Hey, guys, welcome to our next session. Really happy to have JP here from Lightspeed. If you think about it, a lot of things have happened the last few weeks, and we had the on-cycle guidance report, and everyone was still nervous. Now, the off-cycle is started reporting, and everyone is really excited about the world again. But to put everyone back on track, talk a little bit about what you saw in your Q2 results. Looked very, very healthy there, so it's nice to see kind of coming together for you. Yeah. Thanks for having me. So look, we're a great business. We have incredible quarter. We, we grew 25% year-over-year. We reached a big milestone where we, surpassed $1 billion in run rate in U.S. dollars. Second biggest milestone also is we're now adjusted EBITDA positive, which was, I think, a surprise to the market. And so, yeah, I mean, the company's in a great position, high growth, great quarter. You know, we exceeded all expectations and, ahead in terms of profits. Yeah. Okay. And you guys have been, it's at your analyst day a while ago, like, we talked about you guys have been on a big during the pandemic a big wave to kind of consolidate the market a little bit. Yeah. There was, like, two different schools of thought, like, what was going on there, either like a consolidation or actually kind of building a, you know, a Veeqo that kind of has a lot more customers. Talk a little bit about your strategy and how you thought about that. Yeah. So, in our space, so we do restaurants and retailers, so hospitality and retail, and, there's a lot of merchants in the, a lot of players in the micro merchants. We do the more established SMBs, more than 10 employees. And in our space, it was a very fragmented market. So every country in the world had a different subscale, little vendor. Mm-hmm. What we did is we said: We're gonna do an IPO because we want to consolidate the market. We want to be the go-to brand for the more established SMBs around the world. So that's what we did. We went public four years ago, and then we ended up acquiring 12 companies, so very active. And the goal for us was to, of course, gain market share, but also we wanted to make sure that we could put together all the best minds in the industry. Mm. We acquired the companies, and then the first project we had is to say, well, let's rebuild a platform with all of these acquired companies that would remove technical debt and put us in a position. Yeah. That's what we did. So we acquired companies all around the world, and we completely rebuilt from scratch a hospitality product, so for managing all the restaurants, and a retail product, that does Omnichannel and sells online and offline, and we've now released those products. So I think you're right, there was a... Because we acquired a lot of companies, everybody at some point then were in this mindset of, is this a, you know, a roll-up- Yeah Or is this truly a technology company? And is there truly organic growth? So we always have disclosed organic versus non. I think there was two big questions, and as you're finding, there's no doubt today, you know, we have about a year organic growth, 100%, and we have now released those two products that are... We have broadened the gap between us and the top five, Toast and Square with the new platform. But the big difference now with a lot of the players, we are truly global. Mm. We have, you know, offices around the world, customers around the world, and a hyper-local go-to-market. Then, just to reconfirm, so the, like, on product side, so the, that revise, the rework, that's all done, basically, it's like[crosstalk] It's all done. It's released. Yeah. What I said last quarter is our close rates are better. Our pool is up big time. Yeah. Yeah, so I think we've broadened the gap with our competitors. What are you doing with the customer base? Like, the, do they get upgraded or moved over under the hood, or is that, like, still, is it a migration journey for[crosstalk] It's gonna be a migration. The goal for us was to say, all new customers. You know, when we acquired all these companies, we had different products in every region, different flows, different products, different ways of selling. Yeah. We normalized everything on one product. So now, if I'm from Germany and I'm Switzerland, I'm in Paris, I'm in Auckland, or I'm in Sydney, it's the same software I'm selling everywhere in the world, the same methodology, same process- Mm. For new customers. I think for us here, the bet was to say, Am I gonna keep the same close rate? Yeah. Am I going to grow our pool? Am I going to attach payments? And those are the three statements are positive. So we're attaching payments to almost 100% of new customers, we're increasing our pool, and, and we're seeing incredible loyalty for new customers. Now, the second part of the strategy, which is what we're gonna be doing in, Yeah In the coming year, is we need to now bring all these customers that are on the legacy systems onto the new platform. So it's gonna be a mix. We actually