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 /PRNewswire/ - 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 EBITDA(1) 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 GTV(2) 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 locations(2) 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, March 31,
2020 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 Three months ended
in June 30,
thousands
of US
dollars,
unaudited)
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 Three months ended June
dollars, except 30,
percentages)
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
% %
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SOURCE Lightspeed POS Inc.
