Thank you for standing by, and welcome to the Lightspeed third quarter 2021 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, Gus Papageorgiou. Thank you. Please go ahead.
Thank you, operator. Good morning, everyone. Welcome to Lightspeed's fiscal third quarter 2021 conference call. Joining me today are Dax Dasilva, Lightspeed's Founder and CEO, Brandon Nussey, Chief Financial Officer, 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, 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 U.S. and Canadian securities regulators. 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 two 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. 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.
Thank you, Gus, and thank you everyone for joining us this morning. Lightspeed had another strong quarter as we continue to support the efforts of our customers to adopt the omni-channel strategies that are helping them navigate the global pandemic and position themselves for eventual recovery. Thanks to the dedication and tenacity of our remarkably committed employees, a solid and ever-improving product offering, our global footprint, and the success of service offerings such as payments, Lightspeed was able to deliver stronger than expected results. In addition, we were also able to complete two major acquisitions and accelerate our innovation initiatives. At times, the pressure on our people has been noticeable, with our employees pushing themselves to the limit in order to deliver new solutions aimed at helping our customers. Despite this pressure, our employees have risen to the challenge, and I could not be prouder of them.
I believe that their strong dedication is largely due to the fact that we, as an organization, deeply believe in our mission as a company. Lightspeed was founded on the belief that the resilience and entrepreneurial spirit of small and medium-sized businesses is fundamental to maintaining vibrant cities and communities. As difficult as the current situation has been, we know that it has been that much harder on our customers. We are proud to be the technology partner of choice for nearly 115,000 customer locations globally as they reinvent their business models and embrace our cloud-based platform.
Notable customer wins in the quarter included Group Alkalage, with hotel, restaurant, and spa properties in Lyon, France, SkiBig3, the legendary Canadian ski resort, where we will be supporting their four existing retail shops with plans for three more to open shortly, and Lan Kwai Fong Group, a household name in Asia with 21 restaurants and hotels in Hong Kong. Our team's dedication continues to pay off for our customers and investors in Q3 as Lightspeed, on a year-over-year basis, delivered revenue growth of 79%, grew locations by 74%, and expanded GPV by 48%. Although the addition of Upserve and ShopKeep boosted our performance for the quarter, even without their contribution, Lightspeed delivered revenue ahead of our previously established guidance and reached software and payments organic revenue growth of 47% year-over-year, accelerating from the 42% we saw last quarter.
We had a very busy quarter, but I want to highlight some key themes. The continued success of payments, the official launch of our Supplier Network, the completion and planned integration of our latest acquisitions, and finally, a view into what a post-COVID world can look like for Lightspeed. Payments had another stellar quarter with year-over-year revenue up almost 4 times the levels of the same quarter last year. Adoption of our payments offering amongst our customer base is growing rapidly, both in terms of the number of customer locations and the proportion of GPV. Payments remains a priority for us, and we expect to have the offering rolled out in all of our key geographies, including the U.K., Australia, Germany, the Netherlands, Belgium, and France in calendar 2021. Payments is a highly compelling service offering for our company.
It can simultaneously increase the long-term value of our customers and further entrench Lightspeed into their operations. It can also act as a gateway to other financial services, such as capital. Although we have seen great success so far, the proportion of our total GPV that flows through payments is still in the single-digit % range, and as such, we have a long runway and sizable opportunity ahead of us. In mid-January, we announced the initial availability of the Lightspeed Supplier Network. I'm very excited about this initiative. We believe it will revolutionize how SMBs order and manage inventory, interact with their suppliers, populate their e-commerce sites, and eventually pay invoices. This is a product years in the making that places our independent merchants on the same strategic footing as enterprise retailers and e-commerce giants, and an offering that truly speaks to our mission as a company.
The Lightspeed Supplier Network will eliminate the time-consuming and frustrating experience of managing multiple B2B supplier portals, allow SMBs to more easily discover new products, keep merchants up to date on the latest product offerings and inventory levels, and allow them to import high-resolution images directly from their suppliers onto their own Lightspeed-powered e-commerce sites. In short, for our SMB customers, the Lightspeed Supplier Network offers a seamless supply chain that will save them time and frustration, and hopefully help increase sales through better inventory management and e-commerce capabilities. The benefits of this initiative are not only limited to our existing customers. In order to create a network effect, we need to offer value to all the participants in this ecosystem. In launch, we had signed over 100 suppliers to the Lightspeed Supplier Network in key verticals. The motivation for these suppliers to join the Lightspeed Supplier Network is clear.
