Lightspeed Commerce Inc.
Condensed Interim Consolidated Financial Statements
(Unaudited)
For the three and six months ended September 30, 2024
(expressed in thousands of US dollars)
| | | | | | | | | | | |
Lightspeed Commerce Inc.
Condensed Interim Consolidated Balance Sheets
(Unaudited) |
| As at September 30 and March 31, 2024 |
| | | |
| (expressed in thousands of US dollars) |
| Notes | September 30,
2024 | March 31,
2024 |
| Assets | | $ | $ |
| | | |
| Current assets | | | |
| Cash and cash equivalents | | 659,018 | | 722,102 | |
| Trade and other receivables | 9 | 49,191 | | 62,284 | |
| Merchant cash advances | 17 | 105,444 | | 74,236 | |
| Inventories | | 19,254 | | 16,492 | |
| Other current assets | 10 | 47,685 | | 42,786 | |
| | | |
| Total current assets | | 880,592 | | 917,900 | |
| | | |
Lease right-of-use assets, net | | 15,691 | | 17,075 | |
Property and equipment, net | | 18,527 | | 20,496 | |
Intangible assets, net | | 191,235 | | 227,031 | |
| Goodwill | | 1,359,882 | | 1,349,235 | |
| Other long-term assets | 11 | 39,756 | | 42,865 | |
| Deferred tax assets | | 557 | | 552 | |
| | | |
| Total assets | | 2,506,240 | | 2,575,154 | |
| | | |
| Liabilities and Shareholders’ Equity | | | |
| | | |
| Current liabilities | | | |
| Accounts payable and accrued liabilities | 12 | 73,003 | | 68,679 | |
| Lease liabilities | | 6,882 | | 6,942 | |
| Income taxes payable | | 1,804 | | 1,709 | |
| Deferred revenue | | 63,248 | | 67,336 | |
| | | |
| Total current liabilities | | 144,937 | | 144,666 | |
| | | |
| Deferred revenue | | 644 | | 851 | |
| Lease liabilities | | 15,078 | | 16,269 | |
| Other long-term liabilities | | 1,247 | | 967 | |
| Deferred tax liabilities | | 379 | | — | |
| | | |
| Total liabilities | | 162,285 | | 162,753 | |
| | | |
| Shareholders’ equity | | | |
| Share capital | 14 | 4,311,821 | | 4,362,691 | |
| Additional paid-in capital | | 220,063 | | 213,918 | |
| Accumulated other comprehensive income (loss) | 15 | 874 | | (4,045) | |
| Accumulated deficit | | (2,188,803) | | (2,160,163) | |
| | | |
| Total shareholders’ equity | | 2,343,955 | | 2,412,401 | |
| | | |
| Total liabilities and shareholders’ equity | | 2,506,240 | | 2,575,154 | |
| | | |
| Commitments and contingencies | 13 | | |
The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
| | | | | | | | | | | | | | | | | | | | |
Lightspeed Commerce Inc. Condensed Interim Consolidated Statements of Loss and Comprehensive Loss (Unaudited) |
| For the three and six months ended September 30, 2024 and 2023 |
| | | | | | |
| (expressed in thousands of US dollars, except per share amounts) |
| | Three months ended September 30, | | Six months ended September 30, |
| Notes | 2024 | 2023 | | 2024 | 2023 |
| | $ | $ | | $ | $ |
| | | | | | |
| Revenues | 4 | 277,182 | | 230,273 | | | 543,273 | | 439,359 | |
| | | | | | |
| Direct cost of revenues | 5, 6 | 162,899 | | 134,105 | | | 320,782 | | 255,286 | |
| | | | | | |
| Gross profit | | 114,283 | | 96,168 | | | 222,491 | | 184,073 | |
| | | | | | |
| Operating expenses | | | | | | |
| General and administrative | 6 | 31,247 | | 26,324 | | | 63,103 | | 51,268 | |
| Research and development | 6 | 30,520 | | 33,081 | | | 57,991 | | 67,116 | |
| Sales and marketing | 6 | 65,681 | | 60,290 | | | 122,751 | | 115,578 | |
| Depreciation of property and equipment | | 1,853 | | 1,493 | | | 3,826 | | 2,950 | |
| Depreciation of right-of-use assets | | 1,369 | | 1,647 | | | 2,763 | | 3,877 | |
| Foreign exchange loss (gain) | | (1,337) | | 689 | | | (1,252) | | 1,360 | |
| Acquisition-related compensation | | 52 | | 560 | | | 52 | | 3,105 | |
| Amortization of intangible assets | | 22,612 | | 23,990 | | | 45,507 | | 48,495 | |
