Lightspeed Commerce Inc. (LSPD) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by, and welcome to the Acquisition of Ecwid and NuORDER Conference Call. [Operator Instructions] I would now like to hand the conference over to Gus Papageorgiou. Please go ahead.

Thank you, operator. Good morning, everyone, and thank you for joining us this morning on such short notice. The purpose of the call today is to both discuss Lightspeed's evolving long-term strategy and highlight our upcoming acquisition of Ecwid and NuORDER. Our company's CEO, Dax Dasilva, will provide a brief introduction; and then JP Chauvet, our President; and Brandon Nussey, our Chief Financial and Operations Officer, will take you through the prepared presentation, which you can also view on the webcast. After the presentation, we will open it up for your questions. We will make forward-looking statements on our call today that are based on assumptions and, therefore, subject to risks and uncertainties that could cause actual results to differ materially from those projected. We undertake no obligation to update these statements, except as required by law. You can read about these risks and uncertainties in our press releases issued today and as well as in our filings with U.S. and Canadian securities regulators. Also, our commentary today will include adjusted financial measures, which are non-IFRS measures. They should be considered as a supplement to, and not a substitute for, IFRS financial measures. Reconciliation between the two can be found in our earnings press release, which is available on our website, on sedar.com and on the SEC EDGAR system. In addition, our commentary today will include key performance indicators that help us evaluate our business, measure our performance, identify key trends affecting our business, formulate business plans and make strategic decisions. Such key performance indicators may be calculated in a manner different than similar key performance indicators used by other companies. And finally, note that because we report in U.S. dollars, all amounts discussed today are in U.S. dollars, unless otherwise indicated. With that, I will now turn the call over to Dax.

Thanks, Gus. Good morning, everyone, and thank you for joining us today. This morning, we announced that we will be acquiring NuORDER, a B2B commerce platform; and Ecwid, an e-commerce platform for SMBs. Since we went public on the Toronto Stock Exchange, we have made several acquisitions, the majority focused on expanding our geographic footprint and building scale. And we believe that they have all proven successful. Our motivation behind the acquisitions we are announcing today is quite different. NuORDER and Ecwid will help us advance our platform, strengthen our technology and help us deliver on our goal of being the dominant commerce platform in the verticals where we are focused. COVID has forever changed the small business landscape. New businesses need fast and easy ways to sell online, while established merchants plans to invest even more in the tools and experiences that will unite their digital and physical operations. Lightspeed will acquire Ecwid, a U.S.-based, best-in-class global e-commerce platform that allows customers to create stand-alone businesses in minutes. Once integrated, the combination of Lightspeed and Ecwid will help merchants reach shoppers wherever they are, whether on social media or digital marketplaces ushering in newfound selling flexibility and omnichannel experiences. In January of this year, we announced the Lightspeed Supplier Network, and the response has been overwhelming. We had 100 suppliers when we made the announcement and are now over double that. Building out the supplier network is a key strategic objective of the company as it not only allows us to help our customers, but also, I believe, creates a significant competitive differentiation for Lightspeed. To advance that initiative even further, Lightspeed has entered into a definitive agreement to acquire NuORDER, a transformative digital platform connecting businesses and suppliers. Together, Lightspeed and NuORDER will create an industry-leading bridge between the merchant and supplier experience, simplifying product ordering for retailers and offering brands' crucial insight into how their products move. The acquisition will capitalize on the early success of the Lightspeed Supplier Network and accelerate the growth of Lightspeed's financial services offerings, including Lightspeed Payments and Lightspeed Capital, while establishing the company as a global distribution network for leading global brands such as Converse, Canada Goose and Arc'teryx. JP is going to take you through a broader explanation of our evolving strategy. But quite simply, we want our platform to become indispensable to anyone starting or running a business within the verticals where we are focused. Vertical dominance not only helps us remain focused, but should also lead to greater financial success. Customers in our dominant verticals are more profitable for us than customers in other verticals. That is because those customers are much more likely to adopt more of our services, such as payments and use more of our software stack. I will now pass it on to JP to take you through a more detailed presentation. And I look forward to answering any questions you may have afterwards. JP, take it away.

