Earnings Call: Q2 2020

Nov 7, 2019

Ladies and gentlemen, thank you for standing by, and welcome to the Lightspeed Second Quarter 2020 Earnings Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer I would now like to hand the conference over to your speaker today, Chris Mamoni, Investor Relations. Please go ahead. Thank you, operator, and good morning, everyone. Welcome to Lightspeed's fiscal 2nd quarter conference call. Joining me today are Dax Vasilva, Lightspeed's Founder and CEO Brandon Nutze, Chief Financial Officer and JP Chauvet, President of Lightspeed. After prepared remarks, we will open it up for your questions. We will make forward looking statements on our call today that are based on assumptions and therefore subject to risks and uncertainties that could cause actual results to differ materially from those projected. We undertake no obligation to update these statements except as required by law. You can read about these risks and uncertainties in our earnings press release issued earlier today as well as in our filings with Canadian Securities Regulatory Authorities. Also, our commentary today will include adjusted financial measures, which are non IFRS measures. These should be considered as a supplement to for IFRS financial measures. Reconciliations between the 2 can be found in our earnings press release, which is available on our website. And finally, note that because we report in U. S. Dollars, all amounts discussed today are in U. S. Dollars unless otherwise indicated. With that, I will now turn the call over to Dax. Thanks, Chris, and thank you, everyone, for joining us today. We're pleased to announce another quarter of progress and solid execution as we continue our journey of building a global leading cloud based omnichannel commerce platform for complex SMBs in retail and hospitality. Highlighting our top line growth during the Q2, total revenue grew by 51% versus last year and topped $28,000,000 to exceed the high end of our guidance range. More than 90% of this base consists of recurring software and payments revenue, which grew 52% during the Q2. We believe the complex SMB is seeking a recognized global market leader for the solutions we provide, And we're making great progress in our journey to be known as that go to player for many high performing global brands. We've now reached almost 57,000 customer locations across our increasingly worldwide footprint. Our customers continuing to succeed through greater use of the Lightspeed platform invigorates us the most. To this end, GTV growth of greater than 37% over the last 12 months to approximately $17,400,000,000 is an effective gauge of a healthy growing customer base that is finding increased success through partnering with Lightspeed. We expect that Lightspeed's long term growth will be driven predominantly by 3 main organic growth vectors. Number 1, attracting new merchants, where we are well positioned to continue growing our overall location count. Number 2, entering new markets, where we see significant opportunity given that less than onethree of our revenue comes from outside North America today and number 3, expanding ARPU where we have tremendous white space to capitalize for both new and existing customers paying for more than 1 Lightspeed product. Lightspeed Payments has continued to be the notable product success story for us in 2019, and we gained very good traction this quarter as attach rates once again were approximately 50% for eligible new customers in our U. S. Retail base. Continue to be deliberate in what we commit to accomplish with likely payments as this remains uncharted territory for us. But as we draw closer to launching payments to additional large customer pools, such as Canada and restaurants, we are more confident than ever that those new segments will embrace payments in a big way, affirming our overarching strategy of being a one stop shop to the core commerce needs for our customers. While we are very pleased with our progress against our longer term strategic objectives, we are still at the start of our pursuit of a vast global market opportunity. We believe this fragmented market needs a leader, and we believe that leader will be Lightspeed. We are moving decisively to achieve this vision. 1st, through continued sharp execution organically, but also accelerating that foundation by bringing together the best of breed players in the space in our quest to create a global powerhouse. We're finding that the best companies in the world with the best minds, the best technology and the best customers want to join forces with Lightspeed. Most recently, we acquired Kounta, a rapidly growing leading cloud based hospitality POS platform in Australia and New Zealand, serving more than 7,000 customer locations across that region. Kounta fits perfectly into our growth strategy to enhance our organic global growth opportunity by combining the most innovative and disruptive teams in technology working to modernize the merchant point of sale environment. Countess' team believes in our strategy of building a one stop shop for their complex SMB customers, offering advanced analytics and purchasing modules, and they've recently begun to monetize their own payments opportunity. We intend to leverage Couch's experience and relationships with the region to accelerate the adoption of Lightspeed's retail offering to further our data