Lightspeed(LSPD) - 2024 Q4 - Annual Report

Financial and Operational Highlights This section details Lightspeed's financial performance for Q4 and full fiscal year 2025, alongside key operational achievements and metric revisions Fourth Quarter Financial Highlights In the fourth quarter of fiscal 2025, Lightspeed's total revenue grew 10% year-over-year to $253.4 million, driven by a 14% increase in transaction-based revenue. The company reported a significant net loss of ($575.9) million, primarily due to a ($556.4) million non-cash goodwill impairment charge. However, Adjusted EBITDA improved to $12.9 million from $4.4 million in the prior year, and Adjusted Income rose to $15.0 million Q4 FY2025 Financial Performance (vs. Q4 FY2024) | Metric | Q4 FY2025 | Q4 FY2024 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $253.4M | $230.2M | +10% | | Subscription Revenue | $87.9M | $81.3M | +8% | | Transaction-based Revenue | $157.8M | $139.0M | +14% | | Net Loss | ($575.9M) | ($32.5M) | - | | includes Goodwill Impairment | ($556.4M) | $0 | - | | Adjusted EBITDA | $12.9M | $4.4M | +193% | | Adjusted Income | $15.0M | $8.5M | +76% | | Adjusted Income per Share | $0.10 | $0.06 | +67% | | Cash at End of Period | $558.5M | - | - | Full Fiscal Year Financial Highlights For the full fiscal year 2025, Lightspeed achieved a milestone by exceeding $1 billion in revenue for the first time, with total revenue reaching $1,076.8 million, an 18% increase year-over-year. Similar to the fourth quarter, the full-year net loss was substantial at ($667.2) million due to the goodwill impairment. Adjusted EBITDA saw a significant turnaround, reaching $53.7 million compared to just $1.3 million in fiscal 2024 Full Fiscal Year 2025 Financial Performance (vs. FY2024) | Metric | FY2025 | FY2024 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $1,076.8M | $909.3M | +18% | | Subscription Revenue | $344.8M | $322.0M | +7% | | Transaction-based Revenue | $697.3M | $545.5M | +28% | | Net Loss | ($667.2M) | ($164.0M) | - | | includes Goodwill Impairment | ($556.4M) | $0 | - | | Adjusted EBITDA | $53.7M | $1.3M | +4031% | | Adjusted Income | $69.5M | $24.5M | +183% | | Adjusted Income per Share | $0.45 | $0.16 | +181% | Fourth Quarter Operational Highlights Operationally, the fourth quarter saw key product enhancements, including a generative AI web builder and improved kitchen display systems. ARPU grew 13% to ~$489, driven by unified POS and payments adoption. Gross Payment Volume (GPV) increased 19% to $7.9 billion. The company also announced a change in how it defines and counts 'Customer Locations', which will increase reported ARPU going forward - Key product releases included a generative AI web builder, PO Sync for NuORDER, omni gift cards, and enhancements to the Kitchen Display System[7] Q4 FY2025 Key Performance Indicators (YoY) | KPI | Q4 FY2025 | Q4 FY2024 | Change | | :--- | :--- | :--- | :--- | | ARPU | ~$489 | ~$431 | +13% | | Total GTV | $20.6B | $20.7B | - | | GPV | $7.9B | $6.6B | +19% | | Gross Profit | $111.8M | $99.7M | +12% | | Gross Margin | 44% | 43% | +1 ppt | | Subscription Gross Margin | 81% | 77% | +4 ppts | - The company is revising its definition of a 'Customer Location' to treat POS and eCommerce solutions as a single omnichannel product. This changes the total count from ~162,000 to ~144,000 as of March 31, 2025, and increases the monthly ARPU from ~$489 to ~$545[7][8] - Over the last twelve months, Lightspeed repurchased ~18.7 million shares (~12% of shares outstanding) for ~$219 million[1][10] Financial Outlook This section outlines Lightspeed's strategic investments and financial guidance for fiscal year 2026 Fiscal 2026 Strategy and Investments For fiscal 2026, Lightspeed plans to significantly increase investments to drive growth. The company will expand its outbound sales team to over 150 representatives and boost product and technology development investment by over 35%. These initiatives are aimed at increasing customer locations in its core markets (retail in North America, hospitality in Europe) and expanding software revenue, with benefits expected to materialize in the latter half of the year - The company plans to grow its outbound sales team to over 150 representatives by the end of Fiscal 2026[9] - Investment in product and