.
Dax Dasilva: We also delivered quarterly adjusted EBITDA of $16 6 million ahead of our previously established outlook of $14 million.
Dax Dasilva: Underpinning our transformation as a core focus on growing locations and increasing our pool specifically software for.
Dax Dasilva: Retail in North America, our outbound go to market motion in investment and sales rep coverage are already yielding wins and helping conversions.
Dax Dasilva: I'll mention a few examples in our focused verticals.
Dax Dasilva: We signed soccer Master in Epoxy depot, both of which are Multilocation merchants with a need for omnichannel capabilities.
Dax Dasilva: <unk> merchants continued to choose lightspeed over other solutions, given our differentiated ability to handle complex inventory management needs and our ability to support Omnichannel and a multilocation environment.
Dax Dasilva: In our supplier network, we renewed contracts with three of the largest North American Department stores. We also signed multiple new brands, including <unk>, and even being and ASW group, which is a distributor for Tommy Hilfiger and Calvin Klein.
Dax Dasilva: In golf, we signed the legendary St Andrews links trust the home of the open.
Dax Dasilva: On the product and technology front I'll highlight how recently introduced software offerings are already contributing to our software revenue growth as well as some of the newer releases this quarter.
Dax Dasilva: The retail insights module, which we launched last quarter is already contributing to our software growth and is enabling merchants to improve their gross margins by a 16% reduction in out of stock days for popular items.
Dax Dasilva: <unk> scanner gives sales associates the power to closed sales on the move and improving the customer experience and eliminating the friction of in store lineups.
Dax Dasilva: <unk> also made significant advances in its supplier network, adding over 1 million new items across key verticals like home and garden golf and pet, enabling automatic Pos integration and saving retailers valuable time.
Dax Dasilva: Additionally, real time supplier inventory visibility now allows retailers to check stock levels before ordering eliminating supply chain uncertainty and improving efficiency.
Dax Dasilva: Lastly, we are uniquely positioned in the market with our supplier network and see tremendous potential of enabling payments repeatable sales brands can now accept payments from retailers and many other countries. In addition to the U S and Canada. We this is already available and we have dedicated resources focused on its expansion across our supplier network.
Dax Dasilva: Moving to hospitality in Europe, or other leading growth engine. We are also building an outbound sales motion by strategically investing in field sales rep coverage across the key markets in cities in Europe. These.
Dax Dasilva: These efforts are starting to gain traction and I'll share some highlights.
Dax Dasilva: We signed the three Michelin star restaurants, and part Alexander Mercia, and Marseille and shut tagged a chain of Belgium based restaurants with seven locations in.
Dax Dasilva: And the hotel adjacent restaurant space, we signed hotels at bond a five star luxury hotel in the heart of Burgundy.
Dax Dasilva: Continue to see excellent product market fit for lightspeed with full service restaurants across our markets in Europe, and our key focus here is to accelerate growth with new investments in our go to market capabilities.
Dax Dasilva: On the product and technology front, our software ARPA growth reached 11% this quarter driven in part by customer adoption of new software modules that help them manage and grow their businesses.
Dax Dasilva: As mentioned before we launched our new kitchen display system, which seamlessly connects front of house and back of house operations, allowing restaurants to run more smoothly even during peak hours customer.
Dax Dasilva: Customer adoption has been strong for this new offering.
Dax Dasilva: Additionally, we introduced late C pulse, providing real time access to essential operating metrics from a mobile device.
Dax Dasilva: Restructures and managers can now view sales daily order averages and even see live orders by location from anywhere.
Dax Dasilva: Finally, we launched instant payouts for eligible hospitality customers in select markets offering access to cash within 30 minutes of a transaction even on weekends.
Dax Dasilva: Reflecting on this quarter, we delivered against several key priorities suffering revenue growth accelerated payments penetration is nearing our end of your targets by C capital revenues more than doubled year to date and our adjusted EBITDA performance is well ahead of our initial outlook from the beginning of the fiscal year.
As we look into next year and beyond my goal is to drive software growth by increasing our ICP location count through efficient go to market investments and expanding our software offering through innovation.
Dax Dasilva: I'm looking forward to our capital markets day in March to provide a more comprehensive updates on those.
Dax Dasilva: I will now let Ashley take us through the quarterly results and provide our outlook.
Ashley: Thanks, Jack and welcome everyone I'm very pleased with <unk> results in the third quarter, our strong performance coupled with prudent cost management has resulted in positive adjusted EBITDA for the sixth consecutive quarter and coming in ahead of our previously established outlook.
Ashley: In addition, and that's highlighted our refocus on software revenue growth is starting to gain traction with software revenue growing 9% year over year.
Ashley: As part of the transformation, we launched we're making targeted investments in both go to market and product development to fuel. This growth while also continuing to maintain a very healthy balance sheet.
Ashley: Thanks, George dedication towards profitable growth, we're raising our adjusted EBITDA outlook for the fiscal year to over $53 million, which is over 30% higher than the initial outlook of a minimum of $40 million at the start of the fiscal year.
Ashley: I will now walk you through the details of our quarterly performance and key metrics, starting with our revenues and then close with our outlook for the remaining fiscal year.
Ashley: Total revenues increased 17% due to a growing software and unified payments efforts despite impacts from weakening foreign currency.
Ashley: Software revenue grew 9% year over year to $88 1 million supported by recent product releases as well as increased pricing on software clients.
Ashley: GCB from our flagships for the quarter grew 23% year over year, indicating strong success in attracting our target customers.
Ashley: However, same store sales and retail remained challenged across many verticals, although the rate of decline is easy.
Overall G T V in the quarter, including non flagship offerings increased approximately 2% to $23 5 billion.