strategy and to eventually leverage Lightspeed Payments as well. This team fits culturally with Lightspeed and we're fully aligned on how to build a global leader in this segment. From our perspective as a leader, we also believe Lightspeed's breadth of expertise can help immensely. To that end, I'd like to share some statistics on the performance of Kona Golf, an acquisition we completed 6 months ago that brought us instant leadership in the golf course operator vertical. As a result of the amazing team effort from our new employees in leveraging the value of Lightspeed's brand more closely, as well as our expertise in partnering with complex SMBs, Crono Golf's growth in new customers accelerated to 114% over the past 6 months, up from 53% a year ago. This type of growth acceleration is a great proof point that our strategy is the right one. Close to 700 golf courses now use the LightSpeed offering to power their operations. Since the acquisition, we've signed many multi course operators, highlighted by Kemper Sports, an Illinois based operator with more than 100 courses, Landscapes Golf, a Nebraska based course operator with 50 total locations and several others with at least 10 or more courses. Turning to iCAN2, the cloud based POS system specializing in the hospitality segment in Europe that we acquired in July is integrating well into Lightspeed. ICan 2 has had some new customer wins such as the Mantra Jazz Fest, one of the world's most renowned jazz festivals held annually in Switzerland in early July. We'll provide a more thorough update to iCAN 2 in a future call. Turning to our product innovation efforts that further our position as the leading cloud based end to end solutions platform in our space. During the Q2, we rolled out the newest version of our core Lightspeed Retail platform, Lightspeed Retail 3.0. Key features behind this faster and more streamlined user experience include a sleek new design, simplified navigation capabilities, more mobile friendly functionality and a more seamless sales workflow engine designed to optimize the selling process in complex retail environments. We have other major new product releases and enhancements coming within both the light food retail and restaurant platforms throughout the year. And I look forward to sharing with you more of the details around this rapid product velocity, a hallmark trait of Lightspeed in future earnings calls. Lightspeed continues to enjoy strong momentum from complex retailers and restaurant owners in North America and around the world, many of whom continue to select Lightspeed given our ability to manage their omnichannel business needs seamlessly. Customers such as international fashion brand Gabriela Hearst, new U. S. Bakery chain Jacques Torres Chocolate and the 4 Seasons operated Costa Palmas Resort in Mexico all selected Lightspeed in the quarter. I'd now like to highlight some recent successes with our channel partner strategy as yet another lever we are utilizing to bolster our go to market approach. We work with many great channel partners in the Lightspeed ecosystem to help complex SMB customers manage all aspects of commerce in their business. Recent strategic partners brought into the Lightspeed Ecosystem restaurant solution Lendio the offer at small business loan marketplace to applicants directly inside the Lightspeed offering and finally Mailchimp, which offers our omnichannel merchants additional ways to engage with our customers. Recently, we hosted the annual Lightspeed Partner Summit in Montreal and Amsterdam, where we recognized the latest Lightspeed partners of the year for their efforts in helping to grow the Lightspeed brand into important new growth markets for our company. To sum up, I'm extremely proud of the entire Lightspeed team for their relentless spirit and enthusiasm around our vision. It's gratifying to see their hard work pay off with these quarterly results. We have the team, the vision and the technology to become the clear leader for complex SMBs globally. I'll now turn it over to Brandon to provide greater detail around the financials for the quarter as well as to provide our updated outlook for fiscal 2020. Brandon? Thanks, Zach. Our second quarter results are a reflection of the solid progress we continue to make across all of the important areas of the business. Before I cover the numbers, just a quick word about how our financial model works for anyone that may be new to Lightspeed. Approximately 90% of our revenue is earned through recurring subscription and payment revenue streams. Our subscription revenue is priced on a per location, per month basis with rates that increase as customers adopt incremental functionality offered by Lightspeed. Customers open new locations or adopt new modules, our subscription revenue grows. We also generate recurring payments revenue, which is earned as a percentage of the underlying transaction value to date mainly from payment referral partners. With the introduction of Lightspeed Payments, we now have the ability to earn a much larger portion of the transaction value, and we expect that this will become a growing portion of our revenue over time. Looking at some of the key metrics we use to track our progress, Total customer locations is now at almost 57,000, up from approximately 45,000 a year ago. The increase was driven by continued organic growth and the addition of iCan 