Earnings Call: Q1 2022

Aug 5, 2021

Thank you, operator, and good morning, everyone. Welcome to Lightspeed's Fiscal Q1 2022 Conference Call. Joining me today are Zack D'Silva, Lightspeed's Founder and CEO Brandon Nussey, Chief Financial Officer and J. P. 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 subject to risks and uncertainties that could cause actual results to differ materially from those projected. Certain material factors and assumptions were applied in respect of conclusions, forecasts and projections contained in these statements. We undertake no obligation to update these statements except as required by law. You should carefully review these factors, assumptions, risks and uncertainties in our earnings press release issued earlier today. Our Q1 2022 results presentation is available on our website as well as in our filings with U. S. And Canadian Securities Regulators. Also, our commentary today will include adjusted financial measures, which are non IFRS measures. These should be considered as a supplement to and not a substitute for IFRS financial measures. Reconciliations between the 2 can be found in our earnings press release, which is available on our website on sedar.com and on the SEC's EDGAR system. In addition, our commentary today will include key performance indicators that help us evaluate our business, measure our performance, identify trends affecting our business, formulate business plans and make strategic decisions. Such key performance indicators may be calculated in a manner different than similar key performance indicators used by other companies. And finally note that because we report in U. S. Dollars, all announced discussed today are in U. S. Dollars unless otherwise indicated. With that, I will now turn the call over to Dax. Thanks, Gus. Good morning, everyone, and thank you for joining us today. Before I get started, I just wanted to welcome everyone from New Order to the Lightspeed team. Together, Lightspeed and New Order are going to redefine how suppliers and retailers interact with each other and revolutionize supply chain management in the industry. I could not be more excited about the opportunity that awaits us all. Welcome aboard. As everyone has likely seen from the results released earlier today, Lightspeed had an exceptional quarter, delivering revenues and adjusted EBITDA well ahead of Street expectations and better than our previously established guidance. Total revenue was up 2 20% year over year with organic software and payments revenue up 78%. The company now maintains over 150,000 retail and locations globally. GTV was strong growing 203% year over year to 16,300,000,000 Organic GTV growth was 91%. Payments penetration continues to increase with approximately 10% of our GTV process through our payment solutions. Some notable customer wins in the quarter include SpaceX, the American aerospace company founded by Elon Musk has chosen Lightspeed Restaurant, Lightspeed Ordering and Lightspeed Payments to support its hospitality operations at its California headquarters. Telluride Ski Resort. The world renowned Colorado ski resort has chosen Lightspeed as its core commerce platform. Telluride will use Lightspeed Retail, Lightspeed E Commerce and Lightspeed Payments to help run its vast resort activities. And finally, Restaurant K. K is the 1st Paris based Japanese restaurant to secure a 3 star Michelin rating, in addition to acknowledgments from Les Grand Table, Dumonde and Gault and Milo. Kay will be using Lightspeed Restaurant to run its award winning establishment. In addition to the strong execution this quarter, We managed to advance some key strategic initiatives. Lightspeed launched payments in the international markets starting with the U. K. And earlier this week announced 5 more European launches, including Germany, Switzerland, France, Belgium and the Netherlands. We closed the acquisition of Vend in the quarter with that group delivering better than expected results. We established a partnership with the leading restaurant reservation platform OpenTable. And finally, we announced definitive agreements to acquire new order in Ecwid, which will help transform Lightspeed into 1 stop commerce platform. The new order transaction was closed last month with Equid expected to close by the end of this quarter. As economies reopen around the world and new business creation accelerates, we believe Lightspeed's one stop commerce platform remains a crucial lifeline for independent businesses. Our goal is to help them simplify their operations, provide them unparalleled opportunities to scale and equip them to deliver exceptional customer experiences. As they step into a new world of commerce forever altered by the COVID-nineteen crisis, both the traditional challenges they have faced as well as the new customer expectations they will seek to meet will be best solved by Lightspeed's solutions. From the customary complexities Supply chain management and accounting to the new demands of online ordering and contactless payments, Lightspeed is the technology that will ignite businesses everywhere. Following our customary routine, Brandon will take you through the details of the financial results, but I wanted to first highlight some key business themes this quarter, including the benefits of economies reopening, the exceptional performance of payments, our early but promising success with Lightspeed Capital, And finally, the ongoing integration of our recent acquisitions. As economies begin to reopen, we are seeing a very positive impact on our overall business, not just from new customers, but also increased demand from existing customers. Our hospitality business saw a very strong performance this quarter, which helped drive great results in EMEA. Hospitality GTV was up 3 