Ladies and gentlemen, thank you for standing by, and welcome to the Lightspeed first 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, then the number one on your telephone. Please be advised that today's call is being recorded. At this time, I would like to turn the conference over to our speaker, Mr. Chris Mammone. Please go ahead, sir.
Thank you, operator. Good morning, everyone. Welcome to Lightspeed's fiscal first quarter 2021 conference call. Joining me today are Dax Dasilva, 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 to your questions. We will make forward-looking statements on our call today that are based on assumptions, and therefore subject to risks and uncertainties that could cause actual results to differ materially from those projected. We undertake no obligation to update these statements except as required by law. You can read about these risks and uncertainties in our earnings press release issued earlier today, as well as in our filings with Canadian securities regulatory authorities. 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 and at sedar.com. Finally, note that because we report in U.S. dollars, all amounts discussed today are in U.S. dollars unless otherwise indicated. With that, I will now turn the call over to Dax.
Thanks, Chris. Our solid execution this past quarter, under historically challenging conditions worldwide, helped to cement Lightspeed's position as a leading cloud-based omni-channel solution in our segment. Nimble and innovative SMBs, rising to the occasion, are abandoning inadequate legacy systems in both the merchant point of sale and payment spaces in favor of Lightspeed's modern cloud-based platforms, giving these businesses the capability to run digital strategies alongside physical ones in a simple and integrated manner. The global pandemic has altered consumer behavior in everlasting ways and accelerated the next three to five years' worth of adoption of omni-channel strategies for SMBs in both the retail and hospitality sectors. The digital transformation forced by COVID-19 has become a permanent state of business. Retailers have doubled down on a shift to omni-channel that was already underway before the pandemic.
Plans to overhaul operations in the next few years were accelerated, and businesses were brought online overnight. The hospitality sector, from quick serve to fine dine, is in a similar state of digital transformation driven by new consumer needs. As new challenges and consumer behaviors emerge, so does the opportunity for small and medium-sized businesses worldwide to build truly end-to-end multi-channel shopping and dining experiences with Lightspeed. It is a moment to be seized on, facilitated only by the right technology. Lightspeed has been a clear beneficiary of these digitization tailwinds. Total revenue grew by 51% compared to the same quarter a year ago and topped $36 million. More than 90% of this base consists of recurring software and payments revenue, which grew 57% during the first quarter compared to the same quarter a year ago.
The scale and diversity of our customer base has served us well in light of the pace of recovery in reopening markets, as Lightspeed's core business has seen a return to levels ahead of last year, driven by strong merchant adoption of omni-channel software and integrated payments. According to our internal data, Lightspeed retail merchants grew their GTV more than 4- 6x faster year-over-year than the industry average retail GTV in 2019. All indications are that our merchants have continued to enjoy this level of success during the pandemic. We've seen retail GTV continue to accelerate through June, and our restaurant GTV has bounced back sharply, evidence that the resilience of our customer base remains strong.
Our customers are well-established, innovative industry leaders ready to evolve with the new commerce economy, inspired to amplify their sales channels, and eager to use technology to future-proof their business for these increasingly digital and virtual realities. Fortunately, this inevitable shift is happening at a time when product innovation at Lightspeed is accelerating, ensuring that we have the right set of solutions in place as our customers rely on us more than ever to enable their digitization journeys. On the retail omni-channel front, we rolled out major improvements to our digital checkout experience, including the availability of our new Mobile Tap custom hardware and software mobile POS solution, which extends the sales perimeter to anywhere inside the store, as well as outside to curbside pickup.
We're now offering Digital Wallet, which supports a broad range of payment methods globally in a secure and seamless one-click e-commerce checkout experience, driving improved conversion online. Our retail POS app saw further upgrades to its analytics capability with the rollout of Analytics Core, a slimmed-down version of our analytics module at a lower price point for customers that, for now, don't require the full solution. By offering a tiered product for reporting, it gives our merchants greater options to grow with Lightspeed at the pace of their business. This further builds upon the inventory management and point of sale upgrades we rolled out throughout this past fiscal year to solidify our status as the premier solution in cloud-based retail POS.
In this regard, we believe no other retail system operates with the power, depth, and sophistication of features required by our segment of merchants, further appealing also to merchants that may have fewer requirements at the outset, but want to do more with technology to differentiate their business in this environment. There's a ton happening also within Restaurant. I'm pleased to share that we've launched our Order Ahead capability, featuring enhanced pickup and delivery tools and other integrations. Our new e-commerce for Restaurant offering is now in beta and features a complete redesign to better fit the evolving needs of customers. Another example of rapid innovation from Lightspeed in the hospitality vertical. The full convergence of our hospitality engineering teams globally into our flagship Restaurant POS product will be completed on schedule during the current quarter.