Ashley: Sophisticated customer locations with GTD exceeding 500000, and $1 million continue to increase as a proportion of our customer mix, while those with GTA V. Under 200000 continued to decline.
Ashley: With our focus on retail in North America in hospitality in Europe, and expanded outbound sales team and these regions. We expect to see an inflection point for growth in our ICP customers in fiscal 2026.
Ashley: In the quarter G. P D as a percentage of GTT with 38%.
Ashley: Slightly from the previous quarter the GP, they makes the quarter shifted away from verticals with higher payment penetration rate such as golf, which was largely a result of seasonality. We expect to end the year with <unk>, representing between 40% to 45% at GTT.
Ashley: Transaction based revenue grew 23% to $181 7 million in the quarter, we saw GPP increased 34% year over year to $8 8 billion as.
Ashley: As we processed a greater portion of our G T D to our lightspeed payments platform.
Ashley: Life capital revenue grew to $10 2 million almost doubling from $5 2 million in Q3 of last year as the program continues to be popular with our customers likely capital offers fast access to capital and automatic repayments are likely payment.
Ashley: Merchant are leveraging this offering to finance inventory upgrade equipment and expand their overall business.
Ashley: Our cross payments and software our total ARPA for the quarter, excluding exit customers reached a record $533, an impressive 19% increase year over year.
Ashley: This improvement is a result of both unified payments as well as an 11% increase in software.
Ashley: Software <unk> is improving thanks to our focus on flagship product and shifting our customer base towards higher GTA V locations, which typically adopt more software modules.
Ashley: Turning to gross profit, we delivered 14% year over year growth total gross margin was 41% flat with the previous quarter and down only slightly year over year. Despite.
Despite the transaction based revenues everything from 62% of the sales mix in Q3 last year to 65%. This year, we were able to maintain our gross margin at comparable levels to affect this fund management and the growth and higher margin revenue from items such as cabinets.
Ashley: On the software side I'm also incredibly pleased with our strong gross margins, which increased to 79% from 76% in the same quarter last year, reflecting our concentrated effort to manage costs.
Ashley: Excluding share based compensation expense gross margin on software revenue was 80%.
Ashley: Gross margins for transaction based revenue were 28% up slightly from the previous quarter and include gross margins from our capital program, which continues to deliver healthy margin of over 19%.
Ashley: As we convert customers to lightspeed payments, we increased our overall net gross profit dollars.
Ashley: Adjusted EBITDA in the quarter came in positive at $16 6 million and over 350% improvement from adjusted EBITDA of $3 6 million in the same quarter last year, driven partially by early successes from our transformation plan.
Ashley: Total adjusted research and development sales and marketing and general and administrative expenses in the quarter increased by 1% compared to the same quarter last year as part of our continued push to drive profitable growth, we are driving cost reductions in many areas and reallocating savings to our growth engine.
We continue to actively manage our share based compensation and related payroll taxes, which at $13 $6 million or 5% of revenue for the quarter were down from $23 6 million or 10% in the same quarter last year the.
The decrease was partially a result of forfeitures due to the restructuring.
Ashley: For the quarter, we had an adjusted income of $18 5 million compared.
Ashley: Compared to $11 8 million last year, largely as a result of the improvement in the items driving our adjusted EBITDA performance.
Ashley: In terms of our balance sheet likely closed the quarter with approximately $662 million in cash and cash equivalents up from approximately 659 million in the previous quarter.
Ashley: The increase was driven primarily by improved adjusted EBITDA performance as well as an increase in merchant cash advances collected due to seasonality.
Ashley: Adjusted free cash flow used in the quarter was approximately zero point $5 million.
Ashley: And Thats announced in his opening remarks, we are announcing a share repurchase program to return up to $400 million in cash to shareholders.
Ashley: We intend to immediately execute on all of the remaining capacity of our current share repurchase authorization.
Ashley: Approximately $100 million at yesterday's closing share price plus an additional $300 million.
Ashley: Under a further authorization in each case subject to market conditions.
Ashley: In addition, we are forecasting meaningful improvement in our adjusted EBITDA performance in our next fiscal year driven by the execution of our transformation plan.
Ashley: Now turning to our outlook for this fiscal year.
Ashley: Likelihood is encouraged by its performance to date with strong revenue growth and adjusted EBITDA that is on track to surpass the outlook provided last quarter.
We're particularly pleased with the success of our packaging and pricing initiatives and the velocity of popular software module launches contributing to our software growth.
Ashley: In the near term, we are contending with two revenue headwind.
Ashley: First the strengthening U S dollar.
Ashley: Downward pressure on non U S dollar denominated revenue.
Ashley: Second life since December restructuring impacted go to market conditions with savings being reinvested in hiring for North American retail and European hospitality. It will take time to ramp up new hires and we expect benefits to materialize in fiscal 2026.
Ashley: Finally note the company's fiscal fourth quarter is seasonally the weakest for GTA V performance based.
Ashley: Based on our achievements to date and with the transformation plan in place like its outlook for the fiscal year is as follows.
Ashley: We expect revenue growth for fiscal 2025 to be approximately 20%.
We are raising our adjusted EBITDA expectations for the fiscal year to over $53 million.
Ashley: This quarter's results are proof that our strategic pivot to focus on growth in our leading markets and unofficial Z everywhere else is working I look forward to this momentum continuing into fiscal 2026 with that I will hand, the call back to the operator.
Ashley: Okay.
Speaker Change: At this time I would like to remind everyone that in order to ask a question Press Star then the number one on your telephone keypad kindly reminded us well that everyone who would like to ask a question can do a one question one follow up thank.
Ashley: Thank you very much we will pause for just a moment to compile the Q&A roster.
Speaker Change: Yeah.
Speaker Change: Okay. So your first question comes from the line of Dan Perlin.
