But outside of that business growing and outside of the cash use to fund that business, we expect in a few quarters that cash from ops will align more closely with adjusted EBITDA as we start to align our incentive plans accordingly.
Operator: Next question comes from the line of Dan Perlin from RBC. Your line is open.
Daniel Perlin: I wanted to just kind of delve in a little bit on ARPU here. It was great to see up 26%. Obviously, payment penetration is a key component of that, but by our math it also looks like your software ARPU, I think was up mid to high single digits. So I guess one is that math kind of plus or minus, correct. And then if it is directly, can you just talk about some of the incremental drivers, especially given all the commentary around the sales team being just so focused on unified payments and not so much on software. I suspect it is mix as part of it, but any color there would be would be great.
Jean Paul Chauvet: Yes, so I will start and Asha, if you want to jump in, just simply put, let’s start with the new products. They drive higher ARPU for software. So given that now the new products are more than 30% of our total store count, and that we have been doing really well there, that just has a big driver on ARPU. So that is the first comment. The second comment is we are developing a lot of software modules that basically need payments to be unlocked. So as an example, our analytics engine for hospitality needs payments for this to become a module. So as we compound people onto payments, we are driving more software. So yes, I think on all fronts we are feeling good about this. And we think we are really in a position of strength, because of those new platforms that are really attracting the right profile of customers that are giving us more on software.
Asha Bakshani: The only thing I would add, I just wanted to confirm that your math on the software ARPU uplifted is right. It is very high single digits.
Daniel Perlin: Excellent. That is great. The other thing I just wanted to kind of touch on in terms of subscription gross margins being steady, I guess a really a question. I know you talked about vendor arrangements and improved efficiencies, but it also seems to suggest that the pricing environment around that software is pretty stable and you are not having to give up kind of as much pricing as I think some had thought in order to kind of drive maybe some of that Unified Payments. So can you just talk to that point a little bit as well? Thanks so much.
Asha Bakshani: Yes, absolutely. So, the subscription revenue growth we had said to expect modest growth, we are doing better than that expectation. And you are right, that is coming from the fact that we have had to discount the software less than we anticipated, but also the fact that churn has been lower than we had anticipated. Churn has been very much in line with historical levels, and we had accepted an uptick in churn from the Unified Payments efforts and we are not really seeing that. So all told our subscription growth is better than anticipated.
Operator: Your next question comes from the line of Josh Baer from Morgan Stanley. Your line is open.
Josh Baer: Just wanted to focus on the go-to-market and sort of overall strategy. I guess. Just to start, Asha, you mentioned that growth in like the key larger GTV customer cohort was not quite where you want it to be. Is that a reallocation of resources to Unified Payments or is there something else that sort of causing that situation versus your aspirations?
Jean Paul Chauvet: Well, let’s just start with the macro. Okay. A lot of the industries where we operate have still not recovered from, you know, the post pandemic kind of scenario. So here, if you look at just GMV per merchant for bikes or for outdoors and sports and homeware, and these are categories where we have a lot of customers and they are still, you know, in decline year over year. So I think that is the, going back to Asha’s comment. On the new customer front we are getting a lot of intake in those industries. I mean, if you look at bikes, I think we are the defacto leader. Anybody opening a bike store is going to buy bike from Lightspeed or, and if you look at all the progress we have done in golf, we are, you know, gaining a lot of courses and that means those industries are doing well.
Josh Baer: Okay. I guess, I’m wondering like, it sounds like it is clear that the, some of the resources on selling more software back into the base, like those are shifted toward attaching payments. I guess I’m just wondering the structure of the salesforce, if the reps that are, were responsible for going after new accounts, if like their focus is also on unified payments, like has the land of new customers been, you know, reallocated toward the payment strategy also?
Jean Paul Chauvet: Again, just going back to it, it is a question of dollars. So of course we have allocated a lot of dollars in our Go-to market overall to upselling payments versus going off to new customers. And I think goes back to the dynamics I described earlier on, is as we get customers on payments, we will allocate more money onto go to market. And I think for me, maybe when I, when I look at go to market, just talking about the dynamics, we have a strong belief that in North America for retail, there is a really good play to be had where we have people with foot on the ground in every city. So another way of saying it is we want to take kind of the hospitality approach that some of our competitors have been having and apply this to retail where there is nobody else than Lightspeed in the more sophisticated.
So I think there is a real opportunity there and that is really what is going to happen as unified payments is behind us and we are getting more, I mean, we are doubling our net take rate from customers. We are going to take a lot of that money and we are going to actually hire people with foot on the ground for retail in North America. The other dynamics that is going to happen is for rest of the world, call it outside of the U.S. On the hospitality side, we want to take the exact same approach as we get more and more of our customers onto payments and we free a lot of money. We want to have a lot of salespeople with foot on the ground in hospitality outside of the U.S. So in Canada, across Europe and APAC because those markets are up for grabs and there are no competitors in those markets.
And I think that is a real opportunity for us. So I think you will see that, on a dollar basis, we are going to allocate more and more money to our finding new logo kind of teams. And we will also over time as we don’t need as many people upselling payments, we will reallocate some of those into going off to new customers.
Operator: Your next question comes from the line of Raimo Lenschow from Barclays. Your line is open.
Unidentified Analyst: Great. Thank you. This is [Jeremy] (Ph) on for Raimo. I just wanted to ask on the payments capture rate, so looks like this quarter came in around 2.3% only slightly lower than Q1. And can you just touch on like the different factors that are impacting that number and the direction going forward in terms of when you think it could sort of bottom out? Thank you.
