Lightspeed Commerce (LSPD) Reports Q3 Revenue of $152.7M, EPS of ($0.07)

Lightspeed Commerce Inc. (NYSE: LSPD), the one-stop commerce platform for merchants around the world to simplify, scale and create exceptional customer experiences, today announced financial results for the three-and nine-month periods ended December 31, 2021.

Third Quarter Financial Highlights(All comparisons are relative to the three-month period ended December 31, 2020 unless otherwise stated):

• Total revenue of $152.7 million, an increase of 165%
• Subscription revenue of $68.6 million, an increase of 123%
• Transaction-based revenue of $75.8 million, an increase of 249%
• Net Loss of ($65.5) million as compared to a net loss of ($42.7) million. After adjusting for certain items such as acquisition-related costs and share-based compensation, Adjusted Loss[1] was ($9.9) million, or ($0.07) per share[1], an improvement to (6.5)% of revenue[1] from (15.9)%
• Adjusted EBITDA[1] loss of $(7.1) million, representing (4.7)% of revenue[1] versus (11.4)%
• At December 31, 2021, Lightspeed had ~$1 billion in unrestricted cash and cash equivalents

In the quarter, Lightspeed completed the acquisition of Ecwid. The table below distinguishes certain quarterly financial measures and key performance indicators between Lightspeed's traditional operations and those of this newly acquired company.

The Company separately announced today that the Lightspeed board of directors has appointed current president JP Chauvet to Chief Executive Officer, effective immediately. In this role, Mr. Chauvet will directly lead Lightspeed's continued growth and strategic development and execution. Founder and long-time CEO Dax Dasilva will continue to serve Lightspeed in the newly-created role of Executive Chair of the board of directors. As Executive Chair, Mr. Dasilva will work with Mr. Chauvet and the Board to set the strategic direction of the Company, with a focus on furthering Lightspeed's business advocacy and global sustainability initiatives through stakeholder outreach, customer advocacy, corporate social responsibility (CSR) and Diversity, Equity and Inclusion (DEI) initiatives. Additionally, in connection with this transition, Patrick Pichette, current Chair, will become the Board's Lead Independent Director. Please refer to the press release issued today for further details.

"Powered by Lightspeed's leading omni-channel capabilities our customers showed exceptional resilience, growing at almost twice the industry average[4]." said JP Chauvet, CEO of Lightspeed. "Lightspeed's modern cloud-based platform continues to drive tremendous value for merchants in our target verticals, as evidenced by our strong GTV performance in the quarter."

"Lightspeed had another strong quarter, achieving organic growth in software and transaction based revenue of 74%" said Chief Financial and Operations Officer Brandon Nussey. "The diversity of our customer base and multiple growth levers in our business model continue to serve us well and give us confidence in the long term durability of our growth model."Operational Highlights

• Total revenue of $152.7 million was up 165% year-over-year due in part to a combination of strong organic[3] growth and $25.9 million in revenue from the recent acquisitions of Vend, NuORDER and Ecwid.
• Subscription and transaction-based revenue grew 175% year-over-year to $144.4 million due in part to a combination of strong organic growth and the recent acquisitions of Vend, NuORDER and Ecwid. Organic growth in subscription and transaction-based revenues was 74% year-over-year.
• Subscription revenue increased 123% year-over-year to $68.6 million and was assisted by the recent acquisitions of Ecwid, NuORDER, and Vend and the growing number of Customer Locations, which totaled approximately 315,000 at the end of the quarter, an increase of 174% year-over-year. When excluding the impact from our recent acquisition of Ecwid, Customer Locations grew to over 159,000 from almost 115,000 in the same quarter last year. Growth in subscription revenue was also assisted by an increased number of customers adopting multiple software modules.
• Transaction-based revenue of $75.8 million grew by a total of 249% year-over-year. The strong performance was a result of continued growth in GTV and an increasing portion of that GTV being processed through the Company's payments solutions. For the payments solutions in respect of which Lightspeed acts as principal, the dollar volumes processed increased over 300% to $2.2B from $0.6B in the same period last year and the Customer Locations using them increased by 195%. The recent acquisition of Vend also contributed to increased transaction-based revenue.
• The monthly ARPU of our Customer Locations grew to approximately $290 compared to approximately $180 in the same quarter last year after excluding the recent acquisition of Ecwid. When including the impact of Ecwid on the quarter, whose approximately 156,000 Customer Locations carry a lower ARPU, monthly ARPU was approximately $155 per Customer Location.

• For the quarter, Lightspeed delivered GTV of $20.4 billion up 124% year-over-year. Omni-channel retail GTV grew by 115% whereas hospitality GTV grew by 137%. Organic GTV growth was 53% year-over-year, with organic omni-channel retail GTV growing at 36% and organic hospitality GTV growing at 79%.
• As of December 31, 2021, $5.3 million of merchant cash advances were outstanding, up 13% from the previous quarter.
• Adjusted EBITDA in the quarter was $(7.1) million versus $(6.6) million in the same quarter last year. As a percent of revenues, Adjusted EBITDA was (4.7)% versus (11.4)% for the same quarter last year. Operating expenses such as sales and marketing, research and development and general and administrative declined as a proportion of revenue in this quarter versus the same quarter last year as the Company recognized the benefits of increased scale.
• After the quarter, the Company announced the appointments of internationally-recognized technology entrepreneurs Nathalie Gaveau and Dale Murray to its board of directors, bringing extensive knowledge of the European and Asia-Pacific markets to an already distinguished board.