Thank you very much, Dax, and good morning, everybody. We're very excited today about our announcement, and we believe this will have a really strong impact on the future of Lightspeed. So when we think about the evolution of commerce in general, the way we look at the world and in the '90s, really, this was the world of physical shopping and cash registers. And at that time, to be successful, if you are a retailer or a restaurateur, a lot of your success based on where you were, and it was all around physical shopping. Then in the 2000, what happened is digital payments arise, and what we started seeing was a lot of on-premise, what people would call at the time, POS or point of sale, which really was -- those were very functional solutions, but they were on-premise and every retailer and restaurateur had their own kind of configuration and no normalization in sight. And then finally, in 2010, when the Internet got -- prevailed and there was enough infrastructure everywhere, what happened is we saw a proliferation of the cloud. And this is really what made the early success of Lightspeed. We were one of the first vendors to have a really complete and very deep solution within the cloud. And at that time, a lot of the merchants were adopting cloud solutions and a lot of the vendors, like Lightspeed, were focusing on adding all the functionality that was on-premise into the cloud. And here, Lightspeed, I think that's what's made the company in the early stages. Finally, what happened is, today, when we think about commerce today, you cannot associate omnichannel. And what this means is really, we went from a world of selling in different channels to a world of basically engaging with the consumer across channels. And again, here, Lightspeed, when you think about all of the cloud vendors, we were the first to go out there with a POS that had more than just the on-premise but that's connected, and we invested a lot in e-commerce and enabling our merchants to sell online. And I think what's very interesting also in the last year, especially with COVID, is we've seen really acceleration of demand for omnichannel. And also within the hospitality space, this became a requirement because the consumer basically is going now from online to off-line. The only way you can thrive and survive when you're a merchant is you need to engage with your consumers across those channels. And here again, Lightspeed, as you know, we were one of the first vendors to propose omnichannel. And really, this is what accelerated Lightspeed throughout COVID and enabled us to do so well within the difficulties of our industry. So what does it mean today when we think about Lightspeed's offering? It's really -- today Lightspeed's offering is really a cloud-based platform. It's a cloud-based POS that's really focused on merchant value, and we do this extremely well. And when you think about how we help the merchants on one side to engage with consumers with what we call omnichannel, but really, the only channel for Lightspeed is, let's call it dual channel, where we enable those merchants to create an e-commerce site and sell through that e-commerce site. And also, when we think about how the Lightspeed merchants work with suppliers, we have an incredible inventory platform, and I think that's where we are the best. And we help those suppliers really build catalogs and load catalogs, so we help suppliers load the catalogs within Lightspeed. And very recently, we've just started to enable those merchants to order directly in the platform. But here, when we look at where we are and where we want to be, there's a lot we still need to do. And we think that for this to be successful, we cannot just only focus on the merchant as a customer, but we need to really think about everybody within the ecosystem. And for us, when we think about connecting everybody within the ecosystem and going from an omnichannel POS platform to really what we now call a commerce platform, we need to look at the entire network and we need to create value to the entire value chain within the network. Today, we need to go from being a POS platform to -- that enabled omnichannel to a commerce platform that really creates value to the entire supply, from the suppliers to merchants, to consumers. And here, I'm just going to bring you through a few examples that we have in mind here and when -- and how we can create much more value than we have today. So as we start by looking at the connection between merchants and consumers, today, as I mentioned, we are really good at e-commerce. But we need to do much more than that. We need to really become headless as a commerce platform, and we need to enable basically our merchants to connect to consumers wherever they are. And this doesn't mean just on their e-commerce site or in their store, it also means connecting with them through social media. It also means connecting them through marketplaces that are probably verticalized marketplaces. And so here, I think very excited about where we're heading, so we need to invest way more on that front. The last thing we need to do when we think about consumers and merchants is we need to enable the merchants have a much better visibility on their consumers and where they consume, and we need to feed back to the merchants way more information about the consumer so that they can adapt their offer to have -- to carry ultimately supplies that are very much in line with their consumers. The second thing we need to think about is really the connection between supplier and merchants. Here, we really are in the early days of connecting suppliers and merchants. But ultimately, we need to enable a merchant to order everything through Lightspeed. And from Lightspeed, they need to have access to inventory levels at the supplier, because that's the only way we can ensure that the merchants are purchasing the right elements at the right time. And here, we can even enable, through data, we can enable merchants to identify suppliers that they're not currently selling that they should hold an inventory because we know that they would go well. Ultimately, also for suppliers, we need to do a much better job at providing them sell-through and enabling a supplier to actually see what sells where in real time so that they can readjust their manufacturing, so that they always have enough of what's selling where. And today, this is very difficult to have. And we think that Lightspeed today, with the network that we have, we could provide a lot of value for suppliers here. Finally, the last thing we're very focused on is the connection between supplier and consumers. What we're doing ultimately and especially through all the acquisition is we now have one of the largest distribution networks you can think for a supplier. And here, what we need to do is look at the data through this distribution network and enable suppliers to identify new stores and basically become a distribution network for suppliers so they can expand their reach into new geographies where we know that the consumers are here to buy. And ultimately, what we need to do is enable suppliers to have a better understanding of their consumers so that they can readjust their offerings and evolve their portfolio based on the aggregate data that we get from consumers as they shop through our network. And here, when you think about Lightspeed with 140,000 customer locations and this acceleration we've had on this network, this now enables us to have really strong network effect between suppliers, merchants and consumers. So here, when we look at everything we're doing, and if we're successful at it, really the first thing this means is that we are really a commerce platform for everyone, all size of merchants and really digital or physical first if you really want to sell within the verticals that we're likely to have concentration, we want you to be the -- we want this to be the best for you. The second one is really around the flywheel and the ecosystem. There's value for everybody within the ecosystem, value for suppliers and merchants. And really, merchants become distributor for any brand who wants to work with us. Next one is really optimizing the inventory within the network. Here, we need to automate everything. We need to make all the data visible to everybody within the party. And that's how you're going to be very successful as you'll know everything you need to know to run your business in the most effective way. And finally here, what we want to be sure of is that there's a lot of brand awareness and a lot of visibility for everybody who works within the ecosystem. At the end of the day, everything we're putting in place is really extremely exciting. And we think that this will bring a ton to local communities and ensure that basically, every merchant of any size has a much greater chance of success within the ecosystem. So for this to work, this is a very interesting analysis here. But for this to work, we obviously need to have concentration. Of course, as an example, you can't get a lot of suppliers who want to work with you if you don't have enough merchants within the industries they serve. And so here, what we're trying to just present is that for us, localization has 2 very different means when you're in retail or in hospitality. For us, when we think about having network effects and having concentration within retail, it's really around verticals. If I'm a bike enthusiast, anywhere in North America, if there's something I want, you can ship it -- the goods to the person. And so that's why for us, for this to work, we've decided we're going to focus on 12 verticals, and they're presented here. And those are the verticals where, through all of these acquisitions, we've now gained a lot of concentration. And those are the verticals now where we can create the network effect between suppliers, merchants and consumers. When you think about hospitality, it's a very different world. Hospitality and gaining concentration in the hospitality space is really around geographies. And often, it has to do with suppliers. And obviously, there's a perishable good at the end of the day. So you need to be sure that the stores are not too far away from the suppliers. And so here, in that world, we've gained a lot of concentration on geographies. And as you know, we acquired companies also across Europe and across Australia, and this helped us gain concentration in geographies. And here, we're going to be focusing on the geographies where we have a strong presence. And we're also going to be thriving at building the same ecosystem between merchants, suppliers and consumers. So with this in mind, I -- this slide really presents the 2 big announcements of today and why these are so important for Lightspeed. NuORDER, and you know we've had a lot of success when you think about how we've been working with suppliers, and we back talk to us about how much growth and demand we have here. Well, NuORDER helps us really advance the road map by 3 to 5 years. And the reason is that NuORDER's only reason for living before joining Lightspeed was really connecting marketplaces and having a platform that connects suppliers to merchants. And so here, we're super excited to have NuORDER join Lightspeed because now, with all the demand that we have, we will be able to really grow much faster and gain a ton of traction with all of the suppliers. And the only thing we need to focus on is connecting NuORDER to Lightspeed in the whole workflows of purchasing that we have. And the good news is these are 2 cloud-based platforms, Lightspeed and NuORDER with APIs, and we don't foresee this being too complicated. And for sure, this is way less difficult than now trying to rebuild NuORDER within Lightspeed. So this is really a very exciting news. When you think about Ecwid, which is the other announcement of today, we're very excited about Ecwid because Ecwid is extremely easy to use for people who want to do stand-alone e-commerce or want to start digital before they go into physical. And this also brings us the logic of headless commerce, where it's not just an e-commerce site, what we have today, but Ecwid will really enable us to sell across all channels, across all social media and really accelerate our road map here. And so we're very excited about that news. And I'll invite you to all have a look at Ecwid and the reviews online and try it out. Ecwid is truly one of the most advanced commerce engines you can find, and they do a lot in terms of digital and connection to all marketplaces. This really puts us in the league where our customer, within those 12 verticals we mentioned in retail, a customer who wants to start with digital will start with Lightspeed because of the network effect and all the value we can create and also now because we have a very, very strong e-commerce engine that is very easy to set up and very easy to use. When we think about NuORDER and here, just wanted to present to you our road maps. And here, when we -- what we had in mind when we thought about how we're going to work with suppliers and what is our road map going forward, it shows in red what we have today, which is really the early stages, which is catalogs and doing ordering within the platform. But here, all of these items that you see above, which is brand discovery, automated ordering, virtual showrooms, digital trade shows and obviously, insights and analytics that we would get to the brands because we have a ton of demand here for brands and suppliers. Well, here, very simply put, the acquisition of NuORDER just checks all those boxes overnight. And all we need to do, as I said, is now connect NuORDER to Lightspeed, and we'll be ready to go. And so I think for us now, now that we have all these incredible technologies that can support the vision and can support the acceleration of us getting to the flywheel, we'll be focused on in the coming months and quarters at doing really incredible integrations between these technologies in Lightspeed, so that our customers can benefit as soon as possible from all these [indiscernible]. So I'm now going to hand it over to Brandon, who is going to walk us through the details of these 2 transactions. And yes, looking forward to your questions later on. Thank you very much.