don't call it internally a migration, we call it an upgrade. Okay. Yeah. Because I think it says a lot about how we want to do this, because we want to build a ton of tech and software- Yeah So that they can migrate, you know, home, click, and be in the new environment. The good news is all the companies we acquired have the same hardware, because, you know, in our world, there's hardware and software, because they're all running on iPads, they're all iOS. Okay. It's a much easier task to upgrade software than to have to change the hardware in every one of the customers. Yeah. That was one of the objectives of the acquisitions: Are we acquiring companies that have the same environment? And the answer is yes. And so now what we're gonna be doing in the coming years is migrating the customers or upgrading the customers onto the new platform, and we have started doing it. So we have some of our products, our eCom now started to be migrated to our new platform. Yeah. Lightspeed eCom, and that's going very well. We've also started migrating ShopKeep, which is an American player, to X. We're learning and we're going forward, but well, there's a material amount of customers that have already moved over, so we know how to do it. Yeah. That's what's going to happen. Then the last question on that one is like, if you think about moving the customer over, is there like an element of charging differently or an opportunity to then upsell better or upsell something as part of the journey or like right after? Like, how do you think about that? Yeah, so the capabilities have expanded on the new platform. Yeah, exactly. We acquired a lot of the point solution vendors that we did one piece, and now we have a platform that does a much broader scope. What we're seeing as part of the upgrades is our tool on the software basis is expanding, so they, they can buy more modules. As an example, if I, if I was an Upserve, which was a U.S. POS for hospitality and I moved them to K. K has an analytics engine, has a, you know, kitchen display, has way more modules. So we're seeing as we migrate them- Yeah ARPU expansion on software, and of course, attaching payments. Payment. Yeah, yeah. And then you mentioned payment a few times, and then that's kind of one of the stories that a lot of the investors get excited about, the payment attachment, you know, to that. Talk a little bit maybe about the journey b ecause, you know, like it didn't fully start out with payment, but it was always the big, I remember like around IPO, and the IPO was always like, look, there's probably a lot more payment. Talk a little bit about that journey. Yeah. So maybe let's start with the easy one is- Yeah. We did the IPO four years ago, and the total GMV of Lightspeed, so the total volume of our platform when we did our IPO, was $13 billion. Sure. At the time of the IPO, we said, we think that in the next four years, we can get to 60% penetration. Yeah. Today, we have $25 billion- Wow! On Lightspeed Payments. So I think we've overachieved fairly broadly on payments. But the reality is today, so why did we not do it, or why—First of all, we wanted one payments platform that worked globally. So we're not a U.S.-centric company- Mm. We work everywhere in the world, and there are not many companies on the planet that do card present, not present, debit, credit, everywhere- Yeah Where we operate. So we wanted to have one code base that worked everywhere, so it took more time. And then from the moment we had that, we wanted to have critical mass customers and to get the feedback, be sure it works. But then kick in what's happening today, which was unified payments. Yeah. Which is now we're telling our customers, "You need to use Lightspeed Payments, to use Lightspeed." Just maybe high-level numbers today, Lightspeed, we have $100 billion of GMV, roughly, going through the platform, which is roughly half of Shopify, and it's about the same as those. The only difference between us and them is that they are monetized at a much higher rate than we are. Mm. For us, now the strategy in the coming 18 months is to get to 50% penetration on payments, because that is gonna be extremely lucrative for Lightspeed, it's gonna sustain our growth. Mm. It's also gonna generate a lot of free cash flow. So maybe just a high level, a customer on payments is double the net ARPU. Yeah. We're doubling the revenue per customer, on a net basis when we bring them payments without doing much. And so that's why for us, the easy path to, you know, free cash flows, sustained growth, and profitability, the easy path there is to bring customers to payments and, and then inject more money and go to market so we can grow faster. Yeah, yeah, yeah. And then there, there's this stickiness and carriage in terms of the installed base. Like, I would assume, like, new customers have to do payment- Yes With you guys. The installed base, a lot of them would have, like, a payment provider. Like, how do you manage that relationship? Yeah, so it's stick and carriage, exactly the