Not only does it simplify product discovery and ordering for their customers, it also provides them with real-time sell-through data. The benefits of this data should not be underestimated, as suppliers can now see almost instantly what products are selling at what prices and where. This data should grant them far superior supply chain agility, ensuring that they are manufacturing the products that consumers are demanding, so that they can maximize their revenue and profitability while minimizing working capital requirements. I know many of you have been asking how we plan to monetize this initiative. For now, access to the Lightspeed Supplier Network is free for our customers, and that is unlikely to change. It is already having an impact. For example, it is already helping to generate new customer leads as suppliers are recommending the Lightspeed solution as the system of choice.
We are also developing plans to further capitalize on this initiative in ways that we believe will minimize the overall cost of sourcing, ordering, and paying for products for our SMB customers and their suppliers. Connecting SMBs directly to their suppliers is one way Lightspeed's innovative offerings can help level the playing field for our customers. We also want to help them connect to consumers, who spend much of their time searching for products online. Part of the challenges our customers have is displaying real-time inventory within search engine results and delivering high-resolution images for those searches. These are issues that large retailers have already solved but are still lacking for SMBs. Supplier Network will solve the issue of high-resolution images, and in the months ahead, we hope to deliver solutions that will display real-time inventory availability by location within popular search engines.
We think this will go a long way in helping level the playing field for our SMB customers and highly differentiate the Lightspeed offering. Moving on to our recent acquisitions of ShopKeep and Upserve. Now that the acquisitions are complete, the teams are actively integrating into our operations and sharing best practices. As we mentioned before, ShopKeep maintains an advanced capital business, and we are working with that team to help develop the roadmap for Lightspeed Capital. With Upserve, we are actively looking to integrate their advanced hospitality analytics solution into the broader Lightspeed platform. On our M&A strategy, I want to make certain things clear. Firstly, Lightspeed looks at companies that have similar operations to our own. That is, they are cloud-based, have similar go-to-market approaches, and are well-run. Because they share a similar approach and structure, integrating these companies into our operations is considerably easier.
Given that we have some experience here, I believe we are developing an expertise in integrating acquisitions. Secondly, I want to make clear that we have no interest in maintaining a portfolio of brands and solutions. The goal is to integrate all of our acquisitions and be in market with one Lightspeed solution for retail and one for hospitality, all under one Lightspeed brand. The pace at which we integrate the acquisitions will vary depending on several factors, but for ShopKeep and Upserve, the integration is well underway, with operations expected to be fully integrated by April and product by end of summer. Finally, our approach to M&A is to look for companies that can expand or solidify our geographic footprint, such as Gastrofix, Upserve, and ShopKeep, take us into compelling verticals such as Chronogolf or advance our technology offering.
These three goals, market expansion, vertical expansion, and technology, will continue to drive our strategy going forward. Before I end, I want to discuss our prospects as we eventually put COVID in the rearview mirror. In the immediate term, things remain challenging as lockdowns remain in place, and in some circumstances are worsening, which negatively impacts our GPV churn and new customer additions. Our global footprint allows us, we believe, a greater degree of visibility into the potential of a recovery. If we look at markets with limited COVID restrictions in place, such as Australia, where they recently reopened the Sydney Opera House, we see very promising signs. Our overall hospitality business saw declines in GPV this quarter. In Australia, we saw double-digit growth. Overall, Australia had the best quarter it has ever had. There are two main influences behind these strong results.
The first is the positive impact from ending lockdowns and allowing consumers to flock back to restaurants, bars, and retail. The second is the ongoing migration of these small businesses from legacy to cloud-based commerce solutions. COVID is highlighting that cloud-based commerce solutions have moved from being a nice-to-have to an absolute necessity. We believe we will see similar trends in Europe and North America once vaccines are distributed and these markets emerge from the shadow of COVID. We cannot know how long the pandemic will continue to impact us, but we are optimistic not only about our prospects in an eventual recovery, but the role our resilient merchants will play in driving a reopening economy. Finally, before I pass it over to Brandon, I want to highlight the addition of Manon Brouillette to our Board of Directors.
Manon brings solid strategic and operational experience with her as the former CEO of Videotron, and is also an experienced Board member. Her addition clearly strengthens our Board, and I look forward to working with her. Now I will pass it over to Brandon.
Thanks, Dax. Today, we reported another terrific quarter, once again, in a very challenging macro environment. Given the many moving pieces this quarter as the result of our recent acquisitions, I encourage you to refer to our investor presentation on our website, our MD&A, as well as the appendix of our press release, where we have added several summary charts to show a more normalized view of certain figures. All told, as you'll see, we had a great quarter across the board. The strength of the quarter was led by the four primary drivers of our business model. First, continued growth of our customer base, which as you have heard, is now just under 115,000 total locations at December 31st. We saw another strong quarter of organic customer location adds, which I believe is one of the most important metrics for us. Second, ARPU expansion.