technology development will increase by over 35% in Fiscal 2026[9][11] - The strategic focus remains on retail customers in North America and hospitality customers in Europe[11] Fiscal 2026 Guidance Lightspeed provided its financial outlook for the first quarter and full fiscal year of 2026. For the full year, the company expects revenue growth of 10-12% and Adjusted EBITDA between $68 million and $72 million. The outlook is consistent with the three-year targets for gross profit and Adjusted EBITDA CAGR presented at its Capital Markets Day Financial Outlook for Fiscal 2026 | Metric | Q1 2026 Outlook | Full Year 2026 Outlook | | :--- | :--- | :--- | | Revenue | $285M - $290M | Approx. 10% - 12% growth | | Gross Profit Growth | Approx. 13% | Approx. 14% | | Adjusted EBITDA | $14M - $16M | $68M - $72M | - The outlook aligns with the three-year target gross profit CAGR of 15-18% and Adjusted EBITDA CAGR of approximately 35%[12] Outlook Assumptions and Forward-Looking Statements This section details key assumptions for Lightspeed's financial outlook and long-term targets Financial Outlook Assumptions The company's financial outlook is based on several key assumptions, including stable macroeconomic conditions, continued customer adoption of its unified POS and payments platform, and success in its growth strategy focused on retail in North America and hospitality in Europe. It also accounts for risks such as inflation, interest rate changes, consumer spending trends, and geopolitical instability - Assumes continued uptake of unified POS and payments solutions and successful pricing strategies[18] - Relies on the ability to attract and retain key personnel, especially outbound sales staff, and manage customer churn[18] - Acknowledges risks from macroeconomic factors (inflation, interest rates), geopolitical events (wars in Ukraine and Israel-Hamas), and exchange rate fluctuations[18] Long-Term Financial Outlook Lightspeed's long-term targets are built on assumptions of sustained growth in its core markets, with a projected 10-15% CAGR in customer locations in its two growth engines through fiscal 2028. The outlook also assumes continued ARPU growth, operating efficiencies, and a gross margin range of 42-45% over time, while acknowledging significant investment requirements and market risks - Targets a three-year Customer Location CAGR of ~10-15% between fiscal 2025 and 2028 in its retail (North America) and hospitality (Europe) growth engines[23] - Expects gross margin to be within a range of ~42-45% over time[23] - Plans for over $50 million in incremental investment in its product and technology roadmap in Fiscal 2026[23] Company Overview and Performance Metrics This section defines Lightspeed's non-IFRS financial measures and key performance indicators Non-IFRS Measures and Ratios The company uses several non-IFRS measures like Adjusted EBITDA, Adjusted Income, and Adjusted Free Cash Flow to provide a clearer view of its core operating performance by excluding items such as share-based compensation, goodwill impairment, and amortization. These supplemental metrics are used by management to facilitate period-to-period comparisons and are believed to be useful for investors - Non-IFRS measures are used to supplement IFRS results and highlight underlying business trends[27] - Key non-IFRS measures include Adjusted EBITDA, Adjusted Income, and Adjusted Free Cash Flow[27] - Adjusted EBITDA excludes items like interest, taxes, D&A, share-based compensation, and goodwill impairment to show core operating performance[28] Key Performance Indicators Lightspeed tracks key performance indicators (KPIs) to evaluate its business, including Average Revenue Per User (ARPU), Customer Locations, Gross Payment Volume (GPV), and Gross Transaction Volume (GTV). A significant change was announced for the 'Customer Location' metric; starting after March 31, 2025, physical and eCommerce sites for a single customer will be counted as one location, reflecting the unified omnichannel product strategy - Key KPIs are ARPU, Customer Locations, GPV (payments processed by Lightspeed), and GTV (total transactions on the platform)[49][51][54][55] - The definition of 'Customer Location' is being updated. Previously, a customer with a physical store and an e-commerce site counted