Lightspeed Announces Third Quarter 2021 Financial Results, Provides Outlook for Fourth Quarter

Third Quarter revenue grew 79% YoY to $57.6M

Excluding the impact of recent acquisitions, revenue was $49.3M, ahead of the guidance range of $44-$47M

Customer locations continued to grow, reaching almost 115,000 globally

GTV grew 48% YoY to $9.1B

Payments continues to grow with revenue up almost 4x the same period last year

Lightspeed reports in US dollars and in accordance with IFRS.

MONTREAL, Feb. 4, 2021 /PRNewswire/ - Lightspeed POS Inc. ("Lightspeed" or the "Company") (TSX: LSPD) (NYSE: LSPD), a leading provider of cloud-based, omnichannel commerce platforms, today announced financial results for the three-and nine-month periods ended December 31, 2020.

Third Quarter Financial Highlights
(All comparisons are relative to the three-month period ended December 31, 2019 unless otherwise stated):

    --  Total revenue of $57.6 million, an increase of 79%
    --  Recurring software and payments revenue of $52.5 million, an increase of
        85%
    --  Net Loss of ($42.7) million as compared to a net loss of ($15.8) million
    --  Adjusted Net Loss[1] of ($7.1) million as compared to an Adjusted Net
        Loss of ($5.9) million
    --  Adjusted Net Loss per Share (EPS)[1] was ($0.06)
    --  Adjusted EBITDA[1] of ($6.6) million, which improved to (11.4)% of sales
        from (16.3)%
    --  At December 31, 2020, Lightspeed had $232.6 million in unrestricted cash
        and cash equivalents

In the quarter Lightspeed completed the acquisitions of ShopKeep and Upserve. The table below distinguishes certain quarterly financial measures and key performance indicators between Lightspeed's traditional operations and those of these newly acquired companies.


                Q3
                Summary
                (In
                millions
                of
                US
                dollars)     Lightspeed            ShopKeep        Total
                                        and Upserve





     Software
     and
     Payments
     Revenue                                 $
            45.1              $
     7.4 $
      52.5


     Total
     Revenue                                 $
            49.3              $
     8.3 $
      57.6


     GTV
     ($B)[2]                                  $
            8.0              $
     1.1  $
      9.1


     Customer
     Locations[2]        ~84,000              ~31,000       ~115,000

Despite ongoing challenges from the global COVID-19 pandemic, Lightspeed continued to see market success as small and medium-sized businesses adopted the Company's cloud-based platform to help enable their omnichannel strategies. As a result, Lightspeed saw customer locations[2] grow to almost 84,000 in the quarter, and to almost 115,000 overall when including the addition of Upserve and ShopKeep. Software revenue increased partially due to a growing portion of Lightspeed's customer base adopting more than one software module. Additionally, payments adoption, both in terms of the number of customer locations and the proportion of GTV[2] processed, continued to grow, with revenue generated through Lightspeed Payments reaching another all-time high.


                                Non-IFRS measure. See "Non-IFRS
                                  Measures" and the reconciliation
                                  to the most directly comparable
                                  IFRS measure included in this
               [1]                press release


               [2]               Key Performance Indicator. See
                                  "Key Performance Indicators"

"Independent merchants worldwide continue to turn to Lightspeed to provide them with the digital tools they need to survive the current environment and advance their omnichannel strategies." said Dax Dasilva, Founder and CEO of Lightspeed. "In addition to maintaining our strong execution we continue to deliver ground breaking innovations with the launch of the Supplier Network, demonstrating how Lightspeed remains deeply committed to democratizing access to the strategic capabilities our customers need to grow their businesses."

"Despite the challenges we continue to face as a result of the pandemic, Lightspeed was able to grow revenues, expand our customer base, deliver highly innovative new offerings and complete two transformational acquisitions," said Chief Financial Officer, Brandon Nussey. "The value of our cloud-based, multi-channel solution is becoming more apparent as a result of the pandemic, as are solutions such as Lightspeed Payments which had another record quarter."

Operational Highlights

    --  Total revenues of $57.6M was up 79% year-over-year, and $49.3M when
        excluding the recent acquisitions of ShopKeep and Upserve representing
        growth of 53% year-over-year.


