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

[Foreign Language] Good morning, ladies and gentlemen. My name is Patrick Pichette, Chair of the Board of Directors of Lightspeed. On behalf of management, the Board of Directors and all our employees, I'd like to welcome you to the Annual and Special Meeting of Shareholders of Lightspeed. The company's meeting is being held virtually, as you can see this year, to respect social distancing practices. I'll begin by introducing the people here with me, virtually. We have the pleasure of having with us today Dax Dasilva, our Founder, Chief Executive Officer and a member of our Board of Directors; Marie-Josée Lamothe, Chair of our Compensation Nominating Governance Committee and a member of our Risk Committee; Mr. Rob Williams, a member of our Audit Committee and our Compensation Nominating and Governance Committee as well; Mr. Dan Micak, our EVP, General Counsel and Corporate Secretary; Ms. Asha Bakshani, our EVP of Finance; and a team of AST Trust Company, the company transfer agents and this meeting's scrutineer.

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[Foreign Language] Good morning, ladies and gentlemen. My name is Patrick Pichette, Chair of the Board of Directors of Lightspeed. On behalf of our management team, the Board of Directors and all of our employees at Lightspeed, I'd like to welcome you to the Annual and Special Meeting of the shareholders of Lightspeed. The company's meeting is held virtually this year to respect social distancing practices. Let me begin by introducing the people with me virtually. We have the pleasure of having with us today Mr. Dax Dasilva, our Founder, Chief Executive Officer and a member of our Board of Directors; Marie-Josée Lamothe, the Chair of our Compensation Nominating and Governance Committee and a member of our Risk Committee; Mr. Rob Williams, a member of our Audit Committee, and our Compensation Nominating and Governance Committee. We have Dan Micak, our EVP, General Counsel and Corporate Secretary; Ms. Asha Bakshani, our EVP of Finance; and finally, a team from AST Trust Company, the company transfer agent and this meeting's scrutineer. Unfortunately, Jean-Paul Chauvet and Paul McFeeters as well as Mrs. Merline Saintil of our Board of Directors could not be with us today. Before I begin, I'd like to say a few words about the proceedings of this meeting, if you don't mind. Please note that only registered holders of subordinate voting shares of record as of June 7 of this year or their duly appointed proxy holders are permitted to participate and vote in this meeting. Following the formal portion of the meeting, time permitting, the members of management here with me today will be available to answer your questions. Although the majority of this meeting will be held in English, please do feel free to address the meeting in English or in French, of course. [Foreign Language] Shareholders who wish to communicate with members of the Lightspeed team here with me or with each other or who wish to present or ask a question in respect of a motion may do so using instant messaging on the Lumi virtual interface. Please note that there will be a slight delay in the publication of the communications received. As this meeting is held virtually, we think it's necessary to set out a few rules for the orderly conduct of the meeting, if you don't mind. So first, questions can be submitted by any registered shareholders or duly appointed proxy holders using the instant messaging service on the Lumi virtual interface that I mentioned a minute ago. Second is when asking a question, please indicate your name, which entity you represent, if any, confirm that you're a registered shareholder or duly appointed proxy holder and then indicate to whom your question is addressed. Also, questions will generally appear shortly after they are submitted, but will only be addressed during the question period at the end of the meeting. Any questions regarding procedural matters, please directly related or directly related to the motions will be addressed during the meeting where appropriate. Questions or comments containing inappropriate language, profanities or hostilities or that otherwise would be disruptive to the orderly conduct of the meeting for all shareholders will clearly not be published nor answered. You're forewarned. We may also not publish any questions which have already been answered or that are redundant or repetitive. For the purpose of the meeting today, voting on all matters will be conducted by a single electronic ballot as requested by certain shareholders of the company in advance and in accordance with the company's bylaws and the Canada Business Corporation Act. Registered shareholders and duly appointed proxy holders will be asked to vote on each business item after the presentation of such business items. You'll be asked to vote, a voting icon will appear at the top of your screen, click on it to access the voting panel. I'd like to point out that the discussions during today's meeting may contain forward-looking information about Lightspeed's outlook, objectives and our strategies to achieve them. These statements are based on assumptions and are subject to important risks and uncertainties. The company's actual results could differ materially from any expectations discussed. The details of our caution regarding forward-looking information are behind me on a slide and can also be found in Lightspeed's public disclosures or records available on SEDAR and EDGAR. So with that, we'll now proceed to the formal portion of today's meeting. So now I call