With RBC capital markets. Please go ahead.
Speaker Change: Thanks, Good morning.
Speaker Change: I was just going to start off maybe with a broader base question.
Speaker Change: <unk> if you could maybe just talk about why the sale process was maybe not the right choice at this time I certainly understand the outline that you gave for it kind of go forward, but I'm just wondering why the sale process maybe just.
Speaker Change: It didn't fit or failed.
Speaker Change: And then in terms of the strategy that you just laid out.
Speaker Change: Are there things that it sounds very similar to the transformation that you had already laid out.
Speaker Change: Just wondering in those non growth markets are you going to be able to maybe accelerate the closures of those noncore locations or markets because it sounds like a continuation of what you've done and you just didn't get the sale completed so anything around that would be would be really helpful. Thank you.
Speaker Change: Yes. Thanks for the question. So yes, it's all about the transformation plan right. We started the strategic review by evaluating all.
Speaker Change: Our portfolio.
Speaker Change: And and really looking at market attractiveness competitive dynamics and our right to win and we did preview I think our focus on North American retail and European hospitality.
Speaker Change: On our last earnings call and so.
Speaker Change: Yes.
Speaker Change: Built out more of the planning and we're going into fiscal 'twenty six with a rock solid plan for execution.
Speaker Change: As part of the strategic review, we ran a process to determine what is the best corporate structure for execution of the transformation plan.
Speaker Change: And the strategic review accomplished exactly what it's designed to do which is which was to answer that question, what's the best way for us to maximize shareholder value and.
Speaker Change: And we didn't have a pre suppose the outcome that we.
Speaker Change: That we that we that we were.
Speaker Change: Leading towards a sale we wanted to know what were the options available what were the different alternatives.
Speaker Change: But the object is how can we how can we best execute the transformation plan and drive the most value.
Speaker Change: And after assessing multiple options, we concluded with art with our board.
Speaker Change: <unk> continuing as a public company offers the best path to maximizing value. We did we did receive strong engagement.
Speaker Change: So the five month process and we have extensive extensive discussions with several participants.
Speaker Change: But our focus now that we've resolved to this question of corporate structure is really executing on our transformation plan and doubling down on the lead growth engines.
Speaker Change: In regards to the.
Speaker Change: The efficiency market or are all of the businesses were.
Speaker Change: Where we arent focused on them being a growth engine.
Speaker Change: What we're going to be doing is we're going to be maintaining those customers or those are great customers for lightspeed, they've contributed to the growing EBITDA picture that youre seeing quarter after quarter as we've raised guidance on EBITDA.
Speaker Change: And it's.
Speaker Change: An important part of our business, but we're not investing.
Speaker Change: And in the same kinds of things as we are for our two growth engines were not doing the outbound youre not doing the marketing spend we've actually reallocated head count and marketing spend.
Speaker Change: Two from that from that from those markets to the growth markets. So that we can double down.
Speaker Change: And we can see.
Speaker Change: Accelerated progress on location on location count and software revenue, which we actually showed a little we showed some progress on software revenue. This this quarter because of that focus.
Speaker Change: Yes, no that was that was great to see thank you for that and then just a quick I guess second question to Asher.
Speaker Change: Any way to just help us with kind of a crossover period expected in 2006, where.
Speaker Change: Obviously, the restructuring pulls in the go to market motion a little bit and then you have to put new people out. So I'm just trying to figure out like how long it takes to get salespeople fully productive to a level that is going to prove impactful to numbers and maybe where that crossover period might look in 'twenty six thank you Bob.
Speaker Change: Yeah. Thanks, Thanks for the question Dan.
Speaker Change: So we're going to give detailed guidance on fiscal 'twenty Stakes on our next earnings call, you'll get a nice preview on our capital markets day next month typically our sales outbound sales folks take about six months to ramp up before we start seeing their their impact in the financials and and you know as you know we had a reorganization early December and.
Speaker Change: We are reallocating resources to our growth markets of North America retail in EMEA hospitality. So you know what I will say is that we do expect our EBIT.
Speaker Change: EBITDA meaningful EBITDA expansion, given the portfolio mix and on the sales side, we do expect to see increase in ICP location count and software continuing the momentum that you've seen US started in Q3, we expect to see that continuing quite nicely in fiscal 'twenty six.
Speaker Change: Great. Thank you.
Speaker Change: Okay.
Speaker Change: Your next question comes from the line of Andrew Baum with Wells Fargo Securities. Please go ahead.
Andrew Baum: Hey, good morning, and thanks for taking the question just wanted to hone in on payments penetration real quickly the pace that you've had over the last couple of years, where you were pushing payments pretty aggressively you are taking up payment penetration roughly 3% sequentially. Each quarter now has kind of stalled out.
Andrew Baum: Hear you that you're still pointing to that 40 to 45 should we expect the low end of that range because it would seem that the high end of that range would would be a pretty sizable step up and what are the variables around this.
Speaker Change: Thanks for the question Andrew.
We are pleased with the pace of payments penetration. When you look when you look at our progress you know we increased G. P V 34% year over year, and we had a 900 basis point increase year over year from Q3 to Q3.
Speaker Change: You're right on the quarter to quarter it was closer to 1%, but that's really just the result of seasonality. What we're seeing is now that more and more of our total G. T V's penetrated where we're approaching 40% youre going to see the impact of the seasonality on the underlying portfolios each quarter and that's really all the Q3 Q3 penetration.
Speaker Change: Number is about in particular golf golf is a very highly penetrated vertical for lightspeed and Q3 is a seasonally slow quarter for golf and so you're just you're seeing the impact of that we're still confident in the 40% to 45% exiting the year.
Speaker Change: Could be closer to 40, maybe even the midrange of that guide, but you know based on what we're seeing so far we're quite confident we'll exit the year in that range.
