Thank you for standing by. My name is Bailey, and I will be your conference operator today. At this time, I would like to welcome everyone to the Lightspeed First Quarter 2024 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press star and the number one. I would now like to turn the call over to Gus Papageorgiou. You may begin. Thank you, Operator. Good morning, everyone. Welcome to Lightspeed's Fiscal Q1 2024 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 first quarter 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 JP. Thank you, Gus. Welcome everyone. Thanks for joining us this morning. Overall, I was very happy with our results this quarter. Revenue came in better than expected, with revenue growth of 20% versus the approximately 14% contemplated in our outlook. Our GPV volumes increased by 56% year-over-year, and our adjusted EBITDA loss of $7 million came in lower than our outlook of adjusted EBITDA loss of $10 million. As I mentioned in our last conference call, this year, fiscal 2024, Lightspeed is focused on execution and better aligning ourselves to the Rule of 40 financial metrics. Our main goals for the year remain the same, namely: reach the benefits of One Lightspeed, accelerate revenue growth for financial services, including both Lightspeed Payments and Lightspeed Capital, continue building products that solve our customers' problems and help them run their businesses, particularly with our supplier network. Finally, accomplish our goal of becoming adjusted EBITDA break even or better for the full fiscal year. In terms of One Lightspeed, we are closer than ever to deploying our flagships in all key markets. At the end of the quarter, we attained fiscalization approval for Belgium, one of the last remaining markets where our flagship hospitality product was not available. We expect to receive approval in the province of Quebec for a full launch. One Lightspeed has allowed us to simplify our operations and reduce costs and complexity across the organization. I think more importantly, it's helping us win the right customers, the customers with higher sales volumes and more complex needs. Our data shows that these complex SMBs adopt more software and churn less. Growing our customer base with the right customers remains an important goal for Lightspeed. In this quarter, we saw ARPU reach all-time highs. Our flagship products are allowing us to attract customers who can take full advantage of our software platforms and whose high volumes drive our payments revenue. Let me share a few examples of new customers who joined Lightspeed this past quarter. In retail, we are pleased to welcome The Spice & Tea Exchange, with over 80 locations across the U.S., adopting our Lightspeed Retail offering. Women's designer clothing, Sol y Amor, with two locations in Maine, also adopted our Lightspeed Retail solution with e-commerce. In the UK, Bath House, a luxury fragrance skincare provider with six locations, has become one of our newest Lightspeed Retail customers. In the world of hospitality, we welcomed Australia's Kickon Group, an organization with six locations that operates large venues that range from full table service to classic pubs. We continue to expand our footprint in the important U.S. markets by adding March First Brewing. March First runs four breweries and tasting rooms locations in Cincinnati and have adopted our Lightspeed Restaurant offering along with Insights. We were honored to be chosen by Chef Teo Paul to power his four locations in the Greater Toronto area, including Michelin-recommended restaurant, Union. In golf, we were chosen by the Cove Cay Golf Club in Clearwater, Florida, who are now using our retail and hospitality platforms to run their golf academy, restaurant, pro shop, and golf course. I'm thrilled to keep adding more names to our roster of customers around the world, but I also think it's worthwhile reflecting on the sheer scale and impact our platforms have had on growing our customers' businesses. In the 12-month period, ended May 2023, Lightspeed's hospitality customers have served over 1 billion meals and facilitated over 300 million dining experiences globally. It's very satisfying to me and the entire Lightspeed team to be a partner of growth and build innovative products and technology that impact both SMBs and their customers around the world. On the topic of scale, I also want to touch on Lightspeed's continued commitment to growing our sustainability impact as a global company. To date, we have planted more than 1.4 million trees through our Carbon Free Dining initiative, and our industry-leading inventory and ingredient management capabilities are helping reduce waste and streamline our merchant supply chains. In July, we published our second annual sustainability report, which is available on our website, and showcases how our customers are leveraging Lightspeed technology to transform the world and build vibrant, diverse communities. Moving back to One Lightspeed, this strategy has allowed us to attract the right kind of customer, but it has also led us to more successful R&D efforts. In this quarter, we were able to deliver several new products and releases that are directly responsive to our customers' needs. In hospitality, we were very excited to launch our Advanced Insights module in Europe. Advanced Insights gives our customers real-time access to their data and offers proactive suggestions for how to run their businesses more efficiently, and in a way that helps them comply with their obligations under GDPR. It is one of our best-selling modules in North America, one that often commands a higher monthly fee than the POS itself, and we hope to see a similar level of success in Europe. Advanced Insights is a major differentiator for our offering and something that separates us from the competition. In our continued commitment to create a best-in-class unified payments offering, we enabled next-day payouts for many retail customers using Lightspeed Payments globally, giving merchants access to their cash faster than we have ever done before, and twice as fast as many legacy systems can provide. We're hearing great feedback from customers who made the switch. Customers like Melissa Joy Manning, an ethically made jewelry store with 2 locations in New York City. I think Lightspeed benefits our business daily, and we're saving a lot of time in the reconciliation process. We're also saving a lot of money in fees, and it's made the business much faster, much easier, and so much cheaper to operate on that end. We also enabled self-service capital for all eligible customers in Canada and expanded Lightspeed Capital into new regions, including Australia. In retail, we enabled multilayered pricing that allows our retail customers to charge