Thanks, JP. We'll start with NuORDER. NuORDER is a California-based business serving over 3,000 brands across several verticals, with over 100,000 active retailers around the globe using their platform. NuORDER processed more than 11 billion of orders in the last 12 months and is just embarking on a payment solution to better monetize this order of volume. The business has been growing nicely and is currently generating more than $20 million in revenue for the last 12 months ended March 31. We will pay $425 million for the business, split equally between cash and the issuance of equity in Lightspeed. The synergies expected from this deal are the acceleration of our supplier strategy, as you heard from JP; B2B payments opportunity, whereby Lightspeed's expertise and NuORDER's execution will bring a tremendous opportunity; and access to a large retail customer base of NuORDER to potentially upsell Lightspeed's core offerings. Looking now at Ecwid. It, too, is a California-based company with better than 130,000 paying customers. They, too, have the payments opportunity, as the majority of payments revenue in this business has been partner-driven to date. The business has been growing very quickly at better than 50% a year, and they, too, generate revenue greater than $20 million a year for the last -- for the trailing 12 months ended March 31. Lightspeed will pay $500 million for the business, with approximately 35% of that by way of cash and the remainder through the issuance of equity in Lightspeed. We expect synergies from this deal as well, whereby Lightspeed customers can get access to even more omnichannel offerings, as you've heard from JP, the payments opportunity, given most of it has been partner-driven to date; and also with this transaction, access to a large customer base for future upsell potential within Lightspeed. We expect to close both transactions in Lightspeed's second quarter of fiscal '22. And when completed, Lightspeed will have a pro forma cash position of just better than $230 million. When completed, with these transactions in place, we expect to significantly grow our total addressable market in an excellent position to drive significantly more revenue throughout our ecosystem. We'll continue our journey of delivering merchant solutions and monetizing more and more of our GTV that is driven from merchant to consumer. But with the addition of Ecwid and NuORDER to our business, we can now drive even greater economics from suppliers, including the B2B payments opportunity and as well drive more consumer-focused solutions. All told, we believe our TAM has now grown considerably as we build our complete commerce platform. With that, I'll pass it back to JP to wrap this up before we take your questions.