term. So for new customers, it's simple. Yeah. You cannot buy Lightspeed anymore if you don't use Lightspeed Payments in the areas where we offer a payment platform. Okay? For existing customers, we're going to them, and we're saying: Look, if you don't use Lightspeed Payments, we will be charging you a gateway fee, basically. Mm. Because the reality is we are developing integration with a number of payments platforms, and that's most of them. I think also for the industry, you know, they need to do more with less. It's going through the roof, and we know that when customers are using Lightspeed Payments, we remove a ton of manual tasks. Mm. We're going to our customers and saying: Look, we will accommodate or beat the current rate that you have, beat or match, but you have to move to Lightspeed Payments. And so here, there's a huge initiative called unified payments that's going on. Actually, it's been on for two quarters now. If you look, we have increased penetration 3% per quarter- Okay In the last two quarters, thanks to that. But we're going to them, we're saying: We will accommodate the rates, we'll give you payment terminals, we'll send somebody on site, we'll buy out your rates, your current contracts, and so only positive. Mm. Now, of course, it's. There's a, call it, a rigorous process to get there. It's gonna take time. Yeah, yeah. But our customers are generally moving forward with the- And then the... Like, like if I'm not in that space, like, how difficult is that decision to change your payment provider for a customer? You know, like, you remember there, like, me, I guess, like for you guys, more medium-sized business, but like it's still a disruption to the— Is it a disruption to business? Like, how do— Yeah, how does that go? It takes about three minutes. Ah! A big disruption [crosstalk] It's a very big disruption. We have, you could see we have a lot, a number of videos online. Yeah That just show the steps. Yeah. Because, of course, we're trying to make it as easy as possible, but the more complex part is not the installing, it's the logistics around it. Yeah. Because we need to get the terminals to pair the keys in the terminals. We ship the terminals to the customer, they have to take it out of the box, SMBs, you know- Yeah Plug it in. But then when they plug it in, it's, it's literally three minutes.... you connect your payment terminal to the network, you see your Wi-Fi. You then go into the POS, we recognize the terminal there, you pair it, and you're done. Mm. So it's, there's very little disruption, and that's why the view here is that there is only benefits to the customer. Yeah. Brand new terminals that support, you know, all the new workflows. They save hours every day because we have one integrated reporting for every transaction they do, and then they're much more efficient because there is a, you know, there's almost an instant integration between the payment terminal and transaction. You scan your item, you tapped, and so you can process more customers. Yeah. And if you're a waiter, you can, you can basically wait on more tables. Yeah, yeah, yeah With a platform like ours. Okay, that's interesting. And then the, I mean, maybe it's not a question for you, but, if you think about like, how does that change your relationship with the payment providers that are there at the moment? Like, because obviously, they're not going to kind of be overly happy, being slowly migrated out. Like, is that kind of the healthy competition that everyone talks about? Or like, how do you think about it? [crosstalk] I mean, let's start with the industry. Yeah. I think, everybody in our space, you know, you mentioned Toast, Shopify, Square, they consider the POS and the payment terminal as one. Actually, if you look at the... I think that the harsh reality is workflows post-pandemic, it's really software meets payments. Mm. Payments is becoming invisible. You have your online meets your offline. We've all been to a restaurant where you have the QR code. So this, just start there, this logic of, I have a piece of hardware on my desk- Mm That is not related to software is the only way for you to pay. That is obsolete. Yeah. If you take that in mind, the reality is, verticalization inside of our industry of software and payments is happening, and actually, in the interest of the customers, we need to use more modern payment products. Mm. The reality is the majority of the market are with these old, ugly, unintegrated terminals, and that's because at the time, the only way to pay was physically in your store, whereas now it's about bolting credit cards, and it, like, it's a completely different world. Yeah. So with that in mind, we are doing what's right for the customer. And of course, if I am a legacy payment, you know- Yeah In Canada, it's called Moneris. I mean, we have them everywhere, yeah? Everywhere in the world, and actually, even in Europe, your bank gives you your terminal when you open an account. It's crazy, but that is going to disappear. There's no... of