All right, great. 8 o'clock. My name is Josh Baer, Software Analyst at Morgan Stanley. We have the honor of having Dax Dasilva back here, founder and CEO of Lightspeed. For research disclosures for important disclosures, please see the Morgan Stanley Research Disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. Dax, welcome back.
Thank you. Thanks, Josh.
Thanks for joining us. Wanna start off with the recent leadership changes at Lightspeed that resulted in your return as CEO position? I guess, you've held that position from when you founded the company in 2005 through 2022. So if you could talk a little bit about what prompted the change at the CEO role?
Yeah. So, as many of you will know, first of all, thanks for having me. You know, was CEO for 17 years, exec chair for the last two, and CEO again for the last few weeks. So I'm excited to be back. You know, we I think we're in a really exciting phase for Lightspeed. It's a phase that's the focus is profitable growth. And I think it is different from the phase that preceded it. And so JP and I where we were, like, where we had 10 acquisitions, we were consolidating into flagship products, rolling out unified payments. I think JP and the team did a phenomenal job of that. But now we're in a phase where we're growing profit margin.
We need to find operational efficiency across the business in order to do that. I think we all agreed that a new type of leadership was needed for this phase. So here I am, excited and energized to take it on.
Excellent. The press release used the words interim CEO, but how should we think about how, you know, permanent this position is?
Yeah. There's no end date for me. I'll be there as long as needed. And, of course, it's at the discretion of the board. So if I do a good job, I'll be sticking around for sure.
Got it. And so does that just mean that there's another search going on, or?
I. The board will have its own succession planning. But I'm the CEO.
Great.
Yeah.
Wanted to ask a few, just to expand on sort of the strategy looking ahead and maybe try to pick up on some of the nuances in how you're thinking about things, some of the differences. The one question I have is around Unified Payments, which has been really, like, a dominant theme over the last year. Like, with your, you know, return to the CEO role, is that still the number one priority? I mean, obviously, you've already been talking about operational efficiency. So is it correct that there's a little bit of a change in how we should think about top priority?
Yeah. So how JP and I saw this overall sort of period was we call it One Lightspeed. The first phase was getting our two flagship products, right? So our product in retail, our product in hospitality. These are the best products Lightspeed's ever seen, including the ones I built at the beginning. The second phase was unified payments. And that's gonna be, you know, a great support for all of the years to come, making sure that this company's well and profitable. But this third phase is the profitable growth phase. And, you know, unified payments, we've done some amazing work where, you know, we're projected to be we were forecasting about 30%-35% payments penetration by the end of this fiscal year.
We're gonna come in at probably the lower end of the range for a number of reasons. You know, one being that EMEA has been a bit slow going. We've had great success in North America, of course, and some legal headwinds in APAC with our Tyro agreement. We'll be delayed until September till we can approach those customers. But it's all within, you know, within range. But yeah. So that's a continuing focus, an important one for the company. But I think that in terms of strategy, we're still on the same strategy. It's still those high GTV customers.
Mm-hmm.
That we're bringing onto the platform that are gonna be amazing payments customers for us, and are, if all of us aren't on the same page, it's about customers that are in retail and hospitality that are $500,000 and greater in annual revenue. So that's really our focus. And we're orienting all of our go-to-market towards that perfect customer, that's a perfect fit for our solutions.
Great. And one follow-up, just thinking about retail versus restaurants, are they both of equal, you know, priority for you? Obviously, company was the history more on the retail side and then restaurants through acquisition. How are you thinking about the two?
Yeah. We have a very, very strong retail base, and amazing close rates in North America, for retail. And that's growing in Europe and in APAC. The hospitality business is primarily Europe, and some in APAC. And it's growing here. But I think those are both very important parts of the business. We have our ICP, our ideal customer profile, that high GTV customer in both segments. And we've got the products to serve them in both places.
Okay. Great. Wanna ask a few on location additions.
Yeah.
