Lightspeed Commerce : Financial Reporting Document

Lightspeed Commerce Inc.

Consolidated Financial Statements

March 31, 2024 and 2023

(expressed in thousands of US dollars)

Management's Annual Report on Internal Control Over Financial Reporting

Management of the Company, under the supervision of the Chief Executive Officer and the Chief Financial Officer, is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.

Management, including the Chief Executive Officer and Chief Financial Officer, have assessed the effectiveness of the Company's internal control over financial reporting in accordance with Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). Based on this assessment, management, including the Chief Executive Officer and Chief Financial Officer, have determined that the Company's internal control over financial reporting was effective as at March 31, 2024.

The effectiveness of the Company's internal control over financial reporting as at March 31, 2024 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report included herein.

May 16, 2024

/s/ Dax Dasilva

Dax Dasilva

Chief Executive Officer

/s/ Asha Hotchandani Bakshani

Asha Hotchandani Bakshani

Chief Financial Officer

2

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors of Lightspeed Commerce Inc.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Lightspeed Commerce Inc. and its subsidiaries (together, the Company) as of March 31, 2024 and 2023, and the related consolidated statements of loss and comprehensive loss, changes in shareholders' equity and cash flows for the years then ended, including the related notes (collectively referred to as the consolidated financial statements). We also have audited the Company's internal control over financial reporting as of March 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of March 31, 2024 and 2023, and its financial performance and its cash flows for the years then ended in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of March 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Annual Report on Internal Control over Financial Reporting. Our responsibility is to express opinions on the Company's consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also

PricewaterhouseCoopers LLP

1250 René-Lévesque Boulevard West, Suite 2500, Montréal, Quebec, Canada H3B 4Y1 T: [phone], F: [phone], [e-mail]

"PwC" refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership.

included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Revenue Recognition - Principal versus Agent Considerations for payment processing services

As described in Notes 3, 4 and 5 to the consolidated financial statements, transaction-based revenue amounted to $545 million for the year ended March 31, 2024 of which a significant portion relates to payment processing services. In accounting for the payment processing services and for determining whether revenue should be recognized based on the gross amount billed to a customer or the net amount retained, where another party contributes to providing the specified service to a customer; management follows the guidance provided in IFRS 15, Appendix B, Principal versus Agent Considerations. This

determination is a matter of significant judgment that depends on the facts and circumstances of each arrangement. The Company recognizes revenue from payment processing services provided at the time of the transaction at the gross amount of consideration paid by the customer, when the Company is the principal in the arrangement with the customer. The Company is the principal in the arrangement when it controls the specified service before that service is transferred to the customer. To determine if the Company controls the specified service before that service is transferred to the customer, management considers indicators including whether the Company is primarily responsible for fulfilling the promise to provide the specified service, whether the Company has inventory risk before the specified service has been transferred to a customer or after transfer of control to the customer, and whether the Company has discretion in establishing the price for the specified service. If the Company does not control the specified service, the Company is an agent in the arrangement with the customer and recognizes transaction-based revenue at the net amount. To assess whether management controls the specified service, management considers among other things whether the Company (i) performs additional services which are integrated with the payment processing services prior to delivering the services to the customer, (ii) bears the risk for chargebacks and other financial losses if such amounts cannot be recovered from the customer, and (iii) has full discretion in establishing prices for the payment processing services.

The principal considerations for our determination that performing procedures relating to Revenue Recognition - Principal versus Agent Considerations for payment processing services is a critical audit matter are (a) that there was significant judgment applied by management in assessing whether the Company (i) is primarily responsible for fulfilling the promise to provide the specified service, (ii) has inventory risk before the specified service has been transferred to a customer or after transfer of control to the customer and (iii) has discretion in establishing the price for the specified service and (b) a high degree of auditor judgment, subjectivity and effort in performing audit procedures and evaluating management's determination as to whether the Company had promised to provide the specified service as principal or as an agent.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management's determination as to whether the Company had promised to provide the service as principal or as an agent. These procedures also included, among others, testing the reasonableness of management's determination as to whether the Company provides the payment processing services as principal or as an agent in the arrangement with the customer, which included assessing whether the Company had control of the specified service before the service was transferred to a customer. This assessment was performed by considering (i) the contractual terms with customers and agreements with service providers on a sample basis, with respect to whether the Company is primarily responsible for fulfilling the promise to provide the service, bears the inventory risk before the specified service has been transferred to a customer or after transfer of control to the customer and has discretion in establishing the price for the service and (ii) whether the conclusions reached by management were consistent with evidence obtained in other areas of the audit.