the -- to order the Annual and Special Meeting of the Shareholders of Lightspeed. In accordance with Lightspeed bylaws, I will act as Chairman of the meeting, and Mr. Micak will act as Secretary of the meeting. In addition, I appoint our registrar and transfer agent, AST Trust Company, to act as scrutineers of this meeting. The scrutineers will report on the number of subordinate voting shares represented in person or by proxy at this meeting, tabulate the votes and report on the voting results. So I'm just drinking a bit here. The matters to be discussed on the agenda today are set out in the management information circular that is dated June 30, 2021. This year, again, the company used the notice-and-access regime enabled by the Canadian securities law to make available its meetings material and sent a notice with all relevant information in that regard to all shareholders on or about July 6th of this year. As mentioned in such notice, the circular and notice of the meeting are available to shareholders on AST Trust Company's online platform, on our website and under the company's profile on SEDAR and EDGAR. Accordingly, I will dispense with reading of the notice of the meeting. Our transfer agent, AST Trust Company, has attested to the proper mailing of the applicable meeting materials. I direct that a copy of all meeting materials be kept by the Secretary with the records of this meeting. I have received the scrutineer's report on attendance at the meeting and the scrutineers' report indicates that at least 2 persons entitled to vote at the meeting and holding in aggregate at least 25% of the shares entitled to be voted at the meeting are, in fact, attending the meeting themselves or by proxy. And so consequently, the quorum requirements in the company's bylaws are met. A company of the scrutineers' report on attendance will also be filed with the records of the meeting. Before we proceed to passing each of the resolutions, I'd like to briefly comment on the voting procedures, if I may. Each shareholders entitled to vote at today's meeting is entitled to 1 vote per subordinate voting shares held by them with respect to all matters to come before the meeting. For the purposes of the meeting today, voting on all matters will be conducted by a single electronic ballot. Registered shareholders or duly appointed proxy holders will be asked to vote on each business item after the presentation of all such business items. When you're asked to vote, you will receive a message on the Lumi virtual interface requesting you to register your vote. You'll only have a certain amount of time to do so. After you have registered your votes for all business items of today's meeting, the transfer agent will compile the votes in respect to each business item. You should know that proxies lodged before this meeting allow management and the Board of the company to cast a significant number of votes. And based on the number of shares represented at this meeting, the members of management and the Board here with me today will be able to determine the outcome of all motions that will come to the vote today. I may, therefore, declare the motions, which will go to a vote today, carried, even though all of the votes may not have been counted or a final report may not be yet available. I shall do this simply to keep the pace of the meeting. To further expedite the formal part of the meeting, M. Jean Sabastian -- M. Jean-David Saint-Martin, as a shareholder of the company, has agreed to move all motions on the formal agenda today in advance; and Mr. Dan Micak, a shareholder of the company, has also agreed to second the motions on the formal agenda to date in advance as well. As such, all motions of today's formal agenda have been duly moved and seconded in advance to ensure just efficient conduct of the meeting. I now declare that this meeting was properly called and duly constituted for the transactions of business. So let's go into the matters ahead. The first item of business is the presentation of the company's consolidated financial statement for the fiscal year ended March 31, 2021 as well as the auditor's report thereon. These financial statements and the auditor's report were included in the company's annual report and were made available to shareholders under our profiles on SEDAR and EDGAR on May 20, 2021, and on AST's online platform on or about July 5th of this year. I would ask again the secretary to include in the minutes of this meeting the consolidated financial statements for the fiscal year ended March 31, 2021, and the auditor's report thereon. Please note that we will entertain any questions with respect to the financial statements in the general question period only. So let me now then move to the next item on today's agenda, the election of the directors of the company. The Board of Directors has determined that a number of directors to be elected at this meeting shall be 7. The term of office of the directors to be elected at this meeting begins today and shall continue until the next Annual Meeting of Shareholders or until such time as their successors have been duly elected or appointed. The management information circular contains information on each of the 7 nominees recommended for election as directors. All of the nominees are current members of our Board of Directors. Registered shareholders and duly appointed proxy holders may vote for each proposed director nominee individually. Each of the following persons for election has been duly nominated to act as a director of the company until the next Annual Meeting of Shareholders, and they include Dax