The fully redesigned hospitality system, delivering on the Lightspeed promise of greatly simplifying complex hospitality workflows, will be rolled out to all of our regions methodically over the next several months. Last quarter, we announced our new omni-channel loyalty customer engagement tool to help Lightspeed merchants across our entire landscape foster personalized, targeted relationships cohesively within their clientele across channels in a moment where this means more to business success than ever. We've seen strong initial adoption of this new product. As our customers begin to switch focus from stabilizing their operations today to optimizing their future growth, we're very excited to be announcing the initial availability of Lightspeed Capital for our U.S. retail customer base.
For those customers utilizing Lightspeed Payments, our new capital offering will assist these SMBs with fast access to up to $50,000 in funds per location that they can use to invest in their businesses much more quickly than they'd be able to accomplish with traditional banks. With Lightspeed Capital, SMBs benefit from a much shorter application and eligibility process versus all of the bureaucracy and paperwork they'd encounter with traditional financial institutions. Our pre-integration with these customer systems provides us with the data and comfort to offer frictionless approval standards. This streamlined process is very important during the pandemic, as it gives SMBs capacity to be nimble and strategic as the retail industry undergoes significant transformation.
In addition to the foregoing, we will continue investing through this period to ensure our technology remains at the cutting edge of the industry, and that we remain the clear leader for our focused market segments. The importance of our work has never been more crucial, and as such, the market opportunity for Lightspeed has never been bigger. That said, the importance of going to market globally as One Lightspeed is paramount. To this end, we've made great progress in terms of the major rebranding initiative we've had underway to fold in the systems, processes, and feature sets of our acquired platforms as One Lightspeed, offering all core products in all core markets. At this stage, both the Chronogolf and iKentoo brands have been completely rebranded as Lightspeed.
We expect to complete this same exercise for Kounta later this summer, and for Gastrofix to achieve this status by the end of the calendar year. I'd now like to highlight some recent successes within our partner strategy as yet another lever we are utilizing to bolster our go-to-market approach. Lightspeed works with many great partners to help our complex SMB customers manage all aspects of commerce in their business. We're thrilled to welcome Google into the Lightspeed ecosystem as one of our newest strategic partners. With Google, we're working on several broad-based initiatives to make physical businesses more discoverable in the digital space. The first of these initiatives is the Google Business Profile advanced profile listing solution.
Currently in beta, Google Business Profile greatly enhances the speed to market for Lightspeed customers, compressing the lead time it takes to get a professional business listing set up and running online from what had been a multi-week process down to just a few days. Before I conclude my remarks, I would like to once again thank the Lightspeed family for the tenacity they have shown over the last few months. They continue to deliver for our merchants every single day. They live and breathe our company mission of bringing cities and communities to life through the economic empowerment of SMBs. They believe deeply that all communities and all entrepreneurs deserve to be successful. That is why I founded Lightspeed 15 years ago. The team I did so with was unique, as we identified entirely as members of the LGBTQIA+ community.
We built the principles of diversity and inclusion into the very DNA of this company. This year, our inaugural Global Diversity and Inclusion Survey showed that nearly one in five Lightspeeders identify as LGBTQIA+. Nine out of 10 Lightspeeders report that they felt comfortable talking about their culture and background with their colleagues, while 83% of Lightspeeders feel that they can be their authentic selves in the workplace. I'm exceptionally proud of the culture and family we have fostered here at Lightspeed, especially during the last few challenging months. In closing, the coronavirus pandemic has made it clear to our merchants that the cloud-based omni-channel solution Lightspeed provides is no longer simply a competitive advantage, but a business imperative as we move forward.
Our merchants have demonstrated that they are the thought leaders that will redesign the retail and hospitality experiences of the future to shore up the economies and livelihoods of the communities that love and appreciate them now more than ever. With that, I'll turn it over to Brandon to review the quarter and our recent business trends.
Thanks, Dax. Overall, we've recorded another positive quarter in the face of a challenging macro environment. Last quarter, we commented that the impacts of the COVID-19 pandemic would accelerate the move away from legacy systems as SMBs adjusted their business priorities. Our first quarter results reinforce this belief and signal strength for the long-term prospects of the business. Recapping the first quarter, total revenue is $36.2 million, up from $24.1 million a year ago, representing growth of 51%. Software and payments revenue was 57% higher than a year ago at $33.4 million. When excluding our recent acquisitions of Gastrofix, Kounta, and iKentoo, software and payments revenue grew by 34% from the first quarter a year ago. EBITDA loss for the quarter was $2.2 million, compared to $5.1 million a year ago.