Goodwill impairment assessment

As described in Notes 3, 4 and 16 to the consolidated financial statements, the carrying amount of the Company's goodwill balance is $1,349 million as of March 31, 2024. Management reviews the carrying value of goodwill on an annual basis on December 31 or more frequently if events or a change in circumstances indicate that it is more likely than not that the fair value of the goodwill is below its carrying amount. Goodwill impairment is determined by assessing the recoverable amount at the Company's operating segment level (Segment), which is the level at which management monitors goodwill. The Segment's recoverable amount is the higher of the Segment's fair value less costs of disposal and its value in use. Management completed its annual impairment test of goodwill as of December 31, 2023 using a fair value less costs of disposal method and no impairment was recorded as a result of the impairment test. The recoverable amount of the Company's Segment was estimated using an income approach, more specifically, a discounted cash flow model. Key assumptions used by management in the discounted cash flow model included revenue growth rate, terminal value multiple and discount rate.

The principal considerations for our determination that performing procedures relating to goodwill impairment assessment is a critical audit matter are (i) the judgment by management when determining the recoverable amount of the Company's Segment; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management's key assumptions related to revenue growth rate, terminal value multiple, and the discount rate; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management's goodwill impairment assessment, including controls over the determination of the recoverable amount of the Company's Segment. These procedures also included, among others (i) testing management's process for determining the recoverable amount; (ii) evaluating the appropriateness of the fair value less costs of disposal method; (iii) testing the completeness and accuracy of underlying data used in the discounted cash flow model; and (iv) evaluating the reasonableness of the key assumptions used by management related to the revenue growth rate, terminal value multiple, and the discount rate. Evaluating management's key assumption related to the revenue growth rate involved evaluating whether the assumption used by management was reasonable considering (i) the current and past performance of the Company's Segment; (ii) the consistency with external market and industry data; and (iii) whether this assumption was consistent with evidence obtained in other areas of the audit. Professionals with specialized skill and knowledge were used to assist in the evaluation of the Company's discounted cash flow model and in assessing the reasonableness of key assumptions related to the terminal value multiple and the discount rate.

/s/ PricewaterhouseCoopers LLP

Montréal, Canada

May 16, 2024

We have served as the Company's auditor since 2015.

Lightspeed Commerce Inc.

Consolidated Balance Sheets

As at March 31, 2024 and 2023

(expressed in thousands of US dollars)
Assets			Notes	2024	2023
			$	$
Current assets			27	722,102	800,154
Cash and cash equivalents
Trade and other receivables			11, 27	62,284	54,842
Merchant cash advances			27	74,236	29,492
Inventories			6	16,492	12,839
Other current assets			12	42,786	37,005
Total current assets				917,900	934,332
Lease right-of-use assets, net			13	17,075	20,973
Property and equipment, net			14	20,496	19,491
Intangible assets, net			15	227,031	311,450
Goodwill			16	1,349,235	1,350,645
Other long-term assets			17	42,865	31,540
Deferred tax assets			22	552	301
Total assets				2,575,154	2,668,732
Liabilities and Shareholders' Equity
Current liabilities				68,679	68,827
Accounts payable and accrued liabilities	18, 27
Lease liabilities			13	6,942	6,617
Income taxes payable			22	1,709	6,919
Deferred revenue			5	67,336	68,094
Total current liabilities				144,666	150,457
Deferred revenue			5	851	1,226
Lease liabilities			13	16,269	18,574
Other long-term liabilities				967	1,026
Total liabilities				162,753	171,283
Shareholders' equity			20	4,362,691	4,298,683
Share capital
Additional paid-in capital			25	213,918	198,022
Accumulated other comprehensive loss	21, 27	(4,045)	(3,057)
Accumulated deficit				(2,160,163)	(1,996,199)
Total shareholders' equity				2,412,401	2,497,449
Total liabilities and shareholders' equity		2,575,154	2,668,732
Commitments and contingencies	23, 24
Approved by the Board of Directors
/s/ Paul McFeeters Director	/s/ Dax Dasilva	Director

The accompanying notes are an integral part of these consolidated financial statements.