Dasilva, Jean-Paul Chauvet, Marie-Josée Lamothe, Paul McFeeters, Rob Williams, Merline Saintil and myself, Patrick Pichette. The affirmative vote required for electing as directors each of the proposed nominee is a simple majority of the votes cast at the meeting. Each of the persons nominated has confirmed that he or she is prepared to serve as a director, if elected by the shareholders, and each of the nominees qualifies under the provisions of the Canada Business Corporation Act and the bylaws of the company to serve as a director. The company has not received notice from any shareholders of other nominations of persons for the election as a director of Lightspeed pursuant to the bylaws of the company relating to advance nominations of directors. Notice of any such nomination was required to be delivered to the company on or before June 26th of this year being 40 days prior to this meeting. As such, I hereby declare the nominations closed. As mentioned at the beginning of this meeting, voting today will be conducted by a single electronic ballot. So we'll, therefore, continue to the next item of business and you will be prompted to vote on the election of each directors after all items of business on today's agendas have been presented. We now go to the third matter to be acted upon, which is the appointment of the auditors of the company for the ensuing year and authorizing the directors of the company to fix the remuneration of our auditors. The Audit Committee and the Board of Directors recommends to reappoint our incumbent auditors, PricewaterhouseCoopers LLP as the auditors of the company for the ensuing year. It has been duly moved that PricewaterhouseCoopers LLP be appointed auditors of the company until the next Annual Meeting of Shareholders and that the Board of Directors be authorized to fix their remuneration. As mentioned at the beginning of this meeting, again, voting today will be conducted by a single electronic ballot. So let me go to the last item of business before we turn on to voting. The last item in business upon -- is the special resolution of shareholders of the company approving the amendment of the company's articles to change its corporate name from Lightspeed POS Inc. to Lightspeed Commerce Inc. The full text of the resolution to be adopted by shareholders of the company is set forth on Page 19 of the Management Information Circular. As set out in the management information circular, in order for the resolution to be passed, it must be approved by at least 2/3 of the votes cast by the shareholders attending this meeting or represented by proxy. It has been duly moved that the special resolution approving the amendment of the company's articles to change its corporate name from Lightspeed POS Inc. to Lightspeed Commerce Inc. be approved. All right. Voting on the items of business. As I previously mentioned, we will vote today by a single electronic ballot. We will now proceed with voting on today's business items being the election of our 7 directors to sit on the Board of Directors of the company; the appointment of our auditors of the company and the adoption of special resolutions approving the amendment of the company's articles to change its corporate name from Lightspeed POS to Lightspeed Commerce Inc. You will now be prompted to register your vote in respect to such decision items. Please register your votes by accessing the voting page when prompted and pressing the for or withhold button next to the names of each proposed director and next to the resolution with respect to the appointment of PricewaterhouseCoopers LLP as the company's auditors. And pressing on the for or against button next to the resolution in respect to the amendment of the company's articles to change its corporate name from Lightspeed POS Inc. to Lightspeed Commerce Inc. Once the electronic ballot closes, the voted page will disappear, and your votes will automatically be submitted. We'll wait a few moments for the completion of the electronic ballots and then move on with the remainder of the meeting. We will provide registered shareholders and duly appointed proxy holder approximately 1 minute to 1.5 minutes to complete the electronic ballots. Once voting is completed, I would ask that the scrutineer compile the report regarding the results of voting on all matters of business. We will reconvene just in a few moments with the scrutineers' report and voting results. [Voting]

Thank you all for waiting. I have received the scrutineers' report and confirm the following: Each of the 7 nominees have been elected as directors of the company to serve until the next Annual Meeting of Shareholders or until their successors are elected or appointed. Second, the appointment of PricewaterhouseCoopers LLP as auditors of the company has been approved, and the Board of Directors has been authorized to fix their remuneration. Finally, the special resolution of shareholders of the company approving the amendment of the company's articles to change its corporate name from Lightspeed POS to Lightspeed Commerce Inc. has also been approved. The formal items of business as set out in the notice of the meeting have now been dealt with. With the consent of the meeting, as there are no further business to come before it, I will thereby declare the formal portion of the meeting to be concluded. With this, at this point, management will give a brief presentation, and then we'd be happy to answer any questions registered shareholders or duly appointed proxy holder may have. So with that, may I invite Dax, our Chief Executive Officer and Founder to give a presentation. Dax?

