Lightspeed Announces First Quarter 2020 Financial Results, Updates Outlook
First Quarter Revenue Grew 38% YoY to $24.1 Million
First Quarter Software and Payments Revenue Grew 40% YoY
Accelerated Adoption of Lightspeed Payments with New US Retail Customers
Lightspeed reports in U.S. dollars and in accordance with IFRS.
MONTREAL, Aug. 7, 2019 /PRNewswire/ - Lightspeed POS Inc. ("Lightspeed" or the "Company") (TSX: LSPD), a leading provider of software, solutions and support systems to small and medium size retailers and restauranteurs, today announced financial results for the three month period ended June 30, 2019.
"This past quarter demonstrated solid execution on a number of our stated growth strategies to ensure Lightspeed continues our journey of building a recognized market leader for SMB retailers and restauranteurs globally," commented Dax Dasilva, Chief Executive Officer of Lightspeed. "Accelerated top-line growth of 38%, continued GTV growth of greater than 30%, and accelerating Payments adoption rates on eligible new customers in the quarter are all effective gauges of a healthy, growing customer base that is finding increased success through partnering with Lightspeed."
"We are pleased with our first quarter performance which demonstrates continued progress across all of the important areas of the business," stated Brandon Nussey, Chief Financial Officer of Lightspeed. "Our investments continue to drive strong new customer additions, and we continue to see highly encouraging signs during the initial rollout year of Lightspeed Payments, helping to provide a positive backdrop to our higher overall growth expectations for the year."
First Quarter Financial Highlights
(All comparisons are relative to the three month period ended June 30, 2018 unless otherwise stated):
-- Total revenue of $24.1 million, an increase of 38%
-- Recurring software and payments revenue of $21.3 million, an increase of
40%
-- Gross margin of 65%, with gross profit on software and payments revenue
up by 33% vs prior year
-- Net loss of $9.1 million as compared to a net loss of $8.1 million
-- Adjusted EBITDA(2) of ($5.1) million, compared to Adjusted EBITDA of
($2.9) million
-- Cash flows used in operating activities of ($6.3) million, compared to
cash flows used in operating activities of ($2.9) million
-- At June 30, 2019, Lightspeed had $191.4 million in cash and cash
equivalents and no debt
(1) Key Performance Indicator. See
"Key Performance Indicators"
Non-IFRS measure. See "Non-IFRS
Measures" and the reconciliation
to the most directly comparable
IFRS measure included in this
(2) press release
Operational Highlights
(All comparisons are relative to the three month period ended June 30, 2018 unless otherwise stated):
-- Customer locations(1) grew 20% to greater than 51,000 at June 30, 2019
-- GTV(1) grew by more than 30% to more than $4.6 billion in the three
month period ended June 30, 2019 and more than $15.6 billion for the
trailing twelve months ended June 30, 2019
-- Ongoing strong adoption of Lightspeed Payments after launch on January
30, 2019 to U.S. Retail customers with demand coming from both new and
existing clients of Lightspeed. Close to 50% of new U.S. retail
customers in the quarter contracted for Lightspeed Payments in addition
to our core offering
-- Strong customer momentum from complex Retailers and Restauranteurs in
North America and around the world. Customers such as Herschel Supply
Company, an affinity backpack brand with dozens of retail locations ,
UK-acclaimed Crosstown Doughnuts and luxury hotel operator the Perle
Oban Hotel in the Scottish Highlands 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.
-- Successfully launched the latest Lightspeed inventory release giving
complex retail SMBs more mastery over inventory tracking across all of
their omnichannel workflows, including tighter management over presales,
back-orders, and overselling
-- Lightspeed Analytics, Lightspeed Loyalty, and Lightspeed Payments all
continue to be notable new product success stories - affirming the
Lightspeed strategy of being a one stop shop for the core commerce needs
for customers
-- Completed the acquisition of a strategic software partner, Chronogolf
Inc., which leverages Lightspeed's retail and restaurant platform to
offer a seamless golf course management solution that includes booking
and membership management capabilities for more than 600 golf course
operators, primarily in North America. This subsegment represents a
compelling opportunity for existing product lines - and in particular an
active funnel for Lightspeed Payments.
-- Completed the acquisition of Switzerland-based iKentoo, which brings
Lightspeed complementary technology well suited for large and complex
deployments, enabling Lightspeed to further accelerate the displacement
of legacy POS providers globally. iKentoo brings nearly 4,000 customer
locations in new countries such as Switzerland, France and South Africa.
