Lightspeed Commerce Inc.

Good morning. My name is Chris, and I will be your conference operator today. At this time, I'd like to welcome everyone to the Lightspeed first quarter 2020 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. If you would like to withdraw your question, press the pound key. Thank you. Chris Mimone, Investor Relations. you may begin your conference.

Thank you, operator, and good morning, everyone. Welcome to Lightspeed's fiscal first quarter conference call. Joining me today are Zach Stasilva, Lightspeed's founder and CEO, Brandon Nussie, Chief Financial Officer, and J.P. Chauvet, President of Lightspeed. After prepared remarks, we will open it up for your questions. We will make forward-looking statements on our call today that are based on assumptions and, therefore, subject to risks and uncertainties that could cause actual results to differ materially from those projected. We undertake no obligation to update these statements except as required by law. You can read about these risks and uncertainties in our earnings press release from yesterday, as well as in our filings with Canadian securities regulatory authorities. Also, our commentary today will include adjusted financial measures which are non-IFRS measures. These should be considered as a supplement to and not a substitute for IFRS financial measures. Reconciliations between the two can be found in our earnings press release, which is available on our website. 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 Dex.

Thanks, Chris, and thank you, everyone, for joining us. We're pleased to announce another great quarter for Lightspeed as we continue our journey of building a recognized market leader for SMB retailers and restaurateurs globally. This past quarter demonstrated solid execution on a number of our stated growth strategies to ensure Lightspeed remains the leading cloud-based solution in our segment. The result was accelerated top-line growth during the first quarter. Total revenue grew by 38% and topped $24 million. Approximately 90% of this base consists of recurring software and payments revenue, which grew 40% during the first quarter. We continue to be extremely pleased with the overall pace of business expansion as we soundly execute on our mission of helping complex, small, and medium-sized businesses thrive in a world with rapidly changing consumer expectations. Our core belief is that cities and communities are built on the success of local SMBs, and our work as their key technology partner is more important than ever, particularly as today's consumer demands a delightful in-store or in-restaurant experience. We believe that Complex SMB is seeking a recognized global market leader for the solutions we provide, and we're pleased with the progress we're making to be known as that go-to player. GDP growth of greater than 30% over the last 12 months to approximately $15.6 billion is is an effective gauge of a healthy, growing customer base that is finding increased success through partnering with Lightspeed. As we look forward, we will continue to grow organically in three primary ways, attracting new merchants, entering new markets, and expanding ARPU. First, continuing to attract new merchants within our existing core markets. Our market is vast and underserved by cloud technology solutions. and we will leverage our growing global brand to attract an increasing number of new merchants to the Lightspeed platform. During the first quarter, more than 2,000 net new retail and restaurant locations joined the Lightspeed ecosystem. We were particularly pleased with our progress in North America this quarter as we saw a considerable uptick in our new sales and top-of-funnel activity on the back of increased awareness of Lightspeed and our focused investments to drive those results. We are well positioned to continue growing our overall location count by greater than 20% per year, while simultaneously generating solid underlying unit economics. Our second organic growth avenue is to selectively enter new markets. Leveraging our sales and marketing expertise in our core markets, we believe new countries and new end markets all represent a compelling opportunity for us. With just about one-third of our revenue coming from outside North America today, we see tremendous runway to continue to grow that overall contribution over time. Although we prefer to pursue new end market growth organically, we also won't hesitate to buy meaningful scale and market leadership in new geographies when it makes financial sense to do so. And that was certainly the case with our acquisition of ICAN2, which I'll discuss further in a moment. And the third way we grow organically is through ARPU expansion. we have amassed the industry's broadest set of functionality for our customers. We continue to see a significant percentage of new and existing customers paying for more than one Lightspeed product, and increasingly, multiple modules being adopted initially by customers, which are encouraging signs. Lightspeed analytics, Lightspeed loyalty, and Lightspeed payments all continue to be notable success stories for us, affirming our strategy of being a one-stop shop for the core commerce needs for our customers. On Lightspeed Payments specifically, our encouraging launch continues. This past quarter, close to 50% of new US retail customers bought payments alongside their Lightspeed software subscription. Meanwhile, hundreds more customers from our existing base made the decision to adopt Lightspeed Payments over their incumbent solution. Our early successes here serve as a welcome validation that this is the right strategy to deploy. To ensure we continue to see this new customer momentum continue, we announced numerous product innovations, which I'll discuss later in my remarks. But first, I'd like to