Speaker Change: That's good to hear.
Speaker Change: Maybe we can get a refresh on your views of the competitive environment and how your current strategy kind of layers up against that you know we've had a lot of the different competitors in the marketplace either moving from online to point of sale and vice versa or enter in different verticals. So in your conversations with new locations of merchants, where do you think that loves.
Speaker Change: <unk> continues to differentiate the most and then a quick just like housekeeping note can you size up the FX headwinds you're calling out.
Speaker Change: Yeah. So I'll take the first part of the question. This is J D from a competitive landscape perspective.
Speaker Change: It really highlights this strategy that said Dax pointed out earlier our solution. Our flagships are really really strong and no I'm retail in EMEA hospitality and non retail specifically, we are the market leader for industries that have highest SKU density.
Speaker Change: Deep inventory management needs and Thats really where our solution fine shines and now, particularly.
Speaker Change: Adding the supplier network to the mix, it's really putting ourselves in a position where we can really win in the fortress verticals where.
Speaker Change: What we're focused on and then similarly in hospitality.
Speaker Change: I've been in Europe for over a decade now with our with our solution, we have tremendous product market fit and also very strong go to market fit.
Speaker Change: And there are two.
Speaker Change: We're a market leader in Continental Europe, and so we weren't really accelerates.
Speaker Change: That growth in those two areas.
Speaker Change: From an FX perspective, you know we did you did see it in the results that that was a headwind for us both in the quarter, we just reported and in the upcoming quarter Lightspeed has significant international operations until the strengthening U S. Dollar it does put downward pressure on our overall topline you know ultimately.
Speaker Change: Though we do still believe that we will.
Speaker Change: Hit the the guidance range that we provided at the beginning of the year.
Speaker Change: And so it was a headwind, but despite that headwind we were pleased with our results.
Speaker Change: Alright, thank you.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Your next question comes from the line of <unk> Shao with Barclays. Please go ahead.
Speaker Change: Perfect. Thank you can.
Speaker Change: Can we you hone in on the software performance one more time.
Speaker Change: Please see if you look at the good progression DRAM could re acceleration can you talk a little bit about what you're seeing like in terms of like obviously price held to but so maybe like help us understand like price, but also what are you seeing kind of in there in terms of early signs in terms of free engaging with the customers there and and how pipeline building is working.
Speaker Change: That part because that was kind of one of the highlights for the quarter. Thank you.
Speaker Change: Yes. Thank you for the question J D. Here, we're really pleased with our progress on on software revenue as you know this has been a focus of the company.
Speaker Change: And moving up to 9% growth year over year in Q3 is a strong sign and we expect that trend will continue in the future.
Speaker Change: As far as the why behind these strong results ultimately we're in this position thanks to the innovation that we are.
Speaker Change: <unk> to the market and to our customers. We've had a lot of modules have been delivered by our product team in the last quarters and hospitality <unk> salary tableside devices are very well received by our customers on the retail side or new insights module.
Speaker Change: As well as our ability to transform our skin wrap into a mobile Pos.
Speaker Change: That's a very strong value proposition and so.
Speaker Change: So you see that impact our <unk> you see our ability.
Speaker Change: Also with our outbound focus to Targa.
Speaker Change: Larger customers, which means larger deals.
Speaker Change: And ultimately larger.
Speaker Change: Size of <unk>.
Speaker Change: Softer revenue.
Speaker Change: And then lastly, as you know as you've heard from us in our previous quarter, we rolled out some price adjustments on the front book, but also on the back book.
Speaker Change: And given the the value and the innovation that we're providing our customers where we are in an ideal position to.
Speaker Change: To look at pricing and in some cases repriced.
Speaker Change: Some course of customers that were on an old pricing.
Speaker Change: And we've also had our account management team, which has been particularly focused on our payments offering and unifying our payment offering and the past quarters come back too.
Speaker Change: Selling and up selling software and and retention. So all of these dynamics are in are coming through and Thats why youre seeing that progress from Q2 to Q3 and you can expect that progress to.
Speaker Change: To continue next quarter and next fiscal year of course.
Speaker Change: Okay perfect. Thank you and then one follow up on the on the share repurchase like you know it was great to see do you like.
Speaker Change: And I saw the first 100 million, maybe more aggressive like how do you think about the cadence there and how you kind of cool about kind of finding the right kind of.
Speaker Change: Point in time to kind of go go more aggressive or less aggressive on the share buybacks. Thank you.
Speaker Change: Yeah sure. So as you mentioned, we do have 100 million outstanding on the share repurchase we launched earlier this fiscal year and.
Speaker Change: And we intend to start executing on that immediately you'll hear an update on that at our capital markets day next month as well.
Speaker Change: Our board has authorized the repurchase of an additional $300 million and so we do plan to.
Speaker Change: In this in fiscal 'twenty six continue on the share repurchase I mean, ultimately we have high confidence in our plan and we do want to return meaningful capital to our shareholders. So so you should expect to see us executing on that and through fiscal 'twenty six as well.
Speaker Change: Okay perfect. Thank you.
Speaker Change: Yeah.
Trevor Williams: Your next question comes from the line of Trevor Williams with Jefferies. Please go ahead.
Trevor Williams: Okay. So on outbound sales, but any context, you can give us just on how big the outbound sales force is today and it sounds like there's still some more hiring youre planning on doing so just how long do you think it takes to get you to the right steady state size with the outbound sales force.
Trevor Williams: Fully go after the two focus markets. Thanks.
Trevor Williams: Yes. Thank you for your question Judy here, we're really pleased with our progress on our down and it's a cornerstone of our strategy going forward as Doug highlighted.