| Restructuring | 13 | 164 | | 80 | | | 9,705 | | 552 | |
| | | | | | |
| Total operating expenses | | 152,161 | | 148,154 | | | 304,446 | | 294,301 | |
| | | | | | |
| Operating loss | | (37,878) | | (51,986) | | | (81,955) | | (110,228) | |
| | | | | | |
| Net interest income | 7 | 9,543 | | 10,746 | | | 19,709 | | 21,108 | |
| | | | | | |
| Loss before income taxes | | (28,335) | | (41,240) | | | (62,246) | | (89,120) | |
| | | | | | |
| Income tax expense (recovery) | | | | | | |
| Current | | 1,692 | | 755 | | | 2,493 | | 1,970 | |
| Deferred | | (372) | | 497 | | | (72) | | 105 | |
| | | | | | |
| Total income tax expense | | 1,320 | | 1,252 | | | 2,421 | | 2,075 | |
| | | | | | |
| Net loss | | (29,655) | | (42,492) | | | (64,667) | | (91,195) | |
| | | | | | |
| Other comprehensive income (loss) | | | | | | |
| | | | | | |
| Items that may be reclassified to net loss | | | | | | |
| Foreign currency differences on translation of foreign operations | | 4,609 | | (2,917) | | | 4,849 | | (3,517) | |
| Change in net unrealized gain (loss) on cash flow hedging instruments, net of tax | | 584 | | (1,017) | | | 70 | | (39) | |
| | | | | | |
| Total other comprehensive income (loss) | 15 | 5,193 | | (3,934) | | | 4,919 | | (3,556) | |
| | | | | | |
| Total comprehensive loss | | (24,462) | | (46,426) | | | (59,748) | | (94,751) | |
| | | | | | |
| Net loss per share – basic and diluted | 8 | (0.19) | | (0.28) | | | (0.42) | | (0.60) | |
The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
| | | | | | | | |
Lightspeed Commerce Inc.
Condensed Interim Consolidated Statement of Cash Flows
(Unaudited) |
| For the six months ended September 30, 2024 and 2023 | | |
| | |
| (expressed in thousands of US dollars) | | |
| Six months ended September 30, |
| 2024 | 2023 |
| Cash flows from (used in) operating activities | $ | $ |
| Net loss | (64,667) | | (91,195) | |
| Items not affecting cash and cash equivalents | | |
| Share-based acquisition-related compensation | — | | 2,953 | |
| Amortization of intangible assets | 45,507 | | 48,495 | |
| Depreciation of property and equipment and lease right-of-use assets | 6,589 | | 6,827 | |
| Deferred income tax expense (recovery) | (72) | | 105 | |
| Share-based compensation expense | 29,657 | | 41,104 | |
| Unrealized foreign exchange loss | 8 | | 84 | |
| (Increase)/decrease in operating assets and increase/(decrease) in operating liabilities | | |
| Trade and other receivables | 13,635 | | 4,834 | |
| Merchant cash advances | (31,208) | | (21,126) | |
| Inventories | (2,762) | | (5,220) | |
| Other assets | (1,324) | | (9,283) | |
| Accounts payable and accrued liabilities | 2,924 | | 1,866 | |
| Income taxes payable | 95 | | (4,460) | |
| Deferred revenue | (4,407) | | (5,000) | |
| Other long-term liabilities | 190 | | 188 | |
| Net interest income | (19,709) | | (21,108) | |
| | |
| Total operating activities | (25,544) | | (50,936) | |
| | |
| Cash flows from (used in) investing activities | | |
| Additions to property and equipment | (1,902) | | (1,909) | |
| Additions to intangible assets | (8,103) | | (5,141) | |
| Acquisition of business, net of cash acquired | (6,706) | | — | |
| Interest income | 21,299 | | 22,046 | |
| | |
| Total investing activities | 4,588 | | 14,996 | |
| | |
| Cash flows from (used in) financing activities | | |
| Proceeds from exercise of stock options | 1,591 | | 1,601 | |
| Share issuance costs | — | | (106) | |
| Shares repurchased and cancelled | (39,946) | | — | |
| Payment of lease liabilities and movement in restricted lease deposits | (4,328) | | (3,905) | |
| Financing costs | (44) | | — | |
| | |
| Total financing activities | (42,727) | | (2,410) | |