2's customer base, which was 3,800 as of the date of acquisition. ARPU expansion is an important metric for us as well, and we saw that continue to grow by double digit percentages versus a year ago. Total GTV processed by our customers during the Q2 was $5,400,000,000 up 48% from a year ago in total and 32% when excluding the initial impact of ICON 2's customer base. DTV is an important measure for us as we roll out Lightspeed Payments. And on Lightspeed Payments, we saw continued strong overall customer receptivity for this important long term growth driver to our business during this initial rollout year. The quarter, new customer adoption of payments remained robust with close to 50% of new U. S. Retail customers contracting Lightspeed payments at the time of purchasing Lightspeed's core software once again this quarter, alongside continued progress in seeing our existing base move from their incumbent solutions to Lightspeed. Turning now to overall financial results for the Q2. We saw accelerating revenue growth again this quarter. Revenue for the quarter was $28,000,000 up 51% from the same quarter a year ago and ahead of our previous guidance of between $26,500,000 $27,000,000 Software and payments revenue was over 90% of the total revenue at 25,400,000 dollars and grew 52% in the quarter. When excluding approximately $1,000,000 of Icahn II revenue, our software and payments revenue growth rate was 46% in the quarter. Gross profit from software and payments revenue was $18,300,000 up 39% from the prior year. Hardware and other gross margin was breakeven in the quarter, reflecting the hardware subsidy we are providing to new Lightspeed Payments customers in this initial launch phase. Overall gross margin was 66 percent of revenue in the quarter. Adjusted EBITDA loss for the quarter was $5,100,000 ahead of our guidance and as compared to $2,700,000 loss a year ago. The increased loss from a year ago reflects the incremental cost of being a public company and the result of our purposeful investment in marketing in the quarter to drive greater brand awareness, primarily in North America. Net loss for the quarter was $10,100,000 compared to $8,200,000 a year ago, and it was a strong quarter for cash generation. Cash used in operations was $2,600,000 for the quarter, ahead of our guidance for a use of around $5,000,000 and compared to $1,000,000 a year ago. We ended the quarter with $172,000,000 in cash on the balance sheet with no debt. As Dax mentioned, on November 1, we completed the acquisition of Kounta, a leading cloud based point of sale solution provider in Australia, for aggregate committed proceeds on closing of just over US43 $1,000,000 through a mix of cash and stock. There are additional cash and share based incentives payable over the next 2 years in the amount of US15.5 million dollars tied to continued employment of key team members and financial performance milestones. For the most recently completed fiscal year ended June 30, Counter earned 6 point $5,000,000 in revenue in U. S. Dollars. As part of this acquisition, we have entered into an agreement with MYOB, a leading accounting software platform in the Australian market. This marketing alliance will further promote Lightspeed in the region for our retail products as well as provide ongoing support for the hospitality offerings from Kounta and Lightspeed. Kounta brings us over 7,000 customer locations, many compelling brands in Australia and New Zealand and a tremendous platform to further grow the Lightspeed brand, our retail offering, our data strategy and ultimately Lightspeed Payments. We have a proven track record here and excited to get to work with the team at Kounta. I'll conclude my remarks by discussing our financial outlook. As a quick note on our currency, our guidance does not consider any potential impact with foreign exchange gains or losses as we do not try to estimate future movements in currency rates. The Q3 ending in December, we expect between $31,500,000 $32,000,000 in total revenue, representing growth of between 57% to 59% from the prior year period. And for the full fiscal year ending March 2020, we now anticipate $117,000,000 to $119,000,000 in total revenue. This represents growth of between 51% at adjusted EBITDA, reflecting a small incremental loss from Kounta's operations this year, we now expect an adjusted EBITDA loss in the range of $19,000,000 to 21,000,000 dollars for the year. And for our fiscal Q3, we expect an adjusted EBITDA loss in the range of $5,000,000 to $5,500,000 And with that, we're now ready to take questions. Operator? Thank And your first question comes from the line of Daniel Chan with TD Securities. Please go ahead. Your line is now open. Good morning, guys. Great quarter. So significant increase in the guidance. Can you give us some color on what's driving that change and how much of that was from Kounta? Hey, Dan, thanks. Yes, the guidance just reflects our ongoing confidence in the core business. Counta did $6,500,000 for the period ended just before we bought them. We closed it on November 1. So that should give you a kind of a sense as to how much we expect from Kounta here in the back part of the year. Obviously, we want to be conservative with any new business that we bring on board as part of our own expectations, but that's kind of how that builds up. To help us think about the counted contribution, can