We ended the quarter with over 77,000 customer locations, and our GTV for the quarter was $5.4 billion, up 17% from a year ago. Over the past 12 months, our GTV was over $23 billion, up almost 50% from the same period a year ago. We ended the quarter with unrestricted cash on hand of approximately $204 million. It was a great quarter for us, all things considered. Looking at some of the specific business trends we saw in the quarter, I'll start with the most encouraging, which was the pace of new business. As mentioned earlier, we feel the long-term outlook for new customer wins will be accelerated given the push to omni-channel cloud solutions, and to see the pace of new business be as strong as it was in the quarter I view as a very positive sign.
Overall, despite the challenges faced by our end markets, we grew our customer base in the quarter. Over 77,000 customer locations, up from 75,500 at the end of April. This was driven by accelerated new customer adds through the quarter, with each month stronger than the month before it. By June, we had added 23% more locations than June of last year, and 63% more than we added in April. Of course, partially offsetting this was higher levels of churn. While churn has improved each month from the levels we saw in March and April, we expect heightened churn to continue for the foreseeable future as the industry grapples with social distancing mandates. While business failure in our SMB customer base is outside of our control, as Dax mentioned earlier, the Lightspeed customer base overall is proving to be resilient and generally outperforming the broader industry.
We saw this in our GTV trends. In aggregate, GTV rebounded nicely in the quarter from the lows we saw in late March and early April, and by June, we are seeing organic growth return. On the back of strong performance in some of our verticals, such as bike, home and garden, sporting goods, and golf, our retail segment globally saw growth in GTV over 30% in June compared to June of the prior year. For the quarter overall, growth was 13%, overcoming the initial slowness we saw in April. Within retail, we saw e-commerce growth of close to 100% in the quarter versus the prior year. By the end of the quarter, we were seeing a strong resurgence in volumes in our physical spaces as well. The restaurant segment also bounced back sharply.
As mentioned last quarter, our restaurant volumes were down by 80% or more in the last week of March and into April. However, by the end of June, we saw overall restaurant GTV get back to its pre-COVID-19 levels. As a reminder, the majority of our restaurant customers are in international markets outside of North America, and this diversity is proving to be an asset as countries and economies around the world recover at differing rates. Finally, last quarter I noted that less than 5% of our customers were on paused subscription plans. Those are now reduced to a negligible amount as customers have become transactional again. All told, the health of our customer base continues to be encouraging as these businesses leverage our omni-channel solutions. Our retail segment is growing, and our restaurant segment is recovering. Which leads us to payments.
Lightspeed Payments continued its rapid growth trajectory in the quarter. As mentioned last quarter, despite overall lower GTV in April, we saw a record month for Lightspeed Payments in April. We saw that not only continue but accelerate further as the quarter progressed. Overall payments volumes grew significantly on the back of strong customer demand from both new and existing customers, an industry-wide move to electronic payments and away from cash, and outstanding performance from some of our end markets like golf and bike. We saw attach rates, that is the portion of new customers contracting for Lightspeed Payments alongside their core subscription, remain at similar levels to the prior quarter in U.S. retail. Payments for Canada, for retail, and U.S. hospitality is off to a good start also.
Despite these new markets being in early stages of rollout, the overall portion of customers contracting for Lightspeed Payments was strong at over 50% in the quarter. While we do expect some of this payments volume to wane as the seasonal aspect of these verticals starts to settle out in the fall, we are still only monetizing a small portion of our GTV through Lightspeed Payments, and significant runway continues to exist here for future growth. As Dax mentioned, we're also now ready with the initial rollout of Lightspeed Capital for our U.S. payments customers, which is something we think will be met with good long-term demand from our customer base. Lightspeed and Stripe have partnered to create this offering whereby we will utilize our deep customer insights and use Stripe's existing infrastructure to create tailored capital offers to our eligible merchants.
Stripe and Lightspeed will share in the net profit from these cash advances, and Lightspeed will leverage Stripe's capacity for capital, keeping our own balance sheet strong to continue to pursue our growth strategies. Offers are already being served to initial set of customer prospects, and we'll be expanding this program throughout the balance of the year. Now transitioning to our outlook for Q2 and beyond, our near-term visibility has improved, owing in part to our recurring software-first business model. We are assuming that heightened levels of churn remain for the foreseeable future, and are being cautious on both the anticipated new business volumes and customer GTV levels while the pandemic remains ongoing. All told, we expect Q2 revenue in the range of $38 million-$40 million, and we expect Q2 EBITDA to be in the range of $7 million-$8 million loss.