| | |
| Effect of foreign exchange rate changes on cash and cash equivalents | 599 | | (313) | |
| | |
| Net decrease in cash and cash equivalents during the period | (63,084) | | (38,663) | |
|
| |
| Cash and cash equivalents – Beginning of period | 722,102 | | 800,154 | |
| | |
| Cash and cash equivalents – End of period | 659,018 | | 761,491 | |
| | |
| Income taxes paid | 2,026 | | 6,432 | |
The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
| | | | | | | | | | | | | | | | | | | | | | | |
Lightspeed Commerce Inc. Condensed Interim Consolidated Statements of Changes in Shareholders' Equity (Unaudited) |
| For the six months ended September 30, 2024 and 2023 | | | | | | |
|
| (expressed in thousands of US dollars, except number of shares) | | Issued and Outstanding Shares | | | | |
| Notes | Number of shares | Amount | Additional
paid-in
capital | Accumulated other comprehensive income (loss) | Accumulated
deficit | Total |
| | | $ | $ | $ | $ | $ |
| | | | | | | |
| Balance as at March 31, 2024 | | 153,547,616 | | 4,362,691 | | 213,918 | | (4,045) | | (2,160,163) | | 2,412,401 | |
| | | | | | | |
| Net loss | | — | | — | | — | | — | | (64,667) | | (64,667) | |
| | | | | | | |
| Exercise of stock options and settlement of share awards | | 1,038,366 | | 25,103 | | (23,512) | | — | | — | | 1,591 | |
| Share-based compensation | | — | | — | | 29,657 | | — | | — | | 29,657 | |
| Shares repurchased and cancelled | 14 | (2,673,926) | | (75,973) | | — | | — | | 36,027 | | (39,946) | |
| Other comprehensive income | 15 | — | | — | | — | | 4,919 | | — | | 4,919 | |
| | | | | | | |
| Balance as at September 30, 2024 | | 151,912,056 | | 4,311,821 | | 220,063 | | 874 | | (2,188,803) | | 2,343,955 | |
| | | | | | | |
| Balance as at March 31, 2023 | | 151,170,305 | | 4,298,683 | | 198,022 | | (3,057) | | (1,996,199) | | 2,497,449 | |
| | | | | | | |
| Net loss | | — | | — | | — | | — | | (91,195) | | (91,195) | |
| Share issuance costs | | — | | (106) | | — | | — | | — | | (106) | |
| Exercise of stock options and settlement of share awards | | 1,200,943 | | 35,048 | | (33,447) | | — | | — | | 1,601 | |
| Share-based compensation | | — | | — | | 41,104 | | — | | — | | 41,104 | |
| Share-based acquisition-related compensation | | 182,357 | | 2,953 | | — | | — | | — | | 2,953 | |
| Other comprehensive loss | 15 | — | | — | | — | | (3,556) | | — | | (3,556) | |
| | | | | | | |
| Balance as at September 30, 2023 | | 152,553,605 | | 4,336,578 | | 205,679 | | (6,613) | | (2,087,394) | | 2,448,250 | |
The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
| | |
Lightspeed Commerce Inc. Notes to Condensed Interim Consolidated Financial Statements (Unaudited) |
| September 30, 2024 and 2023 |
|
| (expressed in thousands of US dollars, except number of shares and per share amounts) |
1. Organization and nature of operations
Lightspeed Commerce Inc. ("Lightspeed" or the "Company") was incorporated on March 21, 2005 under the Canada Business Corporations Act. Its head office is located at Gare Viger, 700 Saint-Antoine St. East, Suite 300, Montréal, Quebec, Canada. Lightspeed’s one-stop commerce platform provides its customers with the critical functionalities they need to engage with consumers, manage their operations, accept payments, and grow their business. Lightspeed has customers globally in over 100 countries, empowering single- and multi-location small and medium-sized businesses to compete in an omni-channel market environment by engaging with consumers across online, mobile, social, and physical channels.
The Company’s shares are listed on both the Toronto Stock Exchange ("TSX") and the New York Stock Exchange ("NYSE") under the stock symbol "LSPD".