80% year over year and new location additions were by far the highest we have ever had. Germany and Belgium showed particular strength, greatly exceeding expectations. And although we did see growing demand from new customers, Demand from existing customers was also strong with our order ahead and loyalty offerings showing continued strength. Lightspeed also maintains a strong partner network helps drive adoption of our offerings. During the depths of COVID, our partner channels were relatively subdued, but this quarter we saw them come roaring back. Payments, of course, continued to be a major source of growth for our company. Transaction based revenues were up over 5 times from last year, Thanks largely to payments. Payments benefited from the strong growth in GTV as well as increasing adoption by our customer base. Currently, our payments business leans towards retail. And although GTV growth here was overshadowed by the resurgence of hospitality this quarter, Omnichannel retail GTV growth still increased 139%. European adoption is off to a strong start with the total number of active payments customers growing strongly from last quarter. And while Europe still only represents a very small portion of our total payments customers, we believe this number will grow rapidly as we launch the solution in 5 more markets in that region. Overall, approximately 10% of our total GTD was processed through our payment solutions, giving us plenty of runway in the months and years ahead. I would also like to call out our capital business. Lightspeed Capital had its best quarter by far, and we are starting to see numbers that are becoming meaningful. Almost 430 capital advances were made in the quarter with revenue from capital growing 68% from the previous quarter. We continue to maintain 2 offerings here, Lightspeed Capital, where we leverage our payments partner, Stripe and the Capital business, which we inherited when we acquired ShopKeep. This quarter, we are expanding the ShopKeep capital model to up serve customers and have already seen some initial success there. For now, this remains a small but highly profitable business for us with revenues still under $1,000,000 quarterly. Given our growing customer base and expanded availability, we believe capital can become a very meaningful driver of growth and especially profitability in the longer term. We also believe that with the addition of new order, we have the potential to extend capital services into the B2B side of our network. Finally, I want to provide an update on the integration of our latest acquisitions. We continue to integrate management from our acquisitions into our own senior executive team. Michael DeSimone, the former ShopKeep's CEO, was recently named our Chief Business Officer with responsibilities for retail, hospitality, golf and payments. And Anna White, the former Vend CEO is now our General Manager for Retail. From a product perspective, we continue to drive towards one core solution for retail and one for hospitality. In hospitality, we are busy integrating Upserve's industry leading analytics engine into our core hospitality offering and expect that to be completed by the end of the summer. We are also working diligently on integrating the Bend offering into our retail solution, which is one of the many reasons Anna White now leads that business. The ShopKeep integration is even further advanced with that offering now fully part of the core Lightspeed Retail Solution. We recently closed the New Order acquisition and we'll be turning our attention to unlocking their potential within our broader network. Once integrated into Lightspeed, we will be able to get brands real time sell through information from their SMB customers, a feature that we believe none of our competition can match and one that we hope will make the Lightspeed supplier network indispensable to all suppliers in the verticals on which we are focused. In closing, I want to stress again what a strong quarter this was. From new customers to higher ARPU to greater payments adoption, the company really fired on all cylinders. When COVID first hit, Lightspeed was able to help our customers pivot their business models and adapt to a new omnichannel business reality. As we emerge from the crisis, we believe Lightspeed can help these same customers take advantage of the economic rebound to scale their businesses and simplify their operations. And in the longer term, we continue to see great opportunities. Payments adoption can go higher. Delivering a unified solution in retail and hospitality should allow for greater for adoption amongst our customer base. Our capital business is still very much in its infancy and the potential from the B2B side with new order and our supplier network has not yet even begun to impact our top line. And finally, once we close our proposed acquisition of Ecwid, we believe we can help our SMB customers to fully recognize the potential of omnichannel commerce. There remains a lot of heavy lifting and long hours ahead, but the potential for Lightspeed as a true one stop Commerce platform has never been greater and the probability of success has, in my mind, never been higher. And with that, I will turn it over to Brandon. Thanks, Dax. Really pleased with these results today. As you heard from Dax, what we are seeing is a strong uptick in our customers' volumes, Strong new customer demand and continued adoption of our value added offerings like payments. The combination of these As usual, we'll look at the building blocks of our business and everything starts with customer locations, which grew to over 150,000 at June 30 from over 140,000 on a pro form a basis last quarter. Our hospitality business, particularly in Europe, performed great were over 60% higher than a year ago organically