Owing to the ongoing uncertainty regarding the duration and magnitude of the COVID-19 pandemic and any possibility of a resurgence, Lightspeed will not be providing full year guidance at this time. With that, we'll turn it back to the operator for your questions.
Ladies and gentlemen, as a reminder, Our first question comes from the line of Daniel Chan with TD Securities. Please go ahead.
Hi, good morning. Congratulations on a good quarter. Just wondering if you guys can give us a little bit more detail around Lightspeed Capital, maybe provide your thoughts on the timing of its rollout, and how the economics work?
Sure. Hey, Dan. Yeah. As you heard, we've launched this initially with Stripe, sort of partnership with them where we'll leverage Stripe's capital infrastructure and Lightspeed's knowledge of the customer to just get this out the door and see how customer demand goes. We're pretty optimistic longer term. This initial launch phase, though, we really are taking kind of a, like we did with payments, a measured approach as we launch this, work out the customer workflows and generally test overall demand. Next quarter or 2, don't expect huge results from this as we do that. Longer term, yeah, we think this will be met with good long-term demand.
Sure. Sounds good. You also mentioned, started from last quarter, but you also mentioned it in this quarter, that you see a lot of opportunity displacing some of the legacy, on-prem POS systems. How many of your new wins would you say are competitive displacements from legacy systems, and are you seeing any opportunities for displacing some of the newer cloud-based POS systems?
Yeah, maybe I'll take this one. Generally speaking, the bulk of the market, roughly 80% of the market is legacy systems, and it's a global fragmented market. I think that's the good opportunity, and we think that with COVID, anyone who's on a legacy system now will want to move to platforms like ours, because obviously you need to sell across channels. The online and the offline worlds need to merge. That is really the bulk of the efforts for us. With that in mind, the majority of our new customers come from legacy systems. The second part of the question, the other cloud-based platforms, there's a clear differentiator between Lightspeed and all the other cloud-based POSs. We have a very deep functionality set, so it does happen that customers would start on the smaller platforms and then need functionality that only Lightspeed can provide.
I think a good example of that is a lot of the cloud-based systems do not have e-commerce or loyalty or curbside pickup. We're seeing a lot of traction there because you can't have a point solution and then integrate everything manually. You need to have one vendor that has the integrated solutions.
That makes sense. Last one from me. Now that you have greater visibility into the market, looks like things are stabilizing and growing again. Your balance sheet remains really strong. What's your view on M&A at this stage, and what are the opportunities looking like in the pipeline? Thanks.
Brandon Nussey, do you want to handle it?
Sure. We continue to be active there. We've always said that M&A is an important part of the long-term strategy. We continue to be active for sure. Seeing lots of good opportunities in front of us. We'll continue to make this a priority for the business.
One point to add is, as we said, every country has a subpar, subscale point-of-sale platform. Here what we're seeing is that there's probably some good opportunity for consolidation as we move forward.
Great. Thank you.
Our next question comes from the line of Thanos Moschopoulos from BMO Capital Markets. Please go ahead.
Hi, good morning. Can you update us on your payment economics and then how that's been trending? On the one hand, you have more card-not-present, presumably, on the other hand, you're doing some initial promotions. Net-net, how's that shaking out?
Not too dissimilar from what we've always said, Thanos. You're right. There is a slight mix change at online versus offline, and that carries slightly different economics for us. Likewise, in Canada, the economics are slightly different than the U.S., but overall, kind of our 2.6% and 65-70 basis points net, that's been holding for us.
Okay. Looking at your guidance for next quarter, it implies a significant step up in OpEx. I'm going to guess that a lot of that is a step up in sales and marketing, just given the improved environments, more investment on new customer acquisition. Is that fair?
Yeah, for sure. When this thing all started, we went into cost containment mode for sure, not knowing what we would necessarily expect from a new business demand and so on. As you've seen today, new demand has been good over the past couple of months and into July. Yeah, ramping back up on some of that discretionary spend around sales and marketing to meet the demand, and that's what you're seeing in the OPEX guidance.
Great. Can you expand on the Google partnership? Should we be anticipating some associated revenue from this? You kind of alluded to this maybe being the first step in a broader relationship. Don't know if you can comment on that, but any color would be helpful.