course, are they happy? They're not happy because they're going to be losing customers because there is so much more value to be integrated. Yeah. So they're trying to play, you know, they're trying to play the cards so that they can stay there as long as possible. They're putting in place penalty clauses to leave them. They're trying to dump the rate customers, because ultimately, they know they have lost them. Yeah. And for me, it's very interesting because, you know, two years ago, it was a commoditized conversation before the pandemic, three years, four years ago. You know, everybody's like: "Okay, I'm going to go with the provider who gives me the best rates." That is gone. Mm. Today, the conversation is: How much time am I going to help you? How much time am I going to save if I use Lightspeed? You can integrate the new workflows where I can order online, pick up in store. How easy is refunding? And as soon as you start digging into any of these workflows- Yeah You realize that, that's why I think the best analogy I've found for now, it's the difference between a fixed phone and a mobile phone. Yeah. And the world of non-smart devices versus the world of smart devices, I think it's the same disconnect that's happening in the market right now. Then you mentioned rates, because, like, that was the other thing that came up a little bit is like, that while the transition happens, you have, it does feel like a pressure on rates. I mean, the volumes are like what they are, and it's a cycle, but on the rates, do you think that's a temporary thing as kind of it all improves it in terms of migration and then it kind of normalizes, or how do you see [crosstalk] this right now? I think pressure is on rate, because the only thing you can offer is a commoditized payment terminal. Yeah. There's no doubt. But if you start to giving you an example, in the hospitality space, our analytics and uses the data from the credit card to give insights to our restaurateurs that nobody else can offer. And for me, the restaurateur is not going to come to us because we have the best rates. They're going to use Lightspeed Payments because they want to have access to the advanced analytics- Yeah That tells them: "Hey, this is a real behavior of your consumers." And so I think that's really what drives the adoption. Yeah. It's not the war on page. I think that's why my view is, if you're commoditized and if you're a non-integrated payment terminal on a, on a counter, the only way, right, is the rate, and you're going to see huge pressure there. Whereas I think the software companies that have an integrated platform that derives more value than just transactions from payments- If you're in a long-term Is gonna, maybe on the retail side, another example is, you know, we do distribution. So we work with all the biggest brands in the world where we, you know, Brunello Cucinelli, I don't know, Harman Kardon and Leica, you know, Bang & Olufsen, and all these people, they basically use Lightspeed as a distribution network to SMBs. Cool? Yeah. But their worry is: I don't want to have an SMB represent my good if it's not the right consumer. Mm. I'm using tokenization and credit cards now to go and say, "Hey, this store is actually attracting profile users that buy your brand today." So I guess to me, that's why it's, it's around removing the friction- Right Which what we're doing for our customers. But I think it's not a commodity, it's, it's around the value add you can bring from bringing Lightspeed customer to them. Another big example is capital. As soon as you're on Lightspeed Payments, we have a, a capital offering.... as soon as you're on Lightspeed Payments, well, we can now give you a capital offer where you can decide to, you know, use the funds or not. It's almost as a, look at it as a line of credit. Yeah. You're pre-approved for a certain amount. Your fridge breaks, or you have an extraordinary expense. I can now instantly withdraw and have the money deposited. So there's a lot of-- we're, we're building a lot of derivative products- Yeah That use Lightspeed Payments at the core of it. And then, that was going to the heart of my next question. You, you mentioned earlier that the monetization of a customer and then some of your competitors, like, or players in the market have a much higher rate here. Payment is one option. Are there other things that we should think about? I guess capital is one [crosstalk] Yeah. Look, the big one is payments. Yeah. You know, everybody knows that because it's so lucrative. It's easy money. With that one, it's easy expansion of our pool. Yeah. But you're right, there's way more. I think capital is incredible. Capital is, for us, a 90% gross margin business. Yeah. You know, default rates are very low because we work with the more established merchants, and that, you know, that is huge, you know, kind of the driver here to actually keep gross margins, you know- Yeah . At a At a good rate. But then there's software. Like, we have an advanced analytics engine. We do