different prices by location or customer group, a feature we believe is unmatched by our competition and highly sought after by high-volume merchants. At NuORDER by Lightspeed, we released assortments for brands, allowing brands that operate their own retail outlets the ability to visualize inventory in the cloud, optimizing inventory allocation, and identify merchandising gaps. This technology is being successfully used by our retail partners, and we're excited to bring its benefits directly to brands themselves. Moving on to Unified Payments. Last quarter, we announced the introduction of Unified Payments, our initiative to combine the power of POS and payments into one platform. By making it mandatory for eligible new and existing customers to adopt Lightspeed Payments, we are confident that more and more Lightspeed customers will soon experience the positive impact a unified platform can bring to their businesses. Last quarter, we notified eligible retail and hospitality customers in North America that they will have to adopt Lightspeed Payments. For new eligible customers, we made payments mandatory. We will continue to launch this initiative to customers around the world during Q2 and throughout the year. I know many of you are interested in our progress. We are still very much in the beginning stages of this rollout. Overall, I'm encouraged by what we are seeing. First of all, I'm very happy to see that our close rates have remained relatively consistent since we made payments mandatory for all new eligible customers. This tells me that the new customers see the value in Lightspeed Payments and understand the benefits of embedding payments with the POS. What's more, sales cycles also remain unchanged, with deals closing very much within our typical timeframe. Thirdly, as I mentioned previously, our ARPU is now reaching all-time high, thanks to our deliberate efforts to target high GTV customers and to unify payments. We are getting these customers transactional faster, thanks to our efforts to improve the onboarding process. Finally, our biggest concern was that we would see customer churn increase substantially as a result of this initiative. So far, that has not been the case, as it remains within historical ranges. What has also become very apparent is how cost competitive we are. At this stage of our rollout, we are quite confident in telling our customers that we are able to meet or beat their current payments rates. Even though we aren't really competing on the cost, the fact that we can deliver a superior experience at a similar or lower cost is an added benefit to our customers. Overall, I'm convinced that unified payments will be a success. The big question in my mind really revolves around timing. For our larger customers who command the bulk of our GTV, we are being as accommodating as possible. If they require longer than two, three months to switch to payments, we are, of course, willing to work within their timelines. In the end, the goal for us is to get all of our eligible customers onto Lightspeed Payments, no matter how long it takes. I also wanted to address our supplier network, which continues to be a key strategic priority for this company. We were happy to add John Shapiro to our product and technology team as our new Senior Vice President in retail, to help further integrate the supplier network into our core platform. John recently joined us from Wayfair, where he was responsible for the global supplier product and design organization, and was previously at Intuit, where he was Director of the Product Management for QuickBooks, including serving as the GM for QuickBooks Payments. I expect John to help advance our ambitions here. I remain encouraged by the feedback we are seeing from our customers and the potential for increasing monetization of this network. Lastly, in terms of profitability, again, we are committed to being adjusted EBITDA breakeven or better in fiscal 2024. Given that the year started off better than expected, I believe we are in a good position to reach this goal. At the risk of repeating myself, I want to make it clear to investors that we are 100% committed to achieving it. I 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 to Asha to take us through the quarterly results and provide outlook. Thanks, J.P. Overall, Lightspeed started the year strong, delivering revenue and an adjusted EBITDA loss that were better than our previously established outlook. We continued to execute on our strategy of attracting high GTV customers and expanding our payments offering across our new and existing customer base. On today's call, I will provide a recap of the quarter, discuss the progress of our Unified Payments launch, then provide an outlook for the upcoming quarter and full year. I was pleased with the progress we've made this quarter. Despite the attention and resources that our Unified Payments initiative is demanding, we were able to maintain our discipline on costs, increase the number of high GTV locations, and drive towards our goal of adjusted EBITDA breakeven or better for the fiscal year. I was also happy to see our total cash balance, excluding merchant cash advances, went down by less than $10 million in the quarter. In the quarter, revenue came in at $209.1 million, an increase of 20% year-over-year and ahead of our previously established outlook. Subscription and transaction-based revenues grew by 21% year-over-year. Subscription revenue increased 7% year-over-year to $78.7 million. Gross margins on subscription revenue remained consistent with last quarter at 75%, the highest in the past 2 years, thanks to a dedicated effort to consolidate cloud vendors and improved overall efficiencies. I want to stress again that in the quarter, our account management team, which is usually focused on upselling our customers on software, has been temporarily assigned the job of onboarding new payments customers. Our account management team historically accounts for half of our added software MRR in any given quarter, and so it was encouraging to see that despite their temporary reallocation of duties, subscription revenue grew by 7% year-over-year. Transaction-based revenue grew 32% to $121 million. In the quarter, we saw gross payments volumes increase 56% year-over-year to $5.1 billion, as a greater portion of our GTV went through our Lightspeed Payments platforms. Gross margins for transaction-based revenue came in at 26%, down from the previous quarter and year-over-year. There were several factors that negatively impacted transaction-based gross margins this quarter, including costs associated with unified payments. We expect many of these factors to dissipate next quarter. Total adjusted gross margin, which excludes the impact of share-based