and over 90% higher in total. We saw some of the lowest churn rates we have ever seen in Quarter and a number of customers come back after pausing or shutting down operations during lockdowns. Combination of this improved churn with record new location additions led to the healthy growth in customer locations we reported today. But we're even more encouraged by the volumes driven by our customers. We're optimistic that as economies reopened, our customers would be beneficiaries, and we saw that happen this quarter. GTV was an outstanding $16,300,000,000 up from $10,800,000,000 just last quarter It was 2 0 3 percent higher than a year ago. On an organic basis, GTV grew over 90% from last year's depressed levels. We're thrilled to see our customers and the communities they serve come back to life. Within GTV, our omnichannel retailers Continue to do really well with 64% organic growth in that segment. We saw more business shift back to physical in the quarter with the portion of our retail GTV driven through physical locations growing 3 times faster than online. As mentioned, hospitality roared back to life as economies reopened. Organic growth in GTV was 164% in the quarter and was up 3 80% overall. This wonderful performance by our customers translated into our payments revenue performing well above our plans. Volume increases with expanding payments availability around the world and strong ongoing customer demand led to overall transaction based revenue growing more than 4 50% year over year. Really encouraged to see all this come together for our customers and for Lightspeed. All told then, we reported $115,900,000 of revenue, up 2 20 percent over last year and well ahead of our guidance of $90,000,000 to $94,000,000 Excluding acquisitions completed in the last 12 months, revenue grew by 81%. Subscription and transaction based revenue was 92% of our total revenue at $106,400,000 and grew by 2 18%. On an organic basis, software and payments grew 78% year over year. As mentioned earlier, this growth was fueled by transaction revenue, which was $56,400,000 up from $10,200,000 a year ago. Gross profit grew by 154% in the quarter with overall gross margins of 50%. The growth in gross profit was driven by higher ARPU, which grew 44% over $2.30 in the quarter, up from $160,000,000 a year ago. The decline in gross margin year over year reflects the growing impact of our payments business and lower hardware margins achieved this year due to various incentives we extended to our customers to encourage adoption of our solutions Adjusted EBITDA loss for the quarter was $6,000,000 ahead of our guidance of approximately 10,000,000 and represented 5% of our revenue. This has improved from prior year levels and continues to exhibit the leverage we see in the business model as more and more of our customers grow their business with Lightspeed and adopt more of our solution footprint. And finally, Adjusted EPS loss was $0.05 in the quarter. So all told, some outstanding results reported today that we're really encouraged by. Some countries back into lockdown, these results today reaffirm to us that the long term outlook is in good order, and I'll share some thoughts on that there shortly. On the back of today's results, we're updating our guidance for the full year and introducing Q2's outlook. For the Q2, we expect revenue in the range of $120,000,000 to $124,000,000 with adjusted EBITDA loss in the range of 12,000,000 These numbers incorporate some caution around ongoing or reinstated lockdowns and reflect a full quarter of new orders operations. As is often the case as we absorb newly acquired companies, they come with a near term increase in EBITDA loss until we integrate more fully. And this is incorporated into the near term outlook we have provided here. For the year, with the assumption that we closed the Ecwid acquisition on or about October 1, we now expect between $510,000,000 $530,000,000 of revenue and an EBITDA loss in the range of 35,000,000 This EBITDA loss would represent approximately 6% to 7% of revenue guidance and has improved from 10% last year and 18% 2 years ago. As we look beyond fiscal 'twenty two, we're encouraged by the progress we're making, the macro trends we are seeing and our improving market position. You'll see in our investor deck posted on our Investor Relations website that we've provided our preliminary views on a longer term operating model. We believe we are well positioned to continue increasing our market share as the Lightspeed brand continues to gain prominence given our best in class solution suite and rapid adoption of cloud based solutions. We further believe that we will be able to grow our software ARPU for new and existing customers as our customers adopt more of our solution footprint and we introduce new functionality to our customers. We also believe that payments penetration will continue at the pace we are seeing today such that 50% penetration of our payment solutions into our customer base is achievable in the foreseeable future, which should continue to contribute to the strong organic growth rates over this period. As a reminder, our payment solutions result in higher contribution margin when told to our customers that are already using our cloud based solutions. As our payments penetration increases, we expect more revenue per customer to contribute to our bottom line profitability. So as these business dynamics occur, we believe it will support strong operating leverage and drive profitability. To that point, over the long term, We anticipate expanding our software gross margins and expect a decline in operating expenses as a percentage of revenue, and we're already seeing that happening in our results now. We further expect our increased scale over this period will allow us to