Hello and welcome to the Lightspeed Fourth Quarter 2023 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a Q&A session. If you would like to ask a question during this time, simply press star one on your telephone keypad. If you would like to withdraw your question, again, press star one. I would now like to turn the call over to Gus Papageorgiou. Please go ahead. Thank you, operator. Good morning, everyone. Welcome to Lightspeed's Fiscal Q4 2023 Conference Call. Joining me today are JP Chauvet, Lightspeed's Chief Executive Officer, and Asha Bakshani, our Chief Financial Officer. After prepared remarks, we will open it up for your questions. We will make forward-looking statements on our call today that are subject to risks and uncertainties that could cause actual results to differ materially from those projected. Certain material factors and assumptions were applied in respect of conclusions, forecasts, and projections contained in these statements. We undertake no obligation to update these statements except as required by law. You should carefully review these factors, assumptions, risks, and uncertainties in our earnings press release issued earlier today. Our fourth quarter 2023 results presentation available on our website, 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 and ratios. 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. 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 J.P. Thank you, Gus. Welcome everyone. Thanks for joining us this morning. Overall, I was very happy with our results this quarter. Revenue grew in line with our outlook. We achieved an organic revenue growth rate of 26%. Our GPV volumes were up by 70% year-over-year. Our adjusted EBITDA loss of $4.3 million came in significantly better than expected. As we enter fiscal 2024, let me walk you through how we see this year unfolding. Since we went public on the Toronto Stock Exchange in 2019, we've been laser-focused on becoming the go-to platform for sophisticated retailers and restaurateurs around the world. Delivering on the strategy meant building our payments platform from ground up. It meant making key strategic acquisitions. It meant honing on our sales and marketing organization to better target higher GTV customers. Earlier this year, it meant reorganizing how we operate to become a more nimble and streamlined company. I would say that we have spent the last four years establishing the foundations of this formidable company. Now fiscal 2024 will be our year of execution. As we look to better align ourselves to the Rule of 40 metrics, this fiscal year, Lightspeed expects to, one, reap the benefits of having our One Lightspeed flagship product in market. We expect this to show up as an increased platform adoption among high GTV merchants, higher ARPU, and more efficient and rapid product innovation. Two, accelerate revenue growth from financial services, including both Lightspeed Payments and Lightspeed Capital. Three, continue building products that solve our customers' problems and help grow their businesses, particularly with our Supplier Network. Four, accomplish our goal of becoming adjusted EBITDA breakeven or better for the full fiscal year. In terms of One Lightspeed, I'm really happy to report that we have achieved our goal of going to market with our two flagship products, Lightspeed Retail and Lightspeed Restaurant, by the end of fiscal 2023. At the end of Q4, 70% of new customer locations were on these flagship platforms, and with very few exceptions, our entire go-to-market team is now exclusively selling these two products. These industry-leading platforms are the best we've ever shipped and offer our merchants unique features that help simplify and scale their businesses. We've seen their added value reflected directly in our customer wins this quarter. A few examples. In retail, we are pleased to welcome Eastern National, an entity that operates 127 locations across America's national parks. We're also thrilled to call Apricot Lane one of our own. With 150 locations, this California-based women's fashion franchise will be using our flagship offering with payments in 12 of their locations with plans to roll out across the entire network. I'm super excited to announce a 4-year contract extension with Saks Fifth Avenue for our B2B platform, which Saks uses to automate their ordering and curating activities. In the world of hospitality, we were honored to sign two locations from Joël Robuchon Group, one in Morocco and one in their newest concept in Monaco. The Joël Robuchon Group maintains more Michelin star restaurants than any other organization in the world. We also welcomed Rosie O'Grady's, one of the busiest restaurants in New York Times Square, and Locanda Locatelli, a Michelin star restaurant located in a 5-star Churchill Hotel in London. Both of these customers adopted Lightspeed Restaurant with Lightspeed Payments. We're also thrilled that Sandals All Inclusive Caribbean Resort in Jamaica, St. Lucia, and the Bahamas joined the Lightspeed family. The road to One Lightspeed was challenging but rewarding. Now that we're focused on two platforms instead of nine, Lightspeed is able to dedicate efforts to achieving more rapid innovation and more focused go-to-market output, which gives me confidence that we'll continue to grow our high GTV customer base. Speaking of which, this quarter alone, we delivered several key product features. We enabled self-serve capital advances in our flagship products and expanded the offering to several new geographies, including the U.K. and New Zealand. In hospitality, we brought even more value to our U.S. customers with new features such as tip management and enhanced APIs. I'm most excited about the launch of Tap to Pay on iPhone. This removes the need for expensive payment terminals and allows restaurants to serve their customers better and turn tables faster. Our customers are thrilled with these features, which we believe is unmatched by our competition. In retail, we went upmarket with new features that facilitate repairs and installations, make it easier than ever for merchants to streamline their business. With our service modules, retailers can now create, schedule, track, and sell services offering within the Lightspeed Retail. We continue to roll out our payments to all paid e-commerce standalone customers in the U.S. with plans to expand into Canada in Q2. Moving on to our financial services. It's been four years since we launched our initial Lightspeed Payments offering for retail customers in the U.S., and in that time we've evolved into an exceptional global payments platform now available across three continents. Today, we've reached a point where if we want to provide our customers the best possible experience to scale their businesses, it is important for us to think about payments and POS platform as one unified product. We have heard from our merchants that they have seen noticeable uplift in their business operations when they use our entire suite of tools. That's why we launched Unified Payments and POS earlier this month. Moving forward, both new and existing customers will be asked to sign up for one cohesive and comprehensive product offering where