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

Hello, everyone, and thank you for joining us today for our webcast on our flagship retail offering, Lightspeed Retail. Most of you know me, I'm Gus Papageorgiou, Head of Investor Relations here at Lightspeed Commerce. Before we begin, I'm obligated to read our legal disclosures. We will make forward-looking statements on this webcast 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 filings with U.S. and Canadian securities regulators. Our commentary today may also include adjusted financial measures, which are non-IFRS measures. 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 filings with U.S. and Canadian securities regulators, which are available on our website, on sedar.com and on the SEC's EDGAR system. Before we get into the meat of our presentation, I just wanted to touch on some housekeeping items. Firstly, please note that this webcast is being recorded and will be shared on Lightspeed Investor Relations site. Secondly, this webcast is expected to last approximately 1 hour, including time for questions and answers. And finally, if you have any questions, please feel free to submit them in the questions box found in your control panel. You can submit questions during the webcast, and we will do our best to answer them in the Q&A session. Joining me today will be Ana Wight, Lightspeed's General Manager of Retail; and Asako Ide, who will be taking us through a product demo. After this introduction, Ana will take you through a presentation on the new flagship Lightspeed retail offering, including a customer testimonial with one of our initial SMB customers. Asako will provide a relatively detailed product demo and then we will take your questions. So without any further delays, I will pass it over to Ana to take you through Lightspeed Retail. Ana, over to you.

