Lightspeed Commerce Inc.

Thank you for standing by. My name is Ian, and I will be your conference operator today. At this time, I would like to welcome everyone to the Lightspeed First Quarter 2025 earnings 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, follow the number one on your telephone keypad. If you would like to withdraw your question, again, press star one. Thank you. I will now hand things over to Gus Papagiorgio, head of investor relations. You may begin your conference.

Thank you, operator, and good morning, everyone. Welcome to Lightspeed's fiscal Q1 2025 conference call. Joining me today are Dax Basilda, Lightspeed's founder and CEO, Asha Bhakshani, our CFO, and JD St. Martin, our president. After prepared remarks from Dax and Asha, 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, risks, and uncertainties in our earnings press release issued today our first quarter 2025 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 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 CEDAR Plus, and 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. Before I hand the call over to Dax, I just want to remind everyone that we will be hosting our Capital Markets Day the morning of Wednesday, November 20th at the New York Stock Exchange. Please mark your calendars, and more details will follow. With that, I will turn it over to Dax.

Thanks, Gus, and welcome, everyone. This is my first full quarter returning as Lightspeed CEO. and I'm happy to report that we are delivering on our goal of profitable growth. Our first quarter results were characterized by strong revenue growth, increased payment adoption, and improved profitability, a trend that I expect to continue through fiscal 2025. We've also put measures in place to accelerate growth in our software revenue and customer locations that will largely be seen in the second half of our year. In Q1, we delivered revenue of $266.1 million, up 27% year over year, and significantly We delivered adjusted EBITDA of 10.2 million, again, well ahead of our previously established outlook of 7 million, and significantly better than an adjusted EBITDA loss of 7 million in the same quarter last year. Payments penetration came in at 36% this past quarter, up meaningfully from 22% in the same quarter last year. Our growing payments penetration, along with a concentrated effort to control costs, allowed us to demonstrate the leverage of our business model and deliver record quarterly adjusted EBITDA results. These strong financial results demonstrate light-speed success in fulfilling our mission of empowering independent retail and hospitality businesses with technology that was previously limited to large enterprises. Our focus remains on attracting our ideal customer profile, or ICP, being sophisticated high-GDP merchants with complex needs. This quarter, we were honored to add a host of compelling new customers, including Google Bike in California, a set of three bike shops on the Google campus. G-Bike allows employees to service and tune their bikes while at work. These three locations and their warehouse will use Lightseed Retail to help serve their customers. Horkins in Dublin, Ireland, with three brands across 17 locations. This well-known home, garden, and pet retailer adopted Lightseed's offering in all 17 locations after a successful three-location pilot. Caravelle Shoes. saw the benefit of the unified light-feed retail solution to replace its separate POS and payment solutions. Foodmaker, a well-known health food restaurant group in Benelux in France, with over 20 locations. Foodmaker was unhappy with their current POS provider and looking for a solution that could better handle their multi-location requirements. After a successful one-location pilot, they planned to start rolling out light-feed restaurants across other locations. Northgate Resorts. With over 20 locations across the U.S., Northgate was looking for a more sophisticated cloud-based offering to manage their multi-location needs. They undertook a one-month pilot of Lightspeed Restaurants, Tableside, and Order Anywhere, and so far have onboarded 10 locations with great success. Denim Coffee, a highly successful boutique coffeehouse chain in downtown Toronto with five locations processing millions in annual GDP, has signed on for Lightspeed Restaurants. Deneen plans to onboard its locations over the next few months to help them compete against the giants in the coffee industry. And for our supplier network, we added several new brands, such as Tommy Hilfiger, Calvin Klein, and Valley, the well-known Swiss luxury footwear and handbag provider. I am always happy to welcome you customers to Lightspeed, but it is sometimes even more satisfying to welcome back customers that have previously left for one of our competitors. Having initially lost wedding dress retailer Amelia Wickstead to one of our cloud-based competitors, we are happy to see them returning to Lightspeed given the depth of inventory management, reporting, and multi-location functionality found within Lightspeed retail. As many of you know, I developed the original Lightspeed offering about 20 years ago, and I have always been very product-focused. And in this area, I am thrilled with the innovations that our R&D teams are delivering. The one-light-seat initiative gave us two compelling flagships, and now that the integration is done, I'm encouraged with the pace of innovation that we are seeing. We launched visionary new functionality this quarter and saw great traction for some of our recently released innovations, with our teams delivering amazing features that I believe are going to delight and impress our existing customers and help us win many more. In retail, we launched our Omni Loyalty Program, which allows customers to earn and redeem loyalty credits both in-store and online. And for store owners and managers, the loyalty program can be managed directly from the POS without having to learn a new UI. Launched this quarter, we've already seen very strong uptake of this feature from our flagship customers. Our efforts in retail are focused on widening the moat between ourselves and other cloud-based competitors and displacing legacy players currently serving our ITP customers. This quarter, we've released three new advanced inventory management features which we believe are unique amongst our cloud-based competitors and especially useful for our ICP customers. These