Lightspeed Commerce, Inc. Q4 FY2025 earnings call

• Fiscal 2025 was pivotal, with revenue growth of 18% and adjusted EBITDA surging to $53.7 million. Launched industry-leading innovations like Retail Insights and Kitchen Display System. - Focused on two core growth markets: North America Retail and European Hospitality. Restructured the organization and completed share repurchases. - In Q4, software ARPU grew 11% year-over-year, gross margin was 44%, and quality customer locations were added in growth markets. - Product development investment increased by 35% in 2026, focusing on enhancing retail and hospitality platforms with new modules and features to drive software uptake.

In fiscal 2025, Lightspeed exceeded $1 billion in annual revenue, growing 18%. Adjusted EBITDA rose from $1.3 million to $53.7 million. Software ARPU grew 11% year-over-year. Gross margin reached 44%. Software revenue was $87.9 million, up 8% year-over-year, and transaction-based revenue was $157.8 million, up 14% year-over-year. GTV rose 19% year-over-year to $7.9 billion. GTV from growth engines (North America Retail and European Hospitality) grew 6% year-over-year despite the strategic pivot starting in December 2024. Revenue contribution: Software revenue was a significant portion