If you look at the quarter is again, a record setting quarter for that motion November, particularly was a record month.
Trevor Williams: Overall across our quota carrying team at 19% of our reps are focused on on the sound on motion, we expect that number to climb to about 25% by the end of this fiscal year as you heard.
Trevor Williams: Made some adjustments in January right sizing the size of our team in the areas of the business that are more focused on efficiencies. So that we can invest in growth.
Trevor Williams: A portion of that investment is going into.
Trevor Williams: Increasing our mix of non.
Trevor Williams: Non reps relative to our overall quota carrying team.
Trevor Williams: And we intend to continue to do that.
Trevor Williams: Next year as well, adding more to that motion and the reason why we have strong confidence in that motion ultimately is our ability to really target our ICP our target customer.
Trevor Williams: Our down is it was very successful and also if you look at our unit economics, our payback, we're really really pleased with what we're seeing so.
Trevor Williams: Expect to see that mix continues to trend upward.
Trevor Williams: And ultimately that will pay dividends as far as profitability.
Trevor Williams: As market share and we also see a halo a positive halo effect on our two other customer acquisition motions inbound and partnerships as a result of our efforts in all down so all in all very pleased with the progress.
Okay, great. Thanks, and Usher could you unpack just and I know it was slight but just where the uptick in GTA V growth came from this quarter. It sounded like there was maybe some smaller same store sales pressure in some of the retail verticals, but just with all the moving pieces around the transformation I heard you guys say you expect ICP located.
Trevor Williams: <unk> growth to accelerate next year out of that but how should we think of the mechanics of how that flows through G. T V.
Trevor Williams: Kind of a nearer term thanks.
Speaker Change: Yeah sure. Thanks, Thanks for the question Trevor So if I start with CTV growth for Q3, I mean that that's really coming from retail.
Speaker Change: When you when you look at retail although some of the verticals still remain depressed what you've heard from us in the prepared remarks is is that rate of decline is easing right and that is helping the overall GDP growth and you know Q3 is our best quarter for retail and so youre seeing GTA V growth there as well in addition, J D talked a little bit about our.
Flagships, but you know our flagships are are a bigger and bigger part of our overall portfolio really approaching 50% and the GTA V growth on our flagship so as you know over 20% and so as the flagship which is where we're attracting are the right customers and the majority of that is in the growth portfolio.
Speaker Change: As that mix grows you should start to see that reflected in the overall GDP growth for the company as well.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: Your next question comes from the line of Josh Baer with Morgan Stanley. Please go ahead.
Josh Baer: Great. Thank you for the question wanted to clarify with this shift in strategy and the focus on North America retail and rest of world hospitality.
Josh Baer: How should we think about your prior focus on the larger GTP merchants like I'm wondering if this new focus is opening up to smaller complex SMB merchants that fit into these.
Josh Baer: Target markets now.
J D: Thank you for the question J D here it goes.
Josh Baer: Hand in hand, with our focus on.
Josh Baer: Higher G TV customers again, as a reminder, that definition as customers doing north of 500 K in annual turnover per location.
Josh Baer: If you think about it another way another way to frame. It is to look at our progress with our flagship products our flagship products are.
Josh Baer: Really.
Josh Baer: Dominating and norm retail and in EMEA hospitality.
Josh Baer: And there you can see that we've made some serious progress on location count we're up 25% year over year, GTA V or flagships up 23% year over year, and our focus there with those products.
Josh Baer: From a product market fit and go to market perspective is really targeting those more complex smbs doing north of Farmington GTD complex inventory management on the retail side.
Table side restaurants on the on the hospitality side. So all in all this is.
Josh Baer: Flowing nicely with our with our strategy of <unk>.
Josh Baer: Into into those regions and focusing on IGT customers.
Speaker Change: Okay, Great that's helpful.
Speaker Change: Was hoping you could just give a little bit of transparency into how much of your business of your revenue is coming from the over 500000 G television North America retail rest of world hospitality.
Speaker Change: The new focus.
Speaker Change: And what that mix is and what the growth of that business. Thank you, Yeah, Hey, Josh so and the growth verticals no I'm retail in EMEA hospitality. The majority of our revenue is already in our portfolio and say approximately 70% and the majority of our growth as well and so this this strategic pivot.
Speaker Change: It's quite natural what we did was having recognized that the highest growth is coming from this portfolio were just reallocating resources from the efficiency portfolio, which is essentially the rest of the world portfolio and doubling down in resources on both product and go to market in this in this portfolio, but but today that that portfolio is about 70 per.
Speaker Change: <unk> of our revenues already.
Speaker Change: Okay got it thank you.
Speaker Change: Okay.
Your next question comes from the line of span of MS Coppola with BMO capital markets. Please go ahead.
Speaker Change: Hi, good morning.
MS Coppola: I guess, firstly for Russia can.
Speaker Change: Can you remind us regarding the timing of the price increases.
Speaker Change: Q3 is sort of a partial quarter of price increases and we'll see the full benefit in Q4.
Hey, Thanos, yes, thanks for the question.
Speaker Change: Q3 is still going to be a partial quarter, even though our three out of the four waves of price increases that we're executing this year is behind us, but it's really in Q4 and actually even in Q1 of F. 'twenty six when youre going to see the full impact because we do have one more wave coming out in Q4, So Q1 F 'twenty six.
Speaker Change: Do you really see the full impact of of all the price increases.
Speaker Change: Great and if you look at your two core markets.
Speaker Change: American retail and hospitality.
Speaker Change: Is there anything you'd call out as far as I guess the growth prospects of those businesses over the upcoming year. So when you look at some of the metrics under the Hood.
Speaker Change: Be it your LTV to CAC.
Speaker Change: Yes.
Speaker Change: Serviceable Tam.
Speaker Change: Yes, just near term.