Merchant adds, because I think it's really important that it hits on the themes around competition, TAM. And you know, over the years, we've seen different growths in your customer count, and in your disclosures there. So I guess the question is, like, what is your message to investors about recent location growth, either overall or across those important cohorts?
Yeah. So, you know, we do have, you know, as we did the acquisitions, we do have customers that are outside of our ideal customer profile or outside of our ICP that are, you know, sub-$200,000 in annual revenue that will churn. So that does impact our overall, you know, location count especially as we transition to focusing on this high GTV customer. And so there is, so we've tried to take the focus off location count because there'll be a smaller location count, and there will be churn in some of those cohorts that are not our focus. But, you know, overall, I think we also, you know, regarding software sales, you know, we're definitely gaining ground in that high GTV category.
And we've got the marketing sort of strategies that are gonna be necessary for winning in that segment. For example, we're moving slowly off performance marketing. You know, your average high GTV customer's not scrolling social media to find their next POS vendor. So it's more brand-based marketing. There's trade shows. There's vertical publications. There's sponsorships, partnerships, all of that. So that's a blend that will happen over the next couple of years. So that's a transformation that will happen. And, you know, we're getting better and better at finding this ICP and bringing it to, you know, and making that our main motion. outbound, I think, is an important part of that story as well as leveraging the ecosystem. These are all sort of the efforts that have to be built up at Lightspeed.
That's helpful. And in thinking about that, less than $200K group of customers, obviously, by definition, lower GTV.
Yeah.
But what about on the software side? Does it make up, like, a more, you know, equitable mix of software revenue?
Yeah. I mean, they're still gonna be a part of our mix. They're just not gonna get the white glove service that the higher GTV customers get. And they just have higher churn rates, in general. They're less at scale. They're less established. And so they're a part of our mix, but they will have higher churn rates. And that's just the nature of the segment.
Got it. So, thinking about forward-looking growth, does that churn eventually stabilize? Then, like, overall, any frameworks for thinking about growth in your target customer segment?
Yeah. Definitely, that we will see stabilization of churn in those cohorts. Like, for example, you know, Gastrofix was our German acquisition. There was OEM customers in that segment. And that's definitely that churn is over. And we'll start to see that in other cohorts of that low GTV customer. But, you know, our goal is to have 10%-15% software growth. You know, we're not there at the moment. And that's primarily because we've brought a lot of our AMs, our account management team for unified payments. Like, we've made a major push, you know, in this last year to move the needle, meaningfully. And, you know, I always say, when Lightspeed wants to do something and focus on something, we always execute very, very well.
You know, making getting to our flagships, you know, executing on unified payments. But it has come at the expense of some of the software growth. So the AMs will return to focusing on software growth by middle of the year. That doesn't mean that unified payments will stop as a motion. But that initial process, that initial year of having that great focus, will start to become a part of our regular process. And the AMs are a part of, like, half of software sales. So it's a big piece to take out of the machine. So I think that you will see that software growth return, maybe not in the next quarter, but in the quarters to come.
Great.
Yeah.
Just to clarify the return of AMs, is that just in North America, or is that globally?
That's globally. Well, primarily North America. That's been the focus of the first year. There is probably more work to do in Europe in EMEA in APAC for payments. Yes.
Got it. Wanna shift gears for just a couple minutes and talk a little bit about macro and, and GTV, obviously, with higher payments attached, more reliance on, on the macro from that perspective. So just throw it out there, like, what, what you're seeing in the current environment. Like, obviously, GTV growth, as expected, has, has slowed. And wanna ask, what's really embedded in the assumptions around and guidance as well?
Yeah. Obviously, we don't guide to GTV. The macro's gonna do what it will. What I will say is that for some of our strongest, largest verticals in retail, for example, bike and home and garden, these verticals had massive years during COVID. And so there's some consequence for right now in the amount of people that are out buying bikes and home and garden when they invested a lot of money in those segments during COVID. So we'll see that, you know, come back to normal levels over time. So we're not concerned. But it does have an impact on Lightspeed because that's such a meaningful part of our business.
