Mr. J.P. Chauvet reports

LIGHTSPEED ANNOUNCES THIRD QUARTER 2023 FINANCIAL RESULTS

Lightspeed Commerce Inc. has released its financial results for the three and nine months ended Dec. 31, 2022 (all dollar figures expressed in United States dollars).

"We have spent the last two years building the most-compelling commerce platform to help complex SMBs [small- and medium-sized businesses] improve productivity, reduce costs, automate operations and use data-driven insights to scale their business. We continue to be pleased with the growth we are seeing in this targeted customer base," said J.P. Chauvet, chief executive officer of Lightspeed. "Our deliberate focus on this group can be seen in our results this quarter, with customer locations with annual GTV [gross transaction volume] in excess of $500,000 growing 15 per cent and those over $1-million growing by 19 per cent year over year."

Lightspeed's market opportunity remains large, as complex SMBs require technology solutions to run their business and navigate challenging times brought on by weaker consumer spending. Lightspeed is focused on attracting the right customers and ensuring that operating expenses are optimized to best serve this market and achieve its goal of profitable growth.

"Having successfully integrated multiple acquisitions, Lightspeed was able to deliver an adjusted EBITDA [earnings before interest, taxes, depreciation and amortization] loss that was better than the previously established outlook and the lowest in the past nine quarters," said Asha Bakshani, chief financial officer of Lightspeed. "Lightspeed remains committed to our goal of adjusted EBITDA break-even or better in our next fiscal year, and our leaner organizational structure will enable us to be more nimble as we look to capitalize on the sizable, long-term opportunity ahead."

Third quarter financial highlights (relative to the three-month period ended Dec. 31, 2021, unless otherwise stated):

• Total revenue totalled $188.7-million, an increase of 24 per cent, or 26 per cent in constant currency.
• Subscription revenue totalled $74.5-million, an increase of 9 per cent.
• Transaction-based revenue totalled $107.2-million, an increase of 41 per cent.
• Net loss of $814.8-million, representing negative 431.8 per cent of revenue, or negative $5.39 per share. Net loss includes a non-cash goodwill impairment charge of $748.7-million. After adjusting for certain items, such as acquisition-related costs, goodwill impairment and share-based compensation, the company delivered an adjusted income of $400,000, or nil per share.
• Adjusted EBITDA loss totalled $5.4-million, representing negative 2.9 per cent of revenue versus the previously established outlook of an adjusted EBITDA loss of approximately $9-million.
• As at Dec. 31, 2022, Lightspeed had $838.1-million in unrestricted cash and cash equivalents.

Operational highlights:

• Total revenue of $188.7-million was up 24 per cent year over year due to organic growth driven by higher ARPU (average revenue per unit), growing GTV, broader payments adoption and an expanded customer location count among high-GTV customers. On a constant-currency basis, revenue grew 26 per cent.
• Subscription- and transaction-based revenue grew 26 per cent year over year to $181.7-million, all of which was organic growth. On a constant-currency basis, subscription- and transaction-based revenue grew 28 per cent.
• Subscription revenue increased 9 per cent year over year to $74.5-million. Subscription revenue was positively impacted by a growing customer location base among high-GTV customers and expanding ARPU. On a constant-currency basis, subscription revenue grew 13 per cent.
• Transaction-based revenue of $107.2-million grew by 41 per cent year over year. This 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 increased 75 per cent to $3.9-billion from $2.2-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 Lightspeed's industry-leading solutions are ideally suited. As a result, monthly ARPU for customer locations grew by 20 per cent to approximately $348, compared with approximately $290 in the same quarter last year. Subscription ARPU increased to $136 from $131 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 per year increasing by 15 per cent year over year and customer locations with over $1-million per year in GTV increasing by 19 per cent year over year. 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 risk of churn and higher lifetime value for Lightspeed compared with lower-GTV-per-year customers. Total customer locations remained at approximately 167,000, flat to the previous quarter.
• Selected customer wins include: CASETiFY, a leading global technology accessory brand that reaches one in seven millennials, which selected Lightspeed Retail with Payments for its first Australian flagship store; Soletrader, the well-known British shoe retailer that operates 28 locations across the United Kingdom, adopted Lightspeed Retail with Payments; Le Petit Nice, the three-Michelin star restaurant in Provence, chose Lightspeed Restaurant with Payments; Sky-Line Club, a Chicago fine-dining institution since 1926, chose Lightspeed Restaurant with Payments and Analytics; and joining the Lightspeed business-to-business network will be Santoni, the luxury, handmade Italian shoe brand, and Gerber Childrenswear.
• For the quarter, Lightspeed's customers processed GTV of $22.4-billion, up 10 per cent year over year, and processed $23.8-billion, up 17 per cent year over year on a constant-currency basis. Omnichannel retail GTV grew by 6 per cent, whereas hospitality GTV grew by 16 per cent. The company saw the impact of the weaker consumer spending conditions on its customers, with several retail verticals experiencing declining GTV per location year over year. Hospitality GTV was stronger year over year, given the impact of COVID-19 resurgences in the three-month period ended Dec. 31, 2021, but also showed signs of weakness from the previous quarter.
• Net loss in the quarter was $814.8-million, versus $65.5-million in the same quarter last year. As a percentage of revenue, net loss was negative 431.8 per cent, versus negative 42.9 per cent for the same quarter last year. Net loss includes a non-cash goodwill impairment charge of $748.7-million.
• Adjusted EBITDA loss in the quarter was $5.4-million, versus $7.1-million in the same quarter last year. As a percentage of revenue, adjusted EBITDA loss was negative 2.9 per cent, versus negative 4.7 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 revenue that came in at the high end of the previously established outlook range.
• The company conducts its annual goodwill impairment test every Dec. 31. Given the decline in the valuations of technology companies broadly and Lightspeed's share price, the company's net assets exceeded its market capitalization as at Dec. 31, 2022, which was an impairment trigger for the company. The goodwill impairment test resulted in a non-cash impairment charge of $748.7-million.
• In the quarter, the company announced the addition of Kady Srinivasan to its executive leadership team in the role of chief marketing officer. Ms. Srinivasan is a tenured executive with over 15 years of experience leading, building, and scaling marketing efforts at retail, gaming, consumer products and technology companies. She comes to Lightspeed from Klaviyo, where she served as senior vice-president, global head of marketing. Previously, Ms. Srinivasan was the chief marketing officer at Owlet Baby Care and held various roles at Dropbox and Electronic Arts.
• On Jan. 17, 2023, the company announced a streamlining and reorganization of operations with a 10-per-cent work force reduction, eliminating approximately 300 roles. This resulted in an estimated incremental restructuring cash charge of $12-million to $14-million, primarily consisting of severance payments, employee benefits and related costs. The company expects to incur these charges primarily in the company's fourth quarter. The estimated salary and related benefits from the eliminated roles amount to approximately $25-million annually.
• Lightspeed Capital revenue increased by 221 per cent during the quarter from a year ago. As of Dec. 31, 2022, $15.8-million of merchant cash advances were outstanding, up 25 per cent from the previous quarter.

Financial outlook

The company's outlook disclosed herein supersedes all prior statements made by the company and is based on current expectations.

Lightspeed expects consumer spending to remain under pressure in the near term, and, given that transaction-based revenues are now over half of total revenues, this presents a headwind in the months ahead. Lightspeed will continue to prudently manage the business while macrouncertainty continues and will prioritize profitable growth.

For the full year of fiscal 2023, Lightspeed now expects an adjusted EBITDA loss of approximately $37-million, improved from previously established outlook of approximately $40-million. The company now expects annual revenue to come in at the low end of the previously established outlook of $730-million to $740-million (or approximately $740-million to $750-million on a constant-currency basis).

The company remains committed to its goal of adjusted EBITDA break-even or better in fiscal 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, Feb. 2, 2023. 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 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 Feb. 2, 2023, until 11:59 p.m. ET on Feb. 9, 2023, 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 company's website.

Lightspeed's unaudited condensed interim consolidated financial statements and management's discussion and analysis for the three and nine months ended Dec. 31, 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.

We seek Safe Harbor.