Yeah. In terms of the broader relationship, I think it's a series of initiatives that will help physical businesses be more discoverable online. In terms of revenue expectations, we feel that this is being integrated into our retail platform for now. I think it will increase the appeal of our retail platform, as do many of the other feature additions. We're very excited to partner with Google to make our businesses more omnichannel through discoverability.
Great. Thanks, guys. Glad to see the recovery in the business. I'll pass the line.
Our next question comes from the line of Richard Tse with National Bank Financial. Please go ahead.
Yes, thank you. Just wondering if you guys are maybe having to rethink the development roadmap, given the backdrop. My guess is that some of these changes are permanent here, and if that's the case, what will be the changes from the former path from a development perspective?
From a development perspective, we've seen an acceleration of omnichannel, which we've been talking about for at least five years. There's an acceleration of that roadmap, and as you've seen even just the last week, we've rolled out more and more tools for merchants to be able to pivot to the new consumer reality. Things like our Mobile Tap solution, which allows curbside pickup and contactless, Digital Wallet, more analytics tools that are more accessible. Things along those themes of being able to help merchants adapt digitally and for their physical businesses. We're seeing the solutions that address the blend of those be more and more requested and demanded, and you'll see our roadmap continue to accelerate both for retail and hospitality in those directions.
Okay. The new win rates is really impressive in the backdrop, especially given the churn. Can you maybe give us a bit more color on sort of the types of merchants you're drawing in? I get that you're offering this sort of broad sort of omnichannel offering, but obviously, those are really positive numbers. Is it sort of the typical complex merchants, or is it the geography that's stronger than others? Maybe just a touch, a color on that.
I'll take this one. Fundamentally, 80% of the market is legacy systems. When you think about legacy systems, even though they're not connected online, they're very rich, functionally speaking. When you look at the type of customers that are moving towards Lightspeed, they're really the typical Lightspeed customers that need inventory, that need to understand their cost structure. It's the more, let's say, the more advanced merchants that were using the legacy systems and need a platform in the cloud that supports not only the kind of physical requirements for legacy, but also supports omnichannel. Regardless if it's restaurants or retail, these are the more sophisticated, and they're those who need to really understand their inventory and ingredients when you think about restaurants, and most of them obviously have a physical presence and need to sell across channels.
The good news here is nothing has changed. It's really the segment in which we're strong, and we're seeing more demand than ever. That's why going back to what Dax was saying, we're accelerating our roadmaps because we feel that there's going to be acceleration of adoption on the market, and we want to be sure that we're ahead of the game and we're always the best solution for these types of ventures.
Okay. Just the last one from me, with respect to the earlier question on M&A, would you guys be thinking about focusing more on sort of expanding the channel, obviously being successful in diversifying the business that way, or as opposed to sort of technology tuck-ins? Which one are you kind of leaning towards?
We're going to pursue, as we said, and we've always said, there are three big buckets. The first one is really looking at geographical expansion, looking at vendors that are providing point solutions within verticals and industries where we have no presence. The second one is really looking at consolidating markets where we already have a presence. The third one is really looking at expanding our capabilities. I think you can expect a mix of all of these as we go forward.
Okay, great. Thanks.
Our next question comes from the line of Paul Treiber with RBC Capital. Please go ahead.
Thanks very much, and good morning. Just hoping that you could delve a bit more into the growth that you've seen in e-commerce. You commented 100% year-over-year growth in the e-commerce GTV. Could you put some perspective around that, how much % of total GTV in the quarter relates to e-commerce, maybe how that compares versus maybe last quarter or last year?
Yeah. Hey, Paul. We saw, unsurprisingly, a pretty significant spike in e-commerce volumes in April and into May. What we saw happen into June and carrying through into July is that settled down a bit, and a resurgence of the physical. We sort of see this initial bubble of e-commerce where that becomes a much more significant portion of our overall GTV. That wane as the quarter goes on, and the volume return to the physical space. I think from our perspective, this is kind of what being omni-channel is all about. However that volume comes to our merchants, making sure they're able to catch it. Yeah, that's what we've seen in terms of the trends in the quarter.
Started with a lot more online, obviously, and by the end was getting back towards a more traditional mix, albeit a little more tilted to digital. A really strong resurgence of both physical retail as well as dine-in on the restaurant side.
When we think about that mix longer term in the transition to omni-channel, do you see a natural equilibrium or target where, I don't know if it gets to 50/50 or if you want to throw out a certain number, where you could see that getting to over the next several years?