Thank you very much, Brandon. To conclude today's presentation, when we look at our strategic vision for the next 5 years, we really want to think about the merchants. And we want to be sure that as the merchant works within the Lightspeed ecosystem, that they have more chances of success than working with anybody else. The second thing we want to ensure is that regardless if you're a brick-and-mortar or if you just want to be digital or if you want to be digital first, we want to be sure that we are your platform of choice. The third thing that's really important when we think about Lightspeed's vision and strategy, is we want to be sure that as we continue to scale and grow, we will continue to scale and grow at lower cost, because of the flywheel and spinning the flywheel faster and creating more value to anyone at a much lower cost. And the last thing we have in mind is we want to be sure that we give local communities and local businesses a real opportunity and chance to succeed against the giants and be successful and compete within a market that is composed of many different demographics. So that's our presentation today. Thank you very much for attending, and we look forward to having -- to receiving your questions.

[Operator Instructions] First question comes from Daniel Chan with TD Securities.

So you're paying a bit more for these acquisitions than the other 3 more recent acquisitions. And the potential from these aren't quite as easy to calculate as the other 3. Can you help us understand how you thought about forecasting out the opportunity from these acquisitions to justify the valuation?

Dan, it's Brandon. Yes, hopefully, you heard today from Dax and JP that these are really cornerstone acquisitions to cement the strategy of the business over the next several years. Roughly speaking, we're paying around 15x forward revenue for each of them, which we think, given the success and the momentum these businesses have, is appropriate in the current context. In terms of upside, we see lots of upside here, getting access to very large customer bases from each, the payments opportunity we mentioned as well. But certainly, these ones are as much about cementing the strategy of the business for the next 5 years as anything else.

Okay. That makes sense and that's helpful. And there's a large equity component to these transactions as well. How do you determine the mix on making these deals?

I think we're generally following a consistent formula there. We're roughly looking at 50-50 cash equity on those transactions. There's nuances and specifics of each one, but that's a general formula. So we do like to make sure that the acquired businesses and the founders and the management teams of these businesses are very well aligned with Lightspeed shareholders. So Ecwid is a nice way to do that. But that's generally how we've approached that.

