Lightspeed Commerce, Inc. Q2 FY2025 earnings call

• Revenue grew 20% year-over-year to $277.2 million, exceeding the outlook.
• Payments penetration increased to 37% from 25% year-over-year.
• Record quarterly adjusted EBITDA of $14 million, ahead of the outlook.
• Trailing 12-month revenues exceeded $1 billion with adjusted EBITDA of $32 million.
• Added new customers in North American retail and European hospitality, such as GrowGeneration, Nashville Country Music Hall of Fame, etc.
• Product innovations included retail Insights, automatic order distribution, instant payouts, Benchmarks and Trends module, etc.
• Strategic focus shifted to retail in North America and hospitality in Europe, with go-to-market efforts and product development concentrated there.
• Outbound sales team expanded, price increases implemented, and account managers reassigned to upselling software.

Lightspeed reported total revenue of $277.2 million in Q2 2025, a 20% year-over-year growth, exceeding the previously established outlook. Subscription revenue was $85.5 million, up 6% year-over-year, with gross margins on subscription revenue increasing to 79%. Transaction-based revenue was $183.8 million, up 33% year-over-year. Lightspeed Capital revenue grew to $9.3 million, up 121% year-over-year. Gross profit was $114.3 million, up 19% year-over-year. Total adjusted EBITDA was $14 million, a significant improvement from $0.2 million in the same quarter last year. Subscription revenue contributed approximately 30.8% to total revenue, transaction-based revenue contributed around 66.3%, and Lightspeed Capital contributed a smaller portion.

• Q3 2025 revenue expected to be between $280 million and $285 million, adjusted EBITDA approximately $14 million.
• For fiscal 2025, adjusted EBITDA outlook raised to a minimum of $50 million, maintaining overall revenue growth outlook of at least 20%.

• Uncertainty regarding the outcome of the ongoing strategic review.
• Market competition risks in the retail and hospitality sectors.
• Potential impact of seasonality and other factors on payments penetration and revenue growth.

Q: Dan Perlin from RBC Capital Markets asked about early signs of software acceleration and pricing initiatives.

A: Asha Bakshani responded that software revenue showed improvements in October and September, and price increases communicated in July and October will impact Q3.

Q: Andrew Bauch from Wells Fargo Securities inquired about North American retail and EMEA hospitality growth and resource reallocation.

A: Asha Bakshani and J.D. Saint-Martin mentioned these are majority revenue areas, and resource reallocation will be completed by fiscal year end.

Q: Trevor Williams from Jefferies asked about high-value location growth and Titan focus impact.

A: J.D. Saint-Martin said flagship product ICP locations grew 27% year-over-year, and future years will see growth.

Q: Josh Baer from Margin Stanley asked about location growth in target cohorts and market share.

A: J.D. Saint-Martin explained focus on ideal customer profile, strong growth in flagships, and strong market fit in target markets.

Q: Thanos Moschopoulos from BMO Capital Markets asked about payments penetration rate and flagship location growth by sector.

A: Asha Bakshani said payments penetration increased by 170 bps, and flagship location growth was similar in retail and hospitality.

Q: Dominic Ball from Redburn Atlantic asked about hospitality payment adoption and price increase impact on churn.

A: J.D. Saint-Martin said payment adoption in Europe is lagging but trending up, and no uptick in churn from price increases.

Q: Timothy Chiodo from UBS asked about sales team update.

A: J.D. Saint-Martin said outbound sales team is 15% of quota-carrying reps and is being doubled.

Q: Todd Coupland from CIBC asked about Lightspeed network restructuring and R&D/sales separation.

A: J.D. Saint-Martin said resources are reallocated, and retail and hospitality are separate platforms with some shared resources.

Q: Richard Tse from National Bank Financial asked about future products and new merchant wins.

A: J.D. Saint-Martin said focus on inventory management in retail and Kitchen Display in hospitality, with new wins split between new businesses and existing switching.

Q: Kevin Krishnaratne from Scotia asked about European hospitality competition and same-store sales trends.

A: J.D. Saint-Martin said strong position in European hospitality, and same-store sales decline is easing in North America retail