2. Basis of presentation and consolidation
These unaudited condensed interim consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") applicable to the preparation of interim financial statements, including International Accounting Standard ("IAS") 34, Interim Financial Reporting, as issued by the International Accounting Standards Board ("IASB"). Certain information and disclosures have been omitted or condensed. These unaudited condensed interim consolidated financial statements should be read together with the Company’s audited annual consolidated financial statements and notes thereto for the fiscal year ended March 31, 2024.
These unaudited condensed interim consolidated financial statements were approved for issue by the Board of Directors of the Company on November 6, 2024.
Seasonality of interim operations
The operations of the Company are seasonal, and the results of operations for any interim period are not necessarily indicative of operations for the full fiscal year or any future period.
Estimates, judgments and assumptions
The preparation of the unaudited condensed interim consolidated financial statements in accordance with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, revenues and expenses during the period. These estimates and assumptions are based on historical experience, expectations of the future, and other relevant factors and are reviewed regularly. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future period affected. Actual results may differ from these estimates.
In preparing these unaudited condensed interim consolidated financial statements, the significant judgments made by management in applying the Company’s accounting policies and the key sources of uncertainty are the same as those applied and described in the Company’s audited annual consolidated financial statements for the fiscal year ended March 31, 2024.
3. Material accounting policies
The same accounting policies and methods of computation were followed in the preparation of these unaudited condensed interim consolidated financial statements as were followed in the preparation of the most recent audited annual consolidated financial statements.
| | |
Lightspeed Commerce Inc. Notes to Condensed Interim Consolidated Financial Statements (Unaudited) |
| September 30, 2024 and 2023 |
|
| (expressed in thousands of US dollars, except number of shares and per share amounts) |
New and amended material accounting policies issued but not yet effective within the three and six months ended September 30, 2024
In May 2024, the IASB issued amendments to IFRS 9, Financial Instruments and IFRS 7, Financial Instruments: Disclosures to clarify the date of recognition and derecognition of some financial assets and liabilities including introducing a new exception for certain financial liabilities settled using an electronic payment system before the settlement date. The amendments also clarify the classification of certain financial assets and introduces disclosure requirements for financial instruments with contingent features and equity instruments classified at fair value through other comprehensive income. This amendment is effective for annual periods beginning on or after January 1, 2026. The Company is currently evaluating the impact of this amendment on its consolidated financial statements. The Company also continues to evaluate the impact of IFRS 18, Presentation and Disclosure in Financial Statements on its consolidated financial statements. For all other new and amended material accounting policies issued but not yet effective which have been identified in the most recent audited annual consolidated financial statements, the Company does not expect that the adoption of these standards will have a material impact on the financial statements of the Company in future periods.
4. Revenues
| | | | | | | | | | | | | | | | | |
| Three months ended September 30, | | Six months ended September 30, |
| 2024 | 2023 |
| 2024 | 2023 |
| $ | $ |
| $ | $ |
|
| | | | |
| Subscription revenue | 85,536 | | 81,043 | | | 168,850 | | 159,770 | |
| Transaction-based revenue | 183,751 | | 137,672 | | | 357,805 | | 258,642 | |
| Hardware and other revenue | 7,895 | | 11,558 | | | 16,618 | | 20,947 | |
| | | | | |
| Total revenues | 277,182 | | 230,273 | | | 543,273 | | 439,359 | |
Transaction-based revenue includes $9,275 and $17,047 of revenue from the Company's merchant cash advance program for the three and six months ended September 30, 2024 (September 30, 2023 – $4,188 and $5,781).
5. Direct cost of revenues
| | | | | | | | | | | | | | | | | |
| Three months ended September 30, |
| Six months ended September 30, |
| 2024 | 2023 | | 2024 | 2023 |
| $ | $ |
| $ | $ |
| | | | | |
| Subscription cost of revenue | 18,009 | | 19,963 | | | 35,516 | | 39,303 | |
| Transaction-based cost of revenue | 133,497 | | 99,425 | | | 261,449 | | 188,444 | |
| Hardware and other cost of revenue | 11,393 | | 14,717 | | | 23,817 | | 27,539 | |
| | | | | |
| Total direct cost of revenues | 162,899 | | 134,105 | | | 320,782 | | 255,286 | |
6. Employee compensation
The total employee compensation comprising salaries and benefits, including share-based compensation and related payroll taxes and restructuring, excluding government assistance and acquisition-related compensation, for the three and six months ended September 30, 2024, was $85,562 and $169,955 (September 30, 2023 – $90,567 and $173,279).
