Lightspeed Announces First Quarter 2021 Financial Results, Provides Outlook for Second Quarter

Worldwide Customer Locations Grew to over 77,000

First Quarter Recurring Software & Payments Revenue Grew 57% YoY

GTV Improved Throughout the Quarter with 53% Growth in June, Driven by Omnichannel

First Quarter GTV Related to eCommerce Grew Nearly 100% YoY

Strong Customer Uptake in Payments, with Record Quarterly Results

Lightspeed reports in U.S. dollars and in accordance with IFRS.

MONTREAL, Aug. 6, 2020 /CNW Telbec/ - Lightspeed POS Inc. ("Lightspeed" or the "Company") (TSX: LSPD), a leading provider of omnichannel commerce platforms, today announced financial results for the three-month period ended June 30, 2020.

First Quarter Financial Highlights

(All comparisons are relative to the three-month period ended June 30, 2019 unless otherwise stated):

• Total revenue of $36.2 million, an increase of 51%
• Recurring software and payments revenue of $33.4 million, an increase of 57%
• Gross margin of 60%, with gross profit up by 39% versus the prior year quarter
• Net loss of ($20.1) million as compared to a net loss of ($9.1) million
• Adjusted EBITDA¹ of ($2.2) million, compared to Adjusted EBITDA of ($5.1) million,
• Cash flows used in operating activities of $6.4 million, exclusive of $1.0 million in cash used for acquisition-related costs and stock-based compensation. Including those items, cash used in operations was $7.4 million
• At June 30, 2020, Lightspeed had $203.5 million in unrestricted cash and cash equivalents

COVID-19 has permanently altered the way retailers and restaurateurs run their businesses. As consumers increasingly move online, small and medium-sized businesses are finding success with Lightspeed's omnichannel solutions -  abandoning the inadequate legacy systems that hold the vast majority of the current market in order to gain the capabilities needed to run digital strategies alongside physical ones in a simple and integrated manner.

Lightspeed's customer base  showed a quick rebound from April lows induced by the pandemic. On the back of increased digital sales and the recovery of physical sales channels, overall GTV² growth accelerated throughout the quarter, culminating with 53% growth in June as compared to the prior year. Lightspeed saw strong new customer demand as well, growing its customer locations² to over 77,000 by the end of June. These factors combined to contribute to a record quarter of volumes processed by Lightspeed Payments, which continued its rapid growth trajectory.

^1	Non-IFRS measure. See "Non-IFRS Measures" and the reconciliation to the most directly comparable IFRS measure included in this press release
^2	Key Performance Indicator. See "Key Performance Indicators"

"The small- and medium-sized businesses we built Lightspeed to serve have risen to overcome historic challenges prompted by the global pandemic. Their resourcefulness and willingness to innovate has spurred an unprecedented digital transformation, proving why this nimble segment is the backbone of thriving economies all over the world," said Dax Dasilva, CEO of Lightspeed. "As they streamline their operations and reinvent the commerce experience, Lightspeed is their technology partner of choice. We remain committed to providing them the tools and tactics they need to remain leaders in their industries."

"We delivered another positive quarter in the face of a challenging macro environment. Most encouraging was the pace of new business as we witnessed accelerated customer adds through the quarter. Our retail customers are growing, and our restaurants are recovering. All told, our customer base has been resilient, especially those businesses leveraging our omni solutions," said Chief Financial Officer, Brandon Nussey. "Our solid first quarter execution positions us well to further capitalize on the global market opportunity in front of us."