As we grow our customer base, our land and expand strategy kicks in, and we saw continued success there. ARPU for the quarter was our highest ever, as more and more customers adopt a broader portion of the solution set. Third, Lightspeed Payments. With $29 billion in overall GTV, we have a tremendous opportunity for Lightspeed Payments. The number of customers contracting for payments alongside their core subscription were an all-time high this quarter. Lastly, acquisitions. We believe that smart acquisitions will accelerate our leadership position and unlock many revenue, expense, and technology synergies. Our past acquisitions have proven to be highly successful, and our recent acquisitions of ShopKeep and Upserve are landmark deals that significantly alter our scale and market presence. We believe all four of these drivers have substantial runways still ahead of us.
Our market is large, fragmented, and we're working hard to build a category leader. It's worth noting at this point that challenging macroeconomic factors continue to face us. Increased lockdown measures in many of our core markets have muted new customer adds, reduced our customers' GTV, and led to higher churn in our customer base. Fortunately, the growth drivers of the business have more than offset these headwinds to date. As I will speak to later, we will continue to take a cautious stance on our near-term financial results. For the longer term, though, our optimism continues to grow, and today's results reinforce that. Looking at the quarter in more detail, total revenues of $ 57.6 million were up 79% year-over-year, and were $ 49.3 million when excluding the recent acquisitions of ShopKeep and Upserve. This exceeded our previously issued guidance of $ 44 million-$ 47 million.
Software and payments revenue represented 91% of total revenue in the quarter at $52.5 million, which was up 85% year-over-year. Excluding the impact of all acquisitions that were not in the company's results from a year ago, software and payments revenue grew 47% compared to that same quarter a year ago, an increase from 42% growth reported last quarter. Adjusted EBITDA loss for the quarter was $6.6 million, compared to a $5.2 million loss from a year ago. As a percentage of revenue, EBITDA loss was 11%, a five percentage point improvement from 16% a year ago, as we continue to see the leverage of the business model even while investing for growth.
This quarter, we are introducing an adjusted net loss and adjusted net loss per share metric to further align our investor community on a net income loss measure that excludes the impact of acquisition accounting and stock-based compensation, which is largely non-cash in nature. The adjusted net loss for the quarter was $7.1 million or $0.06 a share, up from a loss of $5.9 million a year ago. You'll find a summary table of the calculations for both adjusted EBITDA and adjusted net loss in our press release, MD&A, and investor presentation on our website. We ended the quarter very well capitalized with unrestricted cash on hand of over $230 million. We have also shown an adjusted cash from operations metric in our press release, MD&A, and investor presentation to give a more normalized view of the cash flow of the ongoing business.
This metric primarily adjusts for the impact of transaction-related expenses and liabilities retained at closing from our recent acquisitions that would otherwise have been cash earmarked for the sellers. For accounting purposes, settlement of these retained liabilities shows up as operating cash flow, despite this being a downward adjustment to the amounts we paid the sellers on these transactions. Adjusted cash flow from operations was -$19 million in the quarter. This figure includes a payment for D&O insurance of approximately $10 million on the back of our recent NYSE listing.
When excluding that, adjusted cash flow from operations was - $9.3 million as compared to - $7.9 million a year ago. While we are acquisitive, I expect there to continue to be a lack of consistency coming through in our financials associated with the accounting treatment of the components of our purchase price, and I am hopeful that some of this incremental disclosure will help normalize some of these accounting conclusions. Looking deeper at some of the specific business trends we saw in the quarter, as I mentioned earlier, customer locations grew to 115,000 in total. Excluding ShopKeep and Upserve, our customer locations were almost 84,000 at December 31st, up from 80,000 three months earlier. This growth was achieved despite the ongoing impacts of the pandemic and various lockdown restrictions in our markets around the world, and I view this as highly encouraging progress.
As mentioned, overall GTV grew 48% versus the same quarter a year ago, and 29% when excluding ShopKeep and Upserve. Within this, we continued to see strength from our retail customers, where overall retail GTV grew 41% versus the prior year. Retail GTV was aided by continued success of e-commerce, where GTV was up by approximately 100% versus the prior year. After a recovery last quarter, our hospitality GTV showed weakness in the quarter as government lockdowns returned to many of our markets around the world. Overall, organic hospitality GTV fell by 19% in the quarter, largely owing to a soft December. Last but not least, payments continues to be an outstanding performer for us. We now are processing 15% of U.S. retail GTV with Lightspeed Payments and more than 10% of Canadian GTV in retail, with our U.S. restaurant payments business still in early stages.