    --  Software and payments revenue came in at $52.5M. Excluding ShopKeep and
        Upserve, software and payments revenue was $45.1M and represented 92% of
        total core Lightspeed revenue, up 59% year-over-year. Excluding the
        impact of all acquisitions that were not in the Company's results from a
        year ago, software and payments revenue grew by 47% as compared to the
        same quarter last year and versus 42% growth last quarter.


    --  Lightspeed's customer base grew to almost 115,000 locations, an increase
        of 74% year-over-year. Excluding the recent acquisitions of ShopKeep and
        Upserve, Lightspeed's customer locations were almost 84,000 at December
        31, 2020, up from 66,000 a year ago.


    --  Even excluding the positive impact from the ShopKeep and Upserve
        acquisitions Lightspeed's ARPU[2] increased from the previous quarter,
        due predominantly to increased payments revenue in the quarter and an
        increased portion of customer's adopting more than one software module.


    --  New offerings such as Order Ahead and Delivery along with traditional
        offerings such as Loyalty and Golf, were strong contributors to software
        growth. Lightspeed's e-commerce solution also continued to see strong
        demand. Our Golf segment continued with very strong performance with
        software and payments revenues up almost 100% year-over-year.


    --  Lightspeed delivered GTV of $9.1B up 48% year-over-year. ShopKeep and
        Upserve collectively contributed $1.1B to GTV. Excluding the recent
        acquisitions, Lightspeed's core operations delivered GTV of $8.0B up 29%
        year-over-year; within this, retail customers saw GTV growth of 41%
        year-over-year, which included eCommerce GTV growth of approximately
        100%. This growth was somewhat offset by hospitality that saw GTV
        decline year-over-year as a result of the government lockdowns in many
        countries around the world. Organic hospitality GTV fell by 19% in the
        quarter with most of the weakness occurring in the month of December.


    --  Lightspeed Payments volumes grew significantly year-over-year as a
        growing portion of overall GTV was processed through Lightspeed
        Payments. Excluding the impact of ShopKeep and Upserve, approximately
        15% of U.S. and 12% of Canadian Retail GTV, respectively, was processed
        by Lightspeed Payments in the last week of the quarter. U.S. hospitality
        levels remained consistent with last quarter in the last week of the
        quarter.


    --  Lightspeed closed two key acquisitions in the quarter, ShopKeep and
        Upserve. These acquisitions solidify Lightspeed as one of the leading
        cloud-based commerce platforms for small to medium-sized businesses in
        the key U.S. market.


    --  After the quarter, Lightspeed announced the availability of Supplier
        Network. This initiative will enable retailers to connect directly with
        their suppliers through the Lightspeed POS solution. Supplier Network
        eliminates the need for retailers to juggle multiple B2B portals,
        simplifies product and supplier discovery, provides valuable inventory
        and product information, allows retailers to import product images
        directly from suppliers onto their own eCommerce sites and offers
        suppliers aggregated and anonymized sell-through data in real time.


    --  To complement the leadership talent that joined Lightspeed through its
        recent acquisitions, the Company is restructuring its operations along
        regional and vertical-specific reporting lines in addition to its
        current global functional reporting lines. Jim Texier, Chief Product
        Officer, is leaving the organization as part of this restructuring.
    --  The Company announced the addition of Manon Brouillette to its board of
        directors. As a former CEO of Videotron and one of Canada's 100 most
        powerful women, as judged by Women's Executive Network, Ms. Brouillette
        brings a wealth of industry knowledge and operating experience to
        Lightspeed's board.

Financial Outlook

Lightspeed's third quarter results were strong, but we remain cautious in the short-term given an increase in government-mandated lockdowns in several of our key geographies across North America and Europe. Prolonged lockdowns can increase churn, negatively impact GTV, delay purchase decisions and increase service suspension requests. In addition fiscal Q4 is traditionally a seasonally slow quarter for GTV, and the comparative periods have historically been slow GTV quarters for ShopKeep and Upserve as well. Given the increasing proportion of our revenue generated from Lightspeed Payments, we expect seasonal trends in GTV to have a greater influence on overall revenue. Reflecting this seasonality and our view of the risks and uncertainties related to COVID-19, Lightspeed anticipates revenue and adjusted EBITDA to be in the following ranges:

Fourth Quarter 2021

    --  Revenues of $68 - $70 million.
    --  Adjusted EBITDA loss of approximately $12 - $14 million.

