Lightspeed Commerce Inc.

Good morning, my name is Krista and I'll be your conference operator today. At this time, I would like to welcome everyone to the Lightspeed third quarter 2024 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, we will have a question and answer session. If you would like to ask a question at that time, simply press star followed by the number one on your telephone keypad. And if you would like to withdraw your question, again, press star one. Thank you. I would now like to turn the conference over to Gus Papagiorgio, head of investor relations. You may begin.

Thank you, operator, and good morning, everyone. Welcome to Lightspeed's fiscal Q3 2024 conference call. Joining me today are J.P. Chauvet, Lightspeed's chief executive officer, and Asha Bakshani, our chief financial officer. After prepared remarks, we will open it 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. We undertake no obligation to update these statements except as required by law. You should carefully review these factors, assumptions, and uncertainties in our earnings press release issued earlier today, our third quarter 2024 results presentation available on our website, as well as in our filings with US and Canadian securities regulators. Also, our comments today will include adjusted financial measures, which are non-IFRS measures and ratios. These should be considered as a supplement to and not a substitute for IFRS financial measures. Reconciliations between the two can be found in our earnings press release which is available on our website, on CDER+, and on the FCC'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 JP.

Thank you, Gus, and welcome, everyone. Lightspeed continues to deliver on its key objectives for the year in Q3. Our Unified Payments Initiative helped us deliver revenue of $239.7 million up 27% year-over-year, and above the high end of our previously established outlook of between $232 to $237 million. Adjusted EBITDA of $3.6 million also came in stronger than our outlook of $2 million. This is our second consecutive quarter of positive adjusted EBITDA performance. GTV as a percentage of GTV was just under 30% this quarter, which is a noteworthy improvement from 25% last quarter and puts us well on track to meet our goal of 30% to 35% by the end of our fiscal year. Given that we are in the final stretches of 2024, I feel very confident that we will meet all our key objectives for the year. As a reminder, these objectives were, one, reaping the benefits of One Lightspeed, two, accelerating revenue growth from financial services, including lightspeed payments and lightspeed capital, Three, continuing to build products that solve our customers' problems and help them run their businesses, particularly with our supplier network. And four, achieving adjusted EBITDA breakeven or better for the full fiscal year. As fiscal 24 is drawing to a close, we are beginning to turn our attention to next year. I will provide a more detailed outlook of our goals for fiscal 25 in our next earnings call. However, I want to recap the tremendous achievements our organization has accomplished since completing our initial IPO five years ago. We consolidated our industry by acquiring and successfully integrating nine companies into two industry-leading platforms. We rolled out Lightspeed payments to our global customer base. We grew revenue over tenfold and GTV over fivefold. And we undertook the necessary measures to achieve adjusted EBITDA profitability having now emerged as a profitable company with strong organic revenue growth. These significant accomplishments took years of effort and a lot of hard work. I want to thank everyone at Lightspeed for their dedication and commitment. Of course, there is still work to do, but going forward, Lightspeed's main focus will be on growing its top line while maintaining adjusted EBITDA positive performance. But I want to stress that growth will be our top priority. We intend to continue to generate positive adjusted EBITDA on an annualized basis, but as we balance the priorities of growth and profitability, the scale will tip towards growth. We operate in a space with a massive opportunity, and many of our target customers continue to use dated legacy systems. We believe the majority of these customers will adopt cloud-based offerings in the next few years. We are well positioned to benefit from this shift And with payments now tightly integrated into the software platform and mandatory for all eligible customers, we believe our unit economics will only improve. Clearly now is the time for us to keep our foot on the gas. In terms of One Light Beat, our code complete platforms are now available in almost all of our target global markets. I want to stress again that these are the best products we've ever shipped, and we continue to believe that the competitive gap between us and others in the market continues to widen. Expanding and innovating our product offerings continues to be a priority for Lightning. And as we look at our product roadmaps, we will continuously assess whether it's better to build or buy. M&A is part of this company, DNA, and I believe our track record demonstrates that we know how to successfully identify, execute, and integrate meaningful acquisitions. M&A was critical in our ability to deliver the most compelling platforms for both retailers and restaurateurs, allowing us to offer best-in-class features such as analytics, ingredient management, and e-commerce within the timeframes that would not have been possible if we had developed these on our own. But at the same time, they did not hinder our business momentum. We continued to deliver very strong organic growth rates and achieved adjusted EBITDA profitability all while acquiring and integrating nine organizations. We also continue to focus on adding more high GTV customers. Let me share a few examples of our customer wins during the quarter. We are excited to announce the addition of three new