Next question comes from Andrew Jeffrey with Truist.

Lots of interesting stuff going on at Lightspeed. I wanted to ask about Ecwid maybe to start. We've seen sort of this convergence in e-comm between infrastructure and payments. A couple of examples of it recently. Can you talk a little bit about sort of how you view that industry sort of broadly evolving, recognizing that this is a clear omni play for Lightspeed. And also maybe address, we've seen at least one other payments company go after this market with an eye towards sort of subsidizing the site design and infrastructure and stuff like that in order to get to the payments. Can you just offer some insight as to what the economic model is going to look like as you move to more direct distribution for Ecwid?

Yes. So maybe I'll take it on the strategy here. And Brandon, if you want to jump in to the economic model. But very simply put, the evolution of e-commerce, the way we look at, let's call it, digital commerce, I think we're going from a world where you have to attract people to your e-commerce sites and from there hoping to sell on your e-commerce site. And I think that's what we proposed, Lightspeed, and we were primarily focused on enabling brick-and-mortar vendors to sell online and by primarily making a website where we had an e-commerce engine in there. I think the world of e-commerce has evolved to what we call this headless commerce, which means that now you need to basically engage with the consumer wherever they are, not just on a website. And this is really the value that Ecwid brings to Lightspeed is Ecwid is a true headless commerce, where you can generate commerce anywhere on social media and not just by attracting people to your e-commerce site, and we see this as very important to the success of our merchants. Also, the other value of Ecwid is that in terms of onboarding and the experience for a stand-alone e-commerce or, let's call it, digital-first customer, is outstanding compared to what we have, and they're probably one of the best players out there. So they bring us this ability to go into our verticals and really tackle digital first within our verticals, but they also enable us to provide a much better solution to our existing customers by connecting on all kinds of social media and enabling commerce to happen everywhere. Maybe I'll just address quickly the payments part. Ecwid does not have monetization of payments. So of course, for us, like we've done with all the other acquisitions, is we will integrate Lightspeed Payments to Ecwid and enable Ecwid within kind of their models to monetize payments and not just modify the software portion. So I think there's a big opportunity there for us to accelerate their revenues.

That's helpful. And just a quick follow-up on NuORDER. Can you talk about maybe some of the complementary technology it brings to the Lightspeed Supplier Network? It sounds to me like Lightspeed's built a lot of the connectivity. Is this more about expanding the TAM? Or is there also functionality or data that NuORDER brings to the table that's complementary?

Yes. It's absolutely complementary. And basically, NuORDER helps us accelerate by 3 or 5 years, our road map. So really, when -- what happened is we went into integration with suppliers, and there was a ton of demand from a lot of our suppliers. But what we realized is that there was also a lot of demand for functionality that we didn't have that we were going to be forced to develop. And here, NuORDER can plug into everything we've built almost instantly and enable much more functionality between the stores and the suppliers. Of course, data is a big piece of this. So a good example is sell-through. They have all the mechanisms to implement sell-through, and that's very important for brands. But also what it has is the entire logic of loading multiple different types of structures upfront. It also has a real marketplace between suppliers and stores. So really, for us, this is very exciting. It helps us just accelerate what we wanted to do and today, have an offering that's ready to be deployed with all of our suppliers.

Next question comes from Thanos Moschopoulos with BMO Capital Markets.

Have you guys disclosed the GTV from Ecwid? I don't think I saw that number.

It's low single-digit billions. We haven't specifically disclosed it, but in that range.

Okay. And as we look at NuORDER, can you speak to the vertical next year? It seems to be heavily apparel-focused as of right now. Is that correct?

Actually, that's what we liked about NuORDER is they have a lot of flexibility. So they do, do -- they do sports and outwear and they do also home and furniture. So they're very versatile in -- on a technology stand front. So for us, I think what's great, first of all, apparel and luxury, apparel is one of the biggest [ category for ] Lightspeed. So that's just there is a no-brainer. But also, it's really a great platform for us to go and bring our suppliers. So a very -- we looked at a lot of players in the industry, and they have a very good and nice platform.

Okay. And looking at your customer base, it seems to do business with some very large retailers. Is that something that will continue under your ownership?

Absolutely. And I think -- so when basically, NuORDER works with brands and then they work with department stores and then they work with many, many call them independent retailers. So I think when we look at the 3 stakeholders, it makes a lot of sense for Lightspeed. The brand, of course, today, we could also bring our POS platform to their brands. And then I think what's very exciting to us is they have hundreds of thousands of stores. So that is a wonderful ground for us to go and upsell our POS. So I think all in all, we will, of course, continue investing into NuORDER and continue supporting and growing their customer base. But I think there's a lot of cross-pollination we can do.