Speaker Change: Gross churn rates, all that kind of stuff like any key differences to call out between those two segments as we think about the topical classics.
Speaker Change: Yeah, you know, we'll get into you know, we'll unpack a lot of that in our in our Investor Day next month's analyst but.
Speaker Change: Ultimately, we have a proven right to win in these growth markets and that that was really the catalyst behind our decision to focus and double down on growth there our LTV to CAC ratios are highest in those markets because of the competitive moat that we have in retail and hospitality in Europe in particular and in our fortress verticals.
Speaker Change: From a revenue opportunity slash Tam perspective, I mean, you know Theres, an 80 billion dollar revenue opportunity when we look at the North America retail EMEA hospitality and vertical then you know so lots of room to grow there and given that we have the highest right to win in those markets. The LTV to CAC theyre far outweighs the.
The LTV to CAC in the rest of the world. So a return on every dollar invested is highest there so that that really made the most sense for us. So this pivot actually changes the financial profile of the company quite nicely and we will unpack a lot of that at our capital markets day.
Speaker Change: Great Best of luck.
Speaker Change: Okay.
Speaker Change: Your next question comes from the line of Dominion ball with Redburn.
Speaker Change: Please go ahead.
Speaker Change: Hey, Docs Harsha Johnson J D. Thank you for the question I wanted to start with for dogs in the U S retail space.
Speaker Change: Rapid change going on.
Speaker Change: I grew up through multiple in store channel with multiple online channels can you give us any color on the way large speed is helping its merchant nuclear jobs than the nature of competition.
Speaker Change: And just.
Speaker Change: For the second question it sounds of the transformation plans, you mentioned transformation initiatives to free up capital for investment in growth areas does this all mean that you'd be looking to divest any part of your business is outside of the reach almost policy that's cool.
Speaker Change: I'll take the first question I'll take the second so in regards to lightspeed retail.
Speaker Change: We serve that medium and high complexity.
Retailer.
This is a.
Speaker Change: A proportion of Smbs the portion that actually transaction has the highest transaction volume. There there are more at scale. They are more complexity of the business and they need essentially a light ERP, so theyre not theyre not.
Speaker Change: At the scale, where they need enterprise software, but they need us.
Speaker Change: Abstentious system Thats going to manage all elements of operations inventory across multiple locations.
And in.
Speaker Change: In 2025, we also need to be able to manage inventory across multiple physical and online channels in.
Speaker Change: In addition to integrating with with many different kinds of online services and potentially ERP accounting systems on the backend and so we are tailoring our both our software.
Speaker Change: And our service model, our go to market model, and our and our support model.
Speaker Change: To their needs are like I said, there are medium to high complexity smbs, they're not quite enterprise customers and so we are a perfect fit for <unk>.
Speaker Change: For answering what they need at that level of complexity and I think that.
Speaker Change: The benefits of Lightspeed is that they drive a lot of transaction volume.
Speaker Change: There's less churn and so for us the economics are very favorable.
Speaker Change: Hey, Dominic from a divestiture perspective, I mean, I'll start by saying that you know return return on capital or capital allocation. These are always top of mind for us as we evaluate all our options in that that's why you see the increased share repurchase that we announced today. So from a divestiture perspective, while there are no immediate plans for it.
Speaker Change: Divestitures, we do remain focused on maximizing value and overall capital efficiency and so we continue to assess any opportunities that would align with this strategy.
Speaker Change: Okay.
Speaker Change: So thank you.
Speaker Change: Okay.
Operator: Your next question comes from the line of Tien Tsin Huang with Jpmorgan. Please go ahead.
Operator: Thank you so much on the software side the growth of 9%.
Operator: Given the focus on reason locations is it fair to assume that this 9% is a four and you're targeting.
Operator: Double digit growth ahead, I'm not sure if we could assume a dip from here, but it feels like this is a floor is that reasonable.
Tien Tsin: Yeah, Hey, Tien Tsin, I think that's the right way to look at it I think you know overall, we're expecting this strategic pivot will definitely accelerate growth in our growth markets and overall in the company and so we're looking at that 9% as a floor as well in F. 'twenty six we actually do expect double digit growth.
Tien Tsin: And in subscription software and so yeah. We're looking forward to that I think that's the right way to look at it.
Speaker Change: Okay, great I understand the share repurchase but looking ahead now that you know what your focus in that density will be does M&A come back into the equation again for lightspeed to build out capabilities I think I heard that you mentioned in payroll for example.
Speaker Change: Just curious what your thinking is.
Speaker Change: On the acquisition front.
Speaker Change: Yeah, Yeah, I'll take that one we have no intention on large strategic M&A at this time since then but we remain opportunistic in like you've heard from docs on payroll.
Speaker Change: We see tuck in acquisitions that really further our malls or accelerate our road maps or actually provide any immediate software uplift through modules are then yes that would that that would be something we would look at it we're always the dialogue with our customers is always open.
Speaker Change: And so we're always looking for how do we accelerate roadmaps to put functionality in the hands of our customers that that theyre seeking and so if we were to find tuck ins like that we would definitely be open to it.
Speaker Change: Thank you.
Speaker Change: Your next question comes from the line of the Mafia Caddo Mills at UBS. Please go ahead.
Speaker Change: Great. Thank you for taking the question given the focus on the retail in North America, you mentioned the right to win there just was hoping you could dig in a little bit on the competitive environment, there and any updates there just noting that shopify is retail point of sale globally. That's now approaching roughly $35 billion or so and volumes are starting to scale and then this past fall.
Speaker Change: <unk> released some new SaaS packages, including those for retail vertical. So was just hoping you could provide a little bit of color on lightspeed retail differentiation versus those <unk> any other broader.