an Insights platform that nobody else does. That's another, but also. So I think for me, it's about expanding software output. There's still so much we need to do, and then at the same time, is expanding capital and financial services. But I think any way you look at it, there is so much room for output growth. And so that's why you... You know, we've set our priority right now, which is we want to bring payments to 20-- from, from, you know, we started the year at 19. Yeah. We want to go from 19% to 50% penetration in the coming years. Yeah. That'll bring us a lot of free cash flow, which we can then reinject it to go to market. In parallel to that, a number of projects that we're working on to expand our group. Yeah. That are mainly software. You know, we talked about suppliers. Yeah. That's another huge one where we're doing an integrated supply chain for these, where we are basically connecting the best brands in the world to the best stores. That, again, is huge. I mean, just when you look at the monetization we can make from that piece of the business over time- Yeah It's absolutely incredible. And then, last few minutes, I want to shift gear a little bit. Like, you, you guys, we just, are kind of in the middle of what's going on in the world a little bit, and we just had Black Friday, Cyber Monday, et cetera. Like, I don't know how much you can share, like, but what do you see in terms of at the moment in the traffic, you know, busyness out there? So, you know, being a public company, we haven't said anything around Black Friday and, you know, Christmas. Yeah. So we'll wait till we publish[crosstalk] I'm trying. But I'll think, and that's what I said last quarter, at the end of last quarter. Let's start with hospitality. Hospitality, we do high-end restaurant. So as an example, we have 20% of Michelin star up in the U.S. I think the big quarter in hospitality is summer. That's where, you know, you have your best... That was a very good quarter for us. Mm. We saw people spending and going out, and what I said at the time is, restaurants are doing well, and anything you need to wear to go to a restaurant is doing well. So luxury goods, you know, watches- Yeah Apparel, luxury apparel, restaurants, and it was a very good quarter. Now, I think it's fair to say that the macro, there's a lot of instability, and we are forecasting in a very conservative way because we think macro is not, we don't think the macro is going to be great. Mm. Now, this being said, who knows? I think for me, yeah, what's happening in the Middle East, even though we're a bit sheltered because we do kind of the high-end brands, I don't think it's going to be the most exciting time in the history for, you know, for purchasing. And what I can say about this is we have forecasted the second half of the year in a very conservative way, and we have strong confidence that we'll reach what we said- Yeah Even in an unstable macro. Yeah. Okay. And then the other thing we probably want to kind of talk about is the, over the last year, there has been a kind of much greater focus on profitability, cash flow from you guys. Mm-hmm. Can you talk a little bit about the motivation here and also the action you've taken? Because the numbers are really kind of coming through. Yeah. Look, if I go back, we went public, used our public currency to acquire a lot of companies at a relatively much lower value than ours. Yeah. Get the market together, bring the two new platforms onto the market, launch payments globally. So I, I think for me now, it's, it's, it's really around, you know, execution. Yeah. It's a year of execution, and what we said for this year is we would be, for the entire year, Adjusted EBITDA positive or better. Mm. We gave our forecast in terms of revenues, and we have strong confidence we will meet that. I think going forward, now that we know we're an organic growth story, we know that we're a great business, you have to look at the markets. Mm. Even if you look at the more established retailers and restaurateurs, those with more than 10 employees, there's about 3,000,000-4,000,000- Mm Globally, and we have 170,000 customers. So there is huge runway to go and get that market, and I think also, in my mind is, as you get to the more established merchants, most of them are still on legacy systems. Yeah. Okay? And that's a huge opportunity for us. We're the only vendor on the market that has real sophistication in the workflows that can compete with the legacy systems with the cloud-based platform. Yeah. So we have to go and own that market globally. But why am I saying this?... is, of course, we will be profitable, and, you know, we passed the profitability gap last quarter, and there's no going back. But I think we need to go and get that market. I think it's easy to generate free cash flow in our business. I think the more exciting and more complex part is to have high growth and profitable high growth. Mm. I think the market is so vast that I don't think now is the time to wait too much on, you know, free