Hello, everyone. Wonderful to be with you all today to talk retail and Lightspeed's new flagship retail platform, Lightspeed Retail known as X Series. By way of introduction, my name is Ana Wight, and I joined Lightspeed in April of 2021 as part of the Vend acquisition. I was appointed into the GM retail role about a year ago. Prior to Lightspeed, I was the CEO of end, having spent 4 years there, including as a CFO and Chief Commercial Officer in my time. I've spent my career in TechMedia Telco and prior to vend was the Senior Vice President at McKinsey & Company as well as spending time at Microsoft and their consumer an online division out of London and in Telecom New Zealand's group strategy team, now known as Spark. So my background has always been TMT, and across B2B and B2C and in corporate management consulting, scale-up and style-up environments and currently based in Auckland, New Zealand. Obviously, I'm really excited about what we're doing in retail and the enormous opportunity we have to transform the industry by solving real pain points for merchants, suppliers and consumers. And I can't wait to share with you the incredible offering we've been developing to do just that. But before we jump into Lightspeed's flagship retail offering and why I think it's setting the new standard for retail technology, I thought it might be helpful to share with you some of the broader context surrounding the launch of our platform. We all understand that the pandemic has accelerated the adoption of digital technologies across industries. And we also know from our own published research, the State of Retail 2022 that omnichannel retailers are outpacing their peers in terms of business performance. As retailers across the globe continue to abandon legacy pen and paper and cash register alternatives that are inadequate to meet their business needs and serve consumers in the way that they now want and often need to shop, we expect to see continued adoption of omnichannel solutions like Lightspeed Retail. At Lightspeed, we're very clear who our target customers are today. And because of that, we're building an omnichannel solution to meet their needs. So who is our target customer exactly? Well, let me start by saying our customers aren't your basic pop-up, high churn, low GTV merchants that some of our competitors are targeting and nor are they the multinational enterprise merchants at the opposite end of the spectrum. Here at Lightspeed, our retail customers are complex omnichannel merchants operating both the physical and digital worlds who are looking for powerful and intuitive digital solutions to power their businesses. Unlike small pop-up shops, these retailers typically have several thousand SKUs spanning multiple different brands and in verticals such as apparel and home goods, gift boutiques or sports equipment. And some will even offer a service element as well like bike shops or pet stores. And what matters to these omnichannel retailers more than anything is having a platform that is the single source of truth for their business. That means these merchants need accuracy and in particular, accuracy of inventory. Now that might sound simple in theory, but in practice, it actually requires a lot of very thoughtful product and engineering work to make it happen. Where we see competitors struggle to serve these merchants is managing inventory across more than a very small number of locations and accurately across both physical and digital channels. We're of the opinion that Shopify, one of our key competitors simply has not built the depth of in-store workflows and inventory management capability that is critical to these merchants. Lightspeed Retail is able to power retailers who have hundreds of locations and thousands of SKUs. In fact, in some of our verticals, our merchants will have tens of thousands of SKUs. From a market perspective, what's important for Lightspeed is that we build global density within these sub verticals rather than geographic density. We are clear on the verticals that we'll target to build our global solutions for merchants and suppliers within those verticals. And this becomes important to power our global retail network, which I'll talk about a bit later. With the limitations of competing platforms, we've also identified a sizable opportunity to serve retailers entering the market across different channels, whether they begin physically and expand digitally or begin digitally and expand physically. With our retail offering, we've set our sights on delivering a platform that will provide what our target customers need right when they need it. And while our target market is primarily physical-first omni retailers, the addition of equal to the Lightspeed family has given us the opportunity to serve a second group of SMB retail merchants as well, those that plan to remain digital only. By building a compelling omnichannel solution for both physical-first and digital-first retailers, as well as an ability to support digital-only retailers, we can support retailers wherever they are in their journey. Geographically, today, we're focused on serving merchants primarily in the key English-speaking markets of the United States, Canada, the U.K., Australia and New Zealand. We believe that the problems we need to solve for merchants are globally consistent. One of the reasons we're not immediately offering this full omnichannel solution in key European markets, such as France or Germany is due to country-specific compliance requirements. For example, France has its own complex regulatory requirements regarding the way that sales are recorded and stored. As we shift the functionality that meets these country-specific compliance requirements, we'll be able to open up those markets. Of course, we'll need to translate the product, and that work is very well understood and repeatable. The excitement here is that our omnichannel opportunity is constrained only by the languages we offer and our ability to ship the relevant features for local market compliance both of which we're actively exploring. And on the digital-first or digital-only side, the addition of Ecwid to the family means we're already truly global. So to recap, on the omnichannel side, we're targeting the complex SMB retailer in about 12 key verticals, largely in English-speaking markets today. Given the globally consistent requirements of these merchants, through translation and fiscalization, we expect to be able to increase this opportunity even further moving forward. And on the e-com stand-alone side, we're just getting started in terms of where we can take this incredible offering. Having spoken about the retail industry context, I'd now like to touch on a few key points as we look at Lightspeed more specifically. Firstly, we have a fantastic team with deep launch in the retail space due in part to the strategic acquisitions we've made, which bring together decades of deep retail and retail tech IP that we can now leverage collectively. Secondly, we've also unified all branding across our retail platforms to expand our brand presence in the market. With this crucial step, merchants will be able to tell their colleagues and friends they're using Lightspeed for their commerce needs, no matter which retail point of sale they started on such a ShopKeep or Vend. This step is critical to powering word of mouth and powering our retailer concentration. And lastly, within this retail platform, we have the ability to aggregate and analyze inventory, transaction and customer data for a retailer across both physical and digital spaces. This gives us the opportunity to provide merchants with critical insights as to the efficacy of their marketing and drive even more personalized experience for their customers. So with that industry and company context in mind, let's dive deeper into X Series. With this offering, we're ultimately delivering on our vision to connect merchants, suppliers and consumers in a single ecosystem. Once complete, we hope that our retail flywheel will fuel the rapid adoption of Lightspeed Retail across the retail industry with suppliers co-opting merchants to use the Lightspeed Retail platform, retailers pulling suppliers into the platform and consumers ultimately pulling to and benefiting from the network at large. We're solving real and non pain points for the retail industry. It might be surprising for some of you to know that even a very well-known international brands are often managing their inventory on a spreadsheet. You can imagine the lack of visibility, operating efficiency and insights and how the solution can be right here on the Lightspeed platform. Today, our primary focus is on delivering exceptional experiences for merchants. At its core, Lightspeed Retail X Series is a comprehensive and fully integrated point-of-sale e-commerce and payment solution. In the near term, this combination will be available to all merchants irrespective of what when a sale or e-commerce solution they're using within the Lightspeed portfolio. This helps us to maximize ARPU and payments penetration across our collective base. Let's start with discussing how this retail platform supports omnichannel retailers. We are wanting to build a platform that provides retailers with comprehensive back-office operational tools to optimize and control their businesses, compelling front-of-house experiences that mean they trust the platform as a source of truth upon which to run their businesses, offer embedded financial services that enable them to optimize and grow and provide impactful tools to grow and scale their businesses. Our offering needs to be intuitive, beautiful, powerful and reliable and our product road maps and the functionality we should deliver against that value proposition. We think about core products and add-ons, all of which can be monetized. And in addition to functionality, we also think about the performance and stability of the platform, which is crucial for our merchant. Things like page load times and number of clicks matter when a merchant is using the product every single day multiple times a day. Every second counts when you're running a queue. And if you deeply understand retail, like I believe we do, being these things sharpen your offerings in a way that truly delights those merchants. Ultimately, we know that there are 4 promises or jobs we have to