you give us a sense of what the growth rate on that business was? Yes. I mean, they've been it's as Dax mentioned in his comments, what we're really trying to do here is bring together the best of breeds to build this global platform. So that was a business growing nicely. I won't say they were growing quite the pace of Lightspeed's core, but it's a good healthy business. Okay. And wondering if we can get an update on the progress of rolling out payments to your other geographies? Yes. We are currently entering betas in our main markets. Our focus right now is North America to get payments out into that's our top priority. We've begun onboarding in Canadian retail and rest of our beta testing and it's a deliberate rollout schedule much like U. S. Retail. Pretty pleased with the 50% adoption thus far And that's you'll see continued progress from us. I think the important thing, Dan, is that we'll take a really, as Zach said, a deliberate approach to our rollout just like we did when we launched the main, our U. S. Retail. It's important for us to do this properly and this is the SMBs cash flow. And so you should expect us to continue to be deliberate and all programmatic about that rollout. And are you going to subsidize the hardware in these regions just like you're doing in U. S. Retail? Yes, it's tough to argue with the results so far on that. So we do think it's an important we're still we're happy with our progress. We've got a long way to go here and it's just a friction point that it just to us makes tons of sense to remove out of the process. So yes, we'll continue to do that for the foreseeable future. Okay, makes sense. And then final one for me, consumer spending still seems strong in the U. S, but are you seeing any slowing in consumer spending in other regions? And what's the potential impact for you guys there? Thanks. I mean, our customer base is doing quite well. We disclosed our GTV growth there 32% when we exclude kind of the initial impact of ICANN 2. So yes, our customers are continuing to grow. We're pretty happy with that. Great. Thank you. Your next question comes from the line of Richard Tse with National Bank. Please go ahead. Your line is open. Yes, thanks. On the payment side, I'm kind of curious to see and you should look at your existing customer base, which is quite significant. I was wondering if you could sort of update us on the process for bringing those, I argue, legacy customers on the payments and perhaps the timeline for that? Yes. So we are progressing on that front too, where we now are looking at segments of the customer base and we're starting to deploy strategies there to port them over. And it seems to be working well. Here what we're going to be doing in the coming months is we're going to be looking at new kind of hardware because there's a number of scenarios when you think about existing customers around mobile payments versus fixed terminals. And so what we're doing is as we are delivering on the software front, when we're as we deliver new devices and new methods and new workflows, we're basically attacking those segments of the database and we're porting them over. So again, we're very new in this. We're starting, but we're seeing the results we're expecting. And I think for us, the most exciting part is, as Dax mentioned, is we are going to be looking at U. S. Restaurant, Canadian restaurant, Canadian retail, which really enlarges the segments we can go after. And also we're looking at new formats of hardware, which are going to enable us to accelerate actually penetration within the existing base. Okay. And then the Crono Golf numbers you guys put out there, it's pretty impressive. Like kind of curious to see, you can sort of elaborate in terms of what you contributed to sort of accelerate that growth. Was that sort of things you brought to the table post acquisition? Obviously, it's important because if you guys are making other acquisitions, if you're going to apply the same methodology, just trying to understand how you do that? Yes. I think Crono is a fantastic example actually when you think about our strategy moving forward. We targeted a vertical and within that vertical, we actually just acquired one of the leading vendors and we knew that this vertical was undertaking a lot of transformation from legacy players and from all the legacy POS players into the kind of the modern world. So for us, it was very easy. When you think about it, Crono Golf, prior to the acquisition was a much smaller company, way less sophistication in marketing and how they would approach the market. And also when you think about it, they would talk to customers and they had multiple companies within the portfolio. So they have to explain Lightspeed versus chronograph, they have to explain the restaurant versus retail, whereas now it's all under Lightspeed. And so I think it just accelerates the penetration. And here what we're seeing with Crono Golf is that the larger golf operators with the bigger ones with a lot of locations like Kemper Sports as a good example. I think just having the Lightspeed brand and being sure we're a big, large, well funded company just accelerates the penetration. So net net, I think it's a for us, it's a very good kind of blueprint for our next acquisitions where we want to go into verticals, we want to dominate the verticals and we want to bring our know how, so