I think the first natural answer is it depends on the type of retailer and the type of restaurateur. If I'm a fine dine restaurateur, hopefully the bulk of my business will always be when people come to my restaurant. The same thing is a lot of our retailers, if I'm a bike store, they do need service repairs. You'll always have, I would say, the majority of the transactions be done in the physical world in these cases. However, if I'm a coffee shop or if I'm a quick serve takeaway, obviously the volumes are going to be much stronger now as we move forward with anything around online ordering and delivery. I think generally speaking, going back to what Brandon was saying, is the pandemic hit forced everyone to stay home.
We saw a huge spike at the beginning of the quarter with all the online, and at that point, let's say a big portion of the sales were done online. I think here what we're seeing is we're going back to normal levels, and normal levels being 85%-90% of transactions being done in the physical world.
Okay. Thanks. On a similar set of lines, in terms of the growth in customer locations, what's the "attach rate" of e-commerce websites versus physical locations? How does that growth compare versus last quarter or last year?
I'll let Brandon Nussey talk about the numbers, but I can tell you that the demand is very strong. Dax Dasilva mentioned we've been praising omni-channel for five years, and before COVID, everybody was like, "Yeah, love the strategy. We have time over time." I think what happened since COVID, and I think that's the exciting part, is most of the customers who are talking to us, they have omni-channel in mind. They're not looking at this as a long-term strategy.
They're like, "Okay, I need a vendor that can provide all the abilities that I need for my back office and all the physical, but that can enable me to sell across channels." Here, I think the conversation is changing quite a bit, where most of the merchants now need the omni-channel or see it as a short to medium term solution, whereas before, it was very aspirational. I think it makes us more relevant than ever in a sense that we don't have to explain now the need to sell across channels. We have a strong demand of people coming to us saying, "Hey, I'm on my legacy system. It's very difficult for me to sell online without having silos.
Can you provide me one holistic view, one holistic solution that can help me kind of run my business in the new way of transacting. I don't know if I'm answering your question. Brandon, maybe you have more details on attach rates.
No, I think you've answered it well. We haven't really specifically broken that out, Paul. As JP mentioned, we're obviously seeing a lot more e-commerce attach rates. It's always been a product that sold well for us, but doing significantly better in light of the current environment, for sure.
Okay. Thanks for taking my questions.
Our next question comes from the line of Gus Papageorgiou with PI Financial. Please go ahead.
Hi, good morning. Congrats on a great quarter, and thanks for taking the question. Just a couple of questions. I'm assuming that a lot of the new customers that have come on board have come on at reduced plans, since you did offer some promotions to get new customers. Can you tell us, if they were to be paying full price, would that have made a material impact in the quarter? What do you think the odds are that they'll renew their subscription once their one-year term is over? Secondly, just on capital, can you tell us, do you plan to finance this from your own balance sheet, or are you going to be looking for partners? Are you going to be insuring some of the loans, like using partners like Export Development Canada? Thanks.
Hey, Gus. Yeah, in terms of your first question, was it significant in terms of, I'll paraphrase, but some of the pause subscriptions and concessions we made. For sure, that was an impact on subscription revenue. We said last quarter, under 5% of our customers had paused subscription plans. That comes right out of the revenue line, along with the discounts that we offer to new customers to join and to adopt new tools. That obviously has an impact on revenue. For sure, we saw that. We're pretty optimistic. We monitor the health of the customer base and what percentage are getting transactional and so on. We're pretty optimistic on the types of merchants we attract aren't really tire kickers. We're pretty optimistic that the conversions will happen as really they always have for our customer base.
We'll keep a close eye on that as the year plays out. Then on capital, as we mentioned, we're starting with Stripe, leveraging Stripe's infrastructure and their capacity to do capital, meaning this isn't coming off our own balance sheet here to start. It won't be an impact from our standpoint on that, and therefore no need for insurance. I think as this program matures, we'll see where it goes. We're excited to get this in market, offer it to our merchants, try and help during this difficult time for many of them. We're really excited about the future of it. To start, this is something we'll be offering alongside our great partner, Stripe.
Great. Thanks.
Our next question comes from the line of Suthan Sukumar with Eight Capital. Please go ahead.
Good morning, guys, and congrats on a strong quarter. First question for me is on some product and on module adoption trends. Kind of in looking at your broader portfolio of add-ons available to your merchant base, curious what you're seeing in terms of demand from your existing base over the course of the pandemic compared to what some of the newer merchants have been adding to the core platform right out of the gate.