deliver on for these merchants: trust, grow, optimize and control. As we go through this deep dive of the new Lightspeed retail, our name for our flagship retail platform, I'd like you to remember 3 things that make this platform distinct and that differentiate us as we deliver on those promises. We're easy to use, easy to build, and it's easy to sell. Let's start with easy to use. This is really merchant-centric. We've built a platform that is beautiful, intuitive and easy to use for our merchants and easy to use also means easy to learn, which is important as our retailers hire new staff and adopt new features. We also think deeply about the different user groups within our merchant base. Our product teams figure out how we make our platform easy to use for each of the different types of users. This means we think about cashiers differently than managers or to the admin for the account. Being thoughtful about who can do what or see what in the platform is critical for more complex retailers to have confidence in the platform they choose to run their business on. You want to decide and know for sure who in your business can give discounts, who can see the margin reports and who it was that cashed up at the end of the day. In addition, we have a very mature design system that enables us to deliver these experiences quickly, which means our merchants get a very consistent experience. Here are 4 examples of how this is showing up for our merchants and our economics. Our flagship is built to make it easy for merchants to self-onboard. That means they can take a self-serve trial, subscribe and get trading without human assistance from staff. With a deep understanding of the retail market, we know the behaviors that a retailer needs to demonstrate and in what time frame to be successful on our platform. And we're now able to use in product prompts and tracking to ensure retailers are on track. Self-serve is an important part of our proposition going forward as we leverage the power of data science to build insightful predictive models about the LTV of a merchant and the land-and-expand journey, we want to take them on at Lightspeed. Being very data-driven about the next best interaction with that merchant provides a lower cost and higher conversion way of driving successful onboarding, adoption, expansion and support interactions. As we ship self-serve functionality like targeted workflows to provide guidance to merchants setting up their catalogs or dashboards that support self-set activation, we're pleased to see the increases that's driving an adoption and usage of other areas of the product. What this shows us is that not only do we have a potential path to lowering our overall sales, marketing and support costs for retail customers, we're also creating a more engaging experience for our customers. Two, in addition to the benefits of self-service, we've also seen that the support contract rate for our flagship offering is 2x to 3x lower than our previous offerings. Because X Series is so easy to use, we don't receive the same how do I type context that our previous platforms received. This creates the possibility of lower service and support costs for retail customers going forward. Three, on the embedded financial services side, things are also getting very exciting. Over the last year, we built financial services right into the onboarding experience for our flagship retail offering. We've been thinking a lot about self-serve payments and capital. and we've already significantly reduced the time to onboard to Lightspeed payments through our new self-serve in our onboarding flows. We're also making attaching Lightspeed payments as easy as possible for merchants as well. All of this intentional work on the financial services side has helped contribute to higher revenue for Lightspeed and faster. Capital is also entirely self-serve through our product and marketing messages. We are being really data-driven about how we surface this module. For example, in the area of the product where you order inventory, where you look at sales reporting and in your overall dashboard. They are all moments when a retailer may be looking for cash flow support and so servicing a relevant offer at a time when it would enable them to optimize and grow their business is a great experience that we think will increase adoption. And four, finally, retailers can add additional outlets and registers entirely self-service or upgrade to higher-priced brands to access additional functionality. In the future, we'll also have the option to enable self-serve purchases of additional modules directly in the product. We hope that by giving merchants the ability to self upgrade and encouraging them to do so within the product can have a positive impact on ARPU for our retail customers. In summary, our ease-of-use differentiator not only creates an incredible experience for merchants. It also creates the ability for Lightspeed to reduce our overall sales and marketing and support costs to acquire and upgrade retail prospects and customers. Now let's talk about how Lightspeed Retail X Series is easy to build. This is something that's really important for our product and technology teams and our ecosystem partners. We can deliver so much value so quickly because we've prioritized investing in an easy to build on and extend goal. So what do I mean by that? What this means is micro services architecture with clear integration points between our teams and services. These clear integration points position us for easy development from public API and our retail offering through a single bill and experience. For example, we can offer Age ID verification as a seamlessly integrated experience on the same Lightspeed retail bill as the merchant subscription. Or we can include a bottle deposit app also developed by a third-party alongside Age ID verification to deliver the best point-of-sale experience for liquor stores in 1 bundle. You'll see Asarco demo another example of this with quote machine when we take a look inside X Series a little later in the presentation. We've also now made Lightspeed retail available on Android, which expands the compatibility of our offering with merchants existing equipment and gives us greater freedom and optionality for custom and branded hardware. Again, the ability to build for web, iOS and Android is all because of our continued focus and investment in a platform that is easy to build on. For merchants, this means fantastic experiences that often cater in niche needs. For Lightspeed, this means more revenue from third-party developers, accelerated platform road maps and barriers to entry for competitors attempting to replicate the depth of our offering. And finally, Lightspeed Retail is easy to sell. This differentiator is most important to our go-to-market teams and distribution partners because we're ensuring that it's easy for our teams to say yes to a merchant. For example, this means product functionality and support from third-party developers to increase the top of the funnel. It also means more sophisticated pricing and packaging options as a result of the way the platform was built and the pace at which incremental modules can be built or bundled. With our new flagship offering, we can create new add-ons from existing features in under a day. That's compared to 6 to 8 weeks on our previous platforms. It's huge. We can test prices in different currency markets with 0 hassle, and we can create new bundles for specific segments faster than we ever could before, like a summer home and living bundle targeted exclusively to North American retailers. We are able to build new modules fast. We can help our teams close niche merchants with third-party build outs like Age ID, quote machine or Marcello in a single sale. And we can continue to fuel our easy-to-use self-serve capabilities to create more exceptional experiences for our merchants. And finally, we've spent most of our time today talking about our merchants and the solutions we have for them. However, as I mentioned at the beginning, we're not just building a retail platform for merchants. We're building a retail platform that connects merchants, suppliers and consumers in one. So I'd like to take just a couple more minutes to share some thoughts on our supplier network. Now one of the major problems retailers and suppliers want us to solve this inventory management and at an industry level, the majority of this work is still done in a spreadsheet. If we start with the individual merchants, we have a unique opportunity to streamline and digitize the ordering and inventory management process. This means ordering and reordering inventory directly from the Lightspeed platform and eliminating double handling of purchase orders. And for the individual supplier, this means being able to share their entire catalog with retailers, massively simplifying time. We hope merchants will only want to work with those suppliers that are on the platform, too, given how transformative we expect this to be to their operations. Our ambition is to enable merchants and suppliers to have much more complete in advanced data on things like sell-through rate, inventory levels and reorder points, which is another massive value add for both ends of the value chain. While we'll eventually get to one consolidated platform on the merchant side, we're currently building our supplier network to function across all Lightspeed point-of-sale products. We hope this approach will allow us to instantly offer the vertical density that makes this so compelling for brands and suppliers. At this stage, a supplier would need only to interface with Lightspeed retail to gain access to all of our merchants regardless of which point of sale within the Lightspeed family that merchant is currently using. To wrap this up, I want to say how tremendously excited we are for the opportunity ahead of us. It's a huge opportunity that we believe is greatly underserved. And here at Lightspeed, we're uniquely positioned to meet that need. We have a talented global team, a deep understanding of the retail market and an industry-changing platform that's based on 3 critical differentiators: easy to use, easy to build and easy to sell. Thank you very much for your time today. I'll hand it over to Don, one of our fabulous customers to tell their story using Lightspeed Retail.