Lightspeed Payments is embedded directly into their POS. For new customers globally, this change is immediate. For existing customers, this change will roll out gradually, starting with our retail customers in North America, then expanding to hospitality and across all regions globally throughout the year. We've spent considerable time understanding how best to streamline the onboarding process and have made it as easy and compelling as possible by offering free hardware, free installation, competitive rates, and contract buyouts where necessary. In North America, Lightspeed Payments delivers lower rates than competing solutions the vast majority of the time, giving me confidence that we can save our customers money. We also want to deliver a better service. One example of this is the fact that Lightspeed will now offer North American customers cash deposits within one business day, in contrast to some competitors typically taking twice as long. Merchants who currently use our embedded payments and POS platforms have shown us the value we have added to their business. It saves them time and money, eliminates the need to reconcile separate systems, improves accuracy, reduces manual tasks, and gives them far better data insights into their business. It's clear to us that trying to use a modern software platform with legacy payment systems and outdated terminals holds them back and limits their experience they provide to their own customers. I think it's important to understand how much our customers love Lightspeed Payments. Here's some direct feedback from Silo and Crate, one of our restaurant customers in the U.K.. Having an integrated payment and till screen system revolutionized the speed of service we could do. The time saved on the transaction period between the old system and the new system was phenomenal. I think our busiest day, we ended up making 10% more on our record than we had before, which was amazing. Weekly, I used to have to spend three hours between different reports from payment terminals and till terminals. Now it's all done for me, and I just enter one number and everyone's happy. There is no better endorsement than a happy customer. Asha will take you through the numbers behind this rollout, but first let me reiterate that with our unified payments and POS offering, we expect to accelerate our GPV as a percentage of GTV during fiscal 2024. This year, we also expect to continue to grow our capital business. Lightspeed Capital is now easier to access and more widely available. Self-serve capital is embedded directly into our products and has been expanded to more and more countries. We also have a sales team dedicated to increasing awareness with our customers. Capital continues to be one of our highest growth margin businesses, even surpassing software, and still maintains very low default rates. Many of you have expressed interest in our Lightspeed Supplier Network strategy, which connects our merchants with brands and consumers. Lightspeed Supplier Network is our key strategic initiative and represents one of the most significant R&D investments. Our supplier network will fundamentally revolutionize the retail industry and completely distinguish us from the competition. The ability to search for products, enter orders, and automatically upload inventory from POS will save our merchants time and money. These features are currently rolled out to hundreds of customers, and we have received exceptional feedback on our efforts so far. Although we will not see any direct financial contributions from Lightspeed Supplier Network this year, we do expect it will improve our close rates and lower customer acquisition costs. I look forward to keeping you updated on this initiative throughout the year. I also believe we have significant opportunity to use AI and machine learning to improve our service offerings. To date, AI has helped Lightspeed to reduce costs and better serve our customers. A lot of our customer chat flows are driven by AI. We have the ability to translate customer requests from any language into English and respond in a native language, meaning we can service our European customers from lower cost regions. In product development, we are evaluating the use of AI to drive better efficiency in programming and lower costs. In the future, we are experimenting with using AI to help customers in creative ways, like generating menus and item descriptions. We have a very large transactional data set, and we plan to use this to help our customers become more successful. We expect to be beneficiaries of AI, and we'll continue to explore how we can use it in other parts of the business to complement the exceptional work our teams are doing. In terms of profitability, last year, we committed to being adjusted EBITDA breakeven or better in our fiscal 2024. I cannot stress this enough. Lightspeed will meet this goal in fiscal 2024. As I said earlier this year, it's about execution, and we intend to place this company in a position that highlights the sheer potential of our business model while still investing in our growth opportunities. I will now turn the call over to Asha to take us through the quarterly results and provide outlook. Thanks, JP. I'm pleased to announce that Lightspeed was able to deliver revenue in line with our previously established outlook and an adjusted EBITDA loss better than expected. I'm going to provide a recap of the quarter, discuss the expected financial impact of our unified Payments and POS launch, and then provide an outlook for the upcoming quarter and full year. Given there were no acquisitions in this quarter or the prior year comparable, all growth numbers I will quote are organic. In the interest of time, I will focus most of my comments on the quarter versus the full fiscal year. Overall, for fiscal 2023, Lightspeed delivered revenues of $730.5 million, an increase of 33% year-over-year. On a constant currency basis, revenues were $743.4 million, increasing 36% year-over-year. Adjusted EBITDA loss came in at $33.9 million. Despite the impact of challenges and uncertainty in the macroeconomic environment, for fiscal 2023, we had an annual net retention rate of approximately 110%. One of the highlights of our fourth quarter is our progress towards adjusted EBITDA profitability. We saw subscription gross margins improve to multi-quarter highs, transaction-based gross margins stabilize, and we were more disciplined with hardware subsidies. In addition, we began to see the benefits of the recent restructuring, and now that we're focused on two core products, I expect we will recognize further cost savings, which we can use to invest in accelerating our product innovation. In the quarter, revenue came in at $184.2 million, an increase of 26% year-over-year and in line with our previously established outlook. On a constant currency basis, revenues increased 27%. Subscription and transaction-based revenues grew by 28% or 30% on a constant currency basis. Subscription revenue increased 8% year-over-year to $76.2 million and 11% on a constant currency basis. Gross margins on subscription revenue increased to 75%, the highest in over two years, thanks to a dedicated effort to consolidate