Okay. Great. Couple questions on international, and maybe tying in competition. But how does the competitive landscape differ in North America versus the rest of the world? Maybe we need to break it up between retail and hospitality.
Yeah. There's less competition internationally overall. So, the CAC is lower. Obviously, the payments opportunity is not as meaty because it's the take rates are lower. But, you know, conversely, the cost of acquisition is lower. We do have some very high-end restaurant customers in EMEA, for example. So the GTV is greater. So it sort of offsets, you know, the lower take rate.
Got it. And in North America in hospitality, could you sort of refine what parts of the restaurant market, like, you are going after? What might, you know, not be attractive based on, like, the competitors in North America?
Yeah. You know, our restaurant platform is designed. It's designed for the higher-end restaurant. And the analytics insights platform, that's, like, the big differentiator. And that is really, you know, something that a larger GTV hospitality business is gonna really leverage. It's not worth it for a smaller operation. So that's, I think, very consistent with the kind of customer profile that we have in Europe. And so I think how we win globally is we make sure that how we're designing our retail and our hospitality product is tailor-made for that ICP. You know, we're not trying to win all sorts of segments. We're trying to really compete hard in that ICP and build features that are very differentiated and have great, you know, software moat.
I think that for hospitality, I think that lies in the analytics, the insights that we can give restaurant owners. And then I think because there's such challenges around staffing, and shortages and, you know, the cost of supplies, the cost of inventory, you know, focusing on inventory, focusing on how to manage staff and shifts and so on is of primary importance. And on the retail side, I think for that ICP, it's also those deeper inventory workflows that Lightspeed's been known for from the very beginning, going deeper with that and then connecting those workflows to, you know, those complex omnichannel workflows that are connected into those inventory workflows. And that also connects to our B2B strategy.
So it's overall as a solution, it's gonna be much, much more powerful than a solution that's that maybe applies across a number of different segments or is online only, or is a little bit less focused than our very, very sort of laser-focused approach.
That's helpful. Have you talked about win rates in any of those markets, North America, international re hospitality?
Yeah. I mean, our win rates in North America retail are the best in the company. And our win rates in EMEA hospitality are the best in the company for hospitality. So, you know, we obviously have a lot of marketing dollars focused there. And I think that's also a part of, you know, making us operationally efficient in this period is making sure that we double down on areas where we have great win rates and maybe defocusing on areas that don't have the kind of TAM or don't have the kind of win rates that are worth it for us. I think in many places around the world, we thought, "Okay. We made an acquisition in a place in the hospitality segment where we have a great market.
Why don't we bring our retail team over there?" And I think that some of that has peanut-buttered Lightspeed, you know, too thin, peanut-buttered our go-to-market efforts, spread too thin, you know, across international markets. So I think that we're refocusing in this period is gonna have a really positive impact on the business.
Got it. In the context of operational efficiency, I mean, one of the things that we were looking for this year was starting to invest and build out and field on-the-street sales force, particularly in hospitality. Like, is that still in the plan?
Yeah. I think that's a core strategy for capturing this high GTV merchant. Like, for example, Joël Robuchon International, that's a marquee customer that we just brought on. That was brought on through outbound. Outbound is one of the key ways that we're gonna get this customer. In addition to, you know, those new marketing efforts that expand beyond performance and into more brand building in verticals as well as the ecosystem leveraging the ecosystem partners. Other players, for example, in hospitality have a very closed system, you know? And we want to leverage ecosystem partners that are providing some of the other modules or some of the other, you know, elements like workforce management or scheduling or payroll to be a part of our go-to-market.
So, all of those pieces are, I think, important to us really winning this segment. But outbound is key, you know? I think that just the little bit of shift between, you know, what was said, you know, by previous leadership and how we're gonna approach it now is if we wanna do outbound efforts, I wanna pay for it with operational efficiencies. I don't want it to be taken out of EBITDA to pay for that. So we're going to be, you know, bringing that in EMEA, bringing those outbound reps in a measured way. But they are impactful. We know it works. And not just in high-end, not just in hospitality where we've been working in a number of cities in North America and Europe, but also in retail.