I'm Don. I am a manager of 1 of the 3 locations of Maxwell and Molly's pet supplies in Suite County, New Jersey. We offer boutique food as well as health and wellness, clothing, toys, things of that nature, more concierge-type service of pet products. Sure. Well, one of the things, again, that we pride ourselves on is offering 5-star customer service, 5-star level customers serve. So again, it was very important to not struggle with the software with that customer standing in front of us. We don't want to spend time looking at the screen, trying to figure out how to add a new customer or looking up their sales and helping them out. We want to be able to quickly get information and get them on their way and help them. What Lightspeed Retail is doing is not taking time away from our customer because we are struggling with the software. The software is so easy to use. There is very little need for training. We have a very different, very diverse crew member team. They are high school to retired back-to-work people who just really want to come back to work for a few times a week that aren't necessarily always computer literate. Prior to this -- to Lightspeed retail, what we were doing was we had inventory count sheets that we created in Excel and said, "You need to keep 5 of these things on our shelf every week, and this is the count that we have, and this is what we have to order every week." I wasn't looking at what my reorder points are or should be, that was just -- we need to keep 6 of these, so we have to order 5 more. So our inventory churns was way off. Now with Lightspeed, we're putting our investment into items that are selling versus items that are sitting. These items that are slower moving, we're keeping less inventory, but the items that are -- that are moving faster, we can afford to stock up on that. When I have thousands of dollars worth of frozen meat and products on the floor, my biggest focus is getting them in the freezer and getting them back frozen as quickly as possible and not allowing any thawing to occur. Scanner app just let me take them -- take the boxes and scan them and put them right in the freezer as I'm scanning them seconds to do that. So because of the number of customers that I have and the number of -- and the amount of inventory I'm getting in, I do have help on Thursdays. So we can both use the scanner app at the same time, which was great. Everything is synchronized perfectly. We don't lose anything. It's great. So we can get our work done in half the timing. It's been a lifesaver in inventory management and the cost of inventory. So the greatest thing that Lightspeed Retail has to offer the ease of use for the customer. So not spending time trying to figure the system out while a customer is standing in front of us. But being able to offer the same level of concierge customer service experience to that customer. And then, oh, by the way, there's software back there. That's kind of the way it is. One of the things that I have seen from you is that you do listen and the changes that I have asked for are there. And the scanner app is a prime example of that. So I love cooperating. I love telling you my story because that's how you learn and make a better product for us. So I'm happy to do this.