cloud vendors and improved overall efficiency. Transaction-based revenue grew 49% to $99.6 million. In the quarter, we saw gross payment volumes increase 70% year-over-year to $3.8 billion as a greater portion of our GTV went through our Lightspeed Payments platforms. Expanding our payments offering to more locations and industries helped offset the weakness we saw in certain retail verticals. Because of the growing number of customers on payments, coupled with a strong quarter in hospitality, we saw healthy growth in payments revenue. In Q4, gross payments volume as a percent of GTV came in at 19% versus 13% in March of fiscal 2022. Gross margins for transaction-based revenue came in at 33%, flat to the previous quarter and down only slightly year-over-year. Lightspeed Capital had its strongest quarter yet with revenue growth of over 200% versus our fourth quarter of last year. Total adjusted gross margin, which excludes the impact of share-based compensation, came in at 48%, a slight increase from the previous quarter and roughly flat to last year. Adjusted gross profit dollars came in at $87.8 million, an increase of 22% year-over-year. Despite the growing proportion of payments revenue, Lightspeed was able to maintain its gross margin, given improving subscription margins and significant growth in Lightspeed Capital, which carries gross margins of over 90%. Adjusted EBITDA in the quarter came in at a loss of $4.3 million. This is much improved from a loss of $19.7 million in the same quarter last year. This improvement is the result of our continued focus on prudent spend across our organization, including the efficiencies we identified and implemented through actions like our reorganization done in our fourth quarter. We had an adjusted loss of $0.4 million versus a loss of $22.9 million last year, thanks largely to the improvement in the items driving our adjusted EBITDA loss performance and growing interest income in the quarter, which increased by approximately $8 million from a year ago. Excluding the impact of equity acceleration included in restructuring, share-based compensation came in at $16 million, down substantially year-over-year from $41.6 million, coming in at approximately 9% as a percentage of revenue, down from 28% in the same quarter last year and down from 18% in our previous quarter. Although we expect our share-based compensation to be higher on a quarterly basis than it was in our fourth quarter, we expect our annual share-based compensation to decline over time from historical level. GTV in the quarter came in at $20.2 billion, up 10% year-over-year, and 13% on a constant currency basis. Omnichannel GTV was up 3%, whereas hospitality grew by 20%. We continue to see some of our verticals within retail face challenging conditions as consumers continue to prioritize experiences. Hospitality GTV remains strong as consumers continue to dine out and travel. This quarter, we also continued to grow our complex customers with higher GTV tiers. For example, customer locations with over $500,000 in annual GTV grew by 13% in the quarter, whereas those with under $200,000 in annual GTV fell by 6%. In this quarter, the fastest-growing cohort was locations with over $1 million in annual GTV, which grew 16% year-over-year. Overall customer locations increased by 1,000 from last quarter. As we focus on more complex, higher GTV merchants, we expect the under $200,000 cohort to continue to decline. As a reminder, this cohort of customers represents only 5% of our overall GTV. The annual net retention rate I outlined earlier is testament to the fact that we are successfully monetizing more GTV from our existing customer base. As you've heard from us before, our focus remains on adding the right customers and monetizing GTV, not on maximizing our total location count. As a result, we will only be disclosing location count on an annual basis. Churn rates in the quarter remain consistent with last quarter, despite challenging macroeconomic conditions. Similar to last quarter, the vast majority of our overall customer churn is in the under $200,000 cohort. In terms of our balance sheet, Lightspeed closed the quarter with just over $800 million in cash and cash equivalents, down from approximately $838 million in the previous quarter. The most significant use of cash was the reorganization we announced early in the quarter, which led to approximately $18 million in cash charges, along with the increase in our merchant cash advances by approximately $13 million. Turning now to our unified payments and POS efforts. Before I get into the details, let me share some general comments. As JP mentioned, we are confident that combining our products into one powerful suite of tools will save our customers time and money and provide a superior service. Although we are forecasting a short-term increase in churn as a result of this initiative, largely with lower GTV customers, overall, we believe it will have a favorable impact on our financials, particularly in the second half of the year. Put simply, embedding payments to a customer's POS system doubles the lifetime value of that customer at almost the same cost of acquisition. Second, on the cost of this initiative, there will be some accelerated spending on items such as contract buyouts, hardware, and implementation support as we help make this change as smooth as possible for our customers. We will pay for existing contracts where it is reasonable to do so. Payment terminals will be provided at no cost to our customers, and we will be sending people into the field to help our merchants get up and running on Lightspeed Payments. These upfront costs have a payback of a few months once a customer is transactional, which justifies the investment on our part. On timing, as of May 1st, 2023, all new eligible customers are required to sign up for payments with their subscription service, significantly improving unit economics for new customers going forward. For existing customers, this initiative has already launched in retail in North America. Next month, we plan to roll it out to our hospitality customers in the region as well. We plan to further roll out this initiative to the U.K. and Australia, and then on to the rest of EMEA. On to outlook. With unified POS and payments, we are making the right investment and strategic decisions to drive durable, long-term, and profitable growth, positioning us to accelerate towards the Rule of 40 financial metric as we exit this fiscal year. In the first half of the year, however, we will be impacted by the launch costs associated with our unified Payments offering, which we estimate will total approximately $12 million for the year, $7 million of which is expected to occur in the first half of the year. These launch costs include free hardware, technical support, and contract buyouts where necessary to ensure as smooth a transition as possible for our customers. In light of this, our account management teams that are usually upselling our customer base will be focused on successfully onboarding customers to unified Payments. We do expect some customer disruption as we roll through this, particularly amongst our lower GTV customers, all of which may