Operational Highlights

• Total GTV grew by 17% to over $5.4 billion in the three-month period ended June 30, 2020 and to more than $23 billion for the trailing twelve-months ended June 30, 2020. After the initial softness in April, GTV growth accelerated during each successive month throughout the quarter, culminating with 53% year-over-year growth in the month of June
• Retail GTV rebounded on the back of strong performance by the bike, home and garden, sporting goods, and golf segments. Lightspeed Retail globally saw GTV growth of over 30% for the month of June compared to June 2019. For the quarter, growth was 13%
• Within Retail, eCommerce activity remains robust with a near 100% increase in eCommerce volumes processed by Lightspeed retailers in the first quarter compared to the prior year
• Restaurant GTV also bounced back sharply from the volumes witnessed at the quarter's outset (when volumes were down by >80%). By the end of June, overall Restaurant volumes were back to pre-COVID levels. The geographic diversity of Lightspeed Restaurant customers, which are largely outside of North America, continues to be an asset for the business as countries around the world emerge from COVID-19 at differing rates
• Lightspeed now powers over 77,000 customer locations worldwide, up from 75,500 customer locations as of April 30, 2020. Despite heightened churn, which was higher than the average churn levels experienced throughout last fiscal year, the pace of new customer locations coming to Lightspeed more than offset any lost customer locations over this period
• Lightspeed Payments revenue continued its upward trend through the quarter, culminating with a record month in June, led by increased online sales, the impact of new customer adoption, and good performance across several verticals. The portion of customers contracting for Lightspeed Payments alongside their core software subscription within U.S. Retail were comparable with the prior quarter, and exceeded 50% when including Lightspeed's new Payments markets of Canadian Retail and U.S. Hospitality
• Product innovation at Lightspeed has continued at an accelerated pace. Recently-introduced solutions enhance the omnichannel shopping experience, enable greater multi-location efficiencies and offer opportunities for improved productivity for Lightspeed retailers. Mobile Tap for Curbside Pick-Up and Contactless Payment offers greater flexibility for secure payment processing in situations of social distancing. Digital Wallet for eCommerce supports a plethora of payment methods globally in a secure and seamless one-click eCommerce checkout experience driving improved conversion online. Analytics Core is a new module that provides a lower-cost entry point to Lightspeed's existing analytics suite so that retailers have greater access to the insights on sales, inventory and employee performance necessary to make data-driven decisions about the future
• Lightspeed Hospitality launched an Order Ahead capability featuring expanded pickup and delivery tools. A new eCommerce for Restaurant offering (now in beta) features a complete redesign to better fit the evolving needs of customers. Finally, a fully redesigned hospitality system delivering on the Lightspeed promise of greatly simplifying complex hospitality workflows will be rolled out to all regions over the next several months
• In a separate release, the Company announced the initial availability of Lightspeed Capital in partnership with Stripe. This new offering will help U.S.-based merchants with overall business growth, whether that be buying inventory, investing in marketing, or managing cash flows. It is available for retailers using Lightspeed Payments in the U.S. and provides advances of up to $50,000 per retail location. Featured benefits of Lightspeed Capital for retailers include a fast and efficient approval process, automated and flexible repayments, accessible reporting, and data-driven eligibility
• Lightspeed is collaborating with Google on several broad-based initiatives to help physical businesses become more discoverable in the digital space. The first of these initiatives is the Google My Business advanced profile listing solution. Currently in beta, the offering helps Lightspeed customers get a professional Google My Business listing setup and running online in a matter of days. With this new feature, businesses will be able to manage the information that shows up on their Google listing straight from the Lightspeed UI

Financial Outlook

Our first quarter results coupled with improved visibility into the business versus the initial stages of the outbreak enables us to provide a financial outlook for the quarter ending September 30th. Reflecting our view of the risks and uncertainties related to the COVID-19 pandemic, Lightspeed anticipates revenue and Adjusted EBITDA to be in the following ranges:

Second Quarter 2021

• Revenues of $38 - $40 million
• Adjusted EBITDA of approximately ($7 - $8 million)

Owing to ongoing uncertainty regarding the duration and magnitude of the COVID-19 pandemic and the possibility of a resurgence, Lightspeed will not be providing full year guidance at this time.

When calculating the Adjusted EBITDA included in our financial outlook for second quarter 2021, we considered IFRS measures including revenues, direct cost of revenues, 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 reverse course on the progressive loosening of strict measures previously put in place to help slow the transmission of COVID-19 or put in place new strict measures in response to a resurgence of the virus; churn rates owing to business failures remain in line with current trends; our ability to grow our customer locations in line with historical rates; our continued receipt of partner referrals in line with historical referral 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 Lightspeed Payments having an average GTV at or above that of our average customer; future uptake of Lightspeed Payments remaining in line with past rates and expectations; our ability to price Lightspeed Payments in line with our expectations and to achieve suitable margins; our ability to achieve success in the continued expansion of Lightspeed Payments beyond U.S. and Canadian retail customers and U.S. restaurant customers; 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 manage customer churn; 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: COVID-19, the risk of any resurgence in our core geographies and the resulting impact on SMBs, including heightened levels of churn owing to business failures; attracting and retaining customers; increasing customer sales; implementing our growth strategy; continued acceleration of the rollout of Lightspeed Payments; our reliance on a small number of suppliers for parts of the technology in Lightspeed Payments; improving and enhancing the functionality, performance, reliability, design, security and scalability of our platform; our ability 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; obtaining, maintaining and protecting our intellectual property; international 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; expanding our sales capability; 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.