Yeah. I think, again, adoption of digital solutions is really what we've seen throughout the quarter, and this is where existing customers are getting to us. The simplest of examples is if I'm a restaurateur and my restaurant is closed, we had a lot of customers come to us with the requirement for our delivery platform and curbside pickup platforms. We sold quite a few of those. Then when you look at our retail customers, obviously all of those who didn't have e-commerce came to us asking for the omni-channel package. We saw also a lot of adoption on payments because what's happening is as people are trying to save costs, they're trying to buy more from one vendor, hoping that the bundled cost will be lower. We've seen quite a bit of that. Finally, omni-channel loyalty.
We launched our loyalty platform that enables customers to redeem points and reengage across different channels, and so that also had a lot of adoption. I think, again, the way we're looking at this is we have built this very sophisticated solution over time of modules that were really good for anything digital, and we're seeing a lot of adoption from that. Even though churns are slightly higher than they've been in the past, we've seen a lot of adoptions of the existing customers of the new modules, which helped out quite a bit.
Great. Thanks. Just with respect to the competitive landscape, how are you guys seeing your peers, especially your cloud-based peers, adapt their strategy with respect to go to market or product? Secondly, do you guys see an opportunity to enhance your go-to-market approach even further?
Obviously the enhance, we're thinking about that every day, trying to make it better. Just I'll address that one, then I'll talk about competition. The way we enhance our go to market is by looking at unit economics and trying to figure out how can we do better with the same rates. Here, a good example is because I have a strong attach rate on payments, I can now obviously spend a little bit more money to keep the same unit economics. That's how we see acceleration. It's really by deploying all of our new platforms and especially all the financial platforms globally.
As you know, we started in the U.S., then we moved to Canada, then we moved to restaurant U.S. and Canada, and now we're working hard to deploy this year, hopefully by the end of the year, to deploy our payments globally. That's how we're going to accelerate adoption, is by having a better LTV because of the attach rates and the better economics on payments, we can hopefully spend more and attract more new customers by keeping the same unit economic. Talking about competition, we've always had competition. I'm just going to go back to the market. It's a very big fragmented market. We operate in many different countries and many different continents, and we do not see the same competition everywhere.
This being said, we understand our segment of the market very well, and we have the best solution on the market for our segment. Where we do see competition is in the customers that are maybe not a perfect fit for us or maybe customers that are maybe slightly smaller or slightly bigger. We haven't seen a lot of change in the competitive dynamics. Our close rates have gone up. We're very excited about that. I think maybe the other point just to add on competition is I think there's a lot of vendors out there that offer point solutions that are maybe not offering e-commerce, they're not offering loyalty, and we think it's going to be a bit more difficult for the vendors that have point solutions because of the market dynamics.
As I said, a lot of the customers are coming to us now, not just for a point of sale, but they're coming to us for a full set of commerce solutions. I think it's probably going to be more difficult if you're a cloud-based vendor and you're offering a point solution versus a Lightspeed that offers true omni-channel.
Okay, great. Thank you for the color, guys. I'll pass the line. Thank you.
Our next question comes from the line of Josh Beck with KBCM. Please go ahead.
Hi, all. This is Alex Markgraff on for Josh. This is more of an extension of a few earlier questions, but just as it relates to the new customers you see coming onto the platform, are you seeing customers that are kind of online first and more secondarily adopting point-of-sale solutions, or is it still kind of largely point of sale first and then good e-com attach rates?
We do see a bit of both, but the vast majority are customers that have a physical presence and need to shift from selling across one channel to selling online and adopting to the new models. We do always, and we've always had customers who were digital first and also selling in store. Just going back to what Brandon was saying, for us, what's important is not so much where they sell, but it's to provide the full solution to enable any kind of model to work. If your model is pure digital and then you want to do pop-ups, it does work with Lightspeed and vice versa. If your model is, I've always been selling in store all my life or serving customers in my fine dine restaurant, and now I need to sell online, we can very easily adapt to any model.
Okay. No, very helpful. Just last question. As it relates to the payments offering, can you just kind of talk about the progress with the Stripe partnership and are there any offerings that you've rolled out recently that are kind of directly attributable to that relationship that maybe you weren't able to roll out with other payments partners?
Yeah. In this, I believe it's been a quarter or two where we rolled out Stripe and then extended from U.S. retail to Canada retail and U.S. resto. We've seen progress and uptake in all of those markets and are excited with the solution that we've been able to provide. This last week, we released a Mobile Tap, which allows for curbside pickup, and there's an integrated iPad custom solution, hardware solution that probably only possible given Stripe's hardware that we're able to integrate into our custom solution. That's a good example of contactless payment and curbside pickup enabled by devices that we have worked on with Stripe.
Perfect. Thank you very much. I guess just maybe one extension of that. The comment about rolling out payments more globally, is that something that you would attribute to expanded relationships on the payment side as well?