When calculating the Adjusted EBITDA included in our financial outlook for the fourth quarter of FY2021, 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 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 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. hospitality 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: any pandemic such as the COVID-19 pandemic, 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 and delayed purchase decisions; 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 8:30 am ET on Thursday, February 4, 2021. To access the telephonic version of the conference call, visit http://www.directeventreg.com/registration/event/3874915. 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 11, 2021, until 11:59 p.m. Eastern Time on February 11, 2021, by dialing 855.589.2056 for the U.S. or Canada, or 404.537.3406 for international callers and provide conference ID 3874915. 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 (NYSE and 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", "Adjusted Net Loss", "Adjusted Net Loss per Share (EPS)", "Adjusted Cash Flows Used in Operating Activities", "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.

"Adjusted Net Loss" is defined as net loss excluding amortization of intangibles, as adjusted for stock-based compensation and related expenses, compensation expenses relating to acquisitions completed, and transaction-related expenses.

"Adjusted Net Loss per Share (EPS)" is defined as net loss excluding amortization of intangibles, as adjusted for stock-based compensation and related expenses, compensation expenses relating to acquisitions completed, and transaction-related expenses, divided by the weighted average number of common shares (basic and diluted).

"Adjusted Cash Flows Used in Operating Activities" is defined as cash flows used in operating activities as adjusted for the payment of payroll taxes on stock-based compensation, the payment of compensation expenses relating to acquisitions completed, the payment of assumed transaction costs assumed through recent acquisitions, and the payment of transaction-related expenses.

See the financial tables below for a reconciliation of the non-IFRS financial measures.

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.

ARPU. "Average Revenue Per User" or "ARPU" represents the total software and payments revenue of the Company in the period divided by the number of Customer Locations of the Company in the period.

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", "suggests", "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, under "Risk Factors" in our most recent Annual Information Form, and in our other filings with the Canadian Securities regulatory authorities and the U.S. Securities and Exchange Committee, all of which are available under our profile on SEDAR at www.sedar.com and on EDGAR at www.sec.gov. 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                                                                           Three months ended                     Nine months ended
    share amounts, unaudited)                                                                                              December 31,                          December 31,



                                                                                                              2020                    2019           2020                       2019


                                                                                         
              
                $ 
           
                $  
     
            $   
            
                $




                            Revenues                                                                        57,611                  32,275        139,333                     84,366




                            Direct cost of revenues                                                         24,334                  10,691         55,989                     27,100

                                                                                                                                                                              ---



                            Gross profit                                                                    33,277                  21,584         83,344                     57,266

                                                                                                                                                                              ---




              
                Operating expenses


               General and
                administrative                                                                              20,765                   6,289         35,794                     14,749


               Research and development                                                                     16,400                   8,344         38,190                     22,440


               Sales and marketing                                                                          28,011                  16,709         63,705                     44,312


               Depreciation of property
                and equipment                                                                                  758                     386          1,609                      1,199


               Depreciation of right-
                of-use assets                                                                                  956                     648          2,655                      1,671


               Foreign exchange loss
                (gain)                                                                                         778                     315          1,548                       (95)


               Acquisition-related
                compensation                                                                                 2,258                   3,187          9,663                      5,949


               Amortization of
                intangible assets                                                                            7,960                   2,154         16,769                      4,966

                                                                                                                                                                              ---



                            Total operating expenses                                                        77,886                  38,032        169,933                     95,191

                                                                                                                                                                              ---



                            Operating loss                                                                (44,609)               (16,448)      (86,589)                  (37,925)




               Net interest income
                (expense)                                                                                     (67)                    283          (500)                     1,992

                                                                                                                                                                              ---



                            Loss before income taxes                                                      (44,676)               (16,165)      (87,089)                  (35,933)

                                                                                                                                                                              ---




              
                Income tax expense (recovery)



              Current                                                                                          20                      56            118                         95