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, August 6, 2020. To access the conference call, visit http://www.directeventreg.com/registration/event/4790886. 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 August 6, 2020, until 11:59 p.m. Eastern Time on August 13, 2020, by dialing 800.585.8367 for the U.S. or Canada, or 416.621.4642 for international callers and provide conference ID 4790886. In addition, an archived webcast will be available on the Investors section of the Company's website at https://investors.lightspeedhq.com.

About Lightspeed

Lightspeed (TSX: LSPD) powers complex small and medium-sized businesses with its cloud-based, omnichannel commerce platforms in over 100 countries. With smart, scalable, and dependable point of sale systems, Lightspeed provides all-in-one solutions that drive innovation and digital transformation within the retail, hospitality, and golf industries. Its product suite enables SMBs to sell across channels, manage operations, engage with consumers, accept payments, and ultimately grow their business.

Headquartered in Montreal, Canada, Lightspeed is trusted by favorite local businesses worldwide, where their communities go to shop and dine. Lightspeed has staff located in Canada, USA, Europe, and Australia.

For more information, please visit: www.lightspeedhq.com

On social media: LinkedIn, Facebook, Instagram, YouTube, and Twitter

Non-IFRS Measures

The information presented herein includes certain financial measures such as "Adjusted EBITDA", "non-IFRS Gross Profit", "non-IFRS general and administrative expenses", "non-IFRS research and development expenses", and "non-IFRS sales and marketing expenses". These measures are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of our results of operations from management's perspective. Accordingly, these measures should not be considered in isolation nor as a substitute for analysis of our financial information reported under IFRS. These non-IFRS measures are used to provide investors with supplemental measures of our operating performance and thus may highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS measures. We also believe that securities analysts, investors and other interested parties frequently use non-IFRS measures in the evaluation of issuers. Our management also uses non-IFRS measures in order to facilitate operating performance comparisons from period to period, to prepare operating budgets and forecasts and to determine components of management compensation.

Non-IFRS gross profit, non-IFRS general and administrative expenses, non-IFRS research and development expenses, and non-IFRS sales and marketing expenses are non-IFRS financial measures that exclude the effect of stock-based compensation expense and related payroll taxes, and in the case of non-IFRS general and administrative expenses and non-IFRS sales and marketing expenses, transaction-related costs.

"Adjusted EBITDA" is calculated as net loss excluding interest, taxes, depreciation and amortization, or EBITDA, as adjusted for stock-based compensation and related payroll taxes, compensation expenses relating to acquisitions completed, foreign exchange gains and losses, and transaction-related expenses.

Key Performance Indicators

We monitor the following key performance indicators to help us evaluate our business, measure our performance, identify trends affecting our business, formulate business plans and make strategic decisions. Our key performance indicators may be calculated in a manner different than similar key performance indicators used by other companies.

Customer Locations. "Customer Location" means a billing customer location for which the term of services have not ended, or with which we are negotiating a renewal contract. A single unique customer can have multiple Customer Locations including physical and eCommerce sites.

Gross Transaction Volume. "Gross Transaction Volume" or "GTV" means the total dollar value of transactions processed through our cloud-based SaaS platform in the period, net of refunds, inclusive of shipping and handling, duty and value-added taxes.

Forward-Looking Statements

This news release contains "forward-looking information" and "forward-looking statements" (collectively, "forward-looking information") within the meaning of applicable securities laws. Forward looking information may relate to our financial outlook (including revenues and Adjusted EBITDA), and anticipated events or results and may include information regarding our financial position, business strategy, growth strategies, addressable markets, budgets, operations, financial results, taxes, dividend policy, plans and objectives. Particularly, information regarding our expectations of future results, performance, achievements, prospects or opportunities or the markets in which we operate and the impact of the COVID-19 pandemic declared by the World Health Organization on March 11, 2020 is forward-looking information.

In some cases, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "targets", "expects" or "does not expect", "is expected", "an opportunity exists", "budget", "scheduled", "estimates", "outlook", "forecasts", "projection", "prospects", "strategy", "intends", "anticipates", "does not anticipate", "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might", "will", "will be taken", "occur" or "be achieved", the negative of these terms and similar terminology. In addition, any statements that refer to expectations, intentions, projections or other characterizations of future events or circumstances contain forward-looking information. Statements containing forward-looking information are not historical facts but instead represent management's expectations, estimates and projections regarding future events or circumstances.