I view this as great progress, but we have so much runway still to go, not only in existing markets, but with Europe and Australia approaching launch later this calendar year. Turning now to our Q4 outlook, the performance achieved in Q3 leaves us very confident in our business in the long term. However, our near-term outlook reflects the realities we are now facing in the core markets where government lockdowns, many of which are as restrictive as they were in the spring, are once again impacting our end markets. We expect that these lockdowns will increase customer churn, will impact purchase decisions by our prospects, and will affect our customers' transaction volumes. We've seen the softness in our hospitality segment continue into January as our customers deal with these government restrictions. Our outlook also incorporates the seasonal impact in our business.
January and February in particular are slow months in retail and hospitality, even in normal years. We expect this year to be worsened by the lockdowns around the world. These drivers of lower volumes are a larger portion of the revenue now, given the acquisitions of ShopKeep and Upserve, along with our own ongoing success of Lightspeed Payments. With all that in mind, we expect Q4 revenue in the range of $ 68 million-$70 million. This represents growth of approximately 90% from a year ago. We expect Q4 EBITDA to be a loss of approximately $ 12 million-$14 million. This estimate reflects the seasonally weak quarter on customer volumes, a cautious stance on the impacts of COVID-19 lockdowns, and the ongoing weakness of the U.S. dollar compared to the Canadian dollar, which is leading to higher overall expenses.
While we will continue to take a cautious view of the near-term results, given the many uncertainties right now, we feel very good about the company's position for the long term. This quarter's results once again demonstrate the power of the business model. With that, we'll turn it back to the operator for your questions.
Thank you. Your first question here comes from the line of Richard Tse from National Bank Financial. Please go ahead, your line is now open.
Yes. Thank you. As we look on the other side of this pandemic, what would you say is sort of the most lacking or most demand of these incremental services you've added lately, capital, for instance? Kind of just curious to see what the uptake currently is across that base for these services.
Yeah. Maybe I'll start with this one. I think really nothing has changed. Overall, we're hearing a ton of demand for omni-channel. As we said many times, our customers went from requesting a point solution for their stores and their restaurants, and now there's a ton of demand for omni-channel. The second thing we're seeing a lot of is payments. We are bundling more and more payments with our software and our core offering, and this is creating a lot of demand. As you know, we launched Capital, and Capital now is ramping up, and we're seeing a lot of demand for that also.
Okay. The Supplier Network sounds like a pretty interesting development. Can you maybe share with us some of that early feedback from the current base, and are you going to be targeting specific markets to start off with, or are you just going to pretty much try to take it broad across the base here?
Yeah. We're very bullish about suppliers. We think this is a very big differentiator for us in the market. As you understand, what suppliers enables us to do is to really completely integrate the ordering process and the supply creation of the catalogs inside of Lightspeed. It really creates this incredible flywheel of value between suppliers, stores, and consumers. As you know, the first test case we had was on bikes, and that proved to be very good for us. When we look at metrics and data on bikes, what's interesting is everybody within the ecosystem is recommending Lightspeed, so it has a really good impact on cost of acquisition and lifetime value on customers. We've now launched it as a real product and service.
That means now we can have all of the suppliers within the verticals that make sense for us, fully integrate their catalogs and their supply levels to Lightspeed. We already have 100 suppliers now on the platform, and we're going to be focusing on the core verticals where Lightspeed has a lot of customers and penetration. As we go into the year, we'll be expanding to others. There's a few verticals right now that we are focusing on, and those are the verticals where we have the highest concentration.
That's perfect. Okay. Thank you.
Your next question comes from the line of Raimo Lenschow with Barclays. Please go ahead. Your line is now open.
Hey, thank you, and congrats from me on these amazing numbers. Can I stay on that Supplier Network, please, Dax? If you look, there are some guys out there that have kind of created these networks like Ariba and Coupa, more on the cleanup procurement side. Do I need to think about this like that? That you just kind of basically centralize the whole thing? The second question is, there was always a big debate about how to monetize that and Ariba and Coupa had some very different views of how to monetize it. How do you think about that? That's on the supplier side. The second question I had was on the reopening.
If you look at Australia and compare the runway post-COVID versus pre-COVID, has there been any learning, any experience that you can share so far as we're looking out through this year with vaccinations getting better and everyone else kind of opening up as well? Thank you.
Hi, Raimo. I'll take the first question. JP will take the second . Regarding Supplier Network, I think the big advantage here is you're opening discoverability for suppliers right within the POS system. It's not a separate system, another set of B2B portals. We're combining all of that functionality directly into Lightspeed, connecting more than 100 suppliers today. We hope to expand that rapidly in the future. It's an integral part of the system where they're already managing inventory and they're already managing their e-commerce assets and site. That I think is a huge advantage here. I think that the big benefit to us is that eventually that we're going to be the system of choice. Suppliers are already recommending Lightspeed to the independent merchants that sell their goods, because over time they'll have aggregate real-time selling data.