Well, now that you've heard from one of our lead customers and Ana, Asako is going to take you through a demonstration of the flagship offering so that hopefully, you can get a fuller understanding of the benefits of Lightspeed Retail. Asako, over to you.

Hi, everyone. My name is Asako Ide, and I'm one of the product managers here at Lightspeed. And today, I'm so excited to take you through a demo of our industry disrupting X Series retail product. In case we haven't said it enough, X Series is built with the goal of being the retail industry's most comprehensive one-stop commerce platform. It's easier to get started, easy to use. And with our new self-serve model, it's even easier to sell. So let's take a look under the hood. With X Series, retailers can get start faster with automated tools like tax rates based on locations. They can add products to their inventory in seconds with quick ad features. And sell those products across all their sales channels with a click of a button. And with Lightspeed Payments built in, they have a payment solution with premium security right out of the box. And the best part, retailers can pick their plants, choose their hardware and get selling all without ever speaking to a salesperson. We told you it's easy to get started. So what about easy to use them? When it comes time to hit the shop floor, X Series makes every second count with features like quick keys to add products and complete sales. While our intuitive user interface makes it easy for anyone to do repetitive tests like search and create a new customer. And our focus on being easy to use also makes X Series easy to learn, whether our retailers on 1 device or several. Seamlessly switch between devices, change profiles instantly and pick up right where you left off, no matter where you end up. It looks like this customer has decided that they want the CAM issues. It looks like we'll have to create a special order. And of course, X Series makes it easy to accept a deposit. And when that order finally arrives, fulfillment is just as simple. Synchronized inventory and sales across platforms means everything from sales data to shopper Info comes right into the same place. Taking the order online, online orders are automatically assigned to the correct location for fulfillment, even it's across 2 different locations. With Lightspeed Retail, merchants can see anything that needs to be picked up or delivered across their entire operation at a glance and with the scanner app available on iPhone and Android, staff can fulfill orders right from the shop floor or do a price check or a quick inventory level check. Just got a new shipment? Simple. Retailers can receive inventory into stock as soon as it's delivered to the store including products they haven't added to their catalog yet. All this right from the shop floor, untethered from their point of sale. Even better, managers can watch the inventory count from a laptop in real time, whether the staff use their mobile devices to count stock around the store. But what about data? Seen across your entire business has never been simpler with built-in data and reporting right at your fingertips. Customer reports and dashboards, let retailers dig deep into top-selling products, employee performance, customers and more. Looks like this product has seen some increased demand, but it's low in stock. No worries. The retailer can reorder right here with Lightspeed built in purchasing tools. It even looks like this retailer is eligible for Light to be capital, so they can even reorder the stock they need today with a cash advance on future sales. Let's see what else X Series recommends from the supplier. We can see the reminders to play those special orders like those canvas shoes as well as other products that are below the reorder points. With X Series, it's never been easier to make sure you're always stocked up on the products you need when you need them. And if the retailer wants to make a change or an addition to their order, it's as easy as search and for the product. They can even order a new product for the very first time all right here from Lightspeed's built in purchasing tools. While X Series gives every staff member of the power to easily manage day-to-day operations out of the box, business owner control will always remain top of mind. That's why with X Series, we offer flexible permissions and customizable roles to suit each retailer's unique business needs. Don't want sales associates issuing store credit without manager approval? Not a problem. Need inventory counts approved by the inventory manager, Piece a cake. As an owner, you also have insight into who is logging in from where. So you can identify unauthorized access and who changed what, when. You've seen that X Series is easy to use, and that contributes to making X Series easy to sell. But the X Series platform also delivers 1 more thing, and that's easy to build. We've developed a platform that simplifies commerce development. This easy-to-build platform powers innovation at pace from our teams out like speed and enables our partner ecosystem to thrive, deliver even more value for our merchants and driving growth for our bottom line. X Series offers all the integrations you would expect from an all-in-one commerce platform, including accounting, e-commerce, customer engagement and staff management. And while some of these are built by our own teams, others are built by third parties, all using our proprietary easy-to-build platform, but where X Series moves beyond synchronizing information between apps is by combining experiences. Here, you can see our serialization feature built by Lightspeed on top of our new workflows platform. And when I add this work order, you can see a similar seamless experience is being delivered by a third-party developer machine. And this is all on the same powerful platform. Plus using our Workflows platform requires developers to bill for their apps via like bees third-party billing API, delivering residuals to Lightspeed and allowing our team to directly monetize the value created for our merchants and partners through the ecosystem. As you can see, with X Series, we built a platform that's easy to use, easy to sell and easy to build. And we're just getting started. At Lightspeed, it's our goal to ignite retail businesses everywhere, and that's exactly what we're going to do.