Speaker Change: Competitive environment updates.
Speaker Change: Yes.
Speaker Change: Yes. Thank you for the question Judy here.
Speaker Change: Some of the names that you mentioned there ultimately either strategy has to be broad and shallow.
Speaker Change: And our difference I'd Lightspeed is that we go deep in specific verticals, we call them fortress verticals internally.
Speaker Change: Where our solution really differentiate relative to the competitive landscape, so in sports and outdoors by golf.
Speaker Change: In apparel, and footwear and home and garden.
Speaker Change: They've been small because these are categories, where really our solution has the.
Speaker Change: Yes.
Speaker Change: These retailers are looking for particularly around inventory management.
Speaker Change: Very strong.
Speaker Change: For us and now coupled with our supplier network again.
Speaker Change: Strong differentiator.
Speaker Change: And so there what you see from a competitive landscape or more legacy solutions.
Speaker Change: That I have been around for a long time are subscale players that are.
Speaker Change: Focus on those verticals and really ultimately for US we we see unfortunately T to consolidate a lot of market share in those.
Speaker Change: In those areas.
Speaker Change: And continued to grow at a healthy pace.
Speaker Change: Thank you.
Speaker Change: Your next question comes from the line of Scott Copeland with CIBC. Please go ahead.
Scott Copeland: Great. Thanks, and good morning, everyone.
Speaker Change: Excuse me I had a follow up on the strategic review.
Speaker Change: I know you talked about high levels of engagement, but are you able to disclose whether there were any offers for the company.
Speaker Change: Yeah.
Yeah, we're not getting into the details of the process. Fortunately, but yes, we had strong engagement and we did have extensive discussions with several.
Speaker Change: Participants in the process I mean ultimately we.
Speaker Change: Determined and concluded that the best way to drive maximum shareholder value is to continue as a public company and execute our.
Speaker Change: Our transformation plan in that context.
Speaker Change: Thank you and then on the buyback.
Speaker Change: I'm not sure of the exact structure is it is it a just a plain buyback or have you contemplated.
Speaker Change: Other options such as substantial issuer bids just give us a little color on that thanks very much.
Todd: Hey, Todd Thanks for the question.
Todd: For the 100 million that we plan to start executing on immediately that's under the N. CIB are that the normal course issuer bid that we filed in this fiscal year.
Todd: Then for the additional authorization we are looking at at all our options.
Todd: We do plan to return capital in this upcoming fiscal year as well in addition to the $100 million, but you'll you'll hear more from us on the structure at our Investor Day next month.
Speaker Change: Great I appreciate that color. Thank you.
Speaker Change: And now for recharge, a chair with National Bank financial.
Speaker Change: Please go ahead.
Speaker Change: Yes, just quickly on new order and the supplier network can you.
Speaker Change: Talk about how that scaling and is this sort of BTB payments the way of monetizing that or do you have another sort of monetization plan for it.
Speaker Change: Thank you for the question I mean, there are multiple ways you can really see how our supplier network is materializing first and foremost as you pointed out our wholesale platform reorder continue.
Speaker Change: <unk> continues to make really solid progress, we announced them some customers that were closed in the quarter. As a reminder, brands amazing brands like our Terex Tom's 10 Baker are using that platform.
Speaker Change: Second as you know we've connected effectively our new order wholesale platform with <unk> with our point of sale.
Speaker Change: And so at the point of sale level now you can actually see.
Speaker Change: The inventory of your suppliers, which is a really a unique proposition that said that no one is able to offer.
Speaker Change: <unk>.
Speaker Change: We're really pleased with the progress there we've seen over 2000.
Speaker Change: Tos customers connecting to the supplier network and that number is growing significantly.
Speaker Change: And then lastly, if you think of how we're monetizing this offering you're really seeing it in our close rates are close rates have increased significantly in the verticals, where we have strong.
Speaker Change: Coverage with our supplier network.
Speaker Change: An example of that is in the pet segment, where we released.
Speaker Change: Our wholesale supplier catalog, we've seen close rates go up by 40%, which is really encouraging.
Speaker Change: And and also we're leveraging that as a as a cornerstone for outbound motion, we're reaching out to <unk>.
Speaker Change: Retailers that are carrying those brands in their store and highlighting the.
Speaker Change: The value proposition of using our point of sale to connect to those brands in a seamless way and here are two you can see the progress from a bookings perspective around our motion in retail is up 266% year over year, which is really encouraging.
Speaker Change: So all in all those different vectors are contributing to the monetization.
Speaker Change: You see now the impact on our overall revenue.
Speaker Change: For our retail.
Speaker Change: Our retail category.
Speaker Change: Okay and my other question has to do with sort of competition as well. So when you look at the.
Speaker Change: Mix of yours or new customer growth.
Speaker Change: What proportion of that from kind of new companies that are starting out versus competitive displacements.
Speaker Change: Yes, I mean, typically what you see is about a third of the customers we win.
Speaker Change: Coming from legacy providers existing existing businesses that are using legacy solutions. The other three typically come from businesses that are outgrowing.
Speaker Change: The more basic.
Speaker Change: Cloud based solutions out there some names that were mentioned earlier, they realize that with their growth with the ambition that we can continue.
With those players they need something more robust and with more functionality and that's where Lightspeed times and then lastly about a third remaining are brand new brand new businesses.
Speaker Change: That are not necessarily equipped with an existing solution.
Speaker Change: Okay.
Speaker Change: Okay. Thank you.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Your next question comes from the line of Martin <unk> with <unk> capital markets. Please go ahead.
Speaker Change: Thanks very much for taking my question can you talk about the drivers of gross margin compression and.
Speaker Change: <unk>.
Speaker Change: In the payments segment.
Speaker Change: Yeah, absolutely. Thanks for the question Martin.