There's benefits for the suppliers in that regard. There's benefits for the stores. Of course, the benefit for us is we become the system of choice. Eventually there'll be other opportunities for us to facilitate B2B invoices, et cetera.
Yeah. Okay. Yeah, makes sense.
JP, regarding Australia.
Your next question here comes from the line of Andrew Jeffrey from Truist. Please go ahead. Your line is now open.
Hi, guys. Good morning. Thank you for taking the question. I also have a reopening question. I wonder about sort of your views of net growth and mix. I guess what I'm thinking about is, you mentioned e-com doubled this quarter. You're seeing good uptake in some relatively protected verticals like golf as well as in Australia. Are there any trade-offs as hospitality comes back, and consumers return perhaps more to card present, or is reopening a net positive any way we look at it?
I'll take that one. Yeah, I think it's a net positive any way we look at it. What we're seeing is, in Australia, I think we mentioned best quarter ever, to get back to Raimo's question. We saw hospitality decline obviously in many of our markets, but we saw that segment come back, and that led to just a wonderful quarter in terms of new customer additions and revenue growth for our business there. I think the reopening process not only drives better volumes across the board, which will help in our ongoing rollout of payments. It just spurs new business creation as well, I think. As you well know, with the majority of this market in legacy systems, the more new business creation, we think is only beneficial to Lightspeed given our position as a modern cloud advanced platform here.
We see nothing but positives, and we really look forward to the year ahead.
Okay. That's helpful. Thank you. Just as a quick follow-up, obviously the value proposition that Lightspeed brings is stark compared to legacy providers. I assume there's still some merchants that are reluctant to do a rip and replace at any time, let alone during pandemic. Are you seeing any changes in merchants' willingness to perhaps take the leap and move to a cloud solution, just sort of culturally in the market, have attitudes changed?
Yeah, I'll take this one. I think it's a very good question. I think that's why we're very excited about the post-pandemic world. I think we're seeing quite the opposite. Think about someone who has a legacy system, and now the majority of their business, if I'm a restaurant, it's going to be online, it's going to be through delivery platforms, it's going to be through Order Ahead.
If you don't have a platform like Lightspeed, you're basically stuck with silos and trying to manage a ton of different applications. The view here is that it's become way more complex for the traditional platforms to operate. Actually, we're seeing more demand from actually more established vendors who maybe would have never moved and now are looking at this, and they understand that they have to do something about it. I think that's why we're very excited about the next few years, because the harsh reality is the majority of the platforms on the market are still legacy systems. They're completely under-serving their merchants. Then there are platforms like Lightspeed that integrate everything and make it much easier for our customers, and we're seeing a ton of demand there.
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. In terms of the current weakness you're seeing in hospitality, where there have been more lockdowns, maybe just qualitatively, can you characterize it? Is it similar to what you were seeing say, back in April? Is it any different this time around maybe because of survivorship bias? Have you gone back to implementing any pause in payment plans or not this time around?
Yeah, to me, Thanos, it does feel different this time around. Certainly, in-person dining is suffering as hard as it was in March. I think the difference now is our customers have adapted. Those that have taken advantage of things like Order Ahead and Home Delivery have those business models in play. I think from our standpoint, we feel better instrumented to know what to expect going through this and the things we can do to help customers. Certainly, if you go back to March, April, when this first started, there was a whole lot of uncertainty and unknown and we do feel differently about it this go around, that we have better visibility and know more what to expect, and just by virtue of that in a position to give the guidance that we gave this quarter.
Okay, great. With respect to ShopKeep and Upserve, I realize it's maybe still early days, but now that you've owned the assets for a few weeks, can you update us on your thinking as far as the Lightspeed Payments opportunity within those customer bases and maybe the timeframe for being able to start to capture some of that?
Well underway. That was up near the top of the to-do list for sure. Teams from both of those businesses are actively working on that rollout now. We're optimistic. Those teams have settled in nicely, already driving significant value to Lightspeed. All good so far.
Yeah, maybe Brandon, just to add, by the end of April, we will have the go-to-market teams fully integrated and focusing on selling one product. The goal is also by the end of summer, we will have Upserve's advanced analytics platform fully integrated with our restaurant and with one product going into market in the U.S. So very happy with the progress there.
Great. Thanks, guys. Back to line.
Your next question here comes from the line of Daniel Chan from TD Securities. Please go ahead, your line is now open.