Forward-looking information is necessarily based on a number of opinions, estimates and assumptions that we considered appropriate and reasonable as of the date such statements are made, are subject to known and unknown risks, uncertainties, assumptions and other factors that may cause the actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking information, including but not limited to the risk factors identified in our most recent Management's Discussion and Analysis of Financial Condition and Results of Operations and under "Risk Factors" in our most recent Annual Information Form, both of which are available under our profile on SEDAR at www.sedar.com. If any of these risks or uncertainties materialize, or if the opinions, estimates or assumptions underlying the forward-looking information prove incorrect, actual results or future events might vary materially from those anticipated in the forward-looking information.

Although we have attempted to identify important risk factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other risk factors not presently known to us or that we presently believe are not material that could also cause actual results or future events to differ materially from those expressed in such forward-looking information. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. No forward-looking statement is a guarantee of future results. Accordingly, you should not place undue reliance on forward-looking information, which speaks only as of the date made. The forward-looking information contained in this news release represents our expectations as of the date of hereof (or as of the date they are otherwise stated to be made), and are subject to change after such date. However, we disclaim any intention or obligation or undertaking to update or revise any forward-looking information whether as a result of new information, future events or otherwise, except as required under applicable securities laws. All of the forward-looking information contained in this news release is expressly qualified by the foregoing cautionary statements.

Condensed Consolidated Statements of Loss and Comprehensive Loss
(expressed in thousands of US dollars, except share and per share amounts, unaudited)	Three months ended June 30,
	2020	2019
	$	$
Revenues	36,229	24,065
Direct cost of revenues	14,615	8,520
Gross profit	21,614	15,545
Operating expenses
General and administrative	6,771	3,790
Research and development	9,824	6,521
Sales and marketing	15,100	13,289
Depreciation of property and equipment	412	390
Depreciation of right-of-use assets	827	414
Foreign exchange loss (gain)	480	(330)
Acquisition-related compensation	5,129	707
Amortization of intangible assets	4,405	1,012
Total operating expenses	42,948	25,793
Operating loss	(21,334)	(10,248)
Net interest income (expense)	(301)	1,019
Loss before income taxes	(21,635)	(9,229)
Income tax expense (recovery)
Current	55	20
Deferred	(1,574)	(152)
Total income tax recovery	(1,519)	(132)
Net loss	(20,116)	(9,097)
Other comprehensive income (loss)
Items that may be reclassified to net loss
Foreign currency differences on translation of foreign operations	6,893	—
Total comprehensive loss	(13,223)	(9,097)
Net loss per share – basic and diluted	(0.22)	(0.11)
Weighted average number of Common Shares (basic and diluted)	92,464,395	83,879,960

Condensed Consolidated Balance Sheets
(expressed in thousands of US dollars, unaudited)	As at
	June 30, 2020	March 31, 2020
Assets	$	$
Current assets
Cash and cash equivalents	203,521	210,969
Trade and other receivables	10,266	10,879
Inventories	623	932
Other current assets	9,532	10,427
Total current assets	223,942	233,207
Lease right-of-use assets	15,334	15,957
Property and equipment, net	7,645	7,989
Intangible assets, net	60,737	62,819
Goodwill	151,306	146,598
Restricted cash and other long-term assets	11,710	11,749
Deferred tax assets	88	109
Total assets	470,762	478,428
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable and accrued liabilities	31,326	30,810
Lease liabilities	3,474	3,301
Income taxes payable	80	76
Current portion of deferred revenue	32,924	36,622
Total current liabilities	67,804	70,809
Deferred revenue	4,072	5,472
Lease liabilities	13,507	13,546
Long-term debt	29,716	29,687
Other long-term liabilities	8,735	8,198
Deferred tax liabilities	5,279	6,578
Total liabilities	129,113	134,290
Shareholders' equity
Share capital	858,436	852,115
Additional paid-in capital	16,186	11,773
Accumulated other comprehensive income (loss)	622	(6,271)
Accumulated deficit	(533,595)	(513,479)
Total shareholders' equity	341,649	344,138
Total liabilities and shareholders' equity	470,762	478,428