| | |
Lightspeed Commerce Inc. Notes to Condensed Interim Consolidated Financial Statements (Unaudited) |
| September 30, 2024 and 2023 |
|
| (expressed in thousands of US dollars, except number of shares and per share amounts) |
The following table outlines share-based compensation and related payroll taxes included in the following expenses:
| | | | | | | | | | | | | | | | | |
| Three months ended September 30, | | Six months ended September 30, |
| 2024 | 2023 | | 2024 | 2023 |
| $ | $ | | $ | $ |
| | | | | |
| Direct cost of revenues | 1,071 | | 1,587 | | | 1,813 | | 3,440 | |
| General and administrative | 5,534 | | 6,463 | | | 9,834 | | 12,644 | |
| Research and development | 5,747 | | 6,963 | | | 8,922 | | 15,339 | |
| Sales and marketing | 7,175 | | 8,291 | | | 10,632 | | 10,614 | |
| | | | | |
| Total share-based compensation and related payroll taxes | 19,527 | | 23,304 | | | 31,201 | | 42,037 | |
As at September 30, 2024, the Company had 10,940,399 options (1,014,999 of which have vesting dependent on market conditions tied to the Company's future share price performance), 7,500,502 restricted share units and 142,715 deferred share units outstanding (September 30, 2023 - 11,717,285 options, 6,767,005 restricted share units and 85,456 deferred share units outstanding).
7. Finance income and costs
| | | | | | | | | | | | | | | | | |
| Three months ended September 30, | | Six months ended September 30, |
| 2024 | 2023 |
| 2024 | 2023 |
| $ | $ |
| $ | $ |
|
| | | | |
| Interest income | 9,899 | | 11,143 | | | 20,459 | | 21,898 | |
| Interest expense | (356) | | (397) | | | (750) | | (790) | |
| | | | | |
| Net interest income | 9,543 | | 10,746 | | | 19,709 | | 21,108 | |
| | | | | |
8. Loss per share
The Company has stock options and share awards as potentially dilutive shares. Diluted net loss per share excludes all potentially-dilutive shares if their effect is anti-dilutive. As a result of net losses incurred, all potentially-dilutive shares have been excluded from the calculation of diluted net loss per share because including them would be anti-dilutive; therefore, basic and diluted number of shares is the same for the three and six months ended September 30, 2024 and 2023. All outstanding potentially dilutive shares could potentially dilute loss per share in the future.
| | | | | | | | | | | | | | | | | |
| Three months ended September 30, |
| Six months ended September 30, |
| 2024 | 2023 | | 2024 | 2023 |
| | | | | |
| Issued Common Shares | 151,912,056 | | 152,553,605 | | | 151,912,056 | | 152,553,605 | |
| Weighted average number of Common Shares (basic and diluted) | 153,551,716 | | 153,478,935 | | | 154,144,370 | | 153,003,277 | |
| | | | | |
| Net loss per share – basic and diluted | ($0.19) | | ($0.28) | | | ($0.42) | | ($0.60) | |
The weighted average number of potentially dilutive shares that are not included in the diluted per share calculations because they would be anti-dilutive was 16,540,293 and 16,182,725 stock options and share awards for the three and six
| | |
Lightspeed Commerce Inc. Notes to Condensed Interim Consolidated Financial Statements (Unaudited) |
| September 30, 2024 and 2023 |
|
| (expressed in thousands of US dollars, except number of shares and per share amounts) |
months ended September 30, 2024 (September 30, 2023 - 17,519,996 and 17,321,764). This weighted average number includes all of the Company's issued and outstanding potentially dilutive shares notwithstanding exercise prices, as applicable.