cash flow and profitability. I think we still need to grow at a strong rate. But I think in my mind, we want to get to the Rule of Forty, and that's, you know, what I told the market. But I think we want to be a very growth-oriented Rule of Forty. Yeah. So we won't lose money- Sure. We won't earn, but we will be heavily weighted on growth. Why? Because the market is up for grabs. Yeah. The majority of the market is still on legacy, and the time is right for us to go get that. And then, if you think about it, but as a part of that, better profitability, you did think about customers, which customers you want to deal with, et cetera. Like, can you speak to that a little bit, like? [crosstalk] Yeah, yeah. I mean, look, it's very simple. In the SMB space, the closer you get to micro merchants, the more churn goes through the roof. The more you get close to established merchants, the more, you know, churn is very low. Because the majority of churn. You know, we are the ERP, so we're the central, we're the nerve, we're the central system of everyone who works with us. Yeah, yeah. So it's tough to implement, but once you've implemented it, you never want to change it. The only reason why you would churn is if you run out of business. Yeah. Okay? Or you go out of business. So we have been very clear that we want to work with the more established. And that's why when I say my addressable market, there's 3,000,000-4,000,000, even though there's 65,000,000 retailers and restaurateurs on the planet. The rest of them, I think, are very well suited for other players in the market that are, you know, focusing on the micro merchants. We want to do the well-established. So if you look at some of our, some of our brands, or even in the restaurant space- Mm. Joël Robuchon, it's like 31 locations around the world, all Michelin star restaurants. You know, you know, in San Francisco, Benu- Mm-hmm. Three Michelin star restaurant on Lightspeed. So we want to do the well-established ones, the restaurant and the retail space- Yeah. Because they don't churn. And that means for us, we'll bear cost of acquisition, but they'll stay with us forever, and we will see our full extension, forever. Yeah, yeah. Basically, do a good job. Yeah. Okay, makes sense. And so how does the... Like, it does sound like you gave the intro already, but I just wanted to make sure I ask it directly. Like, so M&A versus organic, it sounds like now it's a lot more organic. It's, it-[crosstalk] Yeah. Look[crosstalk], let's go back. Yeah. We know how to do M&A, we know how to integrate businesses, we know how to find leverage from good M&A, which is what we, we have done. Yeah. We, you know, we multiplied pretty much every number I know by 10 in the last three, four years. Yeah. We come out on the other side as a strong growth, profitable, you know, a great business. So we have to keep our eyes open on M&A. There's no doubt, because when you look at the share of wallet inside of a customer, there's still a lot of platforms that we do not have today that we need to offer to our customers. Mm. I think for me, it's always the same question: it's build or buy? Yeah, yeah. How much is it gonna cost to build? How much is it gonna cost to buy? And I think ultimately, it's also a question of relative value. When you look at our multiples today, I don't think we have reached the full benefits of everything we've done. No. So we need to continue executing for at least two, three quarters before we even talk about anything else. Yeah, yeah. So there's no doubt in my mind there, but there are great companies. And I may be sorry the last my long answer, but the last piece in my mind is, the private markets have not reestablished the values as a public company has done. So and I think there's gonna be opportunity in the coming years. Yeah, yeah. When those private companies that were overvalued are gonna come for more funding, they'll probably reset their expectations [crosstalk]. Expectations, yeah. I think for us, it might be a better opportunity to build versus buy. Yeah. But in our mind right now, it's the build. We're gonna build modules, we're gonna build capabilities, we're gonna rebuild, you know, trust and value Lightspeed, and then we'll talk about. I guess the other thing, though, that time gives you time to show to the market that y ou know, like you can integrate, you know, you have like one technology solution [crosstalk]. We've had a year now- Yeah. Of very strong organic growth [crosstalk]. Exactly, yeah, yeah. Four quarters, and you know, and, I think the lowest we were was 25% growth. Yeah. So we are a strong organic story, but I think we continue... For me, it's still the same. I got to rebuild the value of the stock, so I can start entertaining, you know, good M&A at relative values that are lower than ours. Yeah. And then maybe last question. Oh, actually, actually, I'll let you go. Because our time, our time is up, actually. Great. Hey, JP, I really enjoyed our conversation. Thank you. Thank you for having me. Thank you.