Okay. I think we are live. I hope we're live. Thanks, everybody, for joining us this afternoon. We have Ana Wight here, our General Manager for retail. We also have Asha Bakshani, our CFO, joining us, and we'll go through your Q&A again.

[Operator Instructions] First question, Ana. What are the common catalysts that you see in your target merchant profiles that prompts the shift to Lightspeed's retail offering?

Thanks for the question, Gus and team. There's really 2 major factors that drive our merchants to choose light speed. The first is more complex retailers that realize that the systems that they're currently running their businesses on legacy systems, pen and paper are just inadequate for what they want to achieve in their businesses. It's creating friction, it's frustrating, it's limiting. You heard Dan talk about that. And the second big driver is our merchants realizing that they can't serve their customers in the way that their customers want to or need to shop with their legacy or current offering. So especially at omnichannel, you see that come true that it's just not possible for those businesses to serve consumers.

Okay. Great. We'll move on to the second question. You discussed the underlying technology? How did you integrate all these acquisitions? Did you recode everything? Or is it a mesh of multiple solutions?

It's absolutely not a mishmash of solutions. Look, we did privilege the original Vend code base and platform is the foundation for our flagship offering. But we brought the best of each platform together. And we also haven't been shy about letting go of parts of different platforms that aren't industry leading so that what we put forward into the market is really the best of breed for retail comes.

Okay. Great. Another one. Would you ever consider putting feet on the street like the hospitality sector is doing?

That's a good question. Look, we're after those complex high GTV customers in retail. And we know that our customers want to be able to talk to our teams. And so we're likely to leverage some of those hospital learnings into our retail businesses. And I think just more broadly, we're always exploring new channels to take our solution to the market.

Great. Okay. Can you give us a sense of how the ease of use has led to higher module adoption and cross-sell opportunities?