9. Trade and other receivables
| | | | | | | | |
| September 30,
2024 | March 31,
2024 |
| $ | $ |
| | |
| Trade receivables | 40,321 | | 48,132 | |
| Allowance for expected credit losses | (5,533) | | (5,056) | |
|
| |
| Trade receivables, net | 34,788 | | 43,076 | |
| | |
| Research and development tax credits receivable | 6,807 | | 8,276 | |
| Sales tax receivable | 4,466 | | 7,106 | |
| Accrued interest and other | 3,130 | | 3,826 | |
| | |
| Total trade and other receivables | 49,191 | | 62,284 | |
10. Other current assets
| | | | | | | | |
| September 30,
2024 | March 31,
2024 |
| $ | $ |
| | |
| Restricted cash and restricted deposits | 1,525 | | 1,582 | |
| Prepaid expenses and deposits | 13,480 | | 14,097 | |
| Commission asset | 16,866 | | 14,806 | |
| Contract asset and other | 15,814 | | 12,301 | |
| | |
| Total other current assets | 47,685 | | 42,786 | |
11. Other long-term assets
| | | | | | | | |
| September 30,
2024 | March 31,
2024 |
| $ | $ |
|
| |
| Restricted cash | 545 | | 368 | |
| Prepaid expenses and deposits | 2,920 | | 3,229 | |
| Commission asset | 18,726 | | 18,164 | |
| Contract asset | 17,565 | | 21,104 | |
| | |
| Total other long-term assets | 39,756 | | 42,865 | |
| | |
Lightspeed Commerce Inc. Notes to Condensed Interim Consolidated Financial Statements (Unaudited) |
| September 30, 2024 and 2023 |
|
| (expressed in thousands of US dollars, except number of shares and per share amounts) |
12. Accounts payable and accrued liabilities
| | | | | | | | |
| September 30,
2024 | March 31,
2024 |
| $ | $ |
|
| |
| Trade payables | 39,048 | | 33,499 | |
| Accrued compensation and benefits | 20,701 | | 23,595 | |
| Accrued payroll taxes on share-based compensation | 4,231 | | 3,566 | |
| Sales tax payable | 4,719 | | 4,893 | |
| Provisions and other | 4,304 | | 3,126 | |
| | |
| Total accounts payable and accrued liabilities | 73,003 | | 68,679 | |
13. Contingencies and Provisions
Beginning in October 2021, the Company and certain of the Company's officers and directors were named as defendants to an application for authorization to bring a securities class action filed before the Superior Court of Quebec, and the Company and certain of the Company's officers and directors were named as defendants in a securities class action brought in the U.S. district court for the Eastern District of New York (a separate action brought in the Southern District of New York was voluntarily dismissed after a lead plaintiff was appointed in the Eastern District of New York action). The application and action are sought on behalf of purchasers of the Company's Common Shares, and are based upon allegations that the defendants made false and/or misleading statements to the public and seek unspecified damages. On June 27, 2022, the Company filed a motion to dismiss the securities class action brought in the U.S. district court for the Eastern District of New York. Plaintiffs to the securities class action brought in the U.S. district court for the Eastern District of New York filed an opposition to the Company's motion to dismiss, and the Company filed a reply. The Company and management intend to vigorously defend against each of these proceedings.
During the six months ended September 30, 2024, the Company, without admitting liability or wrongdoing, made a general damages payment in settlement of allegations by a residual payments partner that the Company had breached covenants in two agreements with the partner. During the fiscal year ended March 31, 2024, the residual payments partner had purported to terminate the two agreements and ceased to make ongoing payments owed to the Company thereunder. Separately, in October 2024, the residual payments partner paid the Company unpaid amounts of over $9,525 owed to it under the agreements through the quarter ended March 31, 2024. The two agreements terminated and neither the Company nor the residual payments partner have ongoing obligations thereunder.
On October 22, 2021, CloudofChange, LLC, a non-practising entity, filed a patent infringement lawsuit against the Company in the Western District of Texas. The patents at issue in the suit were U.S. Patents Nos. 9,400,640, 10,083,012 and 11,226,793. These patents are generally related to web-based point of sale builder systems. Separately, the Company applied for inter partes review of all three patents by the U.S. Patent Trial and Appeal Board (the "PTAB"). The PTAB issued final written decisions finding all asserted claims of all three patents unpatentable. The lawsuit has now been stayed pending final resolutions of the inter partes reviews. The plaintiff is in the process of appealing the PTAB's final written decisions and the Company and management intend to vigorously defend the PTAB's invalidity findings.
Except as indicated, the Company has not provisioned for the above-referenced matters.
| | |
Lightspeed Commerce Inc. Notes to Condensed Interim Consolidated Financial Statements (Unaudited) |
| September 30, 2024 and 2023 |
|
| (expressed in thousands of US dollars, except number of shares and per share amounts) |
The Company is involved in other litigation and claims in the normal course of business. Management is of the opinion that any resulting provisions and ultimate settlements would not materially affect the financial position and operating results of the Company.