Yeah, thanks. Good morning. Just a question on the Lightspeed Supplier Network. With the Anheuser-Busch relationship, you did announce that they would be devoting some resources to selling your product. Are these new suppliers that you're onboarding now also committing any resources to this engagement?
Super excited. All the contracts that we are putting in place in the context of the suppliers have exactly the same logic. As you know, there's benefits for the suppliers and then there are benefits for the stores. The value proposition here is for suppliers to see sell-through. As soon as you've connected your catalogs and your inventory to Lightspeed, what we will do is for the stores that are ordering directly in Lightspeed, we will give you the sell-through, which is very unique in small business, and vice versa, we enable all of the stores to actually see or have visibility on inventory levels at the supplier. That whole relationship is really around basically suppliers and stores promoting Lightspeed within their networks.
Okay. What are some metrics that you're tracking to help guide you on how this new venture is doing?
Yeah, a number of metrics. We are looking at the number of suppliers that we are onboarding. We are looking at the number of SKUs, and we are looking at obviously, our transaction volumes on ordering as part of the platform.
Okay. Brandon, one for you. Your guidance for next quarter suggests that EBITDA margin comes off. Can you just give some color on that?
Yeah, it is really just a couple of things. One, as you heard from our comments, it is a seasonally down quarter, and with an increasing portion of the revenues coming through payments, especially with the addition of ShopKeep and Upserve now on board as well. You kind of take a seasonally lower quarter on transaction volumes against a largely fixed cost base that is a technology company, and that is one contributor to the just sequential change. Secondly, the integration of ShopKeep and Upserve, we are expecting a slight downward impact in this first quarter, again, mainly due to the seasonal nature of those businesses, which is very comparable to our own. The last thing, though not a main thing, is just the FX environment isn't helping us at the moment. It's not too big in the grand scheme of things, that's also playing a role in it.
Great. Thank you.
Your next question comes from the line of Josh Beck with KBCM. Please go ahead. Your line is now open.
Thanks, team, for taking the question. I also wanted to ask about the Supplier Network. Obviously, really unique that you have a B2C software and payments business, and now you're certainly getting more into the B2B realm. I'm just curious, what's the timeframe that we should be thinking about? When I think about to when you went public and you started to embark on Lightspeed Payments, you obviously have given us a lot of color and updates since then, but certainly a journey. Is this a multi-year initiative, and what milestones should we be really focused on? Certainly the size of the Supplier Network, you gave us an update, which I think is a really important indicator. Just what other metrics should we be focused on in the coming quarters and years tied to this initiative?
Okay, great question. It is a journey. I think maybe I'll try and share our mindset with the steps and where we see this heading. I think step number one for us, and this was listening to our customers, actually, we need to make it easier for a customer to order directly through the Lightspeed Supplier Network. The harsh reality in small businesses is everything is pen and paper. There's a lot of back and forth. It's manual, it's inefficient, and it's also inefficient for the supplier. Step 1 for us was to make automation possible within the network, within the software, and go vertical by vertical to try and go inside of the verticals where we have a lot of penetration. Here, there's really two advantages we see.
One is operational efficiency for our stores. The other advantage is really for the suppliers, having visibility on sell-through and helping them adjust manufacturing so that we can get to a model that's fully integrated. Here, what you can expect in the coming quarters is expect to see more and more verticals where we have concentration, where we'll just be onboarding more and more suppliers within the platform and with the goal of efficiency. That's one track. The second track in our mind is payment. Lightspeed Payments right now, we're using Lightspeed Payments from store to consumer. We should be using Lightspeed Payments from store to supplier.
This means that once they've selected the items they want to order, once they've had visibility on the stock and the inventory level of the supplier, and once they pass the order, we expect them to use Lightspeed Payments to actually pay for that order. For us, the value here is we monetize both ways, and we monetize on the sell side, but also on the buy side. I think as we go into all of this, I think the last piece for us is think about all the acquisitions we've done, and we acquire normally companies that have basically sources in the same verticals as Lightspeed. We want to make all of this available to all of the stores within the network.
Here you can imagine that as, I don't know, you put ShopKeep and Lightspeed together in the U.S., there's a ton of commonalities in the verticals where we both operate, and I think there we can gain concentration. I think the last piece for us is really to look at commerce at large and figure out how we're going to use data to actually help suppliers identify new stores that should be selling their supplies that are not selling their supplies. Here, you can think about this with us looking at the data, analyzing the data, and really fingerprinting suppliers to stores by looking at commonalities of inventory and outliers that should be sold by those stores. I think for us, it's a journey. It's a very exciting journey, and it's just the first step.