negatively impact revenue growth in the first half of the year but accelerate revenue growth in the back half of the year. Taking all of these factors into consideration, we're approaching our outlook with a heightened level of caution. For the full year of fiscal 2024, we expect total revenues of between $875 million and $900 million, with break-even adjusted EBITDA. Because of the launch costs associated with unified POS and payments I referred to earlier, we expect adjusted EBITDA performance in the second half of the year to be significantly better than the first half. For the first quarter of fiscal 2024, we expect revenues between $195 million-$200 million. We saw weakness in many of our retail verticals in Q4, and as such, we're being cautious on our GTV forecast. We expect an adjusted EBITDA loss of approximately $10 million. This expected adjusted EBITDA loss includes the first quarter impact of the launch costs on unified payments, as well as approximately $4 million of costs associated with our in-person sales and customer summit, which takes place in June each year. With that, I will pass the call back to JP. Thanks, Asha. As I said, 2024 will be a year of execution for Lightspeed. I expect to exit the year with strong momentum. We will accelerate payments penetration, we will win more complex high GTV customers, and we will innovate like never before. We are very excited for our unified payments and POS initiative and our two flagship platforms, Lightspeed Retail and Lightspeed Restaurant. With that, I will turn it over to the operator to take your questions. Thank you. If you have a question, please press star one on your telephone keypad. If you wish to remove yourself from the queue, simply press star one again. One moment for your first question. Your first question comes from the line of Daniel Chan of TD Cowen. Please go ahead. Hi, good morning, guys. You mentioned that you expect some churn in your larger customers, as you roll out this unified payment strategy. Can you just talk about what you saw with your North American retail customers as you rolled this out? Where did they go, and what was the feedback that they provided to you on why they were leaving, the POS system as you rolled out this payments, unified payment solution? Yes, good morning. Maybe just to clarify, we expect lower churn in the higher GTV. We expect that the initiative will churn actually the lower customers and not the larger ones. Just being clear there. For me, there's two big blocks to the unified payment strategy. The first one is on new business. When you look at the new business customers, we, you know, every customer now, everywhere in the world where we have payments cannot buy Lightspeed without Lightspeed Payments. For now, we've seen actually no change in the close rates, and we've seen, of course, higher ARPU because customers are all buying payments. I think there we're very confident and feeling good about good about the strategy. Then the second fold to this are existing customers. Existing customers for now we're launching in the U.S. on retail, and as we get to the end of the fiscal year, we'll be launching everywhere in the world. On that front, I mean, it's very much in line with what our beliefs were. We do not believe that people are going to change their point of sale and core business platform for the payment terminal. Actually, we have strong belief that on the other side of this journey, we're getting extremely good feedback from customers who are using the payment platform. What we're getting from them is, you know, of course, unified reporting makes their lives much easier. You know, less errors because the customers have an integrated payment platform, better customer experience because these are not, I mean, you know, old terminals. We're giving them state-of-the-art brand new terminals. Maybe the last thing I wanna add on this is we're making it as easy as possible for them. We're giving them free terminals, we're buying out their contracts, we're sending people on-site to help them install. And of course, we'll be and I think we shared the statistic before, but in the majority of the cases, I think it's 70% of the cases, we always have lower rates than the rest of the market. It should be a full net positive for our customers, and that's why we're deciding to do it now. We think it's gonna be a really good initiative. Yeah. Thanks for that clarification. That's very helpful. I noticed that your Lightspeed Capital deployment has increased significantly. How do you plan on scaling that business as payments adoption is expected to accelerate following this unified payments initiative? Yeah, sure. I'll take that, Daniel. The majority of our customers that we offer capital to are actually Lightspeed Payments customers. As we mentioned in the prepared remarks, we have now self-serve on capital in several of our regions. What that means is as more and more customers come on to Lightspeed Payments, we've already underwritten those customers. As a result, those customers will be offered capital. We have algorithms that determine the amount of merchant cash that we advance to each merchant that they're eligible for. We definitely expect that business to continue to scale as we get more and more customers onto Lightspeed Payments, because then they by default become eligible for Lightspeed Capital. Your next question comes from the line of Andrew Jeffrey of Truist Securities. Please go ahead. Hi. Good morning. Appreciate you taking the question. I guess on the unified payments, just so I understand it, can you just detail how it sort of changes from what you've been doing to date with payments that's gotten the payment attach up to 19%? Are there pricing changes that are part of this? You know, does this look like other competitors in the market? I just kinda wanna understand some of the nuance behind this shift. Then I got a follow-up. Yeah. Look, until now, payments was not mandatory. I think that's the best way to say it. We were in a way kind of more with the carrot and kind of Switzerland. We would go to see the customers and say, "Hey, if you want, there is Lightspeed Payments." It was not mandatory for new customers, and it was not mandatory for existing. Here, what we've done is we've spent the last three years really developing one service that could work everywhere in the world. As you know, we have one payment service that works all across Europe, that works in Asia and in the U.S. on hospitality and retail. So we didn't wanna be too aggressive because we wanted to reach scale and ensure that all of our customers were happy, ensure that we knew, sorry, how to onboard customers. So we're very happy with the results there. You know, we've reached scale everywhere in the world now in terms of Lightspeed Payments, and we're getting close to 20% penetration as we, you know, end the quarter, not 19 but 20. So here, for us, we felt it's the right time to do this because we know... I mean, I think we have our process internally that work, and we also know that there is a lot of value. Frankly, I think that's the most exciting part for the market and our customers is when they use Lightspeed Payments, they save