              Deferred                                                                                    (2,045)                  (459)       (4,974)                   (1,094)

                                                                                                                                                                              ---



                            Total income tax recovery                                                      (2,025)                  (403)       (4,856)                     (999)

                                                                                                                                                                              ---



                            Net loss                                                                      (42,651)               (15,762)      (82,233)                  (34,934)

                                                                                                                                                                              ===




              
                Other comprehensive income (loss)




                                           Items that may be reclassified to net loss


               Foreign currency
                differences on
                translation of foreign
                operations                                                                                   8,070                                21,039                          -





                            Total comprehensive loss                                                      (34,581)               (15,762)      (61,194)                  (34,934)

                                                                                                                                                                              ---



                            Net loss per share -
                             basic and diluted                                                              (0.39)                 (0.18)        (0.83)                    (0.41)

                                                                                                                                                                              ===



                            Weighted average number
                             of Common Shares (basic
                             and diluted)                                                              109,563,572              85,661,763     99,007,423                 84,825,306

                                                                                                                                                                              ===






                                 Condensed
                                 Consolidated
                                 Balance
                                 Sheets


                   (expressed
                   in
                   thousands
                   of US
                   dollars,
                   unaudited)                         As at



                                                  December 31,     March 31,
                                                          2020           2020


                  Assets                      
     
                $ 
     
             $




                  Current
                   assets


     Cash and
      cash
      equivalents                                      232,646        210,969


     Trade
      and
      other
      receivables                                       19,854         10,879


     Inventories                                         1,501            932


     Other
      current
      assets                                            24,757         10,427





                  Total
                   current
                   assets                              278,758        233,207




                  Lease
                   right-
                   of-use
                   assets                               21,244         15,957


                  Property
                   and
                   equipment,
                   net                                   8,816          7,989


                   Intangible
                   assets,
                   net                                 227,058         62,819


                  Goodwill                             999,689        146,598


                   Restricted
                   cash
                   and
                   other
                   long-
                   term
                   assets                               11,119         11,749


                  Deferred
                   tax
                   assets                                   39            109





                  Total
                   assets                            1,546,723        478,428





                   Liabilities
                   and
                   Shareholders'
                   Equity




                  Current
                   liabilities


     Accounts
      payable
      and
      accrued
      liabilities                                       72,069         30,810


     Lease
      liabilities                                        5,454          3,301


     Income
      taxes
      payable                                               78             76


     Current
      portion
      of
      deferred
      revenue                                           39,964         36,622





                  Total
                   current
                   liabilities                         117,565         70,809




                  Deferred
                   revenue                               4,058          5,472


                  Lease
                   liabilities                          20,344         13,546


                  Long-
                   term
                   debt                                 29,752         29,687


                  Other
                   long-
                   term
                   liabilities                           4,890          8,198


                  Deferred
                   tax
                   liabilities                           2,823          6,578





                  Total
                   liabilities                         179,432        134,290




                   Shareholders'
                   equity


     Share
      capital                                        1,920,064        852,115


      Additional
      paid-
      in
      capital                                           28,171         11,773


      Accumulated
      other
      comprehensive
      income
      (loss)                                            14,768        (6,271)


      Accumulated
      deficit                                        (595,712)     (513,479)





                  Total
                   shareholders'
                   equity                            1,367,291        344,138





                  Total
                   liabilities
                   and
                   shareholders'
                   equity                            1,546,723        478,428







     
                
                  Condensed Consolidated Statements of Cash Flows



     
                (expressed in thousands of US dollars, unaudited)                            Nine months ended December 31,



                                                                                                                          2020          2019



     
                Cash flows from (used in) operating activities                                    
              
                $ 
     
            $



     Net loss                                                                                                        (82,233)     (34,934)



     Items not affecting cash and cash equivalents



     Acquisition-related compensation                                                                                   9,663         5,949



     Amortization of intangible assets                                                                                 16,769         4,966



     Depreciation of property and equipment and lease right-of-use assets                                               4,264         2,870



     Deferred income taxes                                                                                            (4,974)      (1,094)



     Stock-based compensation expense                                                                                  20,957         4,810



     Stock-based compensation impact from replacement awards issued                                                     1,120



