Lightspeed CEO breaks down Q4 earnings, sector growth, luxury spending, outlook

Lightspeed CEO JP Chauvet joins Yahoo Finance Live to talk about the e-commerce provider's latest earnings report, the growth seen across industries, and the state of the consumer as told by luxury retail and dining spending.

Video Transcript

JULIE HYMAN: Lightspeed Commerce came in line with expected revenue and narrow losses in the fiscal fourth quarter. The company's point of sale and commerce platforms cater to retailers, restaurants, and golf courses across more than 150,000 locations. Weaker customer spending conditions over the past few months did hit the company's users, particularly retailers.

But Lightspeed did see stronger growth across its hospitality businesses as customers continue to dine out and travel. Notably the company's adjusted EBITDA loss in the quarter came in significantly better than predicted. And Lightspeed is hoping to break even in the new fiscal year, even with the cautious outlook in the near term. That cautious near-term outlook does seem to be putting some pressure on the shares, though.

Lightspeed CEO JP Chauvet joins us now. Good to see you, JP. So it does seem like the near-term outlook is hitting the shares a little bit. But talk to us about what your customers are seeing and therefore, what you're seeing right now. Give us sort of a snapshot.

JP CHAUVET: Yes. Thanks for having me. Good morning. So look, generally speaking, you said it correctly. We are seeing the hospitality space really do well. And as you know, we work with the more established restaurants, a lot of Michelin star restaurants. And here, we're seeing a lot of demand, we're seeing high growth in the GMV across the globe in the US and in Europe and in Asia. The flip side of that is the retail side of Lightspeed.

We're seeing basically slow growth year-over-year. And we understand a lot of the pressure points from the markets. And we're seeing that all the industries that were doing well during COVID, outdoor, sports, and home improvement have not been doing well, that they're declining pretty strongly year-over-year. So for us, we're very cautious with the outlook, but we're very happy with the quarter. And we are being very cautious when we look at forecasting next year.

BRAD SMITH: Bank CEOs this earnings season have said that the consumer right now is healthy. You're able to track transactions across both the retail, the restaurant experience, even the kind of experience economy, if you will. With all that considered, how would you describe the state of the consumer right now?

JP CHAUVET: We're seeing a very strong demand for luxury goods. We're seeing very strong demand for apparel, jewelry, and especially a strong demand for anything related to experimental hospitality. So Michelin star restaurants or fine dining restaurants, we're seeing a ton of demand everywhere.

So it's interesting to watch. But the consumers seem to be still going out and shopping for luxury goods and dining in fancy restaurants. So we haven't seen any slowdowns. Actually, GMV has been growing really well year-over-year.

JULIE HYMAN: Gross Merchandise Volume for those who don't know the acronym. JP, you guys talked in your statement about streamlining your offerings. Can you explain that to us a little bit more, the changes that you guys have made and what that is meaning for the business?

JP CHAUVET: Yes. So what we're saying now, it's called unified payments. That's the strategy. We're saying we want all of our customers to use not only our software to manage everything inside of their restaurants and retail stores, but we also want them to use our payments platform.

And the reason why we're doing this is no matter how hard you work on making an incredible product for your back office, the majority of our customers have very outdated payment terminals. So we're doing everything we can to ensure that we're bringing them into Lightspeed, also all the way to the transaction with their end customers. So that means we're going to be giving away a lot of terminals in the first half of the year.

We're going to be doing everything we can to accommodate rates, to get all of our customers onto unified payments because that means in the second half of the year, we're going to see very strong growth and we'll be a profitable company. So that's the last step, if you will, of the One Lightspeed Project and our path to profitability is what we're doing now in the first half of the year.

JULIE HYMAN: So you talk about that, an EBITDA break for the full year, right? So then does that from this year on become more consistent profitability?

JP CHAUVET: Absolutely. And we've always said that. You need the scale. And as you scale, you reach profitability. That's the story of all software and SaaS companies. But here for us, what we're going to be doing in the first half of the year is really getting our entire customer base to move to Lightspeed Payments. And for us it's really important because a customer on Payments is twice the same net rate or the twice the profitability of a customer if they use Payments.

So that's why the first half of the year is going to be kind of slower in terms of growth because we're focusing on bringing our customers on the Payments. But then that means that on the tail end of the year, we'll be ending the year close to the rule of 40, high growth, and with a very strong sales efficiency, if you will.

BRAD SMITH: JP, want to talk about a specific part of your business because I am kind of a golf fan as well as enjoy playing the sport. And I know that is a part of your business that you would look to see more growth. During times of consumer discretionary dollars, whether that be on a product or service side that gets pulled back, it typically is the golf spending.

It's an expensive sport. Have you seen any moderation in the type of and the amount of transactions that are taking place across golf courses and the network that you currently have of customers right now in that part of the business?

JP CHAUVET: So surprisingly enough, we haven't. And that's why-- we've seen actually strong demand. So we work with a lot of great golf courses. St. Andrew's being a good example or Sandals in the Caribbeans. But we haven't seen any slowdown. We're actually seeing stronger adoption right now in the golf space.

We're seeing strong demand. And I think that was really underserved in terms of technology. And we're seeing a lot of demand for our platforms and no slowdown. In terms of tee times, we're seeing quite the opposite. The golf business for US is doing really well.

BRAD SMITH: Awesome. St. Andrew's is one of my favorite trips. My dad got me one year out there. Thanks so much, Lightspeed CEO, JP Chauvet.