we can accelerate the penetration. Okay. And just one last one for me. As I sort of look at the history and then even some of the recent acquisitions you're making, a lot of them have been on the international front. Kind of curious to see what do you think about the relative level of competition in these international markets versus North America? Is it less? Is it more fragmented? Just trying understanding on that. Thanks. Yes. Look, I think for us, what is important is to be a global company because we think that this is a global market. We know that a lot of our customers operate across different geographies. So we wanted to be sure that Lightspeed had a real strong coverage or will have even a stronger coverage in every geography as we move forward. And I think that's what you see with iCAM to encounter. These acquisitions really give us a local presence in fairly interesting markets. When you think about competition, and I think that's what's kind of exciting is that the market is so fragmented that there's no we do not have the same competition in Australia as we have in Europe or we'd have in North America. And all these markets are fairly fragmented. I think the opportunity for us is really when you think about the acquisitions we did, we actually took the best products and the best teams within the regions we wanted to have a strong market share. And I think you can see you can expect the strategy to remain as we go forward, which is we're going to go deep into verticals and we're going to go into geographies that are interesting to us. And here we always have the thought process is, should we go directly or should we acquire and if there's a great company that actually wants to join Lightspeed and can add value on the product front and can also help us accelerate penetration. And the third one is cross pollination of all the products. These are much better fits for us. So yes, we're seeing very different competition and Kounta within their markets are really the leader in Australia. Great. Thank you. Your next question comes from the line of Thanos Moschopoulos from BMO Capital Markets. Please go ahead. Your line is now open. Hi, good morning. Looking at the locations, it seems like the organic location growth was in the high teens year over year. Is that the level of location growth you'd expect in the back half? Or were there any specific factors related to the quarter that may have influenced that growth rate? Yes, good question actually. So first of all, we're very confident with our what we the store count we expect to have in the year is still on track to be reached. For us again, just to go back to the strategy, the most important piece of our strategy is we are focused on CAC to LTV and we're focused on the let's say the more sophisticated, the higher segment of the market. So when you think about ARPU, ARPU has expanded because we are working with larger and larger retailers and restaurants. And here for us, what's really important is to be sure that we attract the right profile of customers. Now, when you think about this quarter versus last year, there's a lot of fluctuations. We're not concerned at all. And actually, when you if you dig down to the quarter we just had, we signed a number of much larger deals than we did in the past. And when you sign the deals, there's a delay between the moment you sign them and they go live. And the bigger they are, the more time it gets for them to go live. So when we actually think about the absolute number of customers we've onboarded, we're very satisfied with the quarter and we see great confidence for the rest of the year. Yes, Thanos, that's an active customer status to depend on what JP mentioned. So we signed a customer and they're not yet deployed, it wouldn't show up in those numbers. But even for larger customers deployment would tend to happen within say, 2 or 3 months? Or what would the time frame be for converting those bookings? Yes. Yes, it's 2 to 3 months, but we let's I mean, I guess it's good news, but we signed really much larger customers than we did in the past. And so those might take a little bit longer. Okay. Maybe a related question, GMV per location seems to be up significantly year over year. Would that increase on that metric, much of that, is that related to the acquisitions? Or is it the fact, as you said, you're signing larger customers? I think it's a bit of both there Thanos. And we gave you the breakdown of GTV without the impact of Cantu's GTV base as well there. But yes, it is growing and the GTV per customer is growing And like take the golf vertical, those are much higher GTV customers for us. So that's certainly contributing. And then some of the comments that JP just made in terms of the profile of the customers helping to increase that as well. Great. And finally, can you comment on how software ARPU growth has been trending and your traction in upselling customers to more modules? Did you, I think I said on the call double digit percentage growth, so that's continuing. Loyalty analytics, obviously payments, all those things continue to go well, Thanos. So no change in trend line there. Everything continues to go reasonably well for us there. Sorry, just to clarify, I was talking about software ARPU ex payments. So on that metric, is there growth in that metric as well on the back of the upselling? Yes. Okay. Okay, I'll pass the