include landed costs, which incorporate items such as shipping and duties, its total product costs, bin location, which allows merchants to identify where products are located within warehouses and storage areas, and inventory adjustments, which allows merchants to record stock adjustments when and where they find them so that they can keep inventory records up to date. Last quarter, we announced improvements in inventory replenishing forecasts. which significantly improves the availability of previously out-of-stock products. This feature will be generally available this month, and we expect it will help merchants improve their sales. Another feature that saw great adoption was payment links. Here we are seeing GTV process through payment links growing by over 30% month over month. A popular module in hospitality is our analytics product called Lightspeed Advanced Insights. Insights allows hospitality customers to determine which menu items drive the most repeat business. so they can promote the items that are proven to increase sales and remove items that are underperforming. In retail, the challenge is maintaining the right amount of inventory on hand to maximize sales. Retailers want to have more stock of what is selling and less stock of what is not. Our teams have been working to deliver a retail insight solution that can help our merchants solve this problem, and I look forward to making an announcement on this release in the weeks to come. For our e-commerce offering, we recently released AI-powered product photo enhancements. Taking professional-looking photographs of products can be challenging for our merchants. Our AI tool can remove the background from photos, insert a colored backdrop, and create photorealistic shadows to enhance product images. Image quality can have a significant impact on boosting sales for our merchants, and we saw a tremendous update of this feature. And for our supplier network, I'm very excited to announce that we have started to 20 brands, including popular brands such as Yeti and Farmina. Merchants can now automatically upload product descriptions and images into their Lightspeed POS by simply typing in the product name, eliminating hours of key as manual data entry. We expect to add even more products to the retail catalogs this quarter, and we will be adding more catalogs from new and existing partnerships in the fashion and apparel and pet verticals. allowing brands to have better product planning for the upcoming season to ensure popular items remain in high supply. In hospitality, we announced the recent partnership with Uber. With simple flat rate pricing, this partnership will give our restaurant customers the ability to offer their own delivery service without hiring a single person or owning a vehicle, and also avoid the more costly alternative of using one of the many food delivery platforms. We continue to roll out our table side and tap-to-pay offerings in more countries within hospitality, which gives you the power of a full POS right in the palm of a server's hands. Table side with tap-to-pay launched for light speed restaurants in the UK and Canada, and tap-to-pay on iPhone launched in France and Australia. Our data shows that our table side customers have higher average check sizes, see better tips, and turn tables faster. Given its productivity improvements, can boost overall software R approved for restaurants. TableSide in and of itself is a fantastic offering, but we believe that when coupled with our soon to be released kitchen display technology, we will demonstrate a level of productivity improvement that restaurants have never seen before. Now I would like to take some time to discuss the year ahead. I will remind everyone that for fiscal 2025, we are focused on three key operational objectives aimed at achieving our goal of profitable growth. And these are continuing to advance adoption of our financial services, controlling costs and finding operational efficiencies, and accelerating software revenue growth and gaining market share. In terms of advancing adoption of our financial services, we saw great momentum in payments adoption this quarter and expect payments penetration to continue the upward trajectory. Lightseed Capital also had a great quarter with revenues of $7.8 million, up from $1.6 million in the same quarter last year. And in terms of controlling costs, We are also seeing great progress here on the back of some tough decisions. The combination of a growing top line and control costs are delivering improved operating leverage in our business. Having spent the last year focused on improving payment adoption, we are now turning our primary attention back to software growth, and we are both putting in necessary measures to grow that business that launch pilot initiatives. Our efforts include increasing our outbound sales motion with an expansive team, Gradually returning our account managers to their traditional roles of upselling software where previously many were deployed to accelerate payments adoption. Updating pricing across our portfolio of products for which we have recently started execution. This will impact revenues in the back half of the year. Perfecting all aspects of our customer journey in terms of how we land, launch, manage, and support our customers. Growing our brand awareness in key retail and hospitality verticals. And finally, launching new software modules that allow us to continue to expand software ARPU. We are already starting to execute these initiatives and expect them to land as we approach the second half of the year. Before I hand it over to Asha, I just want to highlight that we released our sustainability report last week. I'm very proud that the LightSuite offering can help improve our customers' sustainability efforts. LightSuite Restaurant allows our customers to reduce their reliance on paper. Our supplier network helps optimize supply chains and reduce waste. and our capital offering can help independent entrepreneurs grow and thrive. We've gone even further, for example, creating the carbon-friendly dining program, which helped plant over 1.8 million trees. And finally, we've created a culture that values diversity, where 86% of our employees feel that they can be their authentic self at work, and where women represent half of the executive leadership team. I will now let Asha take us through the quarterly results and provide our outlook.