I think that that's, it's a really interesting, you know, go-to-market strategy for our retail segment, you know, which is very, very strong for us. And nobody's doing it.
Great. Before we get into some of the efficiencies and, you know, ways to pay for these investments, let's stick to the investments. So we're talking about outbound sales. You mentioned partners. Just wanted to ask, what, where are you investing in the year ahead?
Yeah. I think that, I in terms of partners?
No. Partners and then more broadly, like, what are the key investment areas?
Yeah. Yeah. I think it is, as you said, it's outbound. I think that the blend of marketing is gonna change to more of the vertical and brand marketing. And then, of course, I think, you know, we need to build out that the partnership and ecosystem go-to-market. And that those are all key investments. Obviously, on the product side, you know, there are big investments that we're doing for building workflows for the ideal customer profile.
Got it. So the commentary around EBITDA margin has been break-even or better, for a while. Margins this year were reiterated, and then, like, talking about modest improvements looking ahead to fiscal 2025. I guess, does this like, how what we've been talking about, how does that sort of change how we might think about the trajectory of margins ahead?
Yeah. So I think, you know, I think some of the things that are coming up in terms of payments are going to help. Like, for example, instant deposit, you know, capital expanding, you know, international payments will help. But I, you know, Lightspeed's been known as a high-growth company, 25%+ growth. That's always gonna be the case of us being a high-growth company. But we'll invest slightly less in growth, in order for us to increase Adjusted EBITDA margins meaningfully, year upon year. So right now, I think we're at 1.5%, you know, adjusted EBITDA margin. But that should, you know, I'd like to have that increased meaningfully year upon year. Still low single digits, but that's the goal.
and anything new we wanna do in terms of the investments we're talking about, will come out of operational efficiencies. For example, you know, on day one, there's a lot to come in terms of announcements in terms of what we're gonna be doing to make the company more efficient and consolidate some of the allocation around all of the acquired companies and so on. But there's some easy things that I've been able to do immediately. For example, we have a sales summit that's internal that's grown a lot. It's $5 million. It's like, you know those are the kinds of things that we're evaluating and cutting, their facilities, etc. So, I think that we've been focused on lots of other things.
Now is the moment to sort of focus on all of the different elements of the business where we can be a lot more efficient.
Very helpful. So I don't wanna get ahead of ourselves.
And I'm not back to be popular, so.
Yeah. Okay.
It's, I think it's good to be focused on this as a company.
Don't wanna get ahead of ourselves as far as, you know, what might come around those efficiencies. But maybe you are able to talk a little bit about like, you did all these acquisitions years ago. You're now on the flagship products. Like, what cost, you know, efficiencies have you already realized in the last couple of years after integrating some of those platforms and teams?
I think there's a lot to do. So I really feel that we've done an immense and a tremendous job of building those flagships. Like I said, they're the best products we've ever had. You know, there's gonna be an amazing software RPU opportunity with those as we have lots of really key modules. A lot of those individual products that we acquired didn't have a really great software RPU path for them. They were very vertical or very region-specific. So the flagships are a huge opportunity. We already have more than 30% of our base on the flagships. So we're very excited about how it's going with them. So big accomplishment. And then, of course, the unified payments is the second big accomplishment. But has the company focused on all of the rationalization of all of those acquisitions?
You know, the answer is no. So that's a big opportunity for us. And so, you know, those are the things that we'll be focused on, and but yeah. It's, I think it's gonna be what I want, is for investors to be able to look at this company and have a really clear sense of our model. And I think right now, because of all the acquisitions and because of the perceived heaviness of the company, there's, and also just the shifts in location counts because there's different cohorts that are lower GTV that are churning out. I think it's complicated for investors to model.
That's why in the fall, we're looking to do a three-year outlook that contemplates, you know, some of these efficiencies baked in that we by then, we'll have done a lot of the planning. And I want it really to be super clear, by that point that investors will know how when we pour marketing dollars in one end, there's an efficient machine that knows how to capture those high GTV merchants. And then out the other end comes a very predictable, understandable, you know, margin. So that, I think, is the goal to be able to present that in the fall at an investor day. And that, I think, is the biggest complaint that I hear from shareholders. They say, "2019, when you went public, I could model this company.