I think when you think about this, once you're in the core of all of this and you're providing value to the entire flywheel from suppliers to stores to consumers, you really become a very sticky platform. I think the last piece is, think about cost of acquisition and lifetime value. As soon as you have the network and you have the entire ecosystem promoting Lightspeed, the cost of acquisition goes down and lifetime value goes up. It's a journey, but we're very excited about the journey and really excited that the product is finally out, and we can bring it to market.
Thanks for sharing those thoughts, JP. Super helpful. Follow-up for you, Brandon, on the payments opportunity. You have the very helpful slide that shows the adoption and some of the geos and verticals. Certainly seems to be going in the right direction. I'm just kind of curious, once we think about what this is going to look like, maybe after we've incorporated ShopKeep and Upserve, which I believe have higher ARPUs in part because they've been successful with payments, if we should be expecting it to kink up or just curious on how the incorporation of those companies will impact these dynamics.
Yeah, for sure we'll take up the Upserve business in particular. The vast majority of their customers were using Upserve Payments as they have a really nice, elegant solution that embeds payments right into the product itself. ShopKeep, they were further along as well on the payments journey from a customer adoption perspective. Though, as we've talked about largely through a referral model, but a good percentage of their customers do use a payment solution there. As we talked about earlier, the teams are working hard to build the infrastructure to make sure that Lightspeed Payments is available to those customers. All told, we expect those things to really positively impact our overall penetration at a global level.
Of course that's core to what we're trying to do around here is to make sure that the vast majority of our customers worldwide take payments. All these things I think are helpful.
Great. Thanks, Brandon.
Your next question comes from the line of Timothy Chiodo from Credit Suisse. Please go ahead.
Great. Thanks a lot for taking the question. I wanted to dig in a little bit more about the path ahead for embedding additional financial services beyond payments and capital. We've talked a little bit in the past about how instant payouts could be a logical next step for you guys. Maybe you could just talk a little bit about how you would see the demand for that offering, what the penetration of the payments volume that would sort of be able to be recycled and go out that path, and maybe some sample use cases, and also how the monetization of that might work.
Hey, look, I think we're in the early stages here for Lightspeed. We're at an exciting stage where we're seeing obviously payments uptake accelerate and all that's good, that puts us in a position to start to launch some of these things. Probably the best example of what we're doing right now is the capital offering itself. We're a couple quarters in working with largely with Stripe right now to kind of test that. We're seeing a lot of good customer receptivity to this. As we mentioned in prior quarters, we expected the first go at this to be a little bit of getting used to each other and a little bit of working out some of the workflows and processes. We're seeing good customer interest.
We're seeing good initial progress with capital and end of the day, I think it's too early to say exactly what percentage of our customer base is going to take advantage of some of these opportunities or financial opportunities. We're excited about it. There's enough there to kind of suggest that, hey, these are going to be good contributors to the business in the mid to long term for sure.
Great. Thanks a lot. Just since you mentioned it, just a quick follow-up on capital. Are there any metrics you can share around just average loan sizes or repeat rates or any metrics? I know it's very early. Is there anything you might be able to share?
With Stripe, loans are up to $100K. We're largely sitting on top of their infrastructure because still early days. Certainly too early to be measuring repeat rates and that sort of thing. Average loan size is obviously a lot less than that $100K number the offer right now. In the ShopKeep, Dax mentioned in the call, ShopKeep had a much more advanced capital product than we did as well. We've started to leverage now their expertise. They pressed pause a little bit at the onset of COVID here and we're ramping that back up now. We'll have some more things to share there, I think as we learn from their experience and we can start to share some of the metrics we're seeing there.
Suffice it to say, they were out at two years ahead of us in terms of this offering and had some really nice returns and really nice success with it, which gives us optimism for the overall business.
Excellent. Yeah, that's a great point on the ShopKeep capital. Okay. Thanks a lot for taking the questions.
Your next question comes from the line of Todd Coupland from CIBC. Please go ahead, your line is now open.
Yes. Good morning, everyone. I wanted to ask about competition. A number of cloud players seem to have gained some stable footing during the second half of 2020, and I'm just wondering if you see any risk of pressure on pricing, whether subscription rates or payments rates, or is it still by features and functionality, the omni-channel supplier network and that kind of thing that's driving decisions? Could you just talk about the landscape in the last six months? Thanks a lot.
Yeah. I'll take this one. In all transparency, I think we've never had a better model, we don't feel pressure from competitors. If you look at our organic, if you look at our close rates, if you look at the ARPU, we're not feeling that pressure. We're actually seeing more and more customers wanting to buy a full package. From one vendor versus buying from multiple vendors. We see our customers wanting solutions like ours because they need to integrate all of the delivery networks on the restaurant front. They need to have true omni-channel when you think about physical retailers with multi-location support. I think the offering is very strong, and I think that the market fit is stronger than it's ever been. We do not feel any pressure right now on pricing from any of our competitors.