as two locations. Prospectively, this will be counted as a single location[52][53] Financial Statements This section presents Lightspeed's condensed consolidated financial statements for the fiscal year ended March 31, 2025 Condensed Consolidated Statements of Loss and Comprehensive Loss For the fiscal year ended March 31, 2025, total revenues increased by 18% to $1.077 billion. However, the company recorded a net loss of ($667.2) million, a significant increase from the ($164.0) million loss in the prior year. This was driven by a ($556.4) million goodwill impairment charge and total operating expenses of $1.146 billion Fiscal Year Ended March 31 (in thousands of US dollars) | Line Item | 2025 | 2024 | | :--- | :--- | :--- | | Total Revenues | $1,076,826 | $909,270 | | Gross Profit | $450,205 | $385,250 | | Goodwill Impairment | ($556,440) | $0 | | Operating Loss | ($696,007) | ($203,019) | | Net Loss | ($667,196) | ($163,964) | | Net Loss per Share | ($4.34) | ($1.07) | Condensed Consolidated Balance Sheets As of March 31, 2025, Lightspeed's total assets stood at $1.826 billion, down from $2.575 billion the previous year. The decrease was primarily due to a reduction in Goodwill from $1.349 billion to $798 million following the impairment charge. Cash and cash equivalents also decreased to $558.5 million from $722.1 million. Total liabilities remained relatively stable at $162.2 million Assets and Liabilities as of March 31 (in thousands of US dollars) | Line Item | 2025 | 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $558,469 | $722,102 | | Goodwill | $797,962 | $1,349,235 | | Total Assets | $1,826,203 | $2,575,154 | | Total Liabilities | $162,236 | $162,753 | | Total Shareholders' Equity | $1,663,967 | $2,412,401 | Condensed Consolidated Statements of Cash Flows For fiscal year 2025, cash used in operating activities was ($32.8) million, a significant improvement from ($97.7) million in the prior year. Investing activities provided $8.0 million in cash, while financing activities used ($138.7) million, largely due to ($132.3) million spent on share repurchases. This resulted in a net decrease in cash of ($163.6) million for the year Cash Flows for Fiscal Year Ended March 31 (in thousands of US dollars) | Line Item | 2025 | 2024 | | :--- | :--- | :--- | | Cash flows used in operating activities | ($32,762) | ($97,667) | | Cash flows from investing activities | $8,042 | $25,950 | | Cash flows used in financing activities | ($138,676) | ($6,226) | | Shares repurchased and cancelled | ($132,317) | $0 | | Net decrease in cash | ($163,633) | ($78,052) | | Cash at end of year | $558,469 | $722,102 | Reconciliation of IFRS to Non-IFRS Measures and KPI Details This section provides detailed reconciliations of IFRS to non-IFRS financial measures and customer location metrics Adjusted EBITDA and Adjusted Income Reconciliation The reconciliation from Net Loss to Adjusted EBITDA and Adjusted Income highlights the impact of non-cash and non-operational expenses. For fiscal year 2025, the Net Loss of ($667.2) million was adjusted for major items including a $556.4 million goodwill impairment, $101.0 million in depreciation & amortization, and $56.6 million in share-based compensation, resulting in an Adjusted EBITDA of $53.7 million and Adjusted Income of $69.5 million FY2025 Reconciliation from Net Loss (in thousands of US dollars) | Metric | Amount | | :--- | :--- | | Net Loss | ($667,196) | | Goodwill Impairment | +$556,440 | | Depreciation and Amortization | +$100,991 | | Share-based Compensation | +$56,578 | | Other Adjustments | +$23,372 | | Net Interest Income | -$36,498 | | Adjusted EBITDA | $53,687 | Customer Locations Reconciliation The company provided a reconciliation to illustrate the impact of its updated 'Customer Location' definition. Under the previous definition, locations were ~162,000 with an ARPU of ~$489 as of March 31, 2025. Under the new, revised definition which consolidates physical and e-commerce sites, the number of locations is ~144,000, which increases the calculated ARPU to ~$545 Customer Location and ARPU Reconciliation (as of March 31, 2025) | Metric | Previous Definition | Revised Definition | | :--- | :--- | :--- | | Customer Locations | ~162,000 | ~144,000 | | Average Revenue Per User (ARPU) | ~$489 | ~$545 |