And then finally, in terms of the customer base of both Ecwid and NuORDER, is it heavily skewed for North America? Or do they have a significant international component?

Both have significant international components. Ecwid is actually extremely strong in Europe, where we have a lot of customers. And these are both companies working in global markets.

Next question comes from Raimo Lenschow with Barclays.

Quick question from me. If you look at the additions you get now versus what you had before, like do I need to think about it a little bit as like they were already at headless, you needed to kind of rewrite some of yours to kind of do headless? So it's just really like a time to market? Or is there like a different angle to that as well?

So it's -- I think you're absolutely right. So we had a good e-commerce engine just for stand-alone commerce website. And if you look at the foundations of how those solutions are developed, headless versus non-headless is a pretty large gap. So for us, this was just a way to accelerate our road maps and get to market with something much better for our customers today. Let's also keep in mind that we're going into a post-COVID world, and time is now. And obviously, COVID has completely changed how we consume. We think there's a lot of demand now, especially for kind of the physical brick-and-mortar, they're now going to move into digital in a much faster way. And really, COVID has evolved how people consume. And so I think the time is now, and that's how we looked at it.

Okay. And then the second question I had was like, if you think about the exposure, like you're getting a good bit of low end, like or more customers, like how does that kind of set you up against like some of the incumbents like the Shopify, et cetera? Does that kind of get you closer to that space? Because so far, you've been staying away slightly, like the slightly higher end, slightly more verticalized. Does this get you in the other direction? Just trying to understand that it might be a stupid question.

So I think, first of all, this doesn't change our strategy. Our customer base -- the customers are going after the same. But I think the big difference with Ecwid compared to Lightspeed standalone is within the verticals that matter. So I'll give you an example within bikes. Today, if I'm even looking for a digital-only strategy within the bike industry, we are now your vendor of choice because of the integration with the suppliers. So I think on an e-commerce stand-alone, yes, we could say that we have an offering now that's getting closer to Shopify. But again, what's important for us is the verticals in which we operate, and we want to have the best solutions in the verticals where we operate, be it digital first also.

Next question comes from Josh Baer with Morgan Stanley.

It's on Ecwid and just thinking about the line on how customers can basically create stand-alone businesses in minutes and just how to think about that in context with generally your more complex SMB or mid-market customer. And so how should I think about that? Is there a disconnect between seemingly the simplicity of Ecwid and the complexity of the customer base and maybe thinking about that potential for upsell with Ecwid onboard?

No. So we -- so I think that's what's interesting with Ecwid is that it scales and it does pretty much everything we need for all our profile of customers. But you're correct in saying that the setup is extremely easy. And -- I mean, it's probably the nicest experience you can find if you're starting. And I think for us, the way we're looking at this, as I said, is if I'm starting in the bike industry and I want to sell on a digital platform or I want to sell in social media, we want to be sure you start with Lightspeed, too. And so that's why in our strategy, we're pivoting from being kind of all industries, we want to go much deeper in the industry that matter for us. And we want to be sure that creation of business within the industry that matter for us go to Lightspeed.

Got it. And we have a pretty good framework for revenue contribution. Any context on the cost side, how that might impact margins or what these companies look like from a margin or cost perspective?

Yes. We'll update the EBITDA side of things on our next conference call once we have better line of sight to closing dates for these. Suffice it to say, both businesses are still in investment mode at this stage of their maturation. I tell you, we'll give more specifics on our upcoming call in August.

Next question comes from Paul Treiber with RBC Capital Markets.

Just want a high-level question on point solutions versus the platform. So I think both acquisitions are quite focused point solutions. I imagine you continue to sell them on a point solution basis and invest in their product road maps as point solutions. But over time, there's ultimately the value proposition become about the broader platform and integration of your Lightspeed ecosystem?

Yes. So they are a point solution, so they all have a mission. So Ecwid's mission is e-commerce and NuORDER's mission is to create basically marketplaces between suppliers and stores. I think the value of Lightspeed is really -- and you're right, well, immediately, the value proposition immediately is we're going to integrate NuORDER and Ecwid to the platform, which means that overnight, we're just going to add functionality to our customers. And then the trick for us is to get customers where they start. Some customers might want to start with e-commerce. Some customers want to start by just having marketplaces. Some customers want start with loyalty. And our goal is going to be to ensure that we get those eyeballs when they start and then we expand them onto the platform as we've always done. Now the value long term, it's really a data play and a financial services play. So I think really what we're after here is taking that same dollar and, throughout the pyramid, recycling that dollar. And I'll give you an example. If a customer wants to -- or wait, someone's calling my phone. I don't know if you can hear it. But if a customer wants to, we can expand suppliers and we can have them connect with stores at the same time. So that means for suppliers, we can be a distribution network. But for stores also now, what we can do is enable them to order directly from the supplier. So take the dollar of ordering. We could also provide them with financial services. And finally, that dollar could be a distribution dollar because we're helping suppliers identify new stores. So once this is all done, you're right, it's going to be a platform without the core of this data play and financial services, but that will happen over time.