Financial Outlook

Lightspeed's core business drivers continue to perform well with Customer Locations, software adoption and GTV growth all supportive of the Company's longer-term opportunity. In the near term, with the growing share of transaction-based revenue within the revenue mix, seasonality is expected to become a bigger influence on quarterly revenue, particularly in the Company's fourth quarter. The near-term financial outlook incorporates the seasonal impact of transaction-based revenue and uncertainties in the macro environment including the ongoing effects of the COVID-19 pandemic, including the Omicron variant. Despite these challenges, the Company expects to deliver strong year-over-year growth for the fourth quarter. Having regard to these factors, Lightspeed expects revenue and Adjusted EBITDA to be in the following ranges:

Fiscal 2022

• Revenue of $540 - $544 million, increasing previous outlook of $520-$535 million.
• Adjusted EBITDA loss of approximately ($45) million in line with previous outlook of ($40) to ($45) million, or approximately (8)% as a percentage of revenue.
• This annual guidance implies the following for the fourth quarter:

Fourth Quarter 2022

• Revenue of $138 - $142 million.
• Adjusted EBITDA loss of approximately ($20) million, or approximately (14)% as a percentage of revenue.

The Company continues to believe that an organic subscription and transaction-based revenue growth rate[5] of 35% to 40% per annum is achievable.

When calculating the Adjusted EBITDA included in our financial outlook for the fourth quarter of FY2022, we considered IFRS measures including revenue, direct cost of revenue, and operating expenses. Our financial outlook is based on a number of assumptions, including that the jurisdictions in which Lightspeed has significant operations do not drastically strengthen or re-strengthen strict measures put in place to help slow the transmission of COVID-19 or put in place new or additional measures in response to the resurgence of the virus; requests for subscription pauses and churn rates owing to business failures remain in line with planned levels; our ability to grow our Customer Locations in line with our planned levels; revenue streams resulting from partner referrals remaining in line with historical rates (particularly in light of the continued expansion of Lightspeed Payments which competes with the solutions offered by some of these referral partners); customers adopting our payments processing solutions having an average GTV at or above that of our planned levels; future uptake of our payments processing solutions remaining in line with past rates and expectations; our ability to price our payments processing solutions in line with our expectations and to achieve suitable margins; our ability to achieve success in the continued expansion of our payments solutions beyond North American customers; historical seasonal trends return to certain of our key verticals and impact our GTV and transaction-based revenues; continued success in module adoption expansion throughout our customer base; our ability to successfully integrate the companies we have acquired and to derive the benefits we expect from the acquisition thereof; our ability to attract and retain key personnel required to achieve our plans; our ability to manage customer churn; our ability to manage customer discount and payment deferral requests; and assumptions as to foreign exchange rates. Our financial outlook, including the various underlying assumptions, constitutes forward-looking information and should be read in conjunction with the cautionary statement on forward-looking information below. Many factors may cause our actual results, level of activity, performance or achievements to differ materially from those expressed or implied by such forward-looking information, including but not limited to the risks and uncertainties related to: any pandemic such as the COVID-19 pandemic, the risk of any new or continued resurgence of the COVID-19 virus or any variants or mutations in our core geographies and the resulting impact on SMBs, including heightened levels of churn owing to business failures, requests for subscription pauses and delayed purchase decisions; our inability to attract and retain customers; our inability to increase customer sales; our inability to implement our growth strategy; our inability to continue the acceleration of the global rollout of our payments solutions; our reliance on a small number of suppliers for parts of the technology in Lightspeed Payments; our ability to maintain sufficient levels of hardware inventory; our inability to improve and enhance the functionality, performance, reliability, design, security and scalability of our platform; our inability to compete against competitors; strategic relations with third parties; our reliance on integration of third-party payment processing solutions; compatibility of our solutions with third-party applications and systems; changes to technologies on which our platform is reliant; our inability to obtain, maintain and protect our intellectual property; risks relating to international operations, sales and use of our platform in various countries; our liquidity and capital resources; litigation and regulatory compliance; changes in tax laws and their application; our ability to expand our sales, marketing and support capability and capacity; maintaining our customer service levels and reputation; macroeconomic factors affecting small and medium-sized businesses; and exchange rate fluctuations. The purpose of the forward-looking information is to provide the reader with a description of management's expectations regarding our financial performance and may not be appropriate for other purposes.

Long-Term Financial Outlook

Our long-term targets constitute financial outlook and forward-looking information within the meaning of applicable securities laws. The purpose of communicating long-term targets is to provide a description of management's expectations regarding our intended operating model, financial performance and growth prospects at a further stage of business maturity. Such information may not be appropriate for other purposes.