line. Thanks guys. Thanks, Adam. Thank you. Your next question comes from the line of Josh Beck with KeyBanc. Please go ahead. Your line is now open. Yes. Thank you for taking the question. I wanted to follow-up a little bit on this slightly larger customer that you're seeing. I mean, is that having an influence on maybe your CAC in any ways and that you need to spend more to go find them? Or is it more of a matter of you're finding the product have a good fit for these larger customers and that's just kind of where you're gravitating towards? Yes. So our model hasn't changed. So we have no salespeople with foot on the ground that the way we attract the customers are identical. And when you think about customers, we attract them in 2 ways. 1 is through our channel. So we have a number of partners all over the world who generate leads for us. And the other way is really through our website. So there is really at this stage no correlation between CAC growing and customers who are just larger. What happens is sometimes even though we're built for the 2 to 5 locations, sometimes we attract much larger customers and we bring them through our process in the same way. And that's really what we're seeing is happening is and we're very pleased with that is as we continue to develop more sophisticated solutions, we have more modules. Now we have pretty much everything it takes for a retailer or restaurant to run their business. We're seeing larger profiles of customers being attracted by the offer. But it's yes, for us, it doesn't change in any way how we attract them the cost of acquisition of customers. Okay. That's good to hear. On the M and A front, it seems like you've done about an acquisition quarter. I'm just wondering on the back end from a technology perspective, Do you envision yourselves running multiple platforms maybe by geography or vertical? Or do you have a goal to consolidate? Just would like to understand a little bit about the tech integration strategy resulting from M and A? Yes. You see there's been a number of hospitality acquisitions, of course, over the last couple of quarters. The long term goal is to have one go to platform, one best of breed platform. Part of the evaluation of these acquisitions is some of the amazing technology that's come as part of them. The way that we build software at Lightspeed is using microservices and we can bring together the best technologies into a reference platform that's the most competitive globally. And that's the strategy. Yes. I think maybe just to add to what Dax is saying, ultimately this is a data play because when you think about all the acquisitions we're doing, these are all modern cloud based systems that also kind of expose services. Absolutely. And here when you think about the volume of transaction and the kind of data that we hold, you've got to look at this as a data plate. And maybe the last thing just talking about these acquisitions, there's tons of cross pollination we can do. They all come with a lot of unique components that we can add to ours and vice versa. There's a lot of our components that we can add to these acquisitions. And Brandon talked about payments as being one of them, but loyalty and the way we built the software is all microservices and these can all be inter exchanged between all the platforms. So there's a lot of synergies every time we do these. Okay. Very helpful. And then last one for me. I know that you had just fairly recently launched this new 3.0 POS app. So maybe just any early learnings and maybe just kind of what you would expect from a benefit or perspective from the sellers and the customers? Yes. I mean retail has been our flagship product. And we this summer, we did open heart surgery in heart surgery and rebuilt the inventory core with some of the negative inventory pieces of the pieces that can manage negative inventory, manage backorders, manage all the complex inventory workflows. What you saw in the fall with Lightspeed Retail 3.0 is us tackling the front end. So really rewriting all the different major components of retail to make it to increase our lead, increase the distance between other competitors and actually really match what was available on legacy players, but in the cloud. And I think that in terms of a retail solution, we're really unmatched. But we are tackling part by part and just upgrading continuously with new innovations. So 3.0, I think, is going to be a much better sales workflow on the front end for regular retail staff and will also a lot better management of locations. Very helpful. Thanks guys. Your next question comes from Paul Steep with Scotia. Please go ahead. Your line is now open. Great. Thanks. Could you talk a little bit more with hospitality about the plans now that you have Kounta to maybe more aggressively go after the broader North American market in hospitality and how we should think about maybe the sales and marketing plan? And then I got one quick follow-up on the technology answer you've given. Okay. So, Joe, I'll maybe address the go to market. And so obviously, the U. S. Is the biggest market for hospitality, and we have a very competitive product there. I think for us, Dax mentioned we're going to be deploying payments into hospitality in North America. We're very confident that once that is out, we're going to have an extremely compelling offer and we'll be able to kind of to