realize better economics for our payment Solutions and capture a greater opportunity within financial services for our customers and their suppliers more broadly. Consequently, this should help drive our overall EBITDA margins and we believe that 20% margins are achievable over time. While we expect to remain active in M and A, we have not factored any new M and A opportunities into this outlook and what their impact could be. With that, we'd like to open it up for questions. Operator? Thank you. We will now open up for Your first question comes from the line of Tim Chiodo of Credit Suisse. Your line is now open. You may ask your question. Great. Good morning, everyone. Thanks a lot for taking my question. I just want to dig into location. So very strong number there, an important leading indicator. I know An important number for investors. I wanted to dig into 2 things there. First being, if we could put a little bit of context around The mix of e com locations versus in store, how those are shaping up in this very strong number for the quarter? And then also when I think about location ads Going forward, sure, there's the reopening play, which is extremely bullish for you guys. But also, we've talked about TAM expansive areas for location ads In terms of ecom first merchants and then we've also talked about the potential to maybe move down market slightly to more of a self onboarding Online sort of direct board opportunity. Maybe you could expand upon those thoughts all around the key topic of locations growth? Sure. I'll start on that one, Tim. It's Brandon here. So I think the you hit on some of the points. What we saw happen in the quarter, 1st and foremost, was benefits of reopening In economies around the world, we saw many of our customers that had previously paused or even shut down operations come back to life, particularly in the hospitality sector. And that was wonderful to see and created certainly a nice bounce back in location growth. We gave a bit of color on the physical versus e commerce. We did see Commerce returning to physical stores at a faster pace than e commerce. And I think that same trend showed in our growth in the quarter as well where the big story was more about the return to physical this quarter than it was online. Longer term, I can maybe let JP weigh in on sort of how we see our market Position in new pockets of opportunity in terms of as I am still in the quarter, I think it was mainly around economies reopening, customers coming back to life and a lot more commerce happening in physical locations. JP, do you want to mention anything about the longer term? Absolutely. And I think also here what we saw is a lot of customers who have removed some of the modules Went back to buying more modules from Lightspeed because of the reopening. So I think all in all, very happy and really this serves the core of our business, which is physical first, as you all know. Now going forward, yes, we of course, we now We announced the Ecwid acquisition, and the goal of that is to be able to Tackle within the verticals where we're strong to tackle digital first and we're very excited with the offering that we're going to bring to market. We're very excited about the capabilities where we think that we have a very strong offering for digital first. But again, what's important for us is omnichannel, and it's really the verticals. We want to go deep inside of the verticals where there's a lot of inventory to manage. And in those verticals, yes, we do want to have digital first customers now and digital only customers. Excellent. Thank you so much, both the brand and JP. Thank you. Thanks, Tim. Thank you. Next question comes from the line of Dan Perlin of RBC Capital Markets. Your line is now open. You may ask your question. Great. Thanks and congrats on some really fantastic results here. I wanted to just touch base on the payments monetization and kind of thinking through this quarter, how much Is really coming from repricing from recent acquisitions and then also from kind of incremental new wins? And then how you're thinking that maybe plays out as we kind of go throughout the year. And then just secondarily on the ARPU, another incredibly strong quarter, I think up 44 In the past, you've kind of broken out what was from payments and what was kind of from software expansion? Thank you. Yes, I'll take that one. Hey, Dan. So I think the main driver of payments, if I kind of take a step back and Look at the quarter. Tim's question is the previous one we saw customer locations Grow exceptionally well in the quarter. But then we also saw GTV grow really, really significantly, dollars 16,000,000,000 in GTV in the quarter, Up from 10.8 just 90 days ago. So big resurgence in GTV and that drove payments. It was Not anything to do with repricing or anything like that. It's really just a function of customer volumes and Customer receptivity to this solution, we've seen continue to sell this at a really healthy clip. We've now you would have seen some news this week. We've now got it in more markets across Europe, which is wonderful. We've got a much Broader coverage now of our customer base for our payment solution. So, yes, that was the main driver of the Great results on the payments line. I'm really encouraged by that and really optimistic as to what it holds for the future. And we're still 10% penetrated of overall GTV on that line. So lots and lots of opportunity ahead and really pleased with the progress there. On ARPU, we do give some supplemental disclosure. So you'll see ARPU on software Standalone was up 14% year over year. J. P. Mentioned, we saw a lot of customers kind of lean back into The additional modules this quarter, which was wonderful to see, and our belief is in the long run that this will continue to be a