It was very, very simple in terms of all of the different, all the different metrics. And now, you know, yes, you have your flagships, but there's been complexity added to the business. So the job is to now decomplexify that, you know, from an operational efficiency standpoint. But also, I think it'll help investors understand how this is an efficient machine for, for winning that ICP.
Great. Talking about the 30% on the flagships, what's the conversation like with customers? What's the, you know, is there a push? Is it up to the customer if to go to the flagship? Like, any sense for the timeline for getting everyone over?
So I think that is gonna come in this year in terms of, like, what is our three-year plan to move piece by piece some of these customers to flagships where it makes sense because a lot of them, some of them are low GTV. And maybe it doesn't make sense for them to move on to one of these platforms. A lot of them have already. Like, for example, if you were a ShopKeep customer, and you wanted to go multi-store, multi-location, you can't do that in the ShopKeep platform. So you're moving on to our retail platform because you have tons of ways you can grow your business. So if you are a business that's, like, we love those, you know, $200K GTV customers that are growing into $500K customers.
So for all of those kinds of customers, you know, we're targeting them to be able to grow them into one of the flagships. And that's been happening naturally. But yeah. So I think that's gonna be a big part of the effort over the next couple of years. We'll go bit by bit. But yeah. There's lots of opportunity in our base to move them to the flagships. And I think 30% already is, I think, pretty good.
What happens from an economic perspective when someone moves to flagship? Any changes?
Well, there's tremendous opportunity in RPU, right? So, there's a lot more modules on the flagships. Like I said, there's not a lot of modules on some of these other legacy platforms. So, not in addition to payments, there's all of these other ways for us to grow them as a customer. And of course, that's all stickiness for us.
Got it.
Value for them.
You talked a little bit about, some of the, the insights as far as modules and, and differentiation. Maybe you could expand on, you know, what are the key modules in the flagships across your different segments? What's really differentiated? What are customers excited about?
Yeah. I think, like, on the retail side, obviously, the biggest, the biggest module that, that attaches is e-commerce and omnichannel. You know, a lot of that technology comes from the Ecwid acquisition. That's been a real winner for us. And we've, we've been able to give, give our retail customers really easy access to, to into incredible, you know, ways to, to sell on, on, on online channels. So that, that's, that's been great. Like I said, we wanna continue to invest heavily in those omnichannel workflows so that the high inventory scenario that our retail customers have, we have workflows that are unbeatable in terms of omnichannel workflow inventory across channels and across not just online and in-store but across different locations, across different warehouses. So that's a really strong module that we will continue to build on.
On the hospitality side, it is the analytics and the insights that's powerful. I think there's opportunity on both. Our teams are building AI-powered workflows on both. You know, there's a place where we can take in analytics and insights to another level that we can do on the hospitality side. There's the more that you know, when it comes to these verticals, the business owner has to deal with an increasingly complex world. You know, they have not only to deal with higher costs and challenging challenges around staffing, but now there's multi-channels. They're not necessarily a technologist.
So the more that they can get from Lightspeed in terms of modules or in terms of intelligence, you know, we're giving them real leverage to be able to compete, not just locally but often, you know, with big box or with large competitors. So we need to continue, you know, as those competitors have better and better tooling themselves, you know, these customers have to be able to compete on another level. So it's that module adoption that I think gives them more and more advantages that they can grow into. And many customers choose Lightspeed because they see that path of module growth.
So whether that's, you know, starting with e-commerce but then later moving into loyalty or online ordering or different, you know, tableside, tableside devices, all of that, all of those options or modules are, you know, opportunities for growth for the customer.
Excellent. I was hoping you could take a couple minutes and talk about the B2B strategy, supplier network, something that I think is really exciting. But when you look at the model, you know, it's tough to tell where it's really making an impact today.