And as a follow-up to that and just in regards to customer sizes, do you see -- I think previously, there was more of an impression that Lightspeed was focused on SMBs. Do you see ultimately customer size being irrelevant in that you could be someone start -- address the needs of someone starting up, but then also grow with them and potentially if they become even a large enterprise, but focused on a specific vertical.

You're absolutely right. So the focus is going to be the verticals, the verticals. And again, the core of that when -- with Lightspeed is verticals where there's a lot of inventory. And I think that's going to be the #1 focus is let's look at all these verticals where we're very strong, where we have a lot of concentration through the acquisitions. And let's ensure that, regardless of your size, you can join us, you can grow with us and you can become a very large company, and we'll support you throughout kind of the life cycle of the company. But what's important is the vertical.

Next question comes from Martin Toner with ATB Capital Markets.

Congrats. What -- is it fair -- I'm assuming that the vast majority of Ecwid's customers are online only. And so question is, how you guys going to be able to split your focus between those type of customers and then your traditional omnichannel/offline customers?

Yes. So I think -- so the way we look at this is, of course, Ecwid has its own business, and they're growing very well. And so we're going to structure it as we've done with all the other industry. So we're going to have an industry, which is e-commerce stand-alone. We're going to have another industry that's going to be omnichannel. And then obviously, we have our hospitality industry. But so we will do both. We will continue to grow Ecwid in a standalone but refocusing Ecwid in the verticals that matter for Lightspeed. And vice versa, what we'll do is Ecwid will become the global commerce -- e-commerce engine for Lightspeed and for all of our traditional customers. But just even today, we do have very large customers that have up to 100 in a couple of hundred locations, and we also do deal with the ones [ even the two of these ]. So we do have today, within Lightspeed structure, teams that are addressing different demographics. But I think it's very important for us, when we think about the platform, that we go after digital only and digital first. Because that -- we've seen a lot of these models happen now with brands starting online and then going into stores. And we want to be sure that as they start online, we are there, too.

That's great. Ecwid allows customers to incorporate other e-commerce platforms into their solution or they give customers access to other platforms like -- or tools, things like WordPress. Is there a significant percentage of the revenue that comes from these integration?

Well, so Ecwid is a headless platform. So that means you can use Ecwid as a stand-alone e-commerce. But if you're on social media, you want to be able to sell in Facebook or you want to sell in Instagram or you want to sell in any of the marketplaces you could do it. Now Ecwid has partners, so they have a partnership network that enables -- and they primarily partner with companies that do not have e-commerce. And so it enables them to build an e-commerce widget within their ecosystem. So I think that's a very good model for us. We have no intention of stopping that, and they have deep partnerships with company where they create value after them and then return to that, they get royalty. So it's again, very typical of a stand-alone e-commerce engine. They also have, of course, a number of partners also that expand their capability. But that's very standard in our world, and we have the intention of continuing that.

Next question comes from Suthan Sukumar with Eight Capital.

Congrats on the acquisitions. First question I wanted to touch on, Ecwid. As part of their existing go-to-market strategy, Ecwid had a, call it a premium offering, also a white-label strategy. Do you guys see opportunity to leverage that as part of your model going forward? Or is that expected to kind of change under your ownership?

No, we will keep the model. I think what you can expect is Lightspeed Payments to be embedded into this. So I think there's a real opportunity here to bundle Lightspeed Payments in the freemium, so to generate the revenues when customers are successful. But as we said, Ecwid is a great business, and we intend to continue their growth path and accelerate it by adding the payments; obviously, adding our go-to-market capabilities; adding our knowledge and marketing; and finally, bringing this to all of our customers as the global omnichannel offering.

Okay. Okay. Great. And on NuORDER, obviously, it sounds like a large portion of their business was exposed to kind of brick-and-mortar retail. Can you talk about the level of disruption that you might have seen from COVID-19? And how the recovery as of late has been trending?

Yes. So I think COVID has been an accelerator to these businesses. So in the world before COVID, if I was a store, I would go to a trade show. And then at that trade show, I would find the brands that I like, and I would order them, and this would be a very manual process. And actually, you would have punch cards for ordering. I mean a very -- let's call it, a very manual world. And here, what NuORDER does is they basically enable kind of the same kind of dynamics in a digital world. So it's been an accelerator. And I think nobody is going to go back to the old world. So I think there's been a lot of demand. And also, I think that what we love about their model is that they work with department stores. And as they work with those department stores, the brands start working with their platform because that's the way they work with the department stores. And from there, then all of the individual stores have an opportunity to use the platform to fulfill their goods. So it's a very nice model all in all.