good revenue driver for us. And I think overall ARPU was up 44% year over year inclusive of the payments revenue as well. That's great. Thanks, Brandon. Appreciate it. Brandon, maybe I don't just want to add also, we're very comfortable and very Happy with our ability to attach new customers and payments. We've seen the attach rates go up and up, and we're just very excited about launching Europe now. And the 1st few months in Europe are really in a good trajectory for us. So we can expect to have deeper penetration of payments throughout our customer base as we go forward. Thank you. Next question comes from the line of Richard Choe from National Bank Finance. Your line is now open. You may ask your question. Yes, thank you. Can you maybe update us on the competitive environment today given the scale that you've built up here in recent years? Like is that Changing your ability to sort of win against some of the former competitors? And maybe I mean, when we started doing this, the best for us was become the go to brands within the verticals that we operate in, in hospitality and in retail. And the second goal we had was to be a global company and not just North American. So I think from the results we've seen this quarter and the pickup we've Over the last few quarters, we can say that today Lightspeed is the go to brand within the verticals that we operate. And of course, the beauty of all the acquisitions that we've done is that they come with a lot of technology. So what this has done, it's basically penetrated the brand. And I think now in most countries where we operate, Lightspeed But I think also the value of this is every one of those have broadened our portfolio, and that's why we have now a lot of modules that we And of course, because the overall solution goes very deep, we are de facto more competitive than do the other players in the market within the markets that we serve. So very happy with the strategy, very happy with where we are and very, very comfortable that within the markets where we operate, we are more competitive than we are. Okay. And just a overlay question just quickly. In terms of your focus before, it has been sort of complex enterprises. So as you gain sort of More cache and your brand gets more recognized in the market with including some of these acquisitions. Are you kind of moving into The last complex retailers in terms of just increasing the potential addressable market in front of you? That's it. Thanks. JP, we can't hear you. JP, your line is on mute. Yes, I can take over. Yes, I think that as we do more as we brought we will brought in, we will do things that are outside of our Just as we bring on more customers, but our focus remains being the go to in those 12 key verticals. Thanks, operator. We'll take the next question. Thank you. We have the next questions come from the line of Andrew Jeffrey of I wonder if we could dig in a little bit on the B2B and the supply chain opportunity Sort of broadly, but also specifically as it relates to New Order and what New Order brings to the table, I'm just thinking about potential commercialization of those offerings This year or next, and what that might look like and what it could mean to your financials? Yes. So as you know, in the verticals in which we operate, There is a number of suppliers that have been asking Lightspeed to fully integrate the ordering process and actually give stores visibility on supply levels at the suppliers. And here, that's the number one goal of the order for It enables us basically, it accelerates our roadmap by a couple of years and enables us to now offer for our customers a fully integrated supply chain between suppliers, stores and consumers and gain a ton of visibility there. So that's really the Strategy with new order. And so for us, the first step is we're integrating as we speak new order into Lightspeed to ensure that when somebody is within the Lightspeed ecosystem that they can directly go and order with the new order for supplies There's no more manual processes. And then the second step we'll be doing from that is bringing all of the suppliers from Lightspeed onto New Order and using New Order as the supplier network for Lightspeed. But we do again, we do believe that the relationship between the store and the supplier is a big component of the success of our customers and stores. The last thing about Jorder is Jorder comes with a number of brands and suppliers that are currently working with them. And here, we're going to enable those brands now to access the Lightspeed network of stores so that they can expand their distribution through Lightspeed. And vice versa, We are also going to provide the brands that are fully integrated with Lightspeed with sell through all the way from the supplier all the way to the So there's a lot of new models we're going to be developing throughout the coming quarters years. And our view here again is to provide a fully integrated rated conference platform between the supplier, the stores and the consumers. All right. Look forward to hearing the details as they come out. Sounds like that's incremental. Brandon, again, reiterate excellent ARPU. When you look out and think about software modules and What do you think since we're talking about long term targets, what do you think the ultimate ARPU potential is for the company? Yes, we haven't given any specific numbers there. But look, as we sit here today, We're really comfortable with the progress we're making on growing market share. When we take a look at the rates we're growing the customer base And the size of our market, we remain really optimistic there. We've been growing and we've always said that we saw opportunity to grow software ARPU at 10% a year or thereabouts. And as we sit here today and think about The reception