Financial Outlook
As a result of continued strength in Lightspeed Payments adoption, continued momentum in new customer location additions, and the impact of recently acquired businesses, Lightspeed now anticipates revenue, cash flows used in operating activities and Adjusted EBITDA to be in the following ranges:
Second Quarter 2020
-- Revenue of $26.5 - $27 million, representing year-over-year growth of
42-45%
-- Cash flows used in operating activities of approximately $5 million
-- Adjusted EBITDA in the range of ($5.5 million) - ($6.0 million)
Full Year 2020
-- Revenue of $112.0 - $115.0 million, representing annual growth of 45-48%
-- Cash flows used in operating activities of $9.5 million - $11 million
-- Adjusted EBITDA in the range of ($18 million) - ($20 million)
Our financial outlook is based on a number of assumptions, including our continued receipt of partner referrals in line with historical referral rates (particularly after having launched 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 attach rates for Lightspeed Payments remaining in line with past attach 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 expanding of Lightspeed Payments beyond our U.S. retail 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; and our ability to manage customer churn. 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: attracting and retaining customers; increasing customer sales; implementing our growth strategy; accelerating the rollout of Lightspeed Payments; our reliance on a single supplier 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 8, 2019. To access the conference call, dial 866.211.3060 for the U.S. or Canada, or 647.689.6576 for international callers and provide conference ID 4294489. 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 8, 2019, until 11:59 p.m. Eastern Time on August 15, 2019, by dialing 800.585.8367 for the U.S. or Canada, or 416.621.4642 for international callers. 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) is a cloud-based commerce platform powering small and medium-sized businesses in approximately 100 countries around the world. With smart, scalable, and dependable point of sale systems, it's an all-in-one solution that helps restaurants and retailers sell across channels, manage operations, engage with consumers, accept payments, and grow their business.
Headquartered in Montréal, Canada, Lightspeed is trusted by favorite local businesses, where the community goes to shop and dine. Lightspeed has grown to over 800 employees, with offices 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 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 annual 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-GAAP financial measures that exclude the effect of stock-based compensation expense and related payroll taxes.
"Adjusted EBITDA" means net loss excluding interest, taxes, depreciation and amortization, or EBITDA, as adjusted for stock-based compensation expense and related payroll taxes, loss on the increase in fair value of redeemable preferred shares, compensation expenses relating to acquisitions complete, 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, cash flows from (used in) operating activities, 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 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
(In thousands of US
dollars, except share
and per share amounts,
unaudited) Three months
ended June 30,
2019 2018
$
$
Revenues 24,065 17,471
Direct cost of revenues 8,366 5,390
Gross profit 15,699 12,081
Operating expenses
General and
administrative 4,411 2,644
Research and development 6,303 4,184
Sales and marketing 13,040 8,647
Depreciation of property
and equipment 390 272
Depreciation of right-
of-use assets 414
Foreign exchange loss
(gain) (330) 119
Acquisition-related
compensation 707
Amortization of
intangible assets 1,012 980
Total operating expenses 25,947 16,846
Operating loss (10,248) (4,765)
Fair value loss on
Redeemable Preferred
Shares (2,952)
Interest income net of
expense 1,019 58
Loss before income taxes (9,229) (7,659)
Income tax expense
(recovery)
Current 20 (5)
Deferred (152) 471
Total income tax expense
(recovery) (132) 466
Net loss and
comprehensive loss (9,097) (8,125)
Loss per share - basic
and diluted (0.11) (0.28)
Condensed Consolidated Balance Sheets
As at
(In thousands of US
dollars, except share
and June 30, 2019 March 31, 2019
per share amounts, unaudited)
$
$
Assets
Current assets
Cash and cash
equivalents 191,440 207,703
Accounts receivable 6,954 8,424
Inventories 348 269
Prepaid expenses and
deposits 1,885 1,527
Commission assets 3,787 3,677
Total current assets 204,414 221,600
Lease right-of-use
assets 12,028 -
Property and
equipment, net 5,385 5,372
Intangible assets, net 8,815 2,618
Goodwill 27,402 22,536
Commission assets 2,934 2,993
Other long-term
assets 710 506
Deferred tax assets 155 186
Total assets 261,843 255,811
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable and
accrued liabilities 15,956 16,183
Lease liabilities 2,057 -
Income taxes payable 131 135
Current portion of
deferred revenue 33,094 32,317
Total current
liabilities 51,238 48,635
Deferred tax
liabilities 1,093 706
Deferred revenue 6,819 8,025
Lease liabilities 11,475 -
Other long-term
liabilities 1,060 1,779
Total liabilities 71,685 59,145
Shareholders' equity (deficiency)
Share capital
84,275,039 Common
Shares issued and