Thank you, Patrick, and good morning to those in attendance today. It has been a transformation -- a year of transformation and growth here at Lightspeed. But as we like to say, this is just the beginning. Today, I'm happy to share how we plan to drive the future of commerce for independent businesses around the world. Our 5-year vision is exciting and ambitious. Tying it all together is our goal of igniting businesses everywhere. To do that, we plan to become the one-stop commerce platform for merchants around the world to simplify, scale and create exceptional customer experiences. Let's take you through how we plan to do that, a strategy that we call our Lightspeed 2026 vision. I'll start with a quick history of commerce and technology. In the 1990s, consumers were confined to shopping and dining in the physical world, visiting the stores and restaurants that were literally in their communities. The 2000s brought us the digitization of payments and arrival of on-premise point-of-sale systems, what we now call legacy systems. This technology went beyond being a simple cash register for the first time, giving businesses the capacity to analyze their operations and start to make more strategic decisions; 10 years later, those systems moved on to the cloud, and that's the moment in time that made us here at Lightspeed, the wave of technological change that drove the initial success we had as a company. But today, we live in a world that is omnichannel where consumer expects a streamlined experience, whether they are consuming online or in person. And these expectations have become entrenched due to the COVID-19 pandemic. So if we look inward right now as a company, we are a platform that currently serves what we call the merchant, businesses in the retail, hospitality and golf industries. The predominant value that the Lightspeed platform provides is the connection of the merchant and the consumer through 2 main channels, digital channels like e-commerce and order anywhere and physical channels such as mobile point of sale. Our product offering is thus predominantly focused on merchant services, including inventory management and analytics and tools to help with accounting and to provide customer experiences such as loyalty and subscription services. But what you've seen in the last few years is Lightspeed building the foundation for a stronger supplier, consumer and financial services offering. So while our financial services offering is currently mainly payment processing, the great news is that the success of that product has validated that once a merchant has a relationship with us through the POS, they trust us to do even more for them. And that hints at our vision for Lightspeed's evolution. As you've noticed, when we recently announced the acquisitions of NuORDER and Ecwid, the first of which is -- of which has closed and the second of which we expect to close before the end of September, we have been mindfully driving a transformation from being a POS platform to becoming a commerce platform, where we extend -- where we expand beyond serving simply the merchants. In fact, we want to become the thread that unites the merchant, the supplier and the consumer and power network that will drive unmatched benefits to all of these -- all 3 of these stakeholders. At the core of this network will be the capacity to leverage data, which will power an unprecedented ability to deliver insights and forecasting to independent businesses and brands alike. And there's also tremendous opportunity for our financial services when we serve as the link between these stakeholders with many more touch points and additional offers we can leverage. The creation of this network presents Lightspeed the opportunity to serve merchants, suppliers and consumers in many more ways than we currently do. By becoming the technological thread that unites the consumer, merchants and supplier, Lightspeed will transform into a true one-stop commerce platform with unique value propositions for each stakeholder. Let's take a moment to break down the value propositions for group. For merchants, Lightspeed will be, one, the complete commerce platform that scales with your business; two, the direct integration with suppliers for on-demand inventory management; three, the connection with consumers wherever they are, whether they're online, on social media, in-store or on third-party marketplaces; four, the provider of the insight data analytics of recommendation engines to drive extra revenue growth; and five, and the provider of the financial services to accept payments, advance capital and much more. For suppliers, Lightspeed will, one, democratize the supply chain with ordering and payments straight to the merchant's point of sale; two, provide sell-through data to help brands understand what sells and where; three, provide data and insights on consumer goods and trends to tailor production of goods; and four, become a global distribution network for the world's leading brands. And lastly, for the consumer, Lightspeed will, one, provide a single login for the Lightspeed profile; two, deliver a tailored and customized shopping experience in store and online; three, create a marketplace that helps consumers discover, access and buy from unique local merchants and restaurants; four, enable independent merchants to deliver the convenience and quality of service equivalent to big brands and e-com marketplaces; and five, ultimately democratize commerce and enable individuals to more easily support small businesses. We believe that in driving this transformation, that a merchant on Lightspeed will have a higher chance of success than on any other platform regardless if they are digital-first or brick-and-mortar, a new or growing business as long as merchants are in our key verticals, they're going to be best served by the Lightspeed commerce platform as the biggest distribution network with the widest reach. With the suppliers' platform of choice to power their business, everyone in the network gets value from Lightspeed, suppliers, merchants and consumers, which will accelerate our growth. We give independent businesses the technological advantage to compete against the giants. Bottom line, we will ignite businesses everywhere. Again, our vision is exciting and ambitious. We're focused on uniting the best technology and talent across the globe under the Lightspeed banner to achieve it. Over the next 5 years, we will deliver on this exceptional mission and power the global economy as the technology partner of choice for businesses everywhere. And with that, I will throw it back to Patrick, who will open up the line for questions.