of our customers to incremental modules, our value prop of being a largely one stop shop for the core offerings, We feel very good that we're going to continue to see that play out. We've mentioned that about half of our customers We use at least 1 Lightspeed module and half don't. So there's lots of white space there for us to continue to grow That's software ARPU in our view. And then the rest of the ARPU comes from, of course, Financial services, payments, Lightspeed Capital, things of that nature, we're about 10% today. We see certainly the opportunity to get to 50% in the foreseeable future. And But all told, if we're successful doing that, we're going to see ARPU growth consistently and a healthy clip here, M and A notwithstanding. Helpful. Thank you. Thank you. We have the next question comes from the line of Josh Beck of KB Centimeters, your line is now open. You may ask your question. Thank you, team, for taking the question. Really good I wanted to ask just a little bit about the pace of M and A. Obviously, you've had a tremendous Track record really for a number of years, but in particular the last year. So as you look out to the market, do you still see Really lots of attractive opportunities, maybe have those become less interesting because you've done so many of them. Just curious about your overall M and A appetite at this point. Yes, I'll take the beginning maybe and Dax and Brendan, if you want to jump in. I mean, we're always strategic opportunities. As you know, I think it's part of our DNA. We're very good at buying companies and integrating them into our business and seeing good returns. And I think we're going to remain with what we always said, which is we have 3 big categories. The first one is we need to increase geographic penetration. The second one is to go into new verticals. And the third is we need to accelerate our roadmaps. And the last example is with Now maybe with one little caveat, could you might see us In the next acquisitions, focus more on technology and scale because I think we've now reached Scale in most geographies where we want to have a presence. But we'll remain opportunistic when we see the right opportunities. I think you'll also see a focus from us on integration and you're going to see the benefits of us to bring all those companies that we've acquired and rolling out some incredible flagship products and things that have been combined efforts. So integration is a big priority on our current roadmap, but we will always continue to look at opportunities to enhance capability. That is very helpful. And maybe just a follow-up for you, Brandon, try a little bit more housekeeping item, but when we start to build in New order and equity into our models, should we be counting those as regular Customers, which I think would effectively make the reported ARPU look lower, just curious how we should build those in? Yes, I think that's the right approach. Ecwid obviously is going to carry a lower ARPU based on The numbers we've provided you all in terms of customer count and revenue and new order will offset that because it's the exact opposite, smaller number of customers, but much more significant contracts. So I think that's the right way to do it. We will continue to report on total customers, obviously, breakout subscription and transaction revenue. And we'll start to track the B2B ordering side of things in terms of order volume and what that opportunity represents for financial services for us. We'll start to track that and report on that a little separately. But in terms of software and ARPU. I think that's the right way to do it. Okay. Thank you. Thank you. Next question comes from the line of Daniel Chan of TD Securities. Your line is now open. You may ask your question. Hi, good morning and congrats on the great results. You reported that 10% of your GTV is attached to payments. I just want to clarify, it was doing that in March, I believe you said in the prior quarter excluding the acquired GTV. So I just want to confirm that the flat attach rate is because you're now taking it on a larger GTV base as you Include acquired GTV into that calc? Yes. I mean, nuanced part of this, Dan, is last quarter we said we were approaching 10% in the final month of the quarter. In this quarter, we said 10% for the entire quarter, but you're spot on. In terms of the tax rates themselves, those continue to be really strong. JP mentioned that earlier. We're selling an awful lot of payments around here to new customers and existing customers and opening up new markets. And in terms of what affects that ratio in the current quarter, It's a couple of things. 1, obviously, we fold Vend and their GTV in and our payment solution isn't yet available there. And then 2, we've seen hospitality GTV just come roaring back and everyone As well aware, we're not as far along on payments penetration and hospitality as we are retail. So that of course affects the ratio. But I mean, look, all told, 10% penetrated is wonderful. We're really pleased with our progress, but there's just a ton of opportunity still ahead and that's probably even more exciting for us. So but that's the mechanics of what's playing at play. Okay, thanks. That's helpful. And then I wanted to ask another question on the competitive dynamics. Obviously, Shopify is saying they're seeing an acceleration in their point of sale I'm just wondering whether you're seeing them more now in the marketplace than before. Thanks. So our close rates are It's as strong as they've ever been within the markets that we serve. And again, our view is we're not trying to be everything to everyone. What we want to do is we want to be strong within the segments that we serve, which are merchants that have kind of heavy inventory lifting. And in that market, I think