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Lightspeed Announces Second Quarter 2020 Financial Results, Updates Outlook

11/07/2019

Second Quarter Revenue Growth Accelerates to 51% YoY to $28.0 Million
LTM Gross Transaction Volume now at $17.4B

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

MONTREAL, Nov. 7, 2019 /CNW Telbec/ - 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.

Logo : Lightspeed POS Inc. (CNW Group/Lightspeed POS Inc.)

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

 

1

Key Performance Indicator. See "Key Performance Indicators"

2

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

 

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.

About Lightspeed

Lightspeed (TSX: LSPD) is a cloud-based commerce platform powering small and medium-sized businesses in over 100 countries around the world. With smart, scalable, and dependable point of sale systems, it's an all-in-one solution that helps restaurants and retailers sell across channels, manage operations, engage with consumers, accept payments, and grow their business.

Headquartered in Montréal, Canada, Lightspeed is trusted by favorite local businesses, where the community goes to shop and dine. Lightspeed has grown to over 900 employees, with offices in Canada, USA, Europe, and Australia.

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

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

Non-IFRS Measures

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

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

"Adjusted EBITDA" means net loss excluding interest, taxes, depreciation and amortization, or EBITDA, as adjusted for stock-based compensation expense and related payroll taxes, loss on the increase in fair value of redeemable preferred shares, compensation expenses relating to acquisitions complete, foreign exchange gains and losses, and transaction-related expenses.

Key Performance Indicators

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

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

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

Forward-Looking Statements

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

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

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

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

 

Condensed Consolidated Statements of Loss and Comprehensive Loss

(expressed in thousands of US dollars, except per share amounts, unaudited)

Three months ended
September 30,

Six months ended
September 30,


2019

2018

2019

2018


$

$

$

$






Revenues

28,026

18,598

52,091

36,069






Direct cost of revenues

9,522

5,251

17,888

10,641






Gross profit

18,504

13,347

34,203

25,428






Operating expenses





General and administrative

5,527

2,910

9,938

5,554

Research and development

7,339

4,024

13,642

8,208

Sales and marketing

12,060

9,039

25,100

17,686

Depreciation of property and equipment

423

324

813

596

Depreciation of right-of-use assets

609

1,023

Foreign exchange loss (gain)

(80)

(9)

(410)

110

Acquisition-related compensation

2,055

108

2,762

108

Amortization of intangible assets

1,800

875

2,812

1,855






Total operating expenses

29,733

17,271

55,680

34,117






Operating loss

(11,229)

(3,924)

(21,477)

(8,689)






Fair value loss on Redeemable Preferred Shares

(3,643)

(6,595)

Interest income net of interest expense

690

33

1,709

91






Loss before income taxes

(10,539)

(7,534)

(19,768)

(15,193)






Income tax expense (recovery)





Current

19

39

(5)

Deferred

(483)

662

(635)

1,133






Total income tax expense (recovery)

(464)

662

(596)

1,128






Net loss and comprehensive loss

(10,075)

(8,196)

(19,172)

(16,321)






Loss per share – Basic and diluted

(0.12)

(0.27)

(0.23)

(0.55)

 

Condensed Consolidated Balance Sheets

(expressed in thousands of US dollars, unaudited)

As at


September 30,
2019

March 31,
2019

Assets

$

$




Current assets



Cash and cash equivalents

171,841

207,703

Accounts receivable

8,413

8,424

Inventories

414

269

Prepaid expenses and deposits

2,565

1,527

Commission assets

3,904

3,677




Total current assets

187,137

221,600




Lease right-of-use assets

13,270

Property and equipment, net

6,260

5,372

Intangible assets, net

21,749

2,618

Goodwill

43,935

22,536

Commission assets

2,891

2,993

Other long-term assets

590

506

Deferred tax assets

145

186




Total assets

275,977

255,811




Liabilities and Shareholders' Equity






Current liabilities



Accounts payable and accrued liabilities

20,513

16,183

Lease liabilities

2,724

Income taxes payable

68

135

Current portion of deferred revenue

36,183

32,317




Total current liabilities

59,488

48,635




Deferred tax liabilities

1,927

706

Deferred revenue

6,575

8,025

Lease liabilities

11,901

Other long-term liabilities

730

1,779




Total liabilities

80,621

59,145




Shareholders' equity



Share capital

668,591

652,336

Additional paid-in capital

5,885

4,278

Accumulated deficit

(479,120)

(459,948)




Total shareholders' equity

195,356

196,666




Total liabilities and shareholders' equity

275,977

255,811

 

Condensed Consolidated Statements of Cash Flows

(expressed in thousands of US dollars, unaudited)

Six months ended September 30,


2019

2018


$

$

Cash flows from (used in) operating activities



Net loss

(19,172)

(16,321)

Items not affecting cash and cash equivalents



Acquisition-related compensation

2,762

108

Fair value loss on Redeemable Preferred Shares

6,595

Amortization of intangible assets

2,812

1,855

Depreciation of property and equipment and lease right-of-use assets

1,836

596

Deferred income taxes

(635)

1,133

Stock-based compensation expense

2,476

320

Unrealized foreign exchange loss (gain)

(55)

59

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



Accounts receivable

2,097

1,635

Prepaid expenses and deposits

(967)