Michelin star restaurants. First, the River Cafe in the UK, which is known to have trained some of the greatest chefs in the world. In Germany, we signed the iconic Hebel in downtown Hamburg and Prism in Berlin, all of whom chose Lightspeed restaurants. Also, Attica, a regular in the world's 50 best restaurants list, has selected Lightspeed to operate their fine-dine restaurant in Melbourne. On the retail front, we added a number of locations for Lole Clothing, the Canadian athletic apparel designer that switched to Lightspeed from one of our cloud-based competitors. In the US, we signed Fit My Feet, from their on-premise legacy POS system. In the UK, we signed two locations from the high-end bike brand Finarello. Family-owned and operated since 1952, Finarello has one simple objective, to make the world's best bikes. In the quarter, Lightspeed was proud to be the retail POS for TwitchCon, the annual conference for the widely popular livestream video gaming platform Twitch, with over 60,000 attendees hosted in Las Vegas. And finally, we signed up several new brands for our supplier network, including casual lifestyle brand Tommy Bahama, Canadian footwear brand Baffin, and the casual men's apparel company Untuckit. The list of high-value brands on our supplier network continues to expand. We remain focused on building an integrated supply chain that links high-value brands to retailers and end consumers. We continue to invest in our supplier network and remain highly confident It'll be a significant differentiator for our retail platform, as well as a valuable source of new revenue streams. Moving on to Unified Payments. At this stage, I'm confident we will meet our goal of GPV representing 30% to 35% of GTV by our fiscal year end, and that our Unified Payments initiative has proven to be a success. We continue to see ongoing progress in North America and rolled out our efforts in Europe and APAC in Q3. As expected, converting customers to payments in Europe and APAC will likely take longer than in North America. We are one of the first players to unify software with payments in Europe, particularly in continental Europe, and so there is more effort involved in educating our customer base. We remain a very strong business in Europe and APAC and face less competition in those markets. Getting these customers onto payments improves our unit economics. So despite a lengthier time to transact in these regions, we are confident this is the right strategy and beneficial to our customers. The benefits of combining payments with software are undeniable. It saves our customers time and delivers much greater insight into their business operations while adding no cost the majority of the time. These advantages are just as applicable to our customers in EMEA and ABAC as they are to customers in North America. As we exit our fiscal 24, our account management teams in North America will gradually go back to upselling software in addition to payments. But we expect to continue to make progress on expanding payments throughout fiscal 25. So while we expect to end 2024 with GPV as a proportion of GTV at between 30 to 35%, we foresee this number continuing to grow throughout fiscal 25. On the product side, we continue to deliver innovative features that help our customers manage and scale their businesses. We had several exciting new product launches this quarter. In the US, we launched instant payouts, allowing retailers to access funds immediately, no matter the date or time. Although still in the early stages, this offering saw very strong initial reception. We launched Lightbeat Capital into France, the Netherlands, and Belgium this quarter, and Germany shortly after the quarter, expanding our global footprint for this high-margin offering. For our customers in the US, we launched Lightspeed Tableside, a compact, portable, and flexible POS and payments processing device for restaurants. With Lightspeed Tableside, servers can instantly process orders and accept payments on an iPhone, reducing wait times, increasing table turnover, and improving customer satisfaction. And we also launched Tap to Pay on iPhone in both the UK and the Netherlands, allowing customers in those regions to accept payments right on their iPhone. We introduced Lightspeed Retail and New Order integration into the flagship retail offering, allowing our retailer customers to order directly from thousands of brands through the New Order by Lightspeed platform, giving our SMB customers the power of an advanced technology platform that was recently only available to enterprise customers and saving them several hours per week. Within Lightspeed Retail, we launched enhancements to advance insights. which will allow retailers to make even better decisions on what to stock, what to discount, and what to promote through new inventory and sales reports. Finally, on the topic of profitability, again, we are committed to being adjusted EBITDA breakeven or better for fiscal 24 and believe we are well positioned to meet that goal. This will put us in a strong position as we advance into next year with breakeven or better adjusted EBITDA and growing top line. As I mentioned at the start of the call, we will balance the dual priorities of growth and profitability, and our focus will be on growth. Though we are focused on adjusted EBITDA profitability, as our GTV continues to grow, some of the incremental profits will be channeled towards expanding our outbound, our feed on the street sales motion. We expect that the unit economics on outbound will be better as these salespeople are more efficient at targeting high GTV customers. I believe expanding outbound can improve our growth rates, however, I want to highlight that the investment year will precede the growth. It takes time to hire and train salespeople, and it generally takes 6 to 12 months for them to become highly productive. I will now turn the call over to Asha to take us through the quarterly results and provide outlook.