time, they have a much better experience with their customers. When you look at the market today with, you know, cost of labor going up and interest rates and everything, for them, the only way out is doing more with less. That's why we feel now is the right time to say, "Well, you know what? You know, we cannot consider any more payments and software as being dissociated. They are one platform. It's actually going to simplify our business going forward because every customer now is going to follow the exact same onboarding flow, where everybody is on payments. Every new customer and every existing customer is going to move to Lightspeed Payments. That means we will only develop one version of our software instead of, you know, having all these integrations with all these different partners. One version of our software that'll provide value to every single one of our customers. Okay. It becomes an attach rate function primarily is what it sounds like. And then just Asha, when I look at one Q and the guide, you had a very nice ARPU, you know, the subscription yield was up really nicely in four Q. Is the implication that GTV on a reported basis could be down in one Q year-on-year? Yes. Yes. We're forecasting. We're being very cautious on GTV, you know, as we exit Q4 and start Q1 in the new fiscal year. We are seeing GTV in several of the retail verticals where Lightspeed thrives, continue to be down year-over-year, such as bike and home improvement. We are being cautious on GTV, and that's what you're seeing come through in the Q1 guide. However, in addition to that, the account management teams inside Lightspeed, who typically focus on upselling our base on software, is gonna be 100% focused in the first couple of quarters on onboarding five to six times the number of customers that we typically onboard on Lightspeed Payments. There's that impacts one Q as well in the softer revenue growth. Over the year, though, you see that, you know, given the guide for the year, it's evident that we expect very strong revenue acceleration in the back half of the year as the initial launch of unified payments is behind us. In addition, we start seeing, the extra volume on those additional customers getting up and running onto Lightspeed Payments. Your next question comes from the line of Martin Toner of ATB Capital Markets. Please go ahead. Thanks for the question. Good morning. At what pace do you think you can move existing customers over to unified POS and payments? How successful are you being at implementing a third-party processing fee? Yeah. I'll take this one. Good morning. The plan is, you know, very simply put, that we believe we can move the majority of our customers between now and the end of the fiscal year onto Lightspeed Payments. As I said, we're gonna start with retail in the US, which is our biggest vertical and the biggest concentration of customers. We'll move to hospitality in the US. We're gonna move to Europe and APAC. This is the year for me of we take all of our existing customers, we bring them to Lightspeed Payments. We've done a number of initiatives there, we know what it's gonna take to get there. I think that's why going back to what Asha was saying, normally, you know, when you sell software, you recognize the revenues immediately. We're gonna take the majority of our go-to-market people and say, "Instead of selling software to our customers, we're gonna move them to payments." There is a delay between the moment they say, "I'm coming to payments," and then we gotta get them onboarded, transactional, shipped, all the hardware. And so that's why you see a softer kind of guide on revenues in the first half of the year. If this works well and according to what we have planned, that means we're gonna end the year with, you know, profitability and high growth. For me, these are all the sequences we've been putting together for the last few years, and we knew this was the final step of Lightspeed Payments. You know, when we always said that we believed we could get to 50% penetrated, we knew there was a step in there, which is, okay, now we know it's working, we know our customers love it, so now we have to go into, okay, now let's bring the majority of our customers onto the platform. That's great. Thanks, JP. Can you talk a little bit about a little more about the implementation? Are there limitations to the pace that you guys can move based on people and availability of hardware? No, I think it's just gradual. You know, it's just I mean, we, you know, we have a lot of customers in every country. I think for us, we wanna be cautious again in how we do it. We wanna be sure that it's a successful outcome. That's why we're starting and we're gonna be learning all year long, you know, as we continue to deploy. For now, just very clearly the process is, you're gonna speak to all of our account managers now are just focused on calling the customers, reaching the customers. As you know, we're going to be accommodating the rate. We need to take their current statements. We need to look at the rate that they have. We need to get back to them with what is the real rate versus, you know, your legacy systems are always very smoke and mirror when it comes to rate. We give them the same rate, we accommodate the same rate. From there, we send them to our onboarding teams. From there, the onboarding team needs to ship the hardware. We have planned for all of the hardware, just being very clear. We've been working with our partners there to be sure we have the right volumes. When the hardwares are shipped, this is where it's going to be obviously, kind of, costing us a lot of money in the first half of the year, is we're then going to be sending people on site who are going to be kind of holding the hand of the customer all the way and are going to be plugging in the terminals, getting in the. Then it's as simple as plugging in the terminals, getting the, putting the right code number, and then the customers are up and running. It's a well understood, repeatable process we've been doing. Now the idea is in the first half of the year, we're going to put, you know, as many people as we can at Lightspeed to do what I just described, which is going on site, which is, you know, shipping those terminals and holding the hands of the customers. The one thing we know about retailers and restaurateurs, they don't really like change. We're doing everything we can to make this change as seamless as possible. You know, we're giving the terminals, we're buying out the contracts, we're accommodating the same rates, we're sending people on site because we want the experience to be good, because we know that once they use it, they will love it. Your next question comes from the line of. Please go ahead. Hi, good morning. if you look at your retail versus hospitality mix, as you're shifting towards the higher GTV locations, is there any shift in that dynamic? Are you having more traction signing up, you know, one of those verticals versus the other when we talk about higher G locations? Thanos, I think again, we're seeing what we've seen for the past year. We're seeing the under 200K cohort. We're seeing that shrink actually now about 6% year-over-year, and