Okay. Thanks very much. Appreciate it.
Your next question comes from the line of Paul Treiber from RBC. Please go ahead. Your line is now open.
Thanks very much, and good morning. I was just hoping, could you bridge between the strong growth in revenue this quarter, I think excluding ShopKeep and Upserve is up 53%, and then GTV also on an organic basis? As the faster growth of revenue, is that predominantly due to payments and perhaps additional software modules that's driving the strong growth there?
Yeah. You kind of have to deconstruct that a little bit. Within the GTV, and some of these were in my prepared comments, I think you'll find them in the press release as well. Retail had a wonderful quarter, up 41% year-over-year. Within that, e-commerce volume's up 100% year-over-year. Overall GTV organic growth dragged down, though, by hospitality, which was down 19% organically. That's what's happening inside of GTV. When you convert that into revenue, as you'll see in the payments kind of penetration slide, most of our payments revenue comes from our retail space right now. We're sort of benefiting on the payments uptake primarily through retail, which is performing exceptionally well.
On the hospitality side, it drags down GTV, but really doesn't have a huge impact on revenue until we kind of look at the additions of Upserve, which is going to be a next quarter thing more than a this quarter thing as they wrestle with the impact of lockdowns. Make sense?
Great. Yeah, no, that's helpful and it connects the dots there. When you look at it longer term in those two segments of retail versus hospitality, should the correlation between revenue and GTV over time align, or do you think that they'll always be fairly independent of each other?
No, it'll start to align. We launched in U.S. retail for payments first. Canadian retail was the second market we launched, mainly because that's where the majority of our own GTV was. We're just newer into the hospitality space with payments. I think we launched it kind of, I don't know, maybe March of this past year. Of course, that hospitality segment has been dealing with some things all year long. Once we get back to a more normalized environment, we're going to see hospitality uptake of payments rival or exceed, I think, retail, and those things will start to align.
Okay, great. Thanks for taking my questions.
Operator, we'll take one last question.
Great. Thank you. Your next question here comes from Tien-Tsin Huang from JPMorgan Chase & Co. Please go ahead. Your line is now open.
Thanks so much. Really great results. I wanted to ask on the location growth being very, very strong, how broad-based was the location strength? Any additional color you can share on where you're positively surprised, either, say, geographically or vertically or by size or type of client? Same question on attrition, too, if you have anything to share there.
Retail, we continue to do really, really well on retail right now. It's the omni-channel solution I think is resonating really well. Retail's really been a great performer despite even the challenging overall environment in that space. Europe has had a tougher go of late just because of the lockdowns in Europe have been fairly strict and firm, and that tends to mute the new customer adds. We shone a light on Australia as just having a wonderful quarter as they've kind of emerged a little more quickly from this virus situation, I suppose, and we saw really good performance there. The last area we wanted to highlight where we're seeing just really, really strong momentum, and kudos to the Lightspeed team behind all this, is the golf segment.
We're seeing triple-digit revenues almost in that growth in that space right now as golf has kind of had a rejuvenated experience globally, I suppose. As golf courses around the world look to upgrade their own infrastructure, we're really benefiting right now.
Great for social distancing, golf. I wanted to ask one more just on sales and marketing. That did step up quite a bit sequentially on a dollar basis, Brandon. Is this a new baseline to consider? Are you seeing better returns on efforts here? Is that related to my first question on location growth, for example? Just curious on anything else you could share on that.
I think it's one of the more encouraging things. Not that we are laser-focused on EBITDA positivity at the moment given all the growth opportunities. If you look at sales and marketing as a percentage of revenue year-over-year, I encourage you to look at the last table in our press release where we sort of normalize all this. I think we're really starting to see the leverage in the model, we're seeing the benefits of just the momentum and the increased brand worldwide. We're adding more stores than ever. Sales and marketing as a percentage of revenue is going down significantly. The uptick in dollars is mainly addition of the acquisitions just taking in their own sales and marketing. The overall percentage of revenue is we're really starting to see some nice leverage.
Understood. Thanks for taking my question.
There are no further questions at this time. We'll turn the call back over to Gus Papageorgiou for any closing comments.
Great. Thanks, everybody, for joining us today. Just a reminder, on February 17th, we are going to be having a webinar on the Supplier Network. JP will be joining us along with Peter Dougherty, our VP of Partnerships, and we will have speakers there from Giant Bicycles as well. If you haven't registered, please go to the IR portion of our website to register, and we look forward to speaking to everybody there then. Thanks, everybody, for joining us, and have a great day.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation, and you may now disconnect.