8

Lightspeed Commerce Inc.

Consolidated Statements of Loss and Comprehensive Loss

For the years ended March 31, 2024 and 2023

(expressed in thousands of US dollars, except per share amounts)
	Notes	2024	2023
		$	$
Revenues	5	909,270	730,506
Direct cost of revenues	6, 8	524,020	398,545
Gross profit		385,250	331,961
Operating expenses
General and administrative	8	103,742	105,939
Research and development	8	129,416	140,442
Sales and marketing	8	234,290	250,371
Depreciation of property and equipment	14	6,634	5,471
Depreciation of right-of-use assets	13	7,946	8,244
Foreign exchange loss (gain)		882	(199)
Acquisition-related compensation		3,105	41,792
Amortization of intangible assets	15	95,048	101,546
Restructuring	8, 24	7,206	28,683
Goodwill impairment	16	-	748,712
Total operating expenses		588,269	1,431,001
Operating loss		(203,019)	(1,099,040)
Net interest income	9	42,531	24,812
Loss before income taxes		(160,488)	(1,074,228)
Income tax expense (recovery)	22
Current		3,799	2,469
Deferred		(323)	(6,688)
Total income tax expense (recovery)		3,476	(4,219)
Net loss		(163,964)	(1,070,009)
Other comprehensive income (loss)	21, 27
Items that may be reclassified to net loss
Foreign currency differences on translation of foreign operations		(1,302)	(5,586)
Change in net unrealized gain (loss) on cash flow hedging instruments, net of tax		314	(148)
Total other comprehensive loss		(988)	(5,734)
Total comprehensive loss		(164,952)	(1,075,743)
Net loss per share - basic and diluted	10	(1.07)	(7.11)

The accompanying notes are an integral part of these consolidated financial statements.

9

Lightspeed Commerce Inc.

Consolidated Statements of Cash Flows

For the years ended March 31, 2024 and 2023

(expressed in thousands of US dollars)	2024	2023
Cash flows from (used in) operating activities	$	$
Net loss	(163,964)	(1,070,009)
Items not affecting cash and cash equivalents
Share-basedacquisition-related compensation	2,953	40,219
Amortization of intangible assets	95,048	101,546
Depreciation of property and equipment and lease right-of-use assets	14,580	13,715
Deferred income taxes	(323)	(6,688)
Share-based compensation expense	74,913	129,167
Unrealized foreign exchange loss (gain)	(116)	100
Goodwill impairment	-	748,712
(Increase)/decrease in operating assets and increase/(decrease) in operating liabilities
Trade and other receivables	(7,566)	(11,967)
Merchant cash advances	(44,744)	(23,192)
Inventories	(3,653)	(5,299)
Other assets	(15,759)	(9,986)
Accounts payable and accrued liabilities	(194)	(9,015)
Income taxes payable	(5,210)	201
Deferred revenue	(1,133)	2,005
Other long-term liabilities	32	19
Net interest income	(42,531)	(24,812)
Total operating activities	(97,667)	(125,284)
Cash flows from (used in) investing activities
Additions to property and equipment	(7,506)	(9,227)
Additions to intangible assets	(10,678)	(3,894)
Purchase of investments	-	(1,519)
Interest income	44,134	23,457
Total investing activities	25,950	8,817
Cash flows from (used in) financing activities
Proceeds from exercise of stock options	2,144	4,710
Share issuance costs	(106)	(193)
Repayment of long-term debt	-	(30,000)
Payment of lease liabilities and movement in restricted lease deposits	(8,227)	(8,870)
Financing costs	(37)	(1,058)
Total financing activities	(6,226)	(35,411)
Effect of foreign exchange rate changes on cash and cash equivalents	(109)	(1,622)
Net decrease in cash and cash equivalents during the year	(78,052)	(153,500)
Cash and cash equivalents - Beginning of year	800,154	953,654
Cash and cash equivalents - End of year	722,102	800,154
Interest paid to financial institutions	-	375
Income taxes paid	7,622	1,154

The accompanying notes are an integral part of these consolidated financial statements.

10