Mm-hmm. Yeah.
Talk about that, that strategy and, and how to think about that.
Yeah. So I think the B2B strategy is really, really interesting because in our retail segments, we have, it's all about high-value inventory, right? And it's about our retailers being the curators and adeptly ordering from these key brands, right? And, you know, for example, our acquisition of NuORDER brings a lot of those brands into direct connection with our retailers. We have large department stores that access those brands through that B2B platform. And now we're opening it up to all the smaller independent retailers that obviously they have a contract with the brand. But now they can procure and they can fulfill all within Lightspeed and have catalogs that feed into Lightspeed.
My goal for B2B because I do, I'm really excited that we're not just monetizing, and we're not just participating in from the merchant to the consumer. But now we're working between the merchant and the brand. And that's exciting because capital is a business that we're excited about growing. We can lend to that merchant so that they can buy inventory from the brands. So that's a big opportunity for us. We wanna build capital into, you know, $100 million business over time. And then there's also this payment flow between the merchant and the brand that over time, I think, we'll be able to facilitate to some degree. So those are all exciting opportunities.
And also, it just provides so much more value to the Lightspeed platform that they can do all their activities in one place, that once they're able to do all of their purchasing inside Lightspeed and all of their transactions, then they're not—merchants are not gonna wanna do it any other way. It's just so time-consuming what they have to do across multiple B2B platforms. So I think it's really exciting. Then we'll have brands, you know, recommending Lightspeed and recommending that ecosystem. So that's as well. That's very powerful. But one of my goals, because it is abstract for investors, is to have a monetizable metric as a part of this three-year plan that you can track our progress of, like, how meaningful is B2B to the Lightspeed overall business.
So I think we're working on that. And we wanna make it really clear. I think it sounds exciting to everyone. And you know, the promise is really there. But what does it mean for the company, in terms of monetization and in terms of an overall opportunity?
Perfect. Looking forward to it. Wanted to ask a few on capital allocation, maybe starting with M&A. Under your leadership, looking back, obviously, a lot of acquisitions. In this conversation, we've only been talking about it, you know, from,
The rearview mirror.
The rearview mirror. Yeah.
Yeah.
Is that the right way to think about M&A?
That's the right way to think about it. I mean, large M&A is not a priority for me. And I think, right now, we don't want the distraction of trying to, you know, add more complexity to the model when I'm trying to, we wanna decomplexify, and we wanna make it a very investible model. And I think that's gonna get more and more exciting for investors to believe that Lightspeed is the best way to be able to capture this really highly valuable segment of the small business market. And so adding another large investment, a large acquisition to the picture right now, I think, would just be a large distraction for us.
I think we can do much better for the business by investing in other things in terms of our time, and our resources. I think small tuck-in M&A is always something that we always look at. But that, you know, if it can add something to software RPU, and drop to the bottom line, I think that's a no-brainer or something that's very, very key to the strategy.
Got it. And I'll pull for questions in a minute. Just wanna ask about the potential for other forms of capital return, buybacks. Definitely an area that I've gotten a lot of questions from.
Mm-hmm.
From investors just given, you know, where the stock is trading and.
Yep.
Your confidence in the business.
Well, you know, I think it's an interesting conversation that is a popular topic right now with our board. So, whereas before, it would probably not be something that we'd really be talking about, given where the stock is trading at the moment, I think we, you know, we are having a discussion.
Got it. Any questions from anyone in the audience?
Yeah.
You know, you've obviously with all the M&A with all the M&A you guys have done, what have you learned that you all have in terms of a skill at doing it? Obviously, you know, there's a distraction. There's the time it takes. But if you actually look back, what was it that Lightspeed built the muscle to do, right? And, you know, and kind of if you have to rekindle that or if you're doing the small tuck-in, it reduces your concerns about, you know, the quantum being smaller but the success being, you know, more, more certain.
