Mr. J.P. Chauvet reports

LIGHTSPEED ANNOUNCES SECOND QUARTER 2023 FINANCIAL RESULTS

Lightspeed Commerce Inc. has released its financial results for the three and six months ended Sept. 30, 2022. All monetary amounts are in United States dollars unless otherwise stated.

"This is a critical moment in time for our customers in retail and hospitality," said J.P. Chauvet, chief executive officer of Lightspeed. "They are recognizing that technology is the key to evolving their businesses. Lightspeed's omnichannel commerce platform helps SMBs [small- and medium-sized business] automate mundane tasks, better connect with consumers and act on compelling data insights, which is why we continue to see strong demand for our technology solutions."

In the quarter, Lightspeed delivered revenue ahead of previously established outlook despite headwinds from foreign exchange fluctuations. Strong GTV (gross transaction value) and ARPU (average revenue per unit) performance were a result of the company's purposeful pursuit of the right customers whose higher GTV and more complex needs make them an ideal fit for Lightspeed's industry-leading solutions. In addition to strong financial performance, the company also moved to strengthen its senior management team with the hiring of former Google executive Ryan Tabone as chief product and technology officer and the promotion of J.D. Saint-Martin to president.

"Lightspeed was able to continue to deliver strong revenue growth of 41 per cent on a constant currency basis in the quarter while delivering adjusted EBITDA [earnings before interest, taxes, depreciation and amortization] performance that was better than our outlook, given our focus on operating discipline across the business," said Asha Bakshani, chief financial officer of Lightspeed. "The company has been focused on attracting the right profile of customer and on expanding Lightspeed Payments adoption. These efforts were evident in our strong gross payment volume and ARPU performance and significantly improved adjusted EBITDA margins, striking a balance between growth and the pursuit of profitability."

Second quarter financial highlights (all comparisons are relative to the three-month period ended Sept. 30, 2021, unless otherwise stated):

• Total revenue of $183.7-million, an increase of 38 per cent, or 41 per cent in constant currency;
• Subscription revenue of $74.5-million, an increase of 25 per cent;
• Transaction-based revenue of $101.3-million, an increase of 56 per cent;
• Net loss of $79.9-million, or 53 cents per share, as compared with a net loss of $59.1-million, or 43 cents per share, representing a loss of 43.5 per cent of revenue versus a loss of 44.4 per cent. After adjusting for certain items such as acquisition-related costs and share-based compensation, adjusted loss was $7.5-million, or five cents per share;
• Adjusted EBITDA loss of $8.5-million, representing loss of 4.6 per cent of revenue, versus previously established outlook of an adjusted EBITDA loss of $10-million;
• As at Sept. 30, 2022, Lightspeed had approximately $863-million in unrestricted cash and cash equivalents.

In its third fiscal quarter of 2022, Lightspeed completed the acquisition of Ecwid Inc. An attached table distinguishes certain quarterly financial measures and key performance indicators between Lightspeed's operations without Ecwid and those of the acquired company for the quarter ended Sept. 30, 2022.

Additionally, fluctuations in foreign exchange rates acted as a headwind in the quarter. An attached table highlights the impact of foreign exchange on revenue and GTV for the three and six months ended Sept. 30, 2022.

Operational highlights:

• Total revenue of $183.7-million was up 38 per cent year over year due primarily to strong organic growth and $7.5-million in revenue from the company's acquisition of Ecwid. On a constant currency basis, revenue grew 41 per cent.
• Subscription- and transaction-based revenue grew 41 per cent year over year to $175.8-million. Organic growth in subscription- and transaction-based revenues was 35 per cent year over year.
• Subscription revenue increased 25 per cent year over year to $74.5-million. Subscription revenue was positively impacted by the acquisition of Ecwid, along with a growing customer location base and expanding ARPU.
• Transaction-based revenue of $101.3-million grew by 56 per cent year over year. The strong performance was a result of continued growth in GTV and an increasing portion of that GTV being processed through the company's payments solutions. GPV (gross payments volume) increased approximately 86 per cent to $3.7-billion from $2-billion in the same period last year.
• In the quarter, Lightspeed remained focused on attracting the right customer profile, those with higher GTV and more complex needs -- customers for which it believes the company's industry-leading solutions are ideally suited. As a result, monthly ARPU for customer locations grew by 25 per cent to approximately $337, compared with approximately $270 in the same quarter last year. Subscription ARPU increased to $136 from $128 a year earlier. Lightspeed's customer base continued to shift toward higher GTV customer locations with the number of customer locations with GTV of over $500,000 oer year, increasing by approximately 25 per cent year over year, and customer locations with over $1-million per year in GTV increasing by approximately 30 per cent. Conversely, the number of customer locations processing under $200,000 per year in GTV shrank on a year-over-year basis. Customer locations with GTV of over $500,000 per year have a substantially lower churn rate and higher lifetime value for Lightspeed compared with lower GTV per year customers. Total customer locations increased to approximately 167,000 from approximately 166,000 in the previous quarter. The above customer location and ARPU numbers exclude approximately 153,000 customer locations attributable to the Ecwid e-commerce stand-alone product, which customer locations carry a monthly ARPU of approximately $15 per customer location.
• Selected customer wins include the following: L'Osteria, with over 130 locations in Germany and expanding throughout Europe, has signed up for Lightspeed Restaurant and Lightspeed Payments; Spa L'Occitane, a five-star resort and spa in France, is also adopting Lightspeed Restaurant and Lightspeed Payments; The consulate in Manhattan's Upper West Side, a French casual dining restaurant, chose Lightspeed for its strong analytics functionality; Everytable, with 53 locations serving grab-and-go delivery meals, will be adopting Lightspeed Retail and Payments; and Anheuser-Busch InBev has chosen Lightspeed's e-commerce solution for its headless commerce initiatives in South America.
• For the quarter, Lightspeed's customers processed GTV of $22.3-billion, up 18 per cent year over year (15 per cent on an organic basis). On a constant currency basis, GTV grew by 26 per cent. GTV growth outpaced location growth partially due to the company adding higher GTV locations. Omnichannel retail GTV grew by 21 per cent whereas hospitality GTV grew by 16 per cent. The addition of higher GTV customers within retail helped offset declining consumer spending in certain verticals. Within hospitality, GTV growth was impacted by deteriorating foreign exchange rates in the quarter.
• Adjusted EBITDA loss in the quarter was $8.5-million versus loss of $8.7-million in the same quarter last year. As a percentage of revenue, adjusted EBITDA loss was 4.6 per cent versus loss of 6.5 per cent for the same quarter last year. Adjusted EBITDA loss came in better than Lightspeed's previously established outlook due to continuing financial discipline and slightly better-than-expected revenue.
• In the quarter, the company announced the addition of Mr. Tabone to its executive leadership team in the role of chief product and technology officer. Mr. Tabone comes to Lightspeed from Google where he was involved in building Google's Chromebook and more recently acted as the vice president and general manager of Google Pay and Google Finance. In addition, after the quarter, Lightspeed promoted Mr. Saint-Martin to the role of president. Mr. Saint-Martin will be directly accountable for the strategic direction and overall performance of all of Lightspeed's verticals.
• As of Sept. 30, 2022, $12.6-million of merchant cash advances were outstanding, up 35 per cent from the previous quarter.

Financial outlook

The following outlook supersedes all prior statements made by the company and is based on current expectations. Lightspeed's second quarter results were strong with growing subscription- and transaction-based revenue. The company continues to execute in areas it controls but is facing macroeconomic conditions that are negatively impacting the business and certain assumptions underlying its previous outlook for the fiscal year ended March 31, 2023. Chief among these are greater-than-expected changes in foreign exchange rates that Lightspeed expects will impact the company by approximately $10-million to $15-million in revenue for the full year. In addition, the company believes that the uncertain macroeconomic environment is reason for increased caution through the second half of the year and particularly for the busy holiday season. As a result, Lightspeed has amended its financial outlook and expects revenue and adjusted EBITDA to be in the following ranges and estimates.

The company now expects annual revenue at constant currency of $740-million to $750-million, as compared with its previously issued outlook of revenue of $740-million to $760-million. After incorporating the impact of new foreign exchange rate assumptions and a more cautious view of the macroeconomic environment, the company expects revenue to be $730-million to $740-million.

For the third quarter, the company expects revenue at constant currency of $189-million to $194-million and $185-million to $190-million in revenue after incorporating the impact of new foreign exchange rate assumptions and a more cautious view of the macroeconomic environment.

Despite the updated revenue outlook, the company expects to achieve adjusted EBITDA loss of approximately $40-million, or loss of approximately 5 per cent as a percentage of revenue, within the previous outlook for adjusted EBITDA loss of $35-million to $40-million. For the third quarter, adjusted EBITDA loss is expected to be approximately $9-million, or loss of approximately 5 per cent as a percentage of revenue.

In addition, the company remains confident in its expectation that it should reach adjusted EBITDA breakeven for the fiscal year ended March 31, 2024.

Conference call and webcast information

Lightspeed will host a conference call and webcast to discuss the company's financial results at 8 a.m. ET on Thursday, Nov. 3, 2022. Access the telephonic version of the conference call on-line. 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 e-mail 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.

Among other things, Lightspeed will discuss quarterly results, financial outlook and trends in its customer base on the conference call and webcast and related materials will be made available on the company's website. Investors should carefully review the factors, assumptions and uncertainties included in such related materials.

An audio replay of the call will also be available to investors beginning at approximately 11 a.m. ET on Nov. 3, 2022, until 11:59 p.m. ET on Nov. 10, 2022, by dialling 800-770-2030 for the United States or Canada or 647-362-9199 for international callers and providing conference ID 74316. In addition, an archived webcast will be available on the investors section of the company's website.

Lightspeed's unaudited condensed interim consolidated financial statements and management's discussion and analysis for the three and six months ended Sept. 30, 2022, are available on Lightspeed's website and will be filed on SEDAR and on EDGAR.

About Lightspeed Commerce Inc.

Powering the businesses that are the backbone of the global economy, Lightspeed's one-stop commerce platform helps merchants innovate to simplify, scale and provide exceptional customer experiences. The cloud solution transforms and unifies on-line and physical operations, multichannel sales, expansion to new locations, global payments, financing, and connection to supplier networks.

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