(577)

Inventories

(76)

43

Commission assets

(125)

(346)

Other long-term assets

(125)

1

Accounts payable and accrued liabilities

658

1,111

Income taxes payable

(67)

(122)

Deferred revenue

1,159

124

Other long-term liabilities

198

19

Interest income net of interest expense

(1,709)

(91)




Total operating activities

(8,933)

(3,858)




Cash flows from (used in) investing activities



Additions to property and equipment

(966)

(1,025)

Payment of liabilities related to acquisition of business

(1,215)

Acquisition of business, net of cash acquired

(26,543)

(1,106)

Interest income

2,298




Total investing activities

(26,426)

(2,131)




Cash flows from (used in) financing activities



Proceeds from exercise of stock options

2,311

127

Share issuance costs

(1,577)

Payment of lease liabilities

(1,181)




Total financing activities

(447)

127




Effect of foreign exchange rate changes on cash and cash equivalents

(56)

(62)




Net increase in cash and cash equivalents during the year

(35,862)

(5,924)




Cash and cash equivalents – Beginning of period

207,703

24,651




Cash and cash equivalents – End of period

171,841

18,727




Interest paid

6

Income taxes paid

60

124

 

Reconciliation from IFRS to Non-IFRS Results

(expressed in thousands of US dollars, unaudited)

Three months ended
September 30,

Six months ended
September 30,







2019

2018

2019

2018


$

$

$

$






Net loss

(10,075)

(8,196)

(19,172)

(16,321)

Fair value loss on Redeemable Preferred Shares(1)

3,643

6,595

Stock-based compensation and related payroll taxes(2)

841

(75)

3,720

413

Depreciation and amortization(3)

2,832

1,199

4,648

2,451

Foreign exchange loss (gain)(4)

(80)

(9)

(410)

110

Interest income net of interest expense(3)

(690)

(33)

(1,709)

(91)

Acquisition-related compensation(5)

2,055

108

2,762

108

Transaction-related expenses(6)

500

528

Income tax expense (recovery)

(464)

662

(596)

1,128






Adjusted EBITDA

(5,081)

(2,701)

(10,229)

(5,607)

 

(1) 

These costs include costs with respect to the change in valuation of our Redeemable Preferred Shares from period to period, which is a non-cash expense. Prior to the completion of our Initial Public Offering, all of our Redeemable Preferred Shares were converted and the liability was reduced to $Nil with a corresponding increase in share capital. There will be no further impact on our results of operations from these shares.

(2) 

These expenses represent non-cash expenditures recognized in connection with the issuance of stock options under our stock option plans to our employees and directors as well as related payroll taxes given that they are directly attributable to stock‑based compensation, are estimates and therefore subject to change, and don't reflect a current cash outlay. We do expect future cash outlays with respect the payroll tax component of stock-based compensation.

(3)

In connection with the adoption of IFRS 16 - Leases, for the three months ended September 30, 2019, net loss includes depreciation of $609 related to amortization of right-of-use assets, interest expense of $210 on lease liabilities, and excludes an amount of $695 relating to rent expense ($1,023, $394, and $1,181 respectively for the six months ended September 30, 2019).

(4)

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

(5)

These costs represent a portion of the purchase price that is associated with the ongoing employment obligations for certain key employees of acquired businesses.

(6)

These expenses relate to our Initial Public Offering and include professional, legal, consulting and accounting fees that are non-recurring and would otherwise not have been incurred.

 

Reconciliation from IFRS to Non-IFRS Results

The following table outlines stock-based compensation and the related payroll taxes associated with these expenses included in the results of operations for the three and six months ended September 30, 2019 and 2018:

(In thousands of US dollars, except percentages)

Three months ended
September 30,

Six months ended
September 30,


2019

2018

2019

2018


$

$

$

$






Gross profit

18,504

13,347

34,203

25,428

% of revenue

66.0%

71.8%

65.7%

70.5%

add: Stock-based compensation and related payroll taxes

48

28

288

51






Non-IFRS gross profit

18,552

13,375

34,491

25,479

% of revenue

66.2%

71.9%

66.2%

70.6%






General and administrative expenses

5,527

2,910

9,938

5,554

% of revenue

19.7%

15.6%

19.1%

15.4%

less: Stock-based compensation and related payroll taxes

414

143

1,376

161






Non-IFRS general and administrative expenses

5,113

2,767

8,562

5,393

% of revenue

18.2%

14.9%

16.4%

15.0%






Research and development expenses

7,339

4,024

13,642

8,208

% of revenue

26.2%

21.6%

26.2%

22.8%

less: Stock-based compensation and related payroll taxes

346

(464)

923

(257)






Non-IFRS research and development expenses

6,993

4,488

12,719

8,465

% of revenue

25.0%

24.1%

24.4%

23.5%






Sales and marketing expenses

12,060

9,039

25,100

17,686

% of revenue

43.0%

48.6%

48.2%

49.0%

less: Stock-based compensation and related payroll taxes

33

218

1,133

458






Non-IFRS sales and marketing expenses

12,027

8,821

23,967

17,228

% of revenue

42.9%

47.4%

46.0%

47.8%

 

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SOURCE Lightspeed POS Inc.

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