     Unrealized foreign exchange gain                                                                                     405           140



     (Increase)/decrease in operating assets and increase/(decrease) in operating liabilities



     Trade and other receivables                                                                                      (4,633)        1,099



     Inventories                                                                                                        (149)         (89)



     Other assets                                                                                                    (10,381)      (3,325)



     Accounts payable and accrued liabilities                                                                        (17,102)          664



     Income taxes payable                                                                                                   2          (10)



     Deferred revenue                                                                                                 (5,881)          342



     Other long-term liabilities                                                                                        2,740           939



     Net interest (income) expense                                                                                        500       (1,992)






     
                Total operating activities                                                                         (68,933)     (19,665)






     
                Cash flows from (used in) investing activities



     Additions to property and equipment                                                                              (1,432)      (2,308)



     Acquisition of business, net of cash acquired                                                                  (234,345)     (61,936)



     Interest income                                                                                                    1,639         2,980






     
                Total investing activities                                                                        (234,138)     (61,264)






     
                Cash flows from (used in) financing activities



     Proceeds from exercise of stock options                                                                           13,327         3,340



     Proceeds from issuance of share capital                                                                          332,334



     Share issuance costs                                                                                            (18,874)      (1,609)



     Payment of lease liabilities net of incentives and movements in restricted lease deposits                        (2,763)      (1,940)



     Financing costs                                                                                                  (1,250)






     
                Total financing activities                                                                          322,774         (209)






     
                Effect of foreign exchange rate changes on cash and cash equivalents                                  1,974            97






     
                Net increase (decrease) in cash and cash equivalents during the period                               21,677      (81,041)





     
                Cash and cash equivalents - Beginning of period                                                     210,969       207,703






     
                Cash and cash equivalents - End of period                                                           232,646       126,662






     Interest paid                                                                                                        787



     Income taxes paid                                                                                                     37           113






                                 Reconciliation from IFRS
                                  to Non-IFRS Results


                  (expressed in thousands
                   of US dollars,
                   unaudited)


                                                                         Three months ended                     Nine months ended
                                                                               December 31,                          December 31,





                                                                  2020                    2019           2020                       2019


                                                          
     
            $ 
           
                $  
     
            $   
            
                $




                  Net loss                                    (42,651)               (15,762)      (82,233)                  (34,934)


     Stock-based
      compensation and
      related payroll
      taxes(1)                                                  18,370                   3,534         33,611                      7,254


     Depreciation and
      amortization(2)                                            9,674                   3,188         21,033                      7,836


     Foreign exchange loss
      (gain)(3)                                                    778                     315          1,548                       (95)


     Net interest (income)
      expense(2)                                                    67                   (283)           500                    (1,992)


     Acquisition-related
      compensation(4)                                            2,258                   3,187          9,663                      5,949


     Transaction-related
      costs(5)                                                   6,970                     971          9,156                      1,499


     Income tax expense
      (recovery)                                               (2,025)                  (403)       (4,856)                     (999)





                  Adjusted EBITDA                              (6,559)                (5,253)      (11,578)                  (15,482)




     
     (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 and nine
              months ended December 31, 2020, the
              stock-based compensation expense
              was $9,954 and $22,077 respectively
              (December 2019 - $2,334 and
              $4,810) and the related payroll
              taxes were $8,416 and $11,534
              respectively (December 2019 -
              recovery of $1,200 and expense of
              $2,444).



     
     (2) In connection with the accounting
              standard IFRS 16 - Leases, for the
              three months ended December 31,
              2020, net loss includes
              depreciation of $956 related to
              amortization of right-of-use
              assets, interest expense of $253 on
              lease liabilities, and excludes an
              amount of $1,022 relating to rent
              expense ($2,655, $745, and $2,848
              respectively for the nine months
              ended December 31, 2020).



     
     (3) These non-cash losses (gains)
              relate to foreign exchange
              translation.



     
     (4) These costs represent a portion of
              the consideration paid to acquired
              businesses that is associated with
              the ongoing employment obligations
              for certain key employees of such
              acquired businesses.



     
     (5) These expenses relate to
              professional, legal, consulting,
              accounting and other fees relating
              to our public offerings and
              acquisitions that would otherwise
              not have been incurred.