Okay. Okay, great. And then just with respect to both Ecwid and NuORDER, do you guys plan to have these brands and offerings remain in market on a stand-alone basis going forward? Or are there plans to maybe consolidate them over time as you integrate the assets into the business?

I think we intend to keep them as a stand-alone because these are our businesses, but there is going to be a big portion of integration, too. I think really, when we look at the integrations, we need to look at primarily the product. We need those products to be tightly integrated so that we can create value for everyone. And I think then especially in the context of NuORDER, there's a lot of opportunity. They have hundreds of thousands of typical Lightspeed customers. So we need to find a way through their platform to tease these customers into buying Lightspeed. And they will buy Lightspeed because we'll create more value by integrating the ordering, the ordering portion and the POS and automating a lot of work done today. So I think there's a real good opportunity there for value creation and a really good opportunity for both companies to expand their revenues because of the cross-pollination between the two.

Next question comes from Todd Coupland with CIBC.

I had a question on headless e-commerce and the economics of Ecwid. Just wondering, when you move on to a social platform, what does the pricing look like with the software platform providers versus the social platforms? It's not clear to me, with you or other players, how that's going to work itself out. Could you just talk conceptually how that's going to look?

Well, just conceptually, it's pretty straightforward. Conceptually, Ecwid has the ability to ignite commerce on those social media platforms. And so to do so, you need to have a subscription to Ecwid and now a subscription to Lightspeed. And from that subscription, you would have the modules that would enable you within social media to purchase. And so from the moment there's a purchase, it goes back to our platform. And hopefully, by then, they'll be using likely payments to do the transaction, and they'll also be paying a subscription to Lightspeed to access the platform on social media.

So JP, in that example, are you collecting and keeping the entire 2.6% in the payments example?

Yes. In that scenario, it shouldn't be different from any other transaction on the platform.

Okay. And then secondly, you've made a number of acquisitions. Payments integration is a core part of each of those acquisitions. Can you just give us a bit of a consolidated view on sort of integration, how those are progressing and how you see them layering into organic growth within payments?

Yes. So on payments, we are exactly where we want to be. So we're on track with everything we said we would. So we start with -- we started with North America, started with the U.S. and moved to Canada. Then we have this plan of moving to Europe and then finally moving to Asia Pacific. So Europe has now launched in beta, and it's been launched for a few weeks now. And we're seeing really good traction, nothing dissimilar to what we've seen in North America when we launched. And of course, now we're going to be launching in Australia, and especially with Vend now, with a lot of their customers in Australia and New Zealand. And also with Kounta, there's a lot of grant there for monetization of growth. So for us, the way it works, the steps are very simple. We develop the service in-house. The service gets launched on different regions. And once they're launched within those regions, the companies we acquire integrate the payment service and then make it available to their customers. And then what we do is we have all of their salespeople sell it. So very straightforward. And I think here in the context of these last 2 acquisitions, nothing has changed. So as an example, Ecwid can, today, start integrating our module that we've launched in Europe and in North America and make it available to their customers. And same thing with NuORDER. Today, for North America and Europe, they can now use our payment service and ignite it. So very straightforward. The last piece for us now is the launch in Australia and New Zealand, and we're going to be focusing on this in the coming quarters so that we can offer a payment service to every one of the acquisitions we've done, including Ecwid and NuORDER.

And JP, is it still reasonable over time to think the majority of these collective customer groups can come on to Lightspeed Payments?

Absolutely. That's core to the strategy.

Last question comes from Steven Li with Raymond James.

Guys, in your press release for NuORDER, you talked about how we can accelerate payments and capital. Is that payments and capital with suppliers? And can you elaborate a bit more?

Yes. So I think for us, again, going back to the strategy, there's the pyramid between suppliers, stores and consumers. And at the core of this is, call it, financial services. Today, we're only monetizing the retailers, the stores today. So we're only lending to them, and we're only enabling them to use like prepayments. Of course, the strategy now is to enable a store to order within NuORDER and to order from their suppliers with a credit card. But then over time, what we want to be able to do is we want to be able to lend to store so that they can replenish a specific type of inventory. But we also want to try over time to offer capital to the entire -- to everybody within the pyramid.

Okay. And at this time, I will turn the call over to Mr. Papageorgiou.

Okay. Well, thanks for joining our call today. The -- a rebroadcast of the webcast will be up on our site shortly. If anyone has any follow-up questions, please feel free to reach out. We will be around all day. Thanks, everyone, and have a great day.

This concludes today's conference call. You may now disconnect.