Restructuring
During the three months ended June 30, 2024, the Company announced and implemented a reorganization to streamline the Company's operating model while continuing to focus on profitable growth. The restructuring expense consisted primarily of cash severance costs. The majority of the expected charges associated with this reorganization were incurred during the three months ended June 30, 2024.
Provision for severance
| | | | | | | | | |
| Six months ended September 30, | |
| 2024 | 2023 | |
| $ | $ | |
| | | |
| Balance - Beginning of period | 2,591 | | 1,106 | | |
| Expensed during the period | 9,705 | | 552 | | |
| Paid during the period | (11,006) | | (1,658) | | |
| | | |
| Balance - End of period | 1,290 | | — | | |
The provision is included in accounts payable and accrued liabilities in the provisions and other category in note 12.
14. Share capital
The Company’s authorized share capital consists of (i) an unlimited number of Subordinate Voting Shares and (ii) an unlimited number of preferred shares, issuable in series. All references to "Common Shares" refer to Subordinate Voting Shares in the capital of Lightspeed.
Normal Course Issuer Bid
The Board and the TSX approved a normal course issuer bid ("NCIB") for the Company to purchase at its discretion for cancellation up to 9,722,677 Subordinate Voting Shares of the Company, representing approximately 10% of the Company's "public float" (as defined in the TSX Company Manual) of Subordinate Voting Shares issued and outstanding as at March 22, 2024, over the twelve-month period commencing on April 5, 2024 and ending no later than April 4, 2025. Any Subordinate Voting Share purchased under the NCIB will be cancelled.
Under the NCIB, other than purchases made under block purchase exemptions, the Company is allowed, subject to applicable securities laws, to purchase daily, through the facilities of the TSX, a maximum of 165,177 Subordinate Voting Shares representing 25% of the average daily trading volume of 660,709 Subordinate Voting Shares, as calculated per the TSX rules for the six-month period ended on February 29, 2024.
In connection with the NCIB, the Company also entered into an automatic share purchase plan (“ASPP”) under which a designated broker may purchase Subordinate Voting Shares at times when the Company would ordinarily not be permitted to purchase its Subordinate Voting Shares due to regulatory restrictions and customary self-imposed blackout periods. Any repurchases made under the ASPP will be made in accordance with certain purchasing parameters.
| | |
Lightspeed Commerce Inc. Notes to Condensed Interim Consolidated Financial Statements (Unaudited) |
| September 30, 2024 and 2023 |
|
| (expressed in thousands of US dollars, except number of shares and per share amounts) |
During the six months ended September 30, 2024, the Company repurchased and cancelled 2,673,926 Subordinate Voting Shares for a total consideration, including transaction costs, of $39,946. The Company did not repurchase any of its Subordinate Voting Shares under an NCIB in the six months months ended September 30, 2023.
15. Accumulated other comprehensive income (loss)
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Foreign currency differences on translation of foreign operations | | Hedging reserve | | Total accumulated other comprehensive income (loss) |
| 2024 | 2023 | | 2024 | 2023 | | 2024 | 2023 |
| $ | $ | | $ | $ | | $ | $ |
| Balance as at March 31, | (4,234) | | (2,932) | | | 189 | | (125) | | | (4,045) | | (3,057) | |
| | | | | | | | |
| Foreign currency differences on translation of foreign operations | 4,849 | | (3,517) | | | — | | — | | | 4,849 | | (3,517) | |
| Change in net unrealized gain (loss) on cash flow hedging instruments | — | | — | | | 96 | | (39) | | | 96 | | (39) | |
| Deferred income tax expense | — | | — | | | (26) | | — | | | (26) | | — | |
| | | | | | | | |
| | | | | | | | |
| Balance as at September 30, | 615 | | (6,449) | | | 259 | | (164) | | | 874 | | (6,613) | |
Foreign exchange forward contracts
The Company designates certain foreign exchange forward contracts as cash flow hedges when all the requirements in IFRS 9, Financial Instruments are met. The Company's currency pair used for cash flow hedges is US dollar / Canadian dollar. The notional principal of the foreign exchange contracts was $64,350 CAD as at September 30, 2024 (March 31, 2024 - $95,550 CAD).