we're seeing the higher GMV or GTV cohorts grow. I think that's, you know, been happening all year round. I think the good news here is when you look at the 200K cohort, that represents 5% of our GMV and represents, I think 80% of our churn. We're seeing good adoption from new customers. We're seeing ARPU grow. You know, we announced a few very large retailers and restaurateurs that have been moving to Lightspeed that we acquired in the quarter. The flip side of that is we're seeing this, you know, this flu of low GMV customers just churn at a higher rate. I think even if you look at the macro environment, we had planned for that. You know, I kept saying the whole year, "Hey, we think that, you know, with what's happening in the economy, that cohort is not going to be a good one." We're seeing heightened churn in those cohorts. We're actually seeing really good adoption on the higher cohorts. The only thing I would add to that, Thanos, is, from a vertical perspective, we remain in the 60% retail, 40% hospitality markets despite the move up market. The split by vertical is still 60% retail, 40% hospitality. Okay, thanks. In terms of, your approach to outbound sales, to date it's been exclusively North America. As you launch the payments initiative globally, given some of the handholding you might need to do, might you start, deploying, direct sales in other geographies as well? Yeah. We are. You're right. You know, more and more as we look at the higher GMV merchants, we're doing more and more outbound, and not just for existing customers with terminals and everything, but also even to try and attract customers. We're taking a very hyper geography, very focused approach in all the different countries. We have teams, you know, as you know, all over the world. That is one of the blends that we're seeing, is that we're seeing more and more outbound. A gain, I think that's very much in line with, you know, the cautiousness that we have. We want to be sure that our unit economics are strong, so we are really focusing on the right customer base. I think for me, the other data maybe that I think is interesting is our cohorts are growing at 110% year-over-year. That's because, you know, the customers that stay on the platform are buying more and are buying more modules and more from Lightspeed. That's why we really have to continue on this strategy of focusing on the higher GMV. You're right, that means a higher blend of outbound versus what we would have historically had in the company. Your next question comes from the line of Tien-Tsin Huang of JP Morgan. Please go ahead. Hi. Thanks. Good morning. I know a lot of hard work went into getting to this point. It feels like JP, very big bet, obviously on the product and fitness and that clients are going to love it. I guess my question is, as you go out into the field and you face resistance, whether it's businesses aren't ready to do it now, they're too busy, or they're happy with what they have, or they get price matching from other peers, is there a plan B? I'm just curious how much force are you going to put in to effectuate the plan? 'Cause again. Yeah. I'm sure you're confident in the product and whatnot. I'm just curious if there's a plan B. Yeah. Look, If you do not want to move to Lightspeed, we will be charging you a transaction fee, you know, like all the other companies actually in our space that are the newer generation. I think nothing new there, but we really have strong confidence. you know, we did a few tests before we launched the initiative on cohorts of customers. What we're seeing is. I mean, you know, that's where we feel strongly is, first of all, the new platforms we just launched, and I don't know if you saw, but yesterday we launched our new hospitality are probably the best products we've ever built and creating a lot of value and with a very clear understanding of where we bring value to customers. I think we just have very strong confidence that people are not going to replace the core platform that runs everything in their business for the payment terminal. We think everybody's gonna see this once they've... Change is the, I think, the most difficult piece, is how do I make change as simple as possible? Once they're on the other side, we're very confident that they're gonna like what they see. If the customers do not want to, well, we will be charging them a transaction fee. You know, when we've modeled the year, we've modeled all the scenarios, and it is a net positive any way you look at it for Lightspeed. Good. No, I appreciate the, you know, the confidence in doing it now. I think it makes sense with the unified platform being done. Last quick question, just on the marketing, the branding in this moment now, right, to take advantage of it, are you gonna do anything unique on the sales and marketing front here beyond the outreach that you described? Well, look, you know, we've hired a new chief marketing officer. She was at Klaviyo before and Dropbox. We've hired somebody that's definitely gonna step up our game. I think for me, when I look at marketing... you know, that's where I get probably very emotionally excited is if you actually look at our restaurants and our retailers and how they use the platform, they use us for everything. They use us to run their email campaigns, to manage their food, to manage their menus, to manage their kitchens, to manage back office, to manage... I've always said it's the hidden side of the iceberg. We truly are, you know, the core platform running their businesses, and I think we need to do a better job at being the go-to brand and making that very clear that we're not just a cash register, we're not just a POS, we run their businesses. Yeah. The big mandate here for Kady who's joined us, is twofold. One, to ensure that we become the go-to platform globally for the, call it the higher GMV SMBs, and ensuring that... I think we need to develop the brand in a much stronger way. Your next question comes from the line of Josh Baer of Morgan Stanley. Please go ahead. Great. Thanks for the question. Just wanted to clarify, which of the location disclosures will be moved to annual disclosures? Hey, Josh. We won't disclose annual total location count, quarterly, but we will on an annual basis. You'll get that from us yearly. We did disclose it this quarter at the year-end, that the total location count was 168,000 locations, outside from Ecwid at the end of March 2023. Okay, thanks. I'm assuming we'll still get ARPU on a quarterly basis? What we wanna make sure is that everyone has all the, you know, the pieces to model the business. We expect subscription revenue, as we've said in the past, to grow annually at a rate of about 10%, GPV to continue to grow 50%+ year-over-year, and we also expect overall gross margins in the 40%-45% range. Between those components and ARPU, we'll ensure that you have what you need to continue to model our business. Your next question comes from the line of Koji Ikeda of Bank of America Securities. Please go ahead. Yeah. Hey, guys. Thanks for taking the questions. A couple from me here. And I wanted to kinda go back to the unified payments and the POS initiative. Just, you know, just digging in, wondering