compensation and related costs, came in at 43%, down from the previous quarter and year-over-year. Adjusted gross profit dollars came in at $89.8 million, an increase of 13% year-over-year. Adjusted EBITDA in the quarter came in at a loss of $7 million. This is much improved from an Adjusted EBITDA loss of $15.6 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 last year. Total adjusted R&D, S&M, and G&A costs increased by only 5% from last quarter, despite the added costs of our sales summit and annual salary increases that were put through this quarter. We had an adjusted loss of $2.2 million versus an adjusted loss of $17.6 million last year, thanks largely to the improvement in the items driving our adjusted EBITDA loss performance and growing net interest income in the quarter, which increased by approximately $8.4 million from a year ago. Share-based compensation and related costs came in at $18.7 million, down from $38.3 million a year ago, coming in at approximately 9% as a percentage of revenue, down from 22% in the same quarter last year, and flat to our previous quarter, once removing equity accelerations included in restructuring. In the past few years, share-based compensation has been elevated, partially due to equity incentives granted to employees of the various acquisitions we have undertaken. GTV in the quarter came in at $23.4 billion, up 6% year-over-year. Omnichannel and hospitality GTV both grew at similar rates in the quarter. This quarter, we also continued to grow our complex customers with higher GTV tiers. Customer locations with over $500,000 a year in annual GTV grew by 10% in the quarter, whereas those with under $200,000 a year in GTV declined. In this quarter, the fastest growing cohort was locations with over $1 million in annual GTV, which grew 11% year-over-year. As we focus on more complex, higher GTV merchants, we expect the under $200,000 GTV cohort to decline. As a reminder, this cohort of customers continues to represent approximately 5% of our overall GTV. I want to add a little more color on what is happening with new location wins. As we keep stressing, our goal is to attract larger, more sophisticated customers who can take full advantage of our software platform. If I look at the ARPU, it has continued to increase, reaching all-time highs in the quarter. At the same time, our acquisition costs have remained relatively steady. We're also seeing our churn rates remain very much within our historical ranges. As a result of this increase in ARPU, we expect our payback period and LTV to CAC ratios to continue to improve, which bodes very well for our ambitions of being adjusted EBITDA breakeven or better for the fiscal year. As I mentioned, churn rates in the quarter remain consistent with last quarter, despite challenging macroeconomic conditions as well as the launch of Unified Payments. The vast majority of our overall customer churn is in the cohort of customers processing under $200,000 in annual GTV. We continued to grow the capital business in the quarter. Under normal circumstances, we would likely be pushing capital even harder. Given the current macro environment, we're being conservative on the ramp. There's no lack of demand from our customers, and we believe our high GTV customer base is an ideal demographic to use this financial service, especially in the long term. Risk of business failure is much lower with high GTV customers, but the need for capital is still substantial. In terms of our balance sheet, Lightspeed closed the quarter with just over $780 million in cash and cash equivalents, down from approximately $800 million in the previous quarter. The largest uses of cash were working capital items and the increase in merchant cash advances of $11 million during the quarter. Turning now to our Unified Payments effort. As J.P. mentioned, we are still very early in this process and are only now beginning to launch this initiative outside of North America. As a reminder, international markets account for approximately half of our total customer locations. In terms of our existing base of customers, what we are seeing is a strong contingent of customers adopting our payment solution almost immediately. In addition, the number of customers that are churning is lower than we expected. However, there's still a large number of customers that have not taken any action. In the coming months, they will see the new transaction costs on their monthly statements, and we expect that will act as a catalyst for action. Based on our experience, we are confident in our ability to match or beat rates for most of our customers, but we are not competing on cost alone. Lightspeed Payments allows our customers to save time and money and gives them unprecedented insights into their operations. Our value proposition is very strong, and in addition, we continue to deploy technical support, contract buyouts, and free hardware to our customers to help them in this transition. That is why we believe this initiative will be a success. Now on to outlook. I was encouraged by our performance this quarter. We believe that our business remains incredibly strong, with abundant opportunities for sustainable long-term growth. We continue to add higher GTV customers, and our new platforms, combined with the Unified Payments initiative, is helping ensure our LTV to CAC ratios are headed in the right direction. I believe we have established the foundations to accelerate towards a Rule of 40 financial metric as we exit the fiscal year. Our key concerns remain the overall macroeconomic environment, as well as the timing of Unified Payments. Transaction-based revenue is over 50% of total revenues and highly dependent on GTV growth. Despite the growth in GTV we saw in the first quarter, we are being increasingly cautious on the macro environment, given central banks continue to increase interest rates. As a result, we are keeping our GTV expectations modest. Additionally, although the signs are promising, it is still too early to determine the full impact of our Unified Payments efforts on our fiscal year. Our key concern here is on timing. Our end goal is to get our eligible customers onto payments, but we want to be as accommodating as possible. After all, we are here to try to help our customers. This may impact the overall time it will take to get our customers transactional. For the second quarter of fiscal 2024, we expect revenues between $210 million-$215 million and an adjusted EBITDA loss of approximately $4 million. For the full year of fiscal 2024, given the macro uncertainty outlined above, we continue to expect total revenues of between $875 million and $900 million, with break even or better adjusted EBITDA. We expect both revenue and adjusted EBITDA performance in the second