really compete with the other players because we really strongly believe that our solution has more depth. But the payments component is a big piece. So here our view is as soon as we have that out, we're going to be doubling down on North America and we're going to be taking the same approach as we've taken everywhere in the world. We want to be sure that as we tackle sales and marketing in North America, the product is the most competitive out there and we're on the verge of being there. So actually maybe related to that and the technology on the answer before you talked, DAX, but moving it towards a single platform. So tying to JP's answer, how should we think about the timeline to get towards that single platform? Obviously, you're running at an incredible pace here. And then maybe what are the key elements of the functionality that we should look at out of iCEN2 and Kounta that will make the product maybe even more interesting over time? Thank you. Yes. I mean, convergence is something that we are approaching aggressively. We're already moving in the direction. And so I think you're going to see timelines that are not multiple years. But I think that one of the reasons for the iCAN2 acquisition was some very, very strong technology, fiscalization technology, that's blockchain. And that was, I think, that was the technology we want to see in this reference platform for hospitality. The other component that we're really excited about as well was very strong peer to peer offline. They can do 100 and actually thousands of concurrent POS terminals at something like a festival, or a very large hotel resort without skipping a beat, no matter the quality of Internet. So very, very strong technology pieces. These are microservices that will bring to the main hospitality platform. So extremely excited about all of that potential. And of course, we as JP mentioned earlier, we have elements of the platform such as our loyalty services, data services, payment services, all of these have been built and we just need to bring them together. We'll have 2 platforms, we'll have a hospitality and we'll have a retail platform that are best of breed. Yes. And I think for accounts, maybe just when you think I think that's what's kind of exciting is every even though on paper kind of they all operate in the same field, every acquisition brings a lot of value. And in the case of Kounta, when you look at their components that we're maybe not the best at that they do really well like ingredient management or supplier integrations, they also have a they do a lot with data. So here, over the next month, we're going to be thinking about, okay, what components are going to be packaged together so that we can have the best products in every region. And here, again, the way we look at this is we're bringing the best brains in the industry together to accelerate the penetration of Lightspeed and we're very confident going back to the U. S. Market that we'll be ready very soon, especially when you think about payments to really tackle this market with the best product out there. Great. One last one I just thought of was on the M and A side, you've been very fast out of the blocks here and deploying capital and buying some businesses. How should we think about it maybe in the next 12 months? Is there a bit of a pause here as you work through the aggressive plans you just laid out to execute on those? Or do we still have capacity in the team to actually do further deals over time? Thanks. Yes. I think we've been pretty clear that we do view the M and A angle as a component to how we build the leadership position we want globally. Paul, those are all things we think about as we embark on this. Are they the right deals? Do we have the capacity? Is it going to influence our ability to continue to execute? And so we think we've we know we've been pretty thoughtful about that today and you should expect that to continue. So if you do see more from us and there certainly is an active pipeline, it will be because we think we can continue to meet our commitments to our shareholders and at the same time moving even more quickly towards achieving our goals. What's encouraging is to see acquisitions thrive within Lightspeed. You see a Cronovolf dramatically accelerate its growth as part of the broader company. And as we see that with each acquisition and get better at these integrations at the pace that we're going, that gives us confidence to really run this robust pipeline that we have to execution. And going back maybe to our initial strategy, we are going to look at geographical penetration and we're going to look at going deeper into certain verticals with more functionality and we're just going to double down and execute on those. Maybe one other comment just with regards to our ability to ingest. We have obviously an internal team and every department has people dedicated to these mergers and acquisitions to be sure that we can operationally ingest them very well. Thank you. Your next question comes from the line of Gus Papageorgiou with PI Financial. Please go ahead. Your line is now open. Thanks and congrats for the nice quarter. Just on the Konta acquisition, so their ARPU is significantly below your own ARPU in terms of software revenue per location. Can you talk a little bit about how the potential to bring that up to your levels and timing? Yes. Gus, I'll start