Mr. J.P. Chauvet reports

LIGHTSPEED ANNOUNCES FOURTH QUARTER AND FULL YEAR 2023 FINANCIAL RESULTS AND PROVIDES OUTLOOK FOR FISCAL 2024

Lightspeed Commerce Inc. has released its financial results for the three months and fiscal year ended March 31, 2023 (fiscal 2023).

Lightspeed reports in United States dollars and in accordance with IFRS (international financial reporting standards).

"I'm incredibly proud of the milestones we have accomplished this year. To go from nine distinct products to two powerful flagship platforms -- Lightspeed Retail and Lightspeed Restaurant -- has allowed us to simplify our organization, increase our focus on our target customers and accelerate our innovation engine," said J.P. Chauvet, chief executive officer of Lightspeed. "We have welcomed an incredible group of sophisticated, high GTV [gross transaction volume] merchants and restaurants this quarter that see the true value of Lightspeed. Our strong annual net retention rate shows that these types of businesses continue to expand their technology suite with us as they grow and thrive, thanks to the power of our platform."

For the fiscal year ended March 31, 2024 (fiscal 2024), Lightspeed is focused on accelerating adoption of its financial services and reaping the benefits of its simplified product portfolio. By focusing on its two flagship products, Lightspeed expects to increase adoption of its solutions amongst more complex merchants, improve sales productivity, and increase the pace at which it can create new products and features that drive value for customers.

"Our adjusted EBITDA [earnings before interest, taxes, depreciation and amortization] loss this quarter came in significantly better than our previously established outlook and shows ongoing progress towards our goal of adjusted EBITDA break-even or better for fiscal 2024," said Asha Bakshani, chief financial officer of Lightspeed. "Our laser focus on continued improvement of unit economics has allowed us to deliver meaningful growth while also positioning us to reach our goal of profitability."

Fourth quarter financial highlights (all comparisons are relative to the three-month period ended March 31, 2022, unless otherwise stated):

• Total revenue of $184.2-million, an increase of 26 per cent, or 27 per cent in constant currency;
• Subscription revenue of $76.2-million, an increase of 8 per cent, or 11 per cent in constant currency;
• Transaction-based revenue of $99.6-million, an increase of 49 per cent, or 50 per cent in constant currency;
• Net loss of $74.5-million, representing 40.4 per cent of revenue or a loss of 49 cents per share, as compared with a net loss of $114.5-million, 78.1 per cent or a loss of 77 cents per share. After adjusting the net loss by $74.1-million for certain items, including share-based compensation, amortization of intangible assets, acquisition-related compensation and the recently announced reorganization, the company delivered an adjusted loss of $400,000, or nil per share;
• Adjusted EBITDA loss of $4.3-million, representing 2.4 per cent of revenue versus a loss of $19.7-million or 13.5 per cent in 2022;
• As at March 31, 2023, Lightspeed had $800.2-million in cash and cash equivalents.

Full fiscal year financial highlights (all comparisons are relative to the full fiscal year ended March 31, 2022, unless otherwise stated):

• Total revenue of $730.5-million, an increase of 33 per cent, or 36 per cent in constant currency;
• Subscription revenue of $298.8-million, an increase of 20 per cent, or 24 per cent in constant currency;
• Transaction-based revenue of $399.6-million, an increase of 51 per cent, or 52 per cent in constant currency;
• Net loss of $1.07-billion, representing 146.5 per cent of revenue or a loss of $7.11 per share, as compared with a net loss of $288.4-million, 52.6 per cent or a loss of $2.04 per share. After adjusting the net loss by $1.04-billion for certain items, including the goodwill impairment recorded in the quarter ended Dec. 31, 2022, share-based compensation, amortization of intangible assets, acquisition-related compensation, and the recently announced reorganization, adjusted loss was $25.1-million, or a loss of 17 cents per share;
• Adjusted EBITDA loss of $33.9-million, representing 4.6 per cent of revenue versus a loss of $41.5-million or 7.6 per cent in 2022.

Fluctuations in foreign exchange rates acted as a headwind in the quarter. The associated table highlights the impact of foreign exchange on revenue and GTV for the three months and fiscal year ended March 31, 2023.

Fourth quarter operational highlights:

• Lightspeed delivered several new product features in the quarter. Self-serve Lightspeed Capital advances were embedded in the flagship products. Lightspeed Capital will have expanded availability in fiscal 2024, with over 80 per cent of customer locations having access to the offering. Within B2B (business-to-business), catalogue search was launched for the bike vertical, enabling merchants to search for products across brands. Tap to pay on iPhone was enabled for Lightspeed Restaurant, eliminating the need for expensive payment terminals and bringing the power of a full point-of-sale (POS) right to customers' smart phones. Lightspeed also launched service module, which allows retailers to create, schedule, track and sell service offerings from within Lightspeed Retail.
• Subscription and transaction-based revenue grew 28 per cent year-over-year to $175.8-million, all of which was organic growth. On a constant currency basis, subscription and transaction-based revenue grew 30 per cent.
• Monthly ARPU (average revenue per user) grew by 24 per cent to approximately $335 compared with approximately $270 in the same quarter last year. Subscription ARPU increased to approximately $138 from approximately $132 a year earlier. Total customer locations grew to approximately 168,000.
• Lightspeed's customer base continued to shift toward higher GTV customer locations. This resulted in the number of customer locations with GTV of over $500,000/year increasing by 13 per cent year-over-year, and customer locations with over $1-million/year in GTV increasing by 16 per cent year-over-year. Conversely, the number of customer locations processing under $200,000/year in GTV shrank on a year-over-year basis. Customer locations with GTV of over $500,000/year have substantially lower risk of churn and higher lifetime value for Lightspeed compared with lower GTV/year customers.
• An increasing portion of GTV is being processed through the company's payments solutions. GPV (gross payment value) increased 70 per cent to $3.8-billion from $2.2-billion in the same period last year.
• For the quarter, Lightspeed's customers processed GTV of $20.2-billion, up 10 per cent year-over-year. On a constant currency basis, GTV grew by 13 per cent year-over-year. Omnichannel retail GTV grew by 3 per cent whereas hospitality GTV grew by 20 per cent. Weaker consumer spending conditions impacted the company's customers, with several retail verticals experiencing lower average GTV year-over-year. Conversely, hospitality GTV was stronger year-over-year, as consumers continue to dine out and travel.
• Net loss in the quarter was $74.5-million versus a loss of $114.5-million in the same quarter last year. As a percentage of revenue, net loss was 40.4 per cent versus 78.1 per cent for the same quarter last year. After adjusting the net loss for certain items, including share-based compensation, amortization of intangible assets, acquisition-related compensation and the recently announced reorganization, by $74.1-million, the company delivered an adjusted loss of $400,000, or nil per share.
• Adjusted EBITDA loss in the quarter was $4.3-million versus a loss of $19.7-million in the same quarter last year. As a percentage of revenue, adjusted EBITDA loss was 2.4 per cent versus 13.5 per cent for the same quarter last year. Adjusted EBITDA loss came in better than Lightspeed's previously established outlook, given strong gross margin performance and pro-active measures to streamline operations.
• Notable customer wins include: Rosie O'Grady's, one of the busiest restaurants in New York's Times Square, which has selected Lightspeed Restaurant and payments to power its steak and seafood restaurant; Apricot Lane, a leading California-based women's fashion franchise, adopted Lightspeed Retail and payments; La Mere Germaine, a Michelin star restaurant in Chateauneuf-du-Pape, France, adopted Lightspeed Restaurant and payments to operate its acclaimed establishment; Eastern National, operator of 127 gift shops across America's national parks, has signed on for Lightspeed Retail; and Lightspeed signed a four-year contract renewal for Lightspeed B2B with renowned retailer Saks Fifth Avenue.
• As of March 31, 2023, $29.5-million of merchant cash advances were outstanding, up 86 per cent from the previous quarter.
• After the quarter, Lightspeed launched its unified payments and POS initiative. Moving forward, both new and existing customers will be asked to sign up for one unified solution, with Lightspeed payments embedded directly into the POS. This initiative has already been launched amongst Lightspeed's North American retail customer base, and will expand to hospitality customers, and globally to EMEA (Europe, the Middle East and Africa) and Asia-Pacific through the course of the first two quarters of the current fiscal year. Over all, Lightspeed has seen the value that unified payments and POS can add to customers' businesses by saving them time and money, eliminating the need to reconcile separate systems, improving accuracy, reducing manual tasks, and providing them far better data insights into their business. This initiative is also expected to boost Lightspeed's growth and significantly improve its unit economics.

Financial outlook

The following outlook supersedes all prior statements made by the company and is based on current expectations.

The company's outlook reflects caution on the near-term results given the economic climate and its impact on the company's end markets (including changes in consumer spending impacting several of Lightspeed's retail verticals). However, with the recent launch of unified payments and POS, the company expects that revenue growth will build as the year progresses, as customers are onboarded to Lightspeed payments and the company begins to see the benefits of added volume processed through its embedded payments solutions. Lightspeed believes it is positioned to accelerate toward the Rule of 40 financial metric as the company exits the fiscal year. As a result, the company is also withdrawing its previously issued target of 35-per-cent to 40-per-cent annual organic subscription and transaction-based revenue growth.

The company expects to incur some incremental costs in the first part of the year as part of the program launch. These include hardware subsidies, technical support and contract buyouts. These costs are estimated to amount to approximately $12-million in the aggregate for the fiscal year.

Factoring this into consideration, the company's outlook for the full fiscal year and the first quarter is as follows:

Fiscal 2024:

• Revenue of approximately $875-million to $900-million, with growth stronger in the second half of the year as unified payments rolls out;
• Break-even or better adjusted EBITDA, inclusive of the costs incurred for the unified payments initiative.

First quarter 2024:

• Revenue of $195-million to $200-million;
• Adjusted EBITDA loss of approximately $10-million;
• This adjusted EBITDA loss outlook includes costs associated with launching the unified POS and payments initiative, as well as approximately $4-million in costs associated with the company's annual sales summit.

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, May 18, 2023. To access the telephonic version of the conference call, register 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 May 18, 2023, until 11:59 p.m. ET on May 25, 2023, by dialling 800-770-2030 for the United States or Canada, or 647-362-9199 for international callers, and providing the conference ID 74316. In addition, an archived webcast will be available on the investors section of the company's website.

Lightspeed's audited consolidated financial statements, management's discussion and analysis, and annual information form for the fiscal year ended March 31, 2023, are available on Lightspeed's website, and will be filed on SEDAR and on EDGAR. Shareholders may, upon request, receive a hard copy of the complete audited financial statements free of charge.

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.

Founded in Montreal, Canada, Lightspeed is dual-listed on the New York Stock Exchange and Toronto Stock Exchange. With teams across North America, Europe and Asia Pacific, the company serves retail, hospitality and golf businesses in over 100 countries.

We seek Safe Harbor.