highlight some recent successes with our channel partner strategy as yet another lever we are utilizing to bolster our go-to-market approach. We work with many great channel partners to help our complex SMB customers manage all aspects of commerce in their business. Recent strategic partners brought into the LightSeed ecosystem include FAIR, which has integrated its marketplace for buying wholesale products into the LightSeed retail solution, and Affirm, to offer point-of-sale financing options for shoppers at LightSeed retail locations. In addition to these three primary organic growth factors, we believe a targeted and opportunistic approach to M&A is also important to solidifying our leadership position globally. Our M&A strategy is to look for targets that will accelerate our product roadmap, increase our market penetration in a way that doesn't slow us down with complicated integration efforts, and add significant value for our shareholders. Longer term, we believe the increased scale will drive significant opportunities for the business to upsell modules, unlock strategies using the immense amount of transaction-level data our systems generate, and monetize an increasing base of GTV. Last quarter, we announced the acquisition of Montreal-based ChronoGolf, which brought us instant leadership in a vertical sub-segment, adding hundreds of golf course operators, primarily in North America. The integration of ChronoGolf, which has been a large software partner of ours over several years, is now completed and went very well as expected. More recently, we announced the acquisition of iCAN2, a rapidly growing cloud-based POS system specializing in the hospitality segment in Europe with close to 4,000 customers. ICAN2 is compelling to us for many reasons. Number one, it brings further platform breadth, capabilities, and upselling opportunities in EMEA in new countries such as Switzerland, France, and South Africa. Number two, iCAN2 brings Lightspeed complementary technology and experience well-suited for large and complex deployments, enabling Lightspeed to further accelerate the displacement of legacy POS providers globally. And number three, we're adding a talented team of passionate people with a similarly disruptive mindset to Lightspeed, which will help drive us forward to take even greater advantage of the structural tailwinds at play in this marketplace. Brandon will comment further about the financial details surrounding this acquisition during his prepared remarks. But first, I'll speak to how some customers operating in complex environments have benefited through integrating iCAN2's advanced solution. iCAN2 recently replaced the legacy system for a five-star hotel group to manage all of their food and beverage POS needs by deploying more than 100 devices across several properties. And this summer, iCAN2 has been powering two large European music festivals, attended by more than half a million people, in one instance functioning as a centralized POS for managing more than 50 food vendors, and in the other case, used on more than 500 devices during two very high-volume weekends. Turning now to some of LightSeed's most exciting recent developments on the new customer and product innovation front that further our position as the leading cloud-based end-to-end solutions platform in our space. Lightspeed continues to enjoy strong customer momentum from complex retailers and restaurateurs in North America and around the world, many of whom continue to select Lightspeed given our ability to manage their omnichannel business needs seamlessly. Customers such as Herschel Supply Company, an affinity backpack brand with dozens of retail locations, UK-acclaimed Crosstown Donuts, and luxury hotel operator the Pearl Oban Hotel in the Scottish Highlands all selected Lightspeed in the quarter. Additionally, Kemper Sports, one of the largest golf course operators in the world, selected Lightspeed to replace their multiple legacy systems and power their golf courses, restaurants, and retail pro shops for over 100 properties across North America. Kemper will be making the full transition to Lightspeed over the coming months. Turning to our product innovation efforts, One of the main reasons customers in retail choose Lightspeed over other cloud-based solutions is our unmatched capabilities in helping a complex SMB manage their most important asset, their inventory. It follows that during the first quarter, we rolled out a multitude of enhanced data-driven inventory management control features and next-generation reporting capabilities to all Lightspeed retail clients, further distancing Lightspeed from other solutions in the marketplace. and giving our complex retail SMB more mastery over inventory tracking across all of their omnichannel workflows, including tighter management over pre-sales, back orders, and overselling. We have other major new product releases and enhancements coming within both the LightSeed retail and LightSeed restaurant platforms throughout the year, and I look forward to sharing with you more of the details around this rapid product velocity, which is an absolute hallmark trait of LightSeed in future earnings calls. And lastly, I'm thrilled to have our new Chief Product Officer, Jim Tessier, join us in a few weeks to help us go even further. To sum up, it was another great quarter. I've never been more excited about the future for our business, and I'm really proud to see the hard work from the entire Lightspeed team translate into stellar results for our company and our customers. We have the momentum, the team, the vision, and the technology to be the clear leader for complex SMBs globally. I'll now turn it over to Brandon to provide greater detail around the financials for the quarter, as well as to provide our updated outlook for fiscal 2020. Brandon? Thanks, Dax.