we're stronger than ever and we're not feeling any kind of threats from other companies. Thank you. We have the next question comes from the line of Thanos Moschopoulos of BMO Capital Markets. Your line is now open. You may ask your question. Hi, good morning. I know it's early days for payments in Europe, but how should we be thinking about that trajectory? Do you think it will play out very similarly in North America as far as the ramp and the attach rates? Or is there any nuances you'd call out? So far, so good Thanos. We're just launched, obviously, so it's early days. We announced availability in more markets this week, which is Wonderful. And so far so good. We're just seeing the teams really embrace it in terms of the teams on the ground with the customers And we're seeing good signs of early uptake. So we remain pretty enthusiastic there for sure. Great. And with respect to capital, as we look at the growth this quarter and going forward, just to Clyde, is that being driven predominantly by the Stripe partnership or is the growth more weighted towards shop keep, which I think would be off your balance sheet? We're going both sides of it right now. We will continue to work through what the longer term model is for us. But I think the most encouraging thing is 430 customers took an advance this quarter And that grew significantly from just a couple of quarters ago. So pretty excited. We always felt like this is going to be a well received product in our customer base. We additionally thought that through this reopening that we might see an uptick in demand. We have brought the offering now to some of the newly acquired customer bases like Upserve, you want to hear from Dax. So we started to introduced this offering to up service customers in addition to ShopKeeps customers in addition to Lightspeed's customers in North America. So we're still kind of finalizing what the go forward model will be. But I think most importantly, we're seeing customer receptivity to the product and we expect that will continue to go. We think it's a great opportunity here. Great. Great quarter guys and I'll pass the line. Thanks. Thank you. We have the next This is Raimo Lenschow of Barclays. This is Raimo on for Raimo. Thanks for taking My question is, if we think about the guidance going forward, could you talk us through some of the assumptions or expectations you have with respect to hospitality and retail and Maybe the different geographies as well with potential restrictions being put back in place? Thank you. Yes, it's a tricky one. We're, we obviously The long term signs and signals we're seeing right now are really strong. Near term, it remains an unpredictable We've seen certain geographies go back into lockdowns. We're seeing Constant headlines about delta variance and what that might be, what that might mean. And so we'll continue to be cautious And prudent in the near term, we're thinking about that. We've obviously seen a quarter here where we saw really significant GTV expansion. I don't know if it's prudent to assume that that's a permanent thing. Hopefully, it is. But I think There's enough variability out there right now that we're going to continue to take a Cautious with the conservative stance in the near term, but, yes, we're really still excited about the long term and what we see in some of the results we reported today. Yes, that definitely makes sense. And then just separately, I wanted to touch on the partnership that you announced Open table quickly, maybe you could just talk us through what that partnership brings and what can it mean for Lightspeed going forward? Yes. So the partnership with OpenTable is very exciting for us. Basically, it enables someone On OpenTable, to reserve a table in a Lightspeed restaurant without having An external terminal to deal with OpenTable. It just gets completely managed within the Lightspeed platform. So making it again, the obsession is to make it easier for our customers. So we're very excited about the opportunity because a lot of our customers who are high end restaurants are reliant on OpenTable for all the bookings. So the beauty here is we book an open table. Instead of having your side terminal like you would in all the other restaurants, if you're using Lightspeed, The reservation directly goes into the POS, goes into the table, and we're going to port in a lot of data, including comments and anything you'll do while you're Got it. Thank you. We have the next question comes from the line of Paul Stipp of Scotiabank. Your line is now open. You may ask your question. Again, Mr. Paul Stipp, your line is now open. You may ask a question. Sure. Thanks. Good morning. Thanks for providing the longer term outlook. Just on the ramp to 50% of GTV, Brandon, can you maybe Set the table for us just in terms of the status of availability. I think it's clear on geos, but maybe what your assumptions are around portfolio and Any sort of gating factors in terms of doing that? And I don't know if that helps inform us, but could you give us a sense of where those Early cohorts are in terms of uptake, in terms of payments, because it sounds like you've stressed foreseeable future A number of times. So I just want to try to get a sense of how we should think about that timing. Yes. So I mean, we've gone from not having payments not that long ago to now 10% of the $16,000,000,000 in GTV being processed by payments here this quarter. So in terms of how we go from 10% out of 50%, I don't see any Step function blocks necessarily, I see it as just ongoing execution. We continue to attach New customers at the pace we've been attaching, which so 60% to 70% in that range and then continue to see our existing base migrate over at the pace we've been seeing. I think it Based on the status and availability, Paul, to