Yeah. We will have to expand relationships to cover other regions. Our ambition is to be able to serve our European and APAC customers by the end of the fiscal year with Lightspeed Payments.
Okay, great. Thanks very much.
Our next question comes from the line of Todd Coupland from CIBC. Please go ahead.
Good morning. I wanted to ask about the guidance and seasonality, when we should expect, I guess, bike and golf and garden to slow a bit. Just talk about that. Will we see that in the September quarter? Will it take to the December quarter for that to flow in?
Yeah. I think it's been an extraordinary period of time for bike shops and home and garden and some of these verticals that we serve very well. We're planning on that, as you said, Todd, almost into starting to wane in the fall. We think we're planning for it to continue through the second quarter for the most part, and then into the fall, start to see that wane a little bit. With any luck, offsetting that will be a good holiday season for retailers and restaurants. Of course, we'll have to monitor how the whole pandemic plays out by then and what impact it may have into the fall and winter periods. That's our best insight right now into the seasonality that we're seeing.
Okay. Just on restaurant, obviously, restaurants have opened up in the regions that you're focused in, and you're seeing good in-room dining. Wondering, though, how you're thinking about the waves of the pandemic versus government support and churn rates and all of that over the next few quarters. Have you learned enough about the restaurant market to give any insight into that? Thanks a lot.
Yeah. I think what we're seeing in the customer base is a resiliency that we hope to see, that we do think we have a merchant base that They're well-equipped to weather the periods of hardship, and certainly, we're testing that at the moment. I think just how that's played out as we've watched the first wave go through has reinforced that. Looking forward, there certainly is uncertainty. We'll have to watch it closely as these peaks and troughs happen throughout the world. I think what we've seen, at least through this first wave, is a customer base that's better equipped to get through these moments in time.
I think maybe the biggest indicator there is transaction volumes. We're keeping a close eye on that. We're happy to see that the transaction volumes have gone back up or are very close to pre-pandemic, especially in the restaurants. It is an indicator that the businesses are getting healthier. As Brandon said, we need to keep our eye on churn.
JP, just one quick follow-up on that. With curbside starting to fill in and help restaurants, is that a 10% lift for restaurants that are operating at a third capacity or 50%? What are you seeing across the platform for curbside and delivery?
It depends on the restaurant, again. If you think about quick-serve, we even have quick-serve restaurants that are doing much better just with curbside pickup now than they were before. I think it's really the dynamics when you're selling online are very different, so you need to have a different mindset and be connected to the right marketplaces and be visible. It really depends on the types of restaurants. Those who have adopted it well, we've seen a very significant pickup in their digital revenues, just put it that way.
Thanks for the color.
Thanks.
Our final question comes from the line of Tien-Tsin Huang with JPMorgan. Please go ahead.
Hey, thanks so much. Good morning. Really encouraging results. Just thinking about some of the answers you guys gave around omni and the roadmap there. Is the end goal to be, let's say, indifferent between a digital-first and a physical world-first retailer? I'm just curious if that's even in the opportunity set of things that you're considering in terms of roadmap, product roadmap.
Yeah, I think that's our perspective. I think that the businesses will start from different starting points, and I think that our vision's always been to have strong digital and physical tools that serve as different entry points. We've seen businesses that started just before the pandemic and moved completely to delivery as the pandemic set in within a few weeks of them opening, and be largely a digital business in these first months to the degree that they've opened second locations from which they're doing delivery. Now, as dining rooms are reopening, they're doing both. That's the kind of business that we foresee really helping to light up both physical and digital strategies. Yeah, no, I think that Lightspeed solution has that depth and definitely has those entry points for people to start on whatever makes sense for the business model.
And maybe if I could-
Go ahead.
Sorry, maybe if I could just add, for us, it's always been kind of the core of everything we've done with selling across channels. We want to be sure we'll continue doing that.
For sure. Understood. Maybe, Brandon, for you, just thinking about with omni and more card-not-present and things like that on the payment side, have you seen any change in fraud or some chargebacks or need to reserve for that? I'm just curious what's been going on the underwriting side where you are the payment facilitator.
We haven't seen any meaningful fraud that we haven't detected or recovered or helped our merchants through. We have seen a greater incident rate of it. Again, with the types of merchants we serve, just this isn't a huge category risk for us. Yeah, we have seen an uptick in potential incidents, but it's all been stuff we've managed through and helped our merchants through.
Okay.
At this point. Knock on wood.
Yeah, knock on wood. Great results, guys. Thanks.
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