16. Related party transactions
Key management personnel includes executive officers. Other related parties include close family members of the key management personnel and entities controlled by the key management personnel.
The executive compensation expense to the top five key management personnel is as follows:
| | | | | | | | | | | | | | | | | |
| Three months ended September 30, | | Six months ended
September 30, |
| 2024 | 2023 | | 2024 | 2023 |
| $ | $ | | $ | $ |
| | | | |
|
| Short-term employee benefits and termination benefits | 663 | | 784 | | | 1,307 | | 1,598 | |
| Share-based payments | 3,505 | | 4,163 | | | 6,515 | | 7,527 | |
| | | | | |
| Total compensation paid to key management personnel | 4,168 | | 4,947 | | | 7,822 | | 9,125 | |
| | |
Lightspeed Commerce Inc. Notes to Condensed Interim Consolidated Financial Statements (Unaudited) |
| September 30, 2024 and 2023 |
|
| (expressed in thousands of US dollars, except number of shares and per share amounts) |
17. Financial instruments
Fair value
The Company measures the fair value of its financial assets and financial liabilities using a fair value hierarchy. A financial instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Three levels of inputs may be used to measure fair value. The different levels of the fair value hierarchy are defined as follows:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2: Other techniques for which inputs are based on quoted prices for identical or similar instruments in markets that are not active, quoted prices for similar instruments in active markets, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the asset or liability;
Level 3: Techniques which use inputs that have a significant effect on the recognized fair value that require the Company to use its own assumptions about market participant assumptions.
The Company estimated the fair value of its financial instruments as described below.
The fair value of cash and cash equivalents, restricted cash and restricted deposits, trade receivables and trade accounts payable and accrued liabilities is considered to be equal to their respective carrying values due to their short-term maturities.
Recurring fair value measurements
The fair value of foreign exchange forward contracts was determined based on Level 2 inputs, which included period-end mid-market quotations for each underlying contract as calculated by the financial institution with which the Company has transacted. The quotations represent the discounted future settlement amounts based on current market rates.
The fair value of merchant cash advances was determined based on Level 3 inputs by calculating the present value of the future estimated cash flows based on the terms of the agreements. Key assumptions for the six months ended September 30, 2024 include an average repayment period of 8 months, an average discount rate of 15% and amounts deemed uncollectible, which includes write offs, of $5,640. No reasonably possible change in the key assumptions would lead to a significant change in the fair value of merchant cash advances due to their expected short-term repayment periods.
The movement in the merchant cash advances is as follows:
| | | | | | | | |
| Six months ended
September 30, |
| 2024 | 2023 |
| $ | $ |
| | |
| Balance - Beginning of period | 74,236 | | 29,492 | |
| Principal issued | 140,517 | | 70,148 | |
| Amounts collected | (120,716) | | (53,151) | |
| Transaction-based revenues from fees collected incorporating fair value movement | 17,047 | | 5,781 | |
| General & administrative expenses from amounts deemed uncollectible | (5,640) | | (1,652) | |
| | |
| Balance - End of period | 105,444 | | 50,618 | |
| | |
Lightspeed Commerce Inc. Notes to Condensed Interim Consolidated Financial Statements (Unaudited) |
| September 30, 2024 and 2023 |
|
| (expressed in thousands of US dollars, except number of shares and per share amounts) |
As at September 30 and March 31, 2024, financial instruments measured at fair value in the unaudited condensed interim consolidated balance sheets were as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| September 30, 2024 | | March 31, 2024 |
| | | | | | | |
| Fair value hierarchy | Carrying amount | Fair value | | Fair value hierarchy | Carrying amount | Fair value |
| | $ | $ |
| | $ | $ |
| | |
| | | | |
| Assets: | | | | | | | |
| Cash and cash equivalents | Level 1 | 659,018 | | 659,018 | | | Level 1 | 722,102 | | 722,102 | |
| Restricted cash and restricted deposits | Level 1 | 2,070 | | 2,070 | | | Level 1 | 1,950 | | 1,950 | |
| Merchant cash advances | Level 3 | 105,444 | | 105,444 | | | Level 3 | 74,236 | | 74,236 | |
| Foreign exchange forward contracts | Level 2 | 353 | | 353 | | | Level 2 | 257 | 257 |
| | | | | | | |
| | | | | | | |