if you could talk a little bit more about, you know, if customers opt out? You know, can you talk a little bit more about what sort of fee is involved if the customer does not or decide not to use Lightspeed Payments? Is that gonna be same around the world? You know, is it a monthly fee,% of transaction? Then, you know, how do you think about churn assumptions or longer sales cycles due to this initiative that is embedded in the guidance? Great. Okay. Let's start. I'll start with the easy one, which is sales cycles. We have already launched payments now, and we have a, you know, a couple of months under our belt, sorry, globally. Here we have seen zero change in length, zero change in close rates, and we've seen higher ARPU. On that front, extremely confident that this is not gonna be a, you know, an impairment to growth and to attracting the right customers. Yeah, on that front, feeling very confident there. Going back to churn assumptions, we do not believe that churn will be high as we launch unified payments to our existing customers on the cohorts that matter. We believe that the high GMV merchants will actually love what we're doing because the bigger the merchant, the more they need automation, the more they need speed of transaction to check out, the more they're gonna like unified payments because it is the best way to provide the best experience to your customers in a very fast and efficient way. We think that those that might not are. We see them as the more emotional customers, which are the lower GMV ones. Those we think that churn is gonna be high, but it's not that important to us given that 5% of our total GMV comes from, you know, the customers under $200K, and that is a significant amount of customers still. I don't know how to answer this differently, but we're feeling really confident around bringing the customers that matter that are gonna have a really big impact on revenue for Lightspeed and growth on ARPU. If they don't, just being very clear, if they do not want to. At the end of all of this, they've all received communication, and they're gonna continue throughout the year in all the other regions that says that, you know, they have a grace period, but at the end of this grace period, if they don't use Lightspeed, they have two options. They have one option is to go and find another vendor, which is okay for that cohort of customers. The second option is they can use Lightspeed Payments, but they're gonna be charged a transaction fee. In the U.S., it's gonna be about 50 basis points, which is again, very much in line with the, you know, other vendors who are proposing this to their customers. That's just being very clear. That's the scenario. We do not believe that there are many customers who are gonna go with the transaction fee, and we've modeled the churn assumptions to levels that, you know, I think we've been very conservative. Even in those scenarios, when we look at, you know, our guidance for the year, we're very confident in it. Got it, JP. That's super helpful. Then my follow-up here, and it's really on the withdrawal of the 35%-40% organic revenue growth guide. I'm trying to really reconcile here the positive comments, you know, the long-term strategy, the payments rollout. I do understand the caution with the macro and maybe just you know, a tilt of caution with the payments initiative just because it's so new. It does sound so long-term positive for the business. You know, what other factors are coming into play or anything else to specifically call out for the reason to withdraw this, the medium-term guide here, the 35%-40%? Thanks, guys. Yeah, absolutely. You know, the main factor for the withdrawing the 35%-40% or actually, you know, the 23% outlook that we're providing for the year is actually that the company will be focused on unified payments in the first half of the year. You're seeing that come through in the revenue guide for the first quarter. For example, our account management teams that are typically focused on upselling our base will be focused fully on onboarding 5-6x the number of customers that we typically onboard. You're seeing the impact of that in the first half of the year as the company is gearing up to onboard, underwrite 5-6x the number of customers that we typically would. In the back half of the year, as the company, you know, that launch of unified payments is behind us, the initial launch, and we get the benefit of the added volumes of all these customers coming on to unified payments and using Lightspeed Payments, we start to see very strong momentum and strong revenue growth in, you know, as we exit fiscal 2024. Yeah, just maybe just clarifying. The difference between software and payments is, and I know I said it, but in software, when you sell and the customer buys your software, it immediately translates into revenues. On payments, and especially with the unified payments approach, you know, in some cases, we're giving our customers a quarter to move because, you know, the larger ones takes a lot of time to deploy. That's why, yeah, it's a year of two halves, basically. First half is. That's why, again, going back to why we withdrew is for this year, we're certainly not, you know, giving the guidance that we had historically given, and that's because it's two halves. Even though we think we'll end the second half in a very strong position. Your next question comes from the line of Suthan Sukumar of Stifel. Please go ahead. Good morning. A couple questions from me. Firstly on the go-to-market piece, you know, it sounds like your sales model has been evolving to more direct sales outbound, to go after the higher LTV merchants, which obviously makes sense. How are you thinking about your CAC? I'm just kinda curious how that's been trending given the higher LTV potential. Do you also see opportunity for more focused investment from a sales and marketing standpoint to drive more impact with these large merchants? Just again, being very clear, the CAC hasn't changed, and I think that's the good news is your CAC hasn't changed, but now we have all customers who are buying payments. On a unit economics front, we've seen really good progress there. I think going back to Of course, outbound is slightly more expensive than inbound as we can all imagine. Here, again, if you're attracting high GMV customers and they're all attaching payments, you can easily afford a slightly higher CAC because your payback is gonna be shorter because your customers are on payments. If you go for the right segment of customers, you're actually gonna have better unit economics. That's, you know, that's how we run the business. That's always, you know, it's always gonna be how we run it. I think for us, we're just obsessed around unit economics. That's why we do believe, and again, if I have to just on a macro map the year, as we end the year and we have more and more customers on unified payments, we will be investing more in go-to-market just because our LTV is gonna be stronger and just because, we'll have unified payments with everyone. I think here, going back to description of the year, first half of the year is about execution, bringing as many customers as possible on