                                 Reconciliation from IFRS to Non-IFRS Results
                                  (continued)


                  (expressed in thousands of US dollars, unaudited)


                                                                                             Three months ended                     Nine months ended
                                                                                                   December 31,                          December 31,

                                                                                                                                                  ---



                                                                                      2020                    2019           2020                       2019


                                                                              
     
            $ 
           
                $  
     
            $   
            
                $




                  Net loss                                                        (42,651)               (15,762)      (82,233)                  (34,934)


     Stock-based compensation
      and related payroll
      taxes(1)                                                                      18,370                   3,534         33,611                      7,254


     Amortization of
      intangible assets                                                              7,960                   2,154         16,769                      4,966


     Acquisition-related
      compensation (2)                                                               2,258                   3,187          9,663                      5,949


     Transaction-related
      costs(3)                                                                       6,970                     971          9,156                      1,499

                                                                                                                                                      ---



                  Adjusted Net Loss                                                (7,093)                (5,916)      (13,034)                  (15,266)

                                                                                                                                                      ===



               See footnotes below the
                next table






                                  Reconciliation from IFRS to Non-IFRS Results (continued)



     
                (Unaudited)


                                                                                                               Three months ended                     Nine months ended
                                                                                                           
             December 31,                          December 31,

                                                                                                                                                                    ---



                                                                                                      2020                      2019           2020                       2019


                                                                                           
     
               $   
           
                $  
     
            $   
            
                $




                   Net loss per Common Share
                    -basic and diluted                                                              (0.39)                   (0.18)        (0.83)                    (0.41)


      Stock-based compensation
       and related payroll
       taxes(1)                                                                                       0.17                      0.04           0.34                       0.09


      Amortization of
       intangible assets                                                                              0.07                      0.03           0.17                       0.06


      Acquisition-related
       compensation (2)                                                                               0.02                      0.04           0.10                       0.07


      Transaction-related
       costs(3)                                                                                       0.06                      0.01           0.09                       0.02

                                                                                                                                                                        ---



                   Adjusted Net Loss per
                    share -basic and
                    diluted                                                                         (0.06)                   (0.07)        (0.13)                    (0.18)

                                                                                                                                                                        ===



      Weighted average number
       of Common Shares (basic
       and diluted)                                                                            109,563,572                85,661,763     99,007,423                 84,825,306




     
     (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 and nine
              months ended December 31, 2020, the
              stock-based compensation expense
              was $9,954 and $22,077 respectively
              (December 2019 - $2,334 and
              $4,810) and the related payroll
              taxes were $8,416 and $11,534
              respectively (December 2019 -
              $1,200 and $2,444).



     
     (2) These costs represent a portion of
              the consideration paid to acquired
              businesses that is associated with
              the ongoing employment obligations
              for certain key employees of such
              acquired businesses.



     
     (3) These expenses relate to
              professional, legal, consulting,
              accounting and other fees relating
              to our public offerings and
              acquisitions that would otherwise
              not have been incurred.






                                 Reconciliation from IFRS to Non-IFRS
                                  Results (continued)


                  (expressed in thousands of US
                   dollars, unaudited)


                                                                                            Three months ended                             Nine months ended
                                                                                 December 31,                          December 31,

                                                                                                                                ---



                                                                            2020            2019                      2020            2019


                                                                      
            $   
              $               
            $   
              $




                  Cash flows used in
                   operating
                   activities                                           (54,143)       (10,732)                 (68,933)       (19,665)


     Payroll taxes
      related to stock-
      based
      compensation(1)                                                      1,786             960                     1,816             960


     Acquisition-related
      compensation (2)                                                         -                                   7,263             158


     Payment of assumed
      transaction costs
      from recent
      acquisitions(3)                                                     31,366                                   31,366


     Transaction-related
      costs(4)                                                             2,001           1,873                     2,916           2,333

                                                                                                                                    ---



                  Adjusted Cash Flows
                   Used in Operating
                   Activities                                           (18,990)        (7,899)                 (25,572)       (16,214)

                                                                                                                                    ===



      Our cash flows used in operating activities of
       $54,143 and $68,933 for the three and nine months
       ended December 31, 2020 include a payment of D&O
       insurance of $9.7 million made during the three
       months ended December 31, 2020.





