LSPD Q3 FY22 Earnings Call
7:00 AM Central Time Zone
Q Guidance: Payment penetration rates are definitely increasing. What are you embedding in the
A Growing customer base, in new markets now and a lot going on in the macro environment and supply
chain issues impacting retailers. January, February and March are slow seasons in their business.
Q Supply chain issues: is it a cost or an ability to get inventory issue?
A So far, they’ve been managing and doing what they can.
Q Organic growth, what were the major differences between this quarter and the previous quarter.
A One of their strongest quarter, however Asia-Pacific has slowed 25% due to lockdowns. Within what
they can control, they’re very pleased with the progress.
Q New Flagship offering within hospitality, what are the lessons learned so far.
A Started by launching a few countries in Europe, and now fully launched in Europe and now in the US.
Lightspeed’s offering is arguably one of the best platforms available.
Q Now that you have New Order, how do you intend to commercialize this given the supply chain issues?
A Inventory visibility, discovering new suppliers, which is where the growth is driven.
Q How much of any headwinds is from Covid and how much is timing?
A European hospitality, where they have a good base of customers continues to grow effectively.
Hospitality segment continues to grow very well.
Q Potential for a terminal shortage. Mostly runs on IOS, is that what you’re seeing for shortages?
A Their partners have helped them secure inventory. Supply of Ipads is tight at the moment.
Q RE: 19% organic location adds…flush out the location strategy to grow organic location growth.
A Majority of locations are on legacy systems, get them to try the software and then onboard them with
the entire system. Because of payments and ARPU expansion, they continue to grow. Long-term, what
they know is where they have a full integration between suppliers and retailers, the suppliers are
the ones pushing lightspeed to their retailers. As they expand, the cost of acquisition goes down
and the intake of customers goes up. They’ll focus on the 10-12 verticals where they’re strong to
expand as a strategy.
Q RE: Supply chain issues, something you’re seeing at the moment or in the future?
A Not impacting at the moment, they’ve stocked up so they can handle it, but will their retailers have
the inventory to succeed during the Christmas season. Will it be the usual hockey stick graph or
Q RE: Lightspeed Restaurant platform –please expand on this.
A They (LSPD) are interested in complexity and targeting multiple location customes. Not interested in
coffee shops. This version handles the depth re: ingredient management, one menu across multiple
locations. With multiple locations, they really need this service and customers are enabled to scale
more effectively than with others.
Q Supply chain constraints are not impacting them now. But how much have you factored into your
A Biggest concern is customer GTV and how that translates into payment revenue.
Getting a lot of the brands on the supply network are pushing the POS. Within SMB, there’s a
disconnect with what retail customers are buying, so they can order within the New Order system.
They’re very excited about this, but there’s a lot of work to do. The good news is that nobody has
done this before.
Q Subscription contribution of ARPU is over 19%. Where could this go with new LSPD offerings?
A Started with POS, added new modules, similar to the Apple strategy, and that’s what they’re planning.
What they’re seeing is that their customers are buying more modules from them. They don’t see this
slowing down. 11% is their current penetration, so there’s a ton of runway and a ton of opportunity
to continue upselling. Acquired Equid and now it’s fully available to their customers within their
retail product offering. ARPU is going to continue to expand and customers will continue to buy more
of their product.
Beefing up their offerings and focus is going to be getting their new products into the hands of
their sales people in their regional offices.
Q Chief analytics in base offering?
A It’s an add-on. Full benefit comes from buying analytics.
Q Churn rates. How are they outside APAC?
A Pretty normal churn everywhere else.
Q Any changes in how you market the brand going forward?
A The brand has a lot of visibility. Very confident that their growth rates will remain the same, have
not seen degradation. There is not a single competitor showing up more frequently. They’re seeing
that the re-openings are helping them and very pleased with the growth.
Q What will be the next service beyond payments that you offer?
A Capital. This service is growing, and they’re seeing good uptick, and a good profitable service that
provides a lot of value to customers.
Q How should we think about the cadence of payments penetration? How does capital incentivize
customers in this regard?
A Integrated payments platform in the vend offering. The initial launches of these offerings have
helped them learn how to launch and execute more effectively.
Q Did the advertising have any impact on marketing efficiency?
A No, It had zero impact. Standard adoption and growth.
Q What type of hardware is required for payments rollout and how much of a constraint is this having on
rollout of payments?
A Stripe and Adian have been very responsive and helpful in meeting customer demand.
Q When you talk about hardware issues going into the next two quarters, are you expecting this to
change with Stripe, etc?
A On the payment terminal, they’ve been able to secure inventory. With the chip shortages, this is
just one of those things we’re going to have to deal with.
Q Growing pains in Europe and Australia –What are they?
A Adoption in the new markets has been smoother outside the US than it was in the US. He’s certain
they’ll have good adoption of their products and services. Feeling really good about knowing how to
sell it and demonstrate the value of it. The 800 they signed previously will be up and transactional
Remarks from CEO and CFO at beginning of call:
The recent short report was inaccurate, misleading and clearly intended to benefit the author.
Consistent w how they announce key metrics and KPI’s, organic growth rate came in at 58% growth and acquisitions have brought LSPD excellent talent and large/growing GTV.
Lightspeed Restaurant and Lightspeed Retail are the two main modules, within which Lightspeed Ecommerce is offered. Payments revenue is now half of their revenue. Payments provides the data that allows Lightspeed to leverage their logistics and ordering offering.
Organic growth does not include newly acquired companies.
Software is priced on a per location basis and per ecommerce site basis, rather than on a per customer basis.
Lightspeed revenue comes from 62% retail and 38% restaurant.
Hardware is excluded from revenue, because it is not considered recurring revenue. Software is recurring revenue, and is what is included in revenue. (?)
Lockdowns from Covid in Asia-Pacific during the quarter resulted in a 25% reduction in revenue.
Hope this is helpful information.