your question, now having covered most of Europe with our solution and those teams seeing good early uptake, Teams internally are working hard to make sure we get payments into our Australian market and to some of our recently acquired Customer bases as well like Vend. So we have near term line of sight to that availability as well. And so I think it's just kind of steady execution from here. We don't worry a lot about whether customers are going to buy this. I we've proven that now. I think the value prop is strong of integrated payments with our software. So I really do think it's just Study execution from along the lines of the pace you've been seeing from us from here to 50. That's helpful. Just An ongoing release cycle, but it's been a while or I hope you could use a refresher on where you're at on the overall integration in terms of Launching newer products that have built in some of the acquisitions you've done. Thanks, guys. Yeah. So, we have our we have a flagship product that we're building towards in retail and one in hospitality. And those will bring together the all of the technology assets of the acquired companies onto industry leading, best of class platform. So one good example would be, upsurge analytics, which are A big differentiator for higher end restaurants, and that's coming to the flagship K Series restaurant platform that's in beta, but will be released later this summer. That's one example. Another one is ShopKeep Capital, which is coming into being brought into all of the into both platforms. And Kounta, the Australian point of sale that we acquired is developing an inventory module for our hospitality platform. All these engineering teams are coming together and building what are very formidable commerce platforms Retail and Hospitality and we're thrilled with what we're seeing across really what is best in class teams for commerce. Thank you. Next question comes from the line of Josh Beder of Morgan Stanley. Your line is now open. You may ask your question. Great. Thanks for the I wanted to double click on hospitality in the U. S. I think 2 out of the 3 new customer wins that you highlighted, I think were U. S. Hospitality restaurants related, an area that you really You've bolstered your presence through acquisitions recently. Can you talk a little bit about the momentum you're seeing specifically in U. S. Hospitality and restaurants, Kind of where your sweet spot is and how you're thinking about the competitive environment? Yes. So I'll take this. Our sweet spot, sorry, is more established restaurants. A lot of them are fine dining table service. As you know, we've and as Doctor mentioned, we've have been working towards the launch of our product in the U. S. That's going to be called K Series, which is our flagship. And really that product is going to be a combination of Lightspeed Payments, The K Series POS, the ingredient management and the advanced analytics platform, and that is due to be launched by the end of summer in the U. S. And we believe that's going to be an extremely competitive product for the market. We have today UP and Lightspeed that serve that market, but we're very bullish and excited about this launch. And we've been preparing for some time now. And we feel that the combination of everything that we're putting together is going to be very unique in the market. And of course, the opportunity is now with all of the reopening, there's a lot of demand. There's a lot of new concepts that are created. There's a lot of current restaurant owners who are opening new facilities. So we feel the market is up for grabs right now. Let's not forget that the majority of this market is on legacy systems still. And there's a big opportunity here for just to go and grab it. Great. Thank you. Operator, I think we have time for one more question. Thank you. So we have the question comes from the line of Ted Copeland of CIBC. Your line is now open. You may ask your question. Thank you. Good morning, everyone. I wanted to ask a question in light of the Square acquisition of buy now pay later $29,000,000,000 acquisition, a big move in FinTech. You're obviously seeing great traction with payments. Is a buy now, Pay later button something that you think is important to your customer base? And if it is, how are you thinking about that opportunity? Thanks a lot. So I'll start on the customer side and then if you guys want to jump in. I mean, again, this play is a Where a consumer is purchasing from a vendor and we're giving them financing and payment terms. So I think it is valuable for Lightspeed merchants. But for now, we are actually working with a number of partnerships And we do not handle this ourselves. Maybe just when we think about going forward and you think about what we're building We're going to hold a tonne of data between suppliers, stores and consumers. This will help us, of course, As we go forward, better understand credit and how we can handle this. But I think for now, we're just going to focus on what we are what we've launched. As you know, we're launching payments. This is very important to us. We're creating a lot of value with all the acquisitions and the acceleration of roadmaps. We're going to finalize this. So think that's going to be a if we think about it, it won't be in the coming 12 months, it'll be later. For now, we're going to partner with companies who provide lending. Okay. I think we'll wrap it up there. So thank you everybody for joining us today. Again, the senior management team will be available for questions if anybody has any. Please feel free to reach out to me if you want to schedule a call. And thank you for joining again and have a great day. Thank you. That concludes today's conference call. Thank you all for participating. You may now disconnect.