A number of assumptions were made by the Company in preparing our long-term targets, including:

• Continuation of favorable economic conditions in our core geographies and verticals, including relatively elevated consumer confidence, disposable income and employment.
• The COVID-19 pandemic, including any variants, having durably subsided with broad immunity achieved in our core geographies and verticals, including the elimination of social distancing measures and other restrictions generally in such markets.
• Customer adoption of our payments solutions in line with past rates and expectations, with new customers having an average GTV at or above planned levels.
• Our ability to price our payment processing solutions in line with our expectations.
• Our ability to achieve success in the continued expansion of our payments solutions beyond North American customers.
• Revenue streams resulting from partner referrals remaining in line with historical rates (particularly in light of the continued expansion of Lightspeed Payments, which competes with the solutions offered by some of these referral partners).
• Long-term growth in ARPU of 10% or more per year, including growth in subscription ARPU, in line with past rates and expectations, driven by customer adoption of additional solutions and modules and the introduction of new solutions, modules and functionalities.
• Our ability to price solutions and modules in line with our expectations.
• Growth in Customer Locations in line with past rates and expectations, including continued organic growth in Customer Locations of approximately 15% per year.
• Our ability to successfully integrate acquired companies and to derive expected benefits from such acquisitions.
• Our ability to attract, develop and retain key personnel.
• The ability to effectively develop and expand our labour force, including our sales, marketing, support and product and technology operations, in each case both domestically and internationally.
• Our ability to manage customer churn.
• Our ability to manage requests for subscription pauses, customer discount and payment deferral requests.
• Assumptions as to foreign exchange rates and interest rates, including inflation.

Many factors may cause actual results, level of activity, performance or achievements to differ materially from those expressed or implied by such targets, including risk factors identified in our most recent Management's Discussion and Analysis of Financial Condition and Results of Operation and under "Risk Factors" in our most recent Annual Information Form. In particular, our long-term targets are subject to risks and uncertainties related to:

• The COVID-19 pandemic, including the risk of any new or continued resurgence in our core geographies and the resulting impact on SMBs, including heightened levels of churn owing to business failures, requests for subscription pauses, payment deferrals and delayed purchase decisions.
• Supply chain risk and the impact of shortages in the supply chain on our merchants.
• Other macroeconomic factors affecting SMBs.
• Our ability to implement our growth strategy.
• The substantial investments and expenditures required in the foreseeable future to expand our business.
• Our liquidity and capital resources, including our ability to secure debt or equity financing on satisfactory terms.
• Our ability to increase scale and operating leverage.
• Our ability to continue the acceleration of the global rollout of our payments solutions.
• Our reliance on a small number of suppliers for parts of the technology in our payments solutions.
• Our ability to improve and enhance the functionality, performance, reliability, design, security and scalability of our platform.
• Our ability to compete and satisfactorily price our solutions in a highly fragmented and competitive market.
• Strategic relations with third parties, including our reliance on integration of third-party payment processing solutions.
• Our ability to maintain sufficient levels of hardware inventory.
• Compatibility of our solutions with third-party applications and systems.
• Changes to technologies on which our platform is reliant.
• Our ability to obtain, maintain and protect our intellectual property.
• Risks relating to our international operations, sales and use of our platform in various countries.
• Seasonality in our business and in the business of our customers.
• Litigation and regulatory compliance.
• Our ability to expand our sales capability and maintain our customer service levels and reputation.
• Our expectation to continue pursuing acquisitions or other strategic opportunities, some of which may be material in size or result in significant integration difficulties or expenditures, or otherwise impact our ability to achieve profitability on our intended timeline or at all.

See also the section entitled "Forward-Looking Statements" in this press release.

Conference Call and Webcast Information

Lightspeed will host a conference call and webcast to discuss the Company's financial results at 8:00 am ET on Thursday, February 3, 2022. To access the telephonic version of the conference call, visit https://conferencingportals.com/event/rPYvDbSx. After registering, instructions will be shared on how to join the call including dial-in information as well as a unique passcode and registrant ID. At the time of the call, registered participants will dial in using the numbers from the confirmation email, and upon entering their unique passcode and ID, will be entered directly into the conference. Alternatively, the webcast will be available live on the Investors section of the Company's website at https://investors.lightspeedhq.com.

An audio replay of the call will also be available to investors beginning at approximately 11:00 a.m. Eastern Time on February 3, 2022, until 11:59 p.m. Eastern Time on February 10, 2022, by dialing 800.770.2030 for the U.S. or Canada, or 647.362.9199 for international callers and providing conference ID 74316. In addition, an archived webcast will be available on the Investors section of the Company's website at https://investors.lightspeedhq.com.

Lightspeed's unaudited condensed interim consolidated financial statements and management's discussion and analysis for the three-and nine-month periods ended December 31, 2021 are available on Lightspeed's website at https://investors.lightspeedhq.com and will be filed on SEDAR at www.sedar.com and on EDGAR at www.sec.gov.

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