payments. Second half of the year is tailwinds of payments. We'll see high growth in revenues, and it'll also enable us to invest way more in attracting more customers. That's how we view it right now. I think just being clear, the CAC over the last year has really gone in the right direction. It's actually not increased. It's been declining. Thank you. That's helpful. next I wanted to touch on the competitive landscape. Curious what you're seeing in terms of the competitive intensity in the market today. Are you seeing competition or rather competitive intensity increase as you move upmarket, or is it largely consistent with what you've been seeing in prior periods? I think we have two big categories of products, and I'm just gonna go through both of them. On the retail front, you know, we now have our new platform. We are extremely competitive everywhere in the world. I think we are the go-to everywhere in the world for more established merchants. We're even seeing customers actually move from other platforms because they scale off the other, the other, you know, cloud-based systems. Actually, we are very excited because what they're telling us is even our e-commerce capabilities are now, they would arguably say better than competition because we've been hard at work for two years, I mean, rebuilding from scratch our retail platform. It's brand new, no technical debt, state-of-the-art. Really what we're hearing from our customers, it's better than it's ever been, and it's extremely competitive. I mean, I think we are the go-to globally for retail. Unfortunately, GMV in that segment, and retail has not been as good as hospitality, but that is really the strongest suit for Lightspeed globally. When you take hospitality, I think hospitality, we have basically two large markets, and I'll start with what I call outside of the U.S., rest of the world. Rest of the world, we are the global dominating go-to merchant for established. If you go to, you know, you go to London, you go to Paris, you go to, you know, Germany in any city, we are the kinda go-to platform, and we're not seeing any competition there. Really, we've spent a lot of time just making this better. We've launched actually, you know, you might have read yesterday, we've launched a new version of our Lightspeed Restaurant, and really we think that's really good. In the U.S., we, you know, we have a competitor called Toast that's doing really well. In the U.S., we don't wanna own everything in the U.S. What we wanna own are the fine dine Michelin star, more established merchants, and actually very excited about the launch we did yesterday because that launch is a bundle of basically hardware, software, analytics, and it's very adapted. I mean, that was focused really on the U.S. market. Maybe just as an example here, the point of sale, which is on the iPhone, is also your payment terminal. That is major for the larger restaurants because now mobility comes at no cost. You don't have to now buy an extra payment terminal. Your iPhone is your payment terminal. I think we're one of the only ones out there now that has launched this, and it's just much slicker than anybody on the market. That's why I'm not saying we wanna own the entire market. We wanna own the more established, the Michelin star, fine dine, and also all restaurants associated to hotels and resorts, and you've probably read the announcements there. That's the strategy. In those segments that I just described, we're feeling really good about the product. I think the most important part, you know, my background is really product. The most important part is that these products are brand new. This means it's new code, this means there's no technical debt. That means that as we go into the next year, we will be delivering at a much faster rate than we have historically because we now have two products that are brand new and that are extremely competitive. That means our velocity in terms of development is gonna be really strong. Great. We'll take one last question, and try to make it quick, please. Your last question comes from the line of Richard Tse of National Bank Financial. Please go ahead. Yes. Thank you for taking my question. In the release, you talked about sort of the Rule of 40. I'm kinda curious to see, you know, what's your ideal balance of sort of growth and profitability, you know, as you look forward over the next couple of years. If I can kinda just slip another one in. I'm kinda also curious to see of the proportion of your customers that have adopted payments, how many of those, you know, on a% basis, have taken on Capital? Okay. I'll maybe start with Capital. Capital is very small right now. You know, we're just getting it launched. We just recently released it in the product. You know, the story around Capital is you need to surface the right offer at the right time. We're putting a lot of efforts into that. You know, as Asha said, we pre-approve a lot of our customers. When they're in a workflow of reordering, that's when you pop up the offer, and it's great for them because it's just easy access to funds. And for us, it's great because we withhold on the sales side, so default rates are very low. And we know everything about our merchants, given we run their businesses. Sorry, I forgot the first question. Rich, what was the first part of the question? Sorry about that. It was between growth and profitability, you know, as you. Oh, yeah, sorry. Yeah, Rule of 40. Look, we are gonna run the business this year really focusing on trying to be as close as possible as we end the year to the Rule of 40, and we are gonna run the business on looking at sales efficiency. I think we gotta do better there. Naturally, as we deploy payments, that's gonna look much better. I think for us, and I'm again, I don't think we have any significant market share. I think the market is up for grabs. For me, it's gonna be the balance between, you know, how much do we reinvest, and if the unit economics are good. You know, I guess the other way to say it is, I'll put it differently, we know that our cohorts or, you know, grow 110% year-over-year. We know that our customers in the right segment are gonna stay with us forever and continue buying more, we know that we have no significant market share for now. I think we need to show that we can be break-even or better, show we can be profitable. I wanna be able to, if we define to double down on getting the market, because I think there's a real opportunity out there to build a much larger company than we have today. I think if the units are strong, we need to double down on going after the market. That's how we're looking at it right now, is Rule of 40 is gonna be always weighted towards growth. We need to be able, if we want to show that we can be, you know, profitable as an organization. There are no further questions at this time. I would now like to turn the call back to Gus Papageorgiou for closing remarks. Okay. Thanks, everyone, for joining us today. If there are any follow-up questions, please reach out to the IR team. We look forward to speaking to you again after our next quarter. Have a great day, everyone. This concludes today's conference call. You may now disconnect.