Speaker Change: From a from a payments perspective.
Speaker Change: Margin what puts downward pressure on gross margin are two things in particular.
Speaker Change: The first one is residuals residuals come in at 100% gross margin just as a reminder, residuals as you know before we had our own payment solution, we would refer customers to an integrated payment provider in and we would get residuals on that revenue stream that that would was recognized net in our books and now as these non solicit.
It's run out we're taking those cohorts of customers and putting them on to lightspeed payments. So that is the biggest driver of the compression that youre seeing on gross margin, but overall gross profit dollars increases when we do that and so it's an overall net positive to lightspeed, but you will see compression on gross margin as a result of that.
Speaker Change: Motion.
Speaker Change: We are quite pleased with the fact that despite payments, becoming such a big part of our overall revenue portfolio, we've been able to keep overall gross margins in the 40% to 45% range.
Speaker Change: And that's because of a couple of things one is international expansion so payments internationally carries a higher gross margin over 30%.
Speaker Change: As compared to North America, which as you know is in the 2025% range.
Speaker Change: And in addition to that we have some pretty high gross margin items, such as capital instant payouts.
Speaker Change: Financial services offerings. These these are extreme come in at over 90% gross margins and so as we're growing those businesses, which are growing at a healthy clip.
Speaker Change: That is helping our overall gross margin and in that 40% to 45% range.
Speaker Change: Okay.
Speaker Change: That's great. Thank you very much.
Is there an opportunity to consolidate support by end of life thing.
Speaker Change: Some of the legacy acquired brands and.
Speaker Change: Is it material and what type of.
Speaker Change: Where are you guys in terms of.
Speaker Change: Taking a look at that.
Speaker Change: I mean, I think we've provided commentary on a couple of.
Speaker Change: Is that the stage on our legacy products at the end of the day.
Speaker Change: These are products that are driving.
Speaker Change: A lot of EBITDA for us.
Speaker Change: They're great customers.
Speaker Change: For the most part are happy to stay on that platform.
Speaker Change: And so we don't intend to.
Speaker Change: Sunset those platforms entirely are we encouraging some of these customers to move to our flagships because they see expanded features extended functionality, but we're not force migrating those customers and so what you can expect from US is over time of course, those platforms or will have less and less of our base.
Speaker Change: And then you Youll continue to see our flagship products.
Speaker Change: Take on more share of our overall base size of next year, we're expecting that to cross.
Speaker Change: About 50% of our overall locations being on our flagships, but.
Speaker Change: But we're not force migrating.
Speaker Change: These.
Speaker Change: These legacy products and ultimately support costs are low and R&D costs are low for these products. So.
Speaker Change: That helps them contribute to profitability for the company.
Speaker Change: Perfect. Thank you very much that's all for me.
Daniel Chen: Your last question comes from the line of Daniel Chen with <unk>.
Colin: Colin Please go ahead.
Daniel Chen: Hi, Good morning, Thanks for squeezing me in I actually you talked about some of the mix and seasonality in your in your G. TV affecting the payments penetration rate can you remind us how that seasonality changes in Q1 to give you confidence around the end of year payments penetration target.
Daniel Chen: Golf will continue to be soft into your Q4 quarter as well.
Yeah, Yeah. Thanks, Thanks, a lot for the question Dan if I if I give you just sort of you know the.
Daniel Chen: Sequencing of what happens to the GTA V throw out there I think you'll you'll get a nice idea.
Daniel Chen: This quarter as you know our fiscal Q4 is the seasonally weakest quarter for GTA V in and we see that across retail as well as hospitality.
Daniel Chen: As you as you move into Q1, you actually do see that GTA V improving for both retail and hospitality.
Daniel Chen: Q2, which is our fiscal Q2, which is the summer is a very high seasonal quarter for hospitality, that's where everyone is dining out and then in particular European hospitality, where we're very strong and then in Q3. The GTA V. Typically remains very strong because it's a very high GTD quarter for retail given the holiday.
Daniel Chen: Shopping season as well so.
Daniel Chen: With Q4 being the seasonally slowest quarter Q1, where we see a nice growth and then Q2 and Q3 being our strongest GTD quarters. That's how you should look at it.
Daniel Chen: Okay.
Speaker Change: Okay. Thank you and then on the on the increased fiscal 'twenty five EBITDA guide if I back into the Q4 EBITDA margin seems to indicate a sequential decline in the EBITDA margin.
Daniel Chen: The reason to expect that EBITDA to compress from the strength you saw this quarter.
Daniel Chen: No actually what when we you know we could talk about that in the one on one but the sequential EBITDA margin you know it.
Daniel Chen: Stays the same and it actually improves a little bit when you think about overall adjusted EBITDA and the revenue for the quarter and so you know you've seen us raise the EBITDA guide every quarter. This year the $53 million of the over 53 that we just guided for the year is about 30% higher than the guide at the initial the initial started the year. So we're pretty pleased.
Daniel Chen: With EBITDA progression and we expect that EBITDA margin to improve.
Daniel Chen: Each quarter from here on.
Daniel Chen: Sounds good thank you.
Daniel Chen: Okay.
Daniel Chen: And that concludes our Q&A session for today.
Speaker Change: I will now turn the call over back to Gosh potash, Eddie you head of Investor Relations. Please go ahead.
Speaker Change: Thanks, Gail thanks, everyone for joining us today.
Speaker Change: Anyone has any follow up questions, we'll be around all day, and we look forward to seeing everybody at the New York Stock Exchange on March 26 for our capital markets day have a great day everyone.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: And that concludes ladies and gentlemen that concludes our call for today. Thank you all for joining you may now disconnect. Thanks have a nice day everyone.
Speaker Change: Please wait the conference will begin shortly.
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