Yeah. I think that there was a lot of doubt as to whether we'd be able to take 10 acquisitions and build 2 amazing flagships. But I think we've proven that we can really we're really good on the technology side and bringing the best engineers from different, you know, from different countries, different cultures, different code bases, and building 2 incredible retail an incredible retail product and an incredible hospitality product. I'm like super proud of that. You know, where I think we have some learning to do is the other part of it is, like, okay, now how do we after, you know, after we've done that, how do we rationalize the size of the company? You know, and I think that we that's the focus right now, you know. And maybe we could have done it before.
But I think that that, you know, getting to two flagships and doing unified payments were very high-value things to do for the company. And I think they set us up to be able to, to be in this, this period where we've had two profitable quarters on an adjusted EBITDA basis. But now, we have all this opportunity to, find the efficiencies. And, and I think that should be easier. It's, it's, it's, I think it's easier to do than, than merging, you know, all these different platforms into and finding the best elements of it to build two technology platforms.
So, hopefully, that next phase is something that we learn from in this period, and we'll maybe be able to do a little bit more in concert with doing a technology integration/payments integration, you know, both.
Wanted to ask a follow-up on payments attach in EMEA and APAC. If you could go through a little bit what you mentioned a little bit slower in EMEA. What are some of the factors to consider there? And then in APAC, you mentioned some legal hurdles, I believe, like how to think about the timing and of that getting cleared up.
Yeah. For APAC, it's just a bit of a delay. Like, I think there's a segment, that's with Tyro that we won't be able to approach until September. So it's not forever. It just changes, it moves out some of our, you know, some of our timeline. EMEA, it's, there's a lot of annual contracts. You know, I think 30% of the payment space has an annual contract. So we have to be opportunistic of, like, when those things expire and sort of, you know, gauge our timeline that way. But those are, you know, there's a resolution for all of that. You know, we'll get it eventually in terms of EMEA and APAC. We just had very aggressive timelines.
Then the reality is, like, once we're in market, it, there's different, there's those kinds of considerations compared to, you know, what we're able to do in North America. There's also, you know, overall with payments, there is the high-risk category, that, you know, when you talk about overall payments penetration, you know, we're, we're gonna be getting to 30, you know, 30 between 30%-35%, probably the low end of that in this fiscal year. I think we can get to 40%-50% in subsequent years. I think there's always gonna be a percentage of cash in the system. There's also gonna be a portion that's high-risk, retail. I think with the high-risk retail, we're already working with partners, that we could be able to capture that piece.
You know, you talk about things like vape or CBD or other kinds of categories that are interesting, that use Lightspeed. So, some of it is not, you know, lost forever, you know. And there are some initiatives internationally that we are rolling out in terms of financial services. Like, right now, you know, U.K. is a great market. But Ireland is coming online for payments, and as well as capital in EMEA. Capital's been we've had a great start in North America. But we think it's gonna be a you know, a well-received as well in EMEA.
Great. Maybe just the final question sort of to sum up the conversation.
Mm-hmm.
And I'll turn it over to you. But, you know, I'm hearing about continued success and continued room to go as far as payment attach, a return to.
Yeah.
software growth, 10%-15%.
Absolutely. Yeah.
Doing this all more efficiently. You got some ideas for, you know, new long-term three-year targets and different KPIs sort of coming.
Yeah.
Potentially in the fall.
At the Investor Day.
You know, anything else that you wanna kinda say to leave to investors, after the you know, sum up this conversation?
Yeah. I just think the takeaway is that, you know, Lightspeed has to be ultra-focused on building product to win that ICP, that high-GTV customer. I think that we need to let go of markets where it doesn't make sense in terms of market fit. We're transitioning marketing to this model that we can capture this ICP. And it's this period's all about profitable growth. So it's finding the efficiencies and finding the customers and rolling out the payments that in areas that make all of that possible. So that's the formula. We gotta keep our heads down. And ultimately, I think that by the fall, that business model should be really, really clear of how we do that.
And it'll, in my view, it's gonna be a very investible business model because we're capturing a very, very highly valuable segment of the business market.
Perfect. Great place to stop. Thank you, Dax.
Thank you.
Welcome back.
Thank you.