outstanding,
unlimited shares
authorized (March 31,
2019 - 83,752,210) 654,471 652,336
Additional paid-in
capital 4,732 4,278
Accumulated deficit (469,045) (459,948)
Total shareholders'
equity 190,158 196,666
Total liabilities and
shareholders' equity
(deficiency) 261,843 255,811
Condensed Consolidated Statements of Cash Flows
Three months ended
June 30,
(In thousands of US dollars,
except share and 2019 2018
per share amounts, unaudited)
$
$
Cash flows from (used in)
operating activities
Net loss (9,097) (8,125)
Items not affecting cash and
cash equivalents
Acquisition-related
compensation 707
Fair value loss on Redeemable
Preferred Shares 2,952
Amortization of intangible
assets 1,012 980
Depreciation of property and
equipment and lease right-of-
use assets 804 272
Deferred income taxes (152) 471
Stock-based compensation
expense 912 388
Unrealized foreign exchange loss
(gain) 5 78
(Increase)/decrease in
operating assets and increase/
(decrease) in operating
liabilities
Accounts receivable 2,418 757
Prepaid expenses and deposits (358) 163
Inventories (79) (87)
Commission assets (51) (49)
Other long-term assets (224) 225
Accounts payable and accrued
liabilities (1,178) (972)
Income taxes payable (4) (78)
Deferred revenue (479) 208
Other long-term liabilities 478 (25)
Interest income net of interest
expense (1,019) (58)
Total operating activities (6,305) (2,900)
Cash flows from (used in)
investing activities
Additions to property and
equipment (393) (411)
Payment of liability related to
acquisition of business (1,215)
Acquisition of business, net of
cash acquired (9,115)
Interest income 1,259
Total investing activities (9,464) (411)
Cash flows from (used in)
financing activities
Proceeds from exercise of stock
options 1,178 30
Share issuance costs (1,401)
Payment of lease liabilities (506)
Total financing activities (729) 30
Effect of foreign exchange rate
changes on cash and cash
equivalents
235 (79)
Net decrease in cash and cash
equivalents during the year (16,263) (3,360)
Cash and cash equivalents -
Beginning of year 207,703 24,651
Cash and cash equivalents - End
of year 191,440 21,291
Interest paid
Income taxes paid 81
Reconciliation from IFRS to Non-IFRS Results
Three months
ended June 30,
(In
thousands unaudited)
of
US
dollars,
except
share
and
per
share
amounts, 2019 2018
$
$
Net
loss (9,097) (8,125)
Fair
value
loss
on
Redeemable
Preferred
Shares(1) - 2,952
Stock-
based
compensation
and
related
payroll
taxes(2) 2,879 488
Depreciation
and
amortization(3) 1,816 1,252
Foreign
exchange
loss
(gain)(4) (330) 119
Interest
income
net
of
expense(3) (1,019) (58)
Acquisition-
related
compensation(5) 707
Transaction-
related
expenses(6) 28
Income
tax
expense (132) 466
---
Adjusted
EBITDA (5,148) (2,906)
---
(1) These costs include costs with
respect to the change in valuation
of our Redeemable Preferred Shares
from period to period, which is a
non-cash expense. Prior to the
completion of our initial public
offering, all of our Redeemable
Preferred Shares were converted and
the liability was reduced to $Nil
with a corresponding increase in
share capital. There will be no
further impact on our results of
operations from these shares
(2) These expenses represent non-cash
expenditures recognized in
connection with the issuance of
stock options under our stock
option 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,
and don't reflect a current cash
outlay. We do expect future cash
outlays with respect the payroll
tax component of stock-based
compensation
(3) In connection with the adoption of
IFRS 16 - Leases, net loss includes
depreciation of $414 related to
amortization of right-of-use
assets, interest expense of $184 on
lease liabilities, and excludes an
amount of $486 relating to rent
expense. Refer to "Critical
Accounting Policies and Estimates"
below for more details on the
adoption of IFRS 16
(4) These non-cash losses (gains)
relate to foreign exchange
translation
(5) These costs represent a portion of
the purchase price that is
associated with the ongoing
employment obligations for certain
key employees of acquired
businesses
(6) These expenses relate to our initial
public offering and include
professional, legal, consulting and
accounting fees that are non-
recurring and 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 associated with these expenses included in the results of operations for the three months ended June 30, 2019 and 2018:
Three months
ended June 30,
(In thousands of US
dollars, except
percentages) 2019 2018
$
$
Gross profit 15,699 12,081
% of revenue 65.2% 69.1%
add: Stock-based
compensation and related
payroll taxes 240 23
Non-IFRS gross profit 15,939 12,104
% of revenue 66.2% 69.3%
General and
administrative expenses 4,411 2,644
% of revenue 18.3% 15.1%
less: Stock-based
compensation and related
payroll taxes 962 18
Non-IFRS general and
administrative expenses 3,449 2,626
% of revenue 14.3% 15.0%
Research and development
expenses 6,303 4,184
% of revenue 26.2% 23.9%
less: Stock-based
compensation and related
payroll taxes 577 207
Non-IFRS research and
development expenses 5,726 3,977
% of revenue 23.8% 22.8%
Sales and marketing
expenses 13,040 8,647
% of revenue 54.2% 49.5%
less: Stock-based
compensation and related
payroll taxes 1,100 240
Non-IFRS sales and
marketing expenses 11,940 8,407
% of revenue 49.6% 48.1%
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SOURCE Lightspeed POS Inc.