     
                (1)              These amounts represent the cash
                                      outflow of payroll taxes on our
                                      issued stock options and other
                                      awards under our equity
                                      incentive plans to our employees
                                      and directors.



     
                (2)              These amounts represent the cash
                                      outflow of a portion of the
                                      consideration paid to acquired
                                      businesses that is associated
                                      with the ongoing employment
                                      obligations for certain key
                                      employees of such acquired
                                      businesses.



     
                (3)              These expenses relate to the
                                      settlement of transaction-
                                      related costs of the targets
                                      that were outside the regular
                                      course of business for our
                                      recent acquisitions of ShopKeep
                                      and Upserve that were assumed as
                                      liabilities on the respective
                                      acquisition dates. Lightspeed
                                      retained amounts in respect of
                                      these liabilities on the closing
                                      of each transaction that would
                                      otherwise have been paid to the
                                      sellers in the transactions.
                                      These amounts were not reflected
                                      in the net loss of Lightspeed
                                      given that they were already
                                      taken as expenses by the
                                      acquired companies prior to the
                                      closing of the respective
                                      transactions.



     
                (4)              These expenses relate to
                                      professional, legal, consulting,
                                      accounting and other fees
                                      relating to our public offerings
                                      and acquisitions that would
                                      otherwise not have been
                                      incurred.






                                 Reconciliation from IFRS to Non-IFRS Results (continued)


     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,
                   unaudited)                                               Three months ended                                                Nine months ended
                                                                     
                December 31,                                        
                December 31,

                                                                                                                                                            ---

                                                                2020                         2019                                    2020                       2019


                                           
              
                $   
              
                $              
              
                $   
              
              $




                  Gross profit                                33,277                                  21,584                                                         83,344 57,266


     % of revenue                                               57.8                                    66.9                                                           59.8   67.9
                                                                   %                                      %                                                             %     %


     add: Stock-based
      compensation and
      related payroll taxes                                    1,329                                     197                                                          2,367    445





                  Non-IFRS gross profit                       34,606                                  21,781                                                         85,711 57,711



     % of revenue                                               60.1                                    67.5                                                           61.5   68.4
                                                                   %                                      %                                                             %     %




                  General and
                   administrative
                   expenses                                   20,765                                   6,289                                                         35,794 14,749


     % of revenue                                               36.0                                    19.5                                                           25.7   17.5
                                                                   %                                      %                                                             %     %


     less: Stock-based
      compensation and
      related payroll taxes                                    4,485                                   1,214                                                          8,051  2,590


     less: Transaction-
      related costs                                            6,674                                     971                                                          8,279  1,499





                  Non-IFRS general and
                   administrative
                   expenses                                    9,606                                   4,104                                                         19,464 10,660



     % of revenue                                               16.7                                    12.7                                                           14.0   12.6
                                                                   %                                      %                                                             %     %




                  Research and
                   development expenses                       16,400                                   8,344                                                         38,190 22,440


     % of revenue                                               28.5                                    25.9                                                           27.4   26.6
                                                                   %                                      %                                                             %     %


     less: Stock-based
      compensation and
      related payroll taxes                                    4,873                                     778                                                          9,898  1,701





                  Non-IFRS research and
                   development expenses                       11,527                                   7,566                                                         28,292 20,739



     % of revenue                                               20.0                                    23.4                                                           20.3   24.6
                                                                   %                                      %                                                             %     %




                  Sales and marketing
                   expenses                                   28,011                                  16,709                                                         63,705 44,312


     % of revenue                                               48.6                                    51.8                                                           45.7   52.5
                                                                   %                                      %                                                             %     %


     less: Stock-based
      compensation and
      related payroll taxes                                    7,683                                   1,345                                                         13,295  2,518


     less: Transaction-
      related costs                                              296                                                                                                   877





                  Non-IFRS sales and
                   marketing expenses                         20,032                                  15,364                                                         49,533 41,794



     % of revenue                                               34.8                                    47.6                                                           35.6   49.5
                                                                   %                                      %                                                             %     %

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SOURCE Lightspeed POS Inc.