Lightspeed Announces Second Quarter 2020 Financial Results, Updates Outlook

Lightspeed POS Inc. (“Lightspeed” or the “Company”) (TSX: LSPD), a leading omnichannel point of sale platform, today announced financial results for the three and six month periods ended September 30, 2019.

Lightspeed is now the point-of-sale (POS) system of choice for nearly 57,000 customer locations¹ across the world, signing high-performing global brands and emerging as a preferred cloud-based omnichannel commerce platform for complex small and medium sized businesses.

“Sophisticated merchants choose Lightspeed to build and grow their businesses,” said Dax Dasilva, Chief Executive Officer of Lightspeed. “They choose us because we strengthen the performance of nearly every aspect of their operations, and they know we are committed to continuous innovation in delivering the best commerce platform in the world.”

Lightspeed also increased its global footprint in the quarter through the acquisition of iKentoo and subsequent to the quarter end, acquiring Kounta, a leading cloud-based hospitality POS platform in Australia and New Zealand. These targeted acquisitions further advance Lightspeed’s strategy to build the leading omni-channel platform for complex SMBs around the world. “Our recent acquisitions not only fortify our leadership in geographic coverage, but we are thrilled that high-performing companies and their talented teams are eager to join forces with us as we tackle our massive market opportunity of building a truly global platform,” added Dasilva.

Second Quarter Financial Highlights

(All comparisons are relative to the three month period ended September 30, 2018 unless otherwise stated):

• Total revenue of $28.0 million, an increase of 51% and ahead of guidance in the range of $26.5-27 million
• Recurring software and payments revenue of $25.4 million, an increase of 52%
• Gross margin of 66%, with gross profit on software and payments revenue up by 39% vs prior year
• Net loss of $10.1 million as compared to a net loss of $8.2 million
• Adjusted EBITDA² of ($5.1) million, compared to Adjusted EBITDA of ($2.7) million and ahead of guidance in the range of ($5.5) million – ($6.0) million
• Cash flows used in operating activities of $2.6 million, compared to cash flows used in operating activities of $1.0 million and ahead of guidance of cash flows used in operating activities of approximately $5 million
• At September 30, 2019, Lightspeed had $171.8 million in cash and cash equivalents and no debt

Operational Highlights

(All comparisons are relative to the three month period ended September 30, 2018 unless otherwise stated):

• GTV¹ grew by more than 48% to over $5.4 billion in the three-month period ended September 30, 2019 and over $17.4 billion for the trailing twelve-months ended September 30, 2019
• Customer locations¹ grew 26% to almost 57,000 at September 30, 2019, including the addition of iKentoo’s customer base from the date of acquisition of approximately 3,800 customer locations¹
• Ongoing strong adoption of Lightspeed Payments after launch on January 30, 2019 to U.S. Retail customers with demand coming from both new and existing clients of Lightspeed. Once again this quarter, close to 50% of eligible new U.S. retail customers in the quarter contracted for Lightspeed Payments in addition to the core offering
• Moreover, existing customers are making the decision to move from their incumbent solution to Lightspeed Payments at an increasing pace
• Strong customer momentum from complex Retailers and Restaurant owners in North America and around the world. Customers such as international fashion brand Gabriela Hearst, new U.S. bakery chain Jacques Torres Chocolate, and the Four Seasons-operated Costa Palmas resort in Mexico selected Lightspeed in the quarter. Additionally, the Montreux Jazz Festival held annually in Switzerland selected Lightspeed to power one of the world’s most renowned jazz festivals
• Successfully launched Lightspeed Retail 3.0, the newest version of the core Lightspeed Retail platform. Key features behind the faster and more streamlined user experience include a sleek new design, simplified navigation capabilities, more mobile-friendly functionality, and a more seamless sales workflow engine designed to optimize the selling process in complex retail environments, further cementing Lightspeed’s reputation as a leader in user experience
• Accelerating success in the golf vertical with growth in new customers reaching 114% over the past 6 months, up from 53% in the same period a year ago. Close to 700 golf courses are now using Lightspeed to power their operations
• On the heels of its recent acquisition of Switzerland-based iKentoo, Lightspeed has increased its presence in the region by introducing its Omnichannel Retail offering in both German and French languages so that SMBs can now offer their customers a cohesive and efficient shopping experience both in-store and online
• Announced the acquisition of Kounta, a leading cloud-based hospitality POS platform in Australia and New Zealand, serving more than 7,000 customer locations¹ across that region, and providing Lightspeed with further global scale

Financial Outlook

Incorporating the impact of recently acquired businesses, Lightspeed now anticipates revenue and Adjusted EBITDA to be in the following ranges:

Third Quarter 2020

• Revenue of $31.5 – $32.0 million, representing year-over-year growth of 57-59%
• Adjusted EBITDA in the range of ($5 million) – ($5.5 million)

Full Year 2020

• Revenue of $117.0 – $119.0 million, representing annual growth of 51-54%
• Adjusted EBITDA in the range of ($19 million) – ($21 million)

Our financial outlook is based on a number of assumptions, including our ability to grow our customer locations¹ in line with historical rates; our continued receipt of partner referrals in line with historical referral rates (particularly after having launched Lightspeed Payments which competes with the solutions offered by some of these referral partners); customers adopting Lightspeed Payments having an average GTV¹ at or above that of our average customer; future attach rates for Lightspeed Payments remaining in line with past attach rates and expectations; our ability to price Lightspeed Payments in line with our expectations and to achieve suitable margins; our ability to achieve success in expanding of Lightspeed Payments beyond our U.S. retail customers; continued success in module adoption expansion throughout our customer base; our ability to successfully integrate the companies we have acquired and to derive the benefits we expect from the acquisition thereof; and our ability to manage customer churn; 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: attracting and retaining customers; increasing customer sales; implementing our growth strategy; accelerating the rollout of Lightspeed Payments; our reliance on a single supplier for parts of the technology in Lightspeed Payments; improving and enhancing the functionality, performance, reliability, design, security and scalability of our platform; our ability to compete against competitors; strategic relations with third parties; our reliance on integration of third-party payment processing solutions; compatibility of our solutions with third-party applications and systems; changes to technologies on which our platform is reliant; obtaining, maintaining and protecting our intellectual property; international sales and use of our platform in various countries; our liquidity and capital resources; litigation and regulatory compliance; changes in tax laws and their application; expanding our sales capability; maintaining our customer service levels and reputation; macroeconomic factors affecting small and medium sized businesses; and exchange rate fluctuations. The purpose of the forward-looking information is to provide the reader with a description of management’s expectations regarding our financial performance and may not be appropriate for other purposes.

Conference Call and Webcast Information

Lightspeed will host a conference call and webcast to discuss the Company’s financial results at 8:00 am ET on Thursday, November 7, 2019. To access the conference call, dial 866.211.3060 for the U.S. or Canada, or 647.689.6576 for international callers and provide conference ID 1048006 or “Lightspeed”. 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 November 7, 2019, until 11:59 p.m. Eastern Time on November 14, 2019, by dialing 800.585.8367 for the U.S. or Canada, or 416.621.4642 for international callers. In addition, an archived webcast will be available on the Investors section of the Company’s website at https://investors.lightspeedhq.com.