Yes, sure. I think it shows up in 2 different ways. One is that ease of use, I think, gives our sales teams confidence to talk to our customers about what they can use and adopt into their businesses. But the second is also our merchants discovering for themselves and being able to almost self-serve and adopt within the product. So by being so easy to use and easy to learn, our retailers have a lot more confidence to bring more of the technology into their businesses, which is really fantastic. And you heard from Don, right? He talked about the fact that he's got a huge variety of staff earn his business and is completely confident to put all of them in front of our technology.

Great. Okay. Can you talk about the ARPU bump you're seeing, if any, on a new offering versus the old offering?

Yes. I mean we're excited about the potential here, right? It's early days, but we are encouraged, I think, by the initial signals. There's a few things there. I'm hoping that with more sophisticated pricing and packaging, which is enabled by the way we've architected the platform. And we've got faster development of new modules. And we can also take more nuanced sales approaches to different customer types. So I think those 3 things lead us to be kind of optimistic about improving our software ARPU over time. And obviously, we're excited to about self-serve, particularly on the financial services side, which we hope can drive adoption over time compared to our previous platforms.

Great. Asha, I think this one is more for you. Can you discuss how you think the new like Speed retail will impact location additions which have been in the $3,000 to $4,000 range recently?

Sure. Thanks for the question. So as Ana mentioned during the webcast, the new retail -- the new Lightspeed Retail flagship product is engineered, as she mentioned, easy to sell, easy for customers to self on board. That's without someone in sales, a touch point from someone in sales and easy to provision new services, new modules or even Lightspeed Payments. So definitely going to help there. But as we have mentioned, we will continue to prioritize high GTV locations that for customers that will take payments and really use the full range of our software suite. If I give you an example, if we were to sign a high-end retailer that does millions of dollars a year in revenue and takes payments, such as a Rolex store that we highlighted last quarter. That is not the same ARPU for Lightspeed as signing up a small retail shop that does say $100,000 a year in revenue and only uses the POS. And so really, we are focusing on high GTV, high ARPU customers for Lightspeed because that is a way for us to take our TAC, which is the cost we -- the cost that we spend to acquire a customer, it takes our tax further when we're signing up these high GTV high ARPU customers because it is important for us to highlight that we need to make choices in our business. We want to meet our growth objectives. And we've also committed to being EBITDA positive or better for our next fiscal year. So we need to keep that in mind. And if you think about the levers of growth that we have at our disposal, we really have -- that we can pull. We have -- we can increase location count, we can increase software ARPU and we can grow payments. So while we definitely intend on continuing to grow location count, the most cost effective way for us to grow is really to upsell our existing customer base on both software and payments. As you've seen from us in the last quarter, we've monetized 10% to 15% of our GTV. So we have so much opportunity to grow there. We have a well-developed account management team, and their job is really to upsell the base. And we have captive customers, and we know them well. They love Lightspeed. So upselling them on new software solutions or payments is really cost effective for us. So when we look at growing just location count, that requires investment from Lightspeed. So in the near term, we really need to balance increasing this location count through net new investment in marketing with growing software ARPU and expanding payments adoption through upselling our base. So the right balance here is really going to help us recognize our goal of adjusted EBITDA breakeven or better next year, but at the same time, meeting our revenue growth objectives.

Great. And I think well, I think this is for you, but I think, Asha, you can chime in as well. A new merchant wins, what proportion is replacing legacy versus replacing other modern solutions?

Yes. From -- I'll jump in first, Asha. I think at a market level, the majority of the market is still on legacy or pen and paper or incumbent solutions, which is one of the reasons we're so excited about the market opportunity. So we think of that level it makes sense that there's a higher proportion where we're replacing legacy systems. And though I do think we should acknowledge that there are times where we are winning or switching from our -- we call them, I think, more cloud-based competitors, and that usually reflects the depth of our platform and this ease of use. So we will see more complex retailers to seek out the Lightspeed Retail platform. Is it -- anything you want to add, Asha?

No, I think that's absolutely what I was going to say. And the only thing I would say is I'd just like to remind everyone that we've made several retail acquisitions then included. And the intention there was to really get the best in breed in terms of technology. And we've combined all of that technology into 1 flagship product. And so when we think about functionality that we provide in our retail flagship, there are lots of times that we do win against modern cloud-based solutions because of that fact.