How Lightspeed POS is fueling retailers during COVID-19

Yahoo Finance’s Brian Sozzi and Julie Hyman speak with Lightspeed CEO Dax Dasilva about the company's business growth amid COVID-19.

Video Transcript

- Despite the pandemic pressures on its core customers in the restaurant and retail spaces, shares of cloud play Lightspeed are up 121% since debuting on the New York Stock Exchange in September. Lightspeed's founder and CEO Dax Dasilva joins us for a chat now. Dax, good to speak with you this morning.

So square this for investors. So you focus on some of the most challenging industries amidst the pandemic-- retail, hospitality, I'll even add golf in there. Your stock has really come out of the gate strong. Why is that the case?

DAX DASILVA: So I think that we're being seen and we are helping these customers reinvent for the new economy. And that's an economy where omnichannel experiences, blended physical and digital experiences, are served by the same system. And so we've helped our customers pivot over to digital sales channels over this period. By April, actually 3/4 of our customers were still able to transact with their customers despite the pandemic. And I think that's going to be a growing trend, and not just for our customers, but as the reopening happens in the economy, businesses will need systems like Lightspeed.

JULIE HYMAN: And Dax, it's Julie here. Have you seen an increase in new customers over this period, or have you seen more of your existing customers kind of have more robust offerings, or get more services from you? And how much attrition have you seen during this time, on the flip side?

DAX DASILVA: Yeah. So one of the remarkable things about the last quarter that we reported was that we actually added new customers. And so there are lots of businesses. The vast majority of our segment, which is the complex SMB, the retailer with, you know, tens or hundreds of thousands of inventory SKUs, or restauranteurs with complexity to their business. They need new systems. They need the new tools. And so that's been either a move from legacy-- this market's really served a. Lot by legacy players and we are powering sort of those new experiences. That's really important.

But also, our existing customers are lighting up the digital channels that we offer on our platform. So there's been a bit of both. In addition, we have Lightspeed Payments and Lightspeed Capital that's helping these businesses have new contactless payment experiences. So yes, there's been growth on a lot of fronts. And we've seen this acceleration to omnichannel happen. What would have taken three to five years is now happening-- we've seen it happen in this past nine months.

- Dax, there's some big players in this market. You certainly have Square. You have Pfizer working with Clover. You have TouchBistro working with the banks. I mean, how are you able to move forward and take business from them?

DAX DASILVA: Yeah. You know, I think Lightspeed, there's 47 million different SMBs in the world. We're targeting that seven million that have complexity. On average, they're doing about $600,000 USD in transaction volume a year. They have very specific needs. And like I said, that specific segment to serve by legacy, we're really targeted. Through our 15-year history, we've been really targeted to serve that customer really well. And they're going to need different tools than some of the other vendors in this new economy.

And we're optimistic about the reopening. We're seeing already some of the progress being made in countries that have already reopened, like Australia and South Africa, where we have presences. And so we do think that we will see demand when the economies reopen.

JULIE HYMAN: So Dax, talk to us, then, about the next phase of growth and what you guys are expecting going into 2021. I mean, it's still fairly recent that you are publicly traded here in the US. And so one would think you have some proceeds to play with there. So what's the plan?

DAX DASILVA: Well, organic growth has been a very strong story for the company. We're selling new systems, obviously, to new customers. We're converting customers over to Lightspeed. And then we're adding modules for those customers, allowing them to have new growth drivers, items like e-commerce or delivery or loyalty, or creating a subscription model for them and their customers. So there's all of those organic drivers that are driven by our innovation.

There's also acquisitions. We've done two major acquisitions in the US since we listed in New York. Both ShopKeep and Upserve give us greater capability on the technology side. But also, we have some of the best of breed teams now. It's our biggest market, the United States, and now we have two amazing teams added to our existing teams to really make sure that we're doubling down on growth.

Like I said, we're bullish on the reopening. And we think that systems like Lightspeed are going to be not just a nice to have. They're going to be a necessity, a crucial lifeline to being able to bridge digital and physical experiences for the modern consumer.

- And just staying on the bullish topic, really, the street, Dax, is very bullish on your company. And they point to two things. One, you have seen an acceleration in new customers throughout the year on your payment platform. That has also accelerated. In fact, it grew 3% in the most recent quarter. Have those trends continued?

DAX DASILVA: Yeah, I think that this is a really bright spot for the company. We've rolled out our own payments platform. And it's becoming so interlinked with how the software works that as we rolled out the new contactless experiences that our customers needed during COVID, and we rolled out things like Lightspeed Capital, and we have other things planned, that's becoming indistinguishable from the software platform itself.

And so in order to unlock the full value of the legacy platform, our customers are adopting our payments. And we think that whether they're using the e-commerce piece of our software or the in-store pieces, it's becoming an intrinsic part of unlocking the value. And so we expect that to continue, and we expect to also be able to offer new financial services to these customers like we just rolled out with Lightspeed Capital. We know these businesses better than anybody.

- Dax, just reviewing your business, my takeaway was it would be a nice part to a larger tech organization, Google, Pfizer, you name it. And thinking about being part of a bigger company over time?

DAX DASILVA: So ShopKeep and Upserve were acquisitions number 10 and 11 for Lightspeed. We've been an amazing organic growth company. But we've also been bringing best of breed companies from all around the world. We've done acquisitions most recently in the last year in Germany and Australia.

We sort of see ourselves as the acquirer, the consolidator for this complex SMB segment. And we're bringing together the best of breed teams. And so we see ourselves sort of more through that lens. And that's part of the reason for the listing in Toronto and now in New York, is to give us the public currency to really be that global champion for this complex SMB segment.

JULIE HYMAN: And Dax, finally, speaking of sort of being a global champion and having a higher profile, I know you've also been a leader in the LGBTQ community. And we have had a lot of conversations this year about corporate diversity, right? A lot of those conversations have centered on people of color, but certainly LGBTQ is part of that equation as well. So I'm curious what you're seeing, and what kind of diagnosis you would give to that part of diversity after what has been a very momentous year.

DAX DASILVA: Yeah. It's really a part of the ethos of the company, diversity and inclusion. Now that we're a public company, we're formalizing sort of our programming and our thoughts and our people and culture strategies. But the original team at Lightspeed were all members of the LGBTQ community, myself included. And we really believe that difference can be a teacher. Especially when you're building a global company, diversity and inclusion is an absolute strength.

And we believe it's been a huge strength for Lightspeed, especially as we've integrated other companies, other cultures, and people from very different backgrounds. And I think that those roots have given us the ability to really succeed with bringing all the voices and all the perspectives to the table.

- Well, we're certainly looking forward to following your journey. Dax Dasilva, Lightspeed founder and CEO, happy holidays and we'll talk to you soon.

DAX DASILVA: Thank you. Happy holidays.