with that one. Coweta has done a great job of growing through word-of-mouth and their customers love their point of sale offering. They're pretty new into kind of the module adoption in their own journey. So they've just launched an analytics offering that built on the same stack as what Lightspeed is and so on. They've just launched some inventory management capabilities and payments is just beginning for them as well. So that's the main driver between the Art Food Delta, but one of the things that attracted us to this team and this company is they just share the similar mindset that a one stop shop approach to this customer base is what makes the most sense. And as a young company, they're just starting down that journey to get a more fulsome product offering and we hope to be helpful there. And I think maybe just to compliment it, I mean, we've been doing land and expand for many years now and here are know how on how to upsell customers and how to create value and how to actually create demand within the software for more modules, I think, will be of great help and should have good results. Okay. Just a couple of follow ups. You generally provide some sort of indication of the proportion of your customers that have more than one module. I think you said the last time you said about 1 third of the customers had more than 1 module. Can you talk a little bit about the trend of 1 plus module adoption among your customer base? Yes. So the trend is continuing. We are seeing more and more adoption. And if you remember in the last one, we launched loyalty. We now launched loyalty in Europe. We're launching analytics in Europe. So we're seeing the adoption. Every month, we follow that and we're very pleased with the adoption. And yes, so more and more customers are buying more modules from Lightspeed and it's what we want. Okay. And just finally, if you look at your GTV, I mean, obviously, payments adoption will be highly dependent on GTV. Is there any portion of the GTV either by industry segment or by geography that you think payments cannot cover? Or do you think that payments can go after about 100% of that GTV? I mean, 100% is probably ambitious, Gus. But the bulk of our GTV opportunity is in North America. I think where we have differences is the European GTV will carry a different card mix to what we see in North America. So that's all stuff that we need to factor in. But in terms of customer adoption of payments, it's certainly the vast majority of it that we think we have an opportunity with. And so yes, and that's why I think for us right now, we're focused on what is the next priority. And so we're looking at the biggest segments and we're trying to cover the biggest segments. And then once those are covered, we'll be looking at sub segments and sub industries where we will have different partners basically to fulfill those payment needs. Okay, great. Thanks for answering the questions. Your next question comes from the line of Todd Coupland with CIBC. Please go ahead. Your line is now open. Good morning, everyone. I wanted to ask about innovation as well. You've answered a few questions. So Dax, you talked about microservices innovation and certainly the pace of updates has been very rapid this year. Do you feel that it's you can call out you're unique enough in the sector to actually get a lead in the complex area that you want to get that lead in? Or is it too early to tell? Well, I think that we've the Lightspeed Product and Technology group is, I think very strong right now. And I think we're also adding some of the best minds around the world through these acquisitions. So there's a ton of energy and a ton of innovation that we've delivered and that's going to come to market. So I think that since we are so focused and focused on winning this segment, I think we our product roadmap is very tailored to being able to win this customer set, especially vis a vis other competitors or other people in this space where we are laser focused on making sure that our innovation sort of is pinpointed towards making sure this customer is successful. And I think that that's what you see bear out in the numbers and the adoption and as well the success of these customers as their GPV rises. And then my second question had to do with markets and what we should expect over the next couple of quarters? Thanks a lot. Yes. So as we launched omni channel retail in Switzerland, where we have 3 offices now, recently visited them. French, we already have Dutch as well, but German is actually a big a very big opportunity for us to bring our retail products. I think we have an immense opportunity in some of these new markets. We're in Europe, but so we're we have some of the largest markets yet to still approach. Yes, maybe just complementing. When you think about it, the 3 largest markets in Europe are Germany, France and the UK. In one of them, we have a physical presence and we're doubling down. France is a very new market for us, but you can expect to have more of this given now that we have a very competitive product. And obviously, we're thinking about Germany and we're going to unveil a strategy as we move forward for Germany. Thanks a lot. And I'm showing no further questions that are in the queue at this time. Ladies and gentlemen, thank you. This concludes today's conference call. Thank you for participating and you may now disconnect.