Condensed Consolidated Statements of Cash Flows
(expressed in thousands of US dollars, unaudited)	Three months ended June 30,
	2020	2019
	$	$
Cash flows from (used in) operating activities
Net loss	(20,116)	(9,097)
Items not affecting cash and cash equivalents
Acquisition-related compensation	5,129	707
Amortization of intangible assets	4,405	1,012
Depreciation of property and equipment and lease right-of-use assets	1,239	804
Deferred income taxes	(1,574)	(152)
Stock-based compensation expense	5,529	912
Unrealized foreign exchange loss (gain)	172	5
(Increase)/decrease in operating assets and increase/(decrease) in operating liabilities
Trade and other receivables	251	2,418
Inventories	309	(79)
Other assets	592	(633)
Accounts payable and accrued liabilities	1,031	(1,178)
Income taxes payable	4	(4)
Deferred revenue	(5,098)	(479)
Other long-term liabilities	415	478
Net interest (income) expense	301	(1,019)
Total operating activities	(7,411)	(6,305)
Cash flows from (used in) investing activities
Additions to property and equipment	(160)	(393)
Acquisition of business, net of cash acquired	(1,779)	(10,330)
Interest income	468	1,259
Total investing activities	(1,471)	(9,464)
Cash flows from (used in) financing activities
Proceeds from exercise of stock options	2,872	1,178
Share issuance costs	(778)	(1,401)
Payment of lease liabilities	(954)	(506)
Financing costs	(343)	—
Total financing activities	797	(729)
Effect of foreign exchange rate changes on cash and cash equivalents	637	235
Net increase in cash and cash equivalents during the period	(7,448)	(16,263)
Cash and cash equivalents – Beginning of period	210,969	207,703
Cash and cash equivalents – End of period	203,521	191,440
Interest paid	301	—
Income taxes paid	—	—

Reconciliation from IFRS to Non-IFRS Results
(expressed in thousands of US dollars, unaudited)	Three months ended June 30,
	2020	2019
	$	$
Net loss	(20,116)	(9,097)
Stock-based compensation and related payroll taxes^(1)	7,216	2,879
Depreciation and amortization	5,644	1,816
Foreign exchange loss (gain)^(2)	480	(330)
Net interest (income) expense	301	(1,019)
Acquisition-related compensation^(3)	5,129	707
Transaction-related costs^(4)	659	28
Income tax expense (recovery)	(1,519)	(132)
Adjusted EBITDA	(2,206)	(5,148)

^(1)	These expenses represent non-cash expenditures recognized in connection with issued stock options and other awards under our equity incentive plans to our employees and directors as well as related payroll taxes given that they are directly attributable to stock-based compensation, are estimates and therefore subject to change. For the three months ended June 30, 2020, the stock- based compensation expense was $5,529  (June 2019 -  $912) and the related payroll taxes were  $1,687 (June 2019 - $1,967).
^(2)	These non-cash losses (gains) relate to foreign exchange translation.
^(3)	These costs represent a portion of the purchase price that is associated with the ongoing employment obligations for certain key employees of acquired businesses.
^(4)	These expenses relate to professional, legal, consulting, accounting and other fees relating to our initial public offering, our acquisitions, our secondary offering in August 2019 and our bought deal in February 2020 that would otherwise not have been incurred.

Reconciliation from IFRS to Non-IFRS Results
The following table outlines stock-based compensation and the related payroll taxes as well as transaction-related costs associated with the company's acquisitions and capital raises included with these expenses in the results of operations.
(In thousands of US dollars, except percentages)	Three months ended June 30,
	2020		2019
	$		$
Gross profit	21,614		15,545
% of revenue	59.7	%	64.6	%
add: Stock-based compensation and related payroll taxes	615		240
Non-IFRS gross profit	22,229		15,785
% of revenue	61.4	%	65.6	%
General and administrative expenses	6,771		3,790
% of revenue	18.7	%	15.7	%
less: Stock-based compensation and related payroll taxes	1,842		962
less: Transaction-related costs	370		28
Non-IFRS general and administrative expenses	4,559		2,800
% of revenue	12.6	%	11.6	%
Research and development expenses	9,824		6,521
% of revenue	27.1	%	27.1	%
less: Stock-based compensation and related payroll taxes	2,251		577
Non-IFRS research and development expenses	7,573		5,944
% of revenue	20.9	%	24.7	%
Sales and marketing expenses	15,100		13,289
% of revenue	41.7	%	55.2	%
less: Stock-based compensation and related payroll taxes	2,508		1,100
less: Transaction-related costs	289		—
Non-IFRS sales and marketing expenses	12,303		12,189
% of revenue	34.0	%	50.7	%

SOURCE Lightspeed POS Inc.

Contacts: Brandon Nussey, Chief Financial Officer; Chris Mammone, The Blueshirt Group, [email protected]

Related Links

https://www.lightspeedhq.com