half of the year to be significantly better than the first half. With that, I will pass the call back to JP. Thanks, Asha. Before we take your questions, I thought it's worth highlighting one more item from our sustainability report. A third of the executive roles at Lightspeed are occupied by women, which is approximately three times the average of the tech sector for women in leadership roles, an accomplishment I am proud of. We are committed to hiring and promoting the best and brightest in this company, and maintaining a diverse workforce is crucial to obtaining this goal. So far, our fiscal 2024 is off to a good start, our goals are simple: 1, benefit from One Lightspeed; 2, expand payments; 3, build great product for our customers; finally, 4, get to profitability. We are fully committed to meeting these goals. With that, I will turn it over to the operator to take your questions. At this time, I would like to remind everyone in order to ask a question, press star, then the one on your telephone keypad. We will take our first question from Daniel Chan with TD Cowen. Your line is open. Good morning. Nice to see some good progress on the payments front. Sounds like there's some uncertainty on the timing going forward. Are you still on track to get the majority of customers on payments by the end of the year? Hey, Daniel. Thanks for your question. It's Asha. What we had committed to was a North America launch in both hospitality and retail, and then APAC and Europe follows. We had mentioned that we expect the penetration to be in the 30%-35% range as we exit the year. You know, we're still very much aligned with that trajectory. We have to keep in mind that when we say the majority of our customers, we have to keep a couple things in mind. There's still certain verticals that we don't underwrite and certain regions where Lightspeed Payments is still not available. We plan to unlock those regions in the coming quarters and verticals as well. The, the goal that we had outlined at the beginning of the year for fiscal 2024, we're still very much aligned with that. Great. Thanks for that, Asha. Then on the fiscal 2024 guidance, you reiterated that despite the beat this quarter, relative to the guidance that you had. Anything to call out there that's, that's changed that, you think in, in the next three quarters, you called out macro and timing, have those gotten worse than what you expected, last quarter, considering the beat this quarter? No, not at all, actually. The, the beat in our first quarter really resulted from two things, as you mentioned. The first is gross payments volume growth, better than expected, and that's just given the verticals where we're well penetrated on payments. As well as some early signs that are quite encouraging on Unified Payments, such as lower churn than we forecasted, as well as time to transact much more quickly in certain contingents of customers. However, as we look forward into the, the, you know, the following three quarters, we're choosing to remain very modest on our GTV assumptions. We do believe that the end consumer hasn't fully felt the impact of rising interest rates and inflation, so we're actually being more modest on our GTV expectations for the next three quarters. With respect to Unified Payments, we have to keep in mind that 50% of Lightspeed's customer base is international, and we haven't yet fully launched in those markets. You know, we don't wanna take the early encouraging signs of Unified Payments and apply it to those regions. We feel it's still early days, and we're choosing to remain cautious. Thanks. I'll pass them on. Your next question comes from Andrew Jeffrey with Truist Securities. Hi. Good morning. Appreciate you taking the question. I wanted to dig in a little bit on retail versus hospitality trends. Interesting to see that both categories are sort of growing at the same rate right now, and I appreciate, Asha, the high-level macro commentary, but that's a notable change from recent periods. How would you sort of anticipate those two categories growing? It sounds like there may be a shift back to more sort of discretionary spend from experiences, and, and maybe you could parse that by geography a little bit, just a little more color on expectations. Uh, thanks- Do you want me to start, Asha, and then we can. I think it's very similar to what we talked about last quarter. What people are wearing to go to restaurants, those categories are doing well. We're seeing luxury apparel, apparel, footwear, and also jewelry going very well. We're continuing to see, call it the COVID, net positive not do that well. Outdoors, sports, bikes, are have still not recovered and are still down year-over-year. On the hospitality side, we're seeing still good demand globally. I think for us, we just wanna remain cautious because we think there might be, you know, we don't know what's gonna happen, but we wanna be cautious as we get into the second half of the year. Okay. No, I, I can appreciate that, given the uncertainty. Just wondering whether or not some of the sort of fee issues that have arisen, customer fee issues that have, that have arisen in the U.S. with sort of a nominal competitor and some of the noise around that has helped, has hurt, has made your selling motion any easier. I know you're not big in U.S. restaurant, but I wonder just generally the cost of payments for merchants. It sounds like you think you have a price advantage. I wonder if you're sort of seeing anything in the market that's notable in that regard. Maybe on payments, what we're seeing is once customers use Lightspeed Payments, they love us. I think that's very encouraging to us. They're saving time, they love the consolidated reports, they love the, the actual hardware and, and the ease of use and, you know, mobility, and all of these are important. I think what they like also, is they're getting all of that at a rate that is very competitive. We're so confident now with our rates, that we're, we're telling our customers we're gonna match or beat your rates, regardless of what happens. I, I think what we're seeing is that people view Lightspeed as a very good choice, at a, at a good price. Again, we're, we're seeing our close rates, and I think maybe that's the most exciting to us, is, you know, with Unified Payments, we were really looking at making payments mandatory for all new customers. Here, what we're seeing is our close rates are just as good, our times to close are just as good, and ARPU has gone up pretty significantly because a lot of our customers are now using payments. Nothing to, to add, except that we're, we're very happy with the outcome for now, but we wanna stay just cautious for the rest of the year. All right, appreciate it. Your next question comes from Thanos Moschopoulos, with BMO Capital Markets. Hi, good morning. With respect to the costs for transitioning customers to payments, such as buying out their contract, the hand-holding required to get them up and running, are, are those trending pretty well as expected, or is there anything to call out in that regard? Hey, Thanos, thanks for the question. Those costs are actually trending, slightly better than the expectations. What we are finding, and again, we, you know, it's only really the North American launch, just 'cause it's very, very early days for the others. But we are finding in North America that there's a lot less hand-holding, that our customers are requiring. Many customers are not requiring on-site installations. We still have, some significant costs of Unified Payments in the quarter, and we expect to have some in Q2 as well, but they are lower than the original expectation. Okay. Then, as far as subscription revenue, just given some of the puts and takes you referenced, how should we think about the trajectory? Would you expect growth to be sort of similar to what we saw this quarter through the remainder of the year, or any color on that line? Yeah, for the first half of the year, we expect a softer subscription revenue growth. We do expect that to improve slightly in the back half of the year, but, you know, as we said, last quarter, fiscal 2024 for us is really the year of execution on Unified Payments. So, you know, even for the full year at large, we, we do expect overall subscription revenue growth to be softer than what we've seen in previous years. Once we exit the year, we expect that to improve to, to historical, more historical levels. Great. Pass the line. Thanks. Your next question comes from Koji Ikeda with BofA Securities. Hey, guys. Thanks, thanks for taking the question. I, I got a question on GPV here as a percentage of GTV. In the quarter, 22%, you know, that's great, an increase of three points quarter-over-quarter. And the way I understand it, is much of that near term growth is fueled by payments adoption. As payments get more and more penetrated within your, your base, GTV becomes. It should get back to GTV as a driver of growth, and that metric grew 6% year-over-year this quarter. How, how do we think about the puts and takes with GTV growth over the next 12-24 months? That's- thanks, thanks for the question, Koji. You're right, or, or you're absolutely right. The, the relationship between GTV growth and GPV growth today for Lightspeed is, is quite disconnected because it, you know, we're only 22%-23% penetrated at the end of the quarter. As, you know, as we become more and more penetrated, GTV growth will become, you know, much more aligned with our, our gross payments volume growth. What we need to keep in mind with the, the 6%, which was, you know, single digit year-over-year growth, not, not super high, is the fact that 50% of our locations at Lightspeed are outside North America. So, you know, we have- we do have some FX headwinds that are impacting that number. In addition, there are certain verticals where we're well penetrated from a GTV perspective, like as JP mentioned, and they're still declining year-over-year. So that is impacting our overall GTV growth. We do find that as we focus more and more upmarket on the over 500K cohort of customers, as you know, is our, our main focus, that we do expect that Lightspeed's GTV growth year-over-year should be better than the overall GTV growth in the SMB market. Got it. Asha, thanks for that. One follow-up if I may here. In your prepared remarks, you were mentioning capital, and you mentioned that you would be pushing harder, but given the macro, you're being conservative on the ramp. Then you also mentioned that there is demand for it. If there is demand, why not push a little bit harder for capital? Yeah, you're, you're absolutely right. Capital is a very promising business for us, but what we have to keep in mind is that it still represents today, a low single digit millions in terms of revenue. You know, when the company is fully focused, our sales teams are fully focused on Unified Payments, there, there was some distraction in the quarter on capital. In addition, we wanna make sure that, you know, in today's macro, that we're not rushing anything. We wanna make sure that we ensure that we stick with the very, very high, credit rated customers for eligibility. You're absolutely right, there's, there's tons of demand. We are taking our time, intentionally, given the macro. Our default rates still remain extremely low, but we definitely should see that pick back up in the back half of the year when, Unified Payments is behind us. Got it. Thanks. That makes a lot of sense. Thank you so much. Your next question comes from Matt Coad with Autonomous Research. Hi. Hey, guys. Thanks for taking the question here. Just one on Unified Payments. You guys mentioned that the gateway, like, fee that's gonna be implemented is going into effect in a couple months. Just curious if you could kinda, like, bifurcate for us. Is that strategy just focused on the smaller customers, or will that be impacting the larger customers as well? Like, any, any color there on your strategy would be helpful. Yeah, that fee is really the stick. When you look at our unified payment strategy, what we're trying to do is we're trying to get all of our customers on payments, and I think that's the expected outcome, is we want everybody on, on, on unified payments. What we're doing there, the carrot, is we're giving away hardware, we're giving away installation, we're, we're, we're beating your rates. You know, we're committed to matching or beating your rates. We're sending people on site. We're giving a lot. The stick here is we're saying, "Well, if you don't move to Lightspeed Payments, we're going to be charging you a transaction fee of 50 basis points." That's been now communicated to our customers. We have a certain percentage of our customers that are now paying this fee. Just, just being very clear, we have a, a whole set of people that are actually reaching out to those customers that are paying this transaction fee and telling them, "Hey, you shouldn't be paying the fee, because you'll be, you'll be paying way less if you're using Lightspeed Payments." It is just a stick, and it's... Did we lose him? Hey, I think, I think we lost JP. I'm gonna continue, but I think to answer your question, I think JP answered it. You know, we are ensuring that the transaction fee at 0.5% is across the base. It's not just for the smaller customers. So we are finding that there's a large contingent of customers that have taken the transaction fee. Still very early days on Unified Payments, and what we are doing is reaching out to those customers to ensure that they understand the implications and trying to, you know, again, reiterate the benefits of Lightspeed Payments. So far, you know, there's no concern on our end there. Awesome. Super helpful, Asha. One, one other one, just on the transaction-based gross margin, you mentioned the one-time items there. Could you just kinda, like, walk us through the puts and takes of should we be modeling that similar to what we've seen in the past couple quarters? Should that be coming down a little bit due to mix shift? Maybe payments is growing faster than capital. Just any, any puts and takes there would be helpful. Right. The transaction-based gross margins. You're right. There were several temporary items impacting the margins this quarter, one of which is the one-time costs or the launch costs on Unified Payments. We do expect that to dissipate in the coming quarters. There will still be some launch costs in the second quarter, but beyond that, we expect that to dissipate. The commentary on Lightspeed Capital, we should see that improve in the second quarter from the print that, you know, you've just seen in Q1, and to further improve in the back half of the year. Those are the one-time items that will improve, and we do expect transaction-based gross margins and overall gross margin growth year-over-year to improve in Q2, and then improve even further beyond. We have to keep in mind, referral fees are declining as expected. That's not one time, and that will happen every quarter as we take those cohorts of customers onto Lightspeed Payments. We do expect Q2 and beyond's, transaction-based gross margin and overall gross margin to improve, given the one time. Thanks, Asha. Your next question comes from Richard Tse with National Bank Financial Markets. Yes, just had a question on certain payments adoption and obviously with the focus on larger merchants. What are your existing large merchants saying in regards to adoption? Like, you know, what do they need to be condensed on? Like, you know, what's sort of any obstacles for their adoption? I'm sure you've had conversations with them, but if you'd be willing to share that, that'd be helpful. Yeah, I'll take this one. Sorry, I, I got kicked out earlier on. The higher GMV merchants are actually more inclined to go with Lightspeed. It's a much easier conversation. It's a business conversation, at the end of the day, what they want is they want... They're, they're really focused on optimizing productivity and optimizing, you know, number of transactions per employee, basically. Here the conversation is very easy. It's like: If you can accommodate my rates, cool. Let's go. Let's do it. I think the conversation is actually easier with the big ones than the small ones. The only thing with the larger ones that have multiple locations, you know, like, you know, I don't know. Well, what happens there is there's a rollout. Between the moment they say, "Yes, we're ready to go ahead," and we roll it out to all of the 80 locations, it takes, it takes time. Generally speaking, we're feeling very confident with the, the high GMV merchants, because the conversation is really a business discussion, and, and there's no emotions. It's really around productivity. Okay, thanks. I think you touched briefly in your prepared comments about NuORDER. Can you give us a sense of, you know, what that revenue model may look like going forward now that you've sort of had a bit of time with it? Then also, you know, the potential timing of, you know, when that sort of commercial model would be available. Yeah. as you know, NuORDER is a business by itself inside of Lightspeed. They work with brands, and they, they basically are the pipeline for distribution of all, of all their goods, you know, to, to, to all the networks for, for the brands. That's been in place. That's continuing to generate revenue. Every, every quarter, we're continuing to sign big brands. Here, the real value of, of NuORDER for Lightspeed is, is the network between the brands and the stores. We, we have nothing for this year, that is in our revenues for that, so we're continuing to develop. What we are seeing is that for the stores that are using Lightspeed and NuORDER, they're seeing tremendous value. We're seeing the NPS score of those customers much higher, and they actually think this is, you know, we heard it's better than sliced bread for them because of all the time they're saving and removing pen and paper and being more efficient. We're confident in NuORDER for the future. We are investing a lot this year in the development to continue to integrate it in a very tight way into Lightspeed. We actually hired John Shapiro, who's now gonna be leading this initiative for Lightspeed. He's a pretty senior executive with a lot of technology background with suppliers and POS. We're progressing well, but we're being cautious again. There's no revenue this year recorded for the integration. We think we need to, you know, spend another, you know, till the end of this fiscal year, continuing to do these integrations before we see the benefits. Now, the benefits we're gonna see, as I've always said, through distribution. We will be between the brand and the store, so we will help brands to find or identify new stores. We will also help brands see sell-through, you know, throughout the entire Lightspeed network so that they can, they can readjust manufacturing. Finally, for the store, we think there's huge value there as a differentiator, where, you know, we're gonna automate everything that's manual with our competitors. I, I think it's a very exciting, as, as we've always said, a very exciting product. We are... I mean, we're building history here, and it's gonna take time, but we are very confident in the outcome once this is done. Okay. Just a quickly last one for me. No doubt, your balance sheet is strong, so you've got a lot of financial flexibility, and with this sort of path to break even or positive EBITDA exiting sort of the year, you do have sort of increasing flexibility. What do you think, you know, in light of the relative valuation on the stock, any possibility of kind of, you know, buying back some of your shares? Yeah, thanks for the question. We, you know, we talk about, we've talked about a stock buyback. We're always evaluating our options there. You know, we, we discuss it with our board regularly as well. It's, it's very important to us that we maintain flexibility around our options, whether it be M&A or anything of the sort. It's not. You know, we're not gonna be likely raising anytime soon in these markets, and so we're trying to balance buying back our stock with what we need the cash for. Things like our merchant cash advance business is thriving. So but we're, you know, we, we continue to evaluate our options there, but, but no, no real decision yet. Okay, thank you. Your next question will come from Jay Hyunseung Hong with JP Morgan. Jay Hyunseung Hong, your line is open. Hey, apologies. Hope you can hear me now. Thanks for the, the good detail here. I think Andrew asked you, JP, on the, on the Toast consumer fee that they initiated, and then they subsequently had to retract that. I'll just ask you more explicitly, any lessons learned from that? I know you're going through a transaction fee intro, and you're bracing for, and expecting a good, good outcome, but I'm just curious if there's any lesson learned from that and, and how you might respond to, any negative feedback. Yeah, I, I, I think the only comment I can make. This is not a short term. We're not here for the short term, and I think you have to be careful when you just jack up prices, you know, just because it, it, it's a fairly easy exercise, you know, to, to grow revenues by just increasing, increasing, increasing fees in a, in a way that's not acceptable to the customer. I think for me, the feedback is we have to be cautious, and we, we look at our customers as a long-term relationship, and so we have to, we have to act well, and especially in the context of Unified Payments. You know, we, we, we want our customers to know that we will not... You know, because I think it's a question of power. Once you have the power and you do everything for the customer, you, you have to behave well, and I think for us, we just have to be cautious in how we do price increases, and they have to be reasonable because if not, the customers are going to react very poorly to that. That's fair. Thank you. Your next question comes from Adhir Kadve with Eight Capital. Thanks, guys, for taking my question. Maybe just one on the unified offering. The new product developments that you guys talked about this quarter. Can you give us a sense of how the unified platforms are now kind of helping your cross-sell and up-sell motion? Are you finding that customers are much more recipient to it, given this tougher macro in terms of labor and everything around that? Absolutely. Actually, the reason why we launched Unified Payments when we launched it, when you look at the market, basically prices are going up, you know, cost of labor is going up, cost of goods are going up, margins are tightening, the only way out for, for our customers is to do more with less, that is really the main driver of Unified Payments, is we are helping our customers save time. You know, we, we, we have numbers, like productivity gains of 20% in some instances of customers. The idea of Unified Payments is to say, it's one solution. If you're a clerk and you're selling or you're a waiter, you don't have to, you know, pull out multiple things. Everything happens within one environment. I think when you look at the back-office capabilities also, when you look at reporting and you look at, you know. If you have two payments, if you have a payment platform and a POS, you need to consolidate those Excel sheets and figure out where the funds are going, whereas we give you a simple report at the end of the day. Time saving everywhere you look. Productivity gains wherever you look. I think that's really what's driving our customers to this. The last piece is access to funds, you know? We have a number of derivative products that are using Lightspeed Payments. The first one is capital. Once you're on Lightspeed Payments, we underwrite you for capital, so you can have access to capital. That is a big win for them and our customers. I think the last one that comes to my mind that is really important is our insights engine. You know, our advanced analytics, our Insights platform, that uses payments to give insights that they've never seen before. By the way, we just launched it now in Europe, Insights, with GDPR or helping our customers comply with GDPR, sorry. All of these are products that are really good and are really helping our customers with productivity and understand how to run a better business, and we are deriving a lot of products that are using payments at the core. Excellent. Thank you. For my second question, just on the customers who have immediately opted for the 50 basis point transaction fee, do you see an opportunity in the future to reengage those customers to kind of keep the conversation going? Or is it more of kind of like a one and done, and then you guys kind of leave them alone? No, no, no, it's an ongoing. I think that's really when you look at our-- when you look at Unified Payments, every customer that goes under, you know, "We don't have time, we're paying transactional, we'll look at this later," et cetera, those are the customers we really want to bring on to payments. A lot of our customers are just using the, you know, transaction fees because they don't have time right now. They, they, they think it's the wrong time of the... You know, if I'm a restaurant and I'm in France and, you know, I do all my money in summer at the beach, well, I'm not gonna use Lightspeed Payments. I'm gonna pay transaction fees. What we're trying to do-- at the end of the day, we do not want any customers paying transaction fees. We think that is not the right way to run the business, so we're doing everything we can to bring them on to Lightspeed Payments. As soon as they take it, we have a whole set of people that are calling them and trying to work out time frames to bring them on to Lightspeed Payments. Thanks a lot, absolutely. Your next question comes from Kevin Krishnaratne with Scotiab ank. Your line is open. Hey, hey there, good morning. I had a question, a couple questions on software. You mentioned that the cohorts, under $200,000 are 5% of GTV. Any sense of how much of your software revenue they account for? Hey, Kevin, thanks for the question. You know, we haven't typically disclosed the percentage of software revenue from that cohort. The way we look at our customer cohorts are, you know, the total net revenue that we get from the customer. When we look at it from that perspective, it, you know, the ratios are quite similar from the GTV, right? Obviously, the larger GTV customers with payments, since all, you know, payments is embedded now into our platforms, the larger GTV customers with payments obviously is very representative of the split. That's typically how we look at it. If, you know, in a, in a typical customer, if I just gave you an example of a very small customer, we have customers that are paying us $50 in ARPU a month on software. We also have very high GTV customers that are paying us $500 a month in software. So, you know, it really, it really, it's difficult for us to just cohort those customers, because even in the over 200,000 bucket, there's quite a large range. Okay. No, no, I appreciate that, and that, that kind of leads to my second question just on the larger merchants, you know, over $500 or over $1 million. You mentioned, you know, $500 as an example, but, you know, maybe bigger picture, even medium to longer term, how, how, how much do you think you can extract out of out of your, your best merchants in terms of of ARPU? Like, where, where do you think it can go? Yeah, I, I think we're early days, frankly. I think just, just look at a customer that has $10 million of GMV and add payments in there, and you'll see that basically the software becomes a small fraction of whatever they're paying. I think that's, that's why, you know, we're doing Unified Payments. I think that, that's, that's where we are obsessed. If we look at the basket, we look at all the tech that these customers are buying, and we think there's, there's room to go well above $1,000 a month just for software, for those higher ARPU customers. And that's per location. There, there's a, there's a lot of room to grow. One thing is certain, is we are... I, I, I said that a number of quarters, but we are doubling down the high GMV merchants, all the way from marketing to onboarding, to supporting, to how we, we, we position ourselves. We are going upmarket, that is really good for Lightspeed because ARPU is much higher, and we're seeing it actually. The new customers that have joined Lightspeed have a much higher ARPU than, you know, and every quarter, the ARPU seems to be growing. The new platforms command a much higher ARPU. We are doing what's right. We know that we could, we could get to much higher levels than we have today. The first step for us is, as we, we said, is Unified Payments, because that really moves the needle quite significantly, especially for the high GMV merchant. Got it. Appreciate the color, JP. Thanks. Your next question comes from Suthan Sukumar with Stifel. Good morning. Just had a question here on merchant growth. You saw fairly solid double-digit growth in larger merchants this quarter. Just curious, has that been changed from a selling motion here for you guys? Also, what are you seeing from a competitive intensity perspective as you, you know, as you continue to focus on larger merchants? Yeah, I, I think, the good news is the more, the larger the merchants, the less competition, okay? That's very simply because if you look at the, the larger merchants, you know, none of the other cloud-based competitors can, can offer what we do. I think that's why we're, we're really focused on that, because it has lower churn, higher ARPU, and, and lower competition. We have adjusted our sales motion, where now, you know, we're, we're working very tightly with the Googles and, and the Facebooks of the world to actually feed back GMV, so that we can do a better job of just targeting them. What we're doing now is we, we, we are creating cohorts of salespeople based on the types of customers. Our more experienced salespeople now are talking to higher GMV merchants. If you just joined Lightspeed, you're probably gonna start with the lower GMV merchants. We are equipping the organization in a way to just optimize throughput of large customers. We're very happy because it's working. Any way we look at it, we're seeing, you know, we're, we're seeing basically payback go down, so we, we get paid back in a shorter, in a shorter amount of time. We are seeing close rates remain very strong, and we are seeing ARPU really strong for new customers. Very happy with what we're doing, and I think, again, it's a journey. You know, it's a journey that started, what, 6 quarters ago, I think, and it's gonna just continue improving as we go forward. Great. Thank you- Bailey, are you able to take one last question? Absolutely. Our final question will come from Raimo Lenschow with Barclays. Great, thank you. This is Jeremy on for Raimo. I, I just wanted to ask on on the Lightspeed supplier network. Understand that it's not being monetized now, but has it sort of been, like, rolled out to customers as a, as a test use case? If so, can you share a little bit on what the feedback has been there? Thank you. Yeah. When we look at the supplier network, the piece that is monetized is we work with the brand, they buy our software, and then we become the platform to distribute their goods for anybody who wants to place an order, and including our competitors, including big box retail and SMBs. That, that piece has been in motion, it's going well. The piece that is still under test is really the, I'm taking the brands, and I'm connecting those brands to Lightspeed stores, and I'm enabling the stores to be way more efficient in how they operate. Instead of going outside of the platform, as they would now, and, you know, write POs and then receive half the goods because they don't have anything in stock, what we're helping them to do is we're helping them, first of all, identify how much they should be ordering through analysis of their sell-through. What we're doing is we're connecting that order directly to the brand, and then we're enabling them to place an order from the brand, looking at the inventory levels at the brand. Finally, what we're helping them do is when they receive the goods, they have no work. They just scan the goods, and the descriptions are there, the videos, and that is really important for our merchants right now. You know, if you wanna sell online, and you wanna sell across multiple channels, you need to have rich packages that describe the goods with videos and images and et cetera. I know this sounds obvious, but the reality is, for this industry, nobody does this. Why am I saying this? Is that the test case we've done, we have a, you know, couple of hundred customers now using the full integration, and the feedback we have from them is outstanding. They believe this is better than sliced bread. This is saving them hours and hours every day. Again, going back to my previous comment, any time you can help today retailers save hours of work, they love you because, you know, they don't have the bandwidth anymore. They don't have the manpower, and it's all around optimizing and doing more with less. That's why we're very excited about this, but we need to start the networks in all the verticals where we operate, and that's gonna take time. We know that once they're on it, the NPS score and the it's just through the roof. People are really happy. Got it. Thank you. With that, I will hand the call back over to Gus for closing remarks. Okay, thanks, everyone, for joining us today. If there are any follow-up questions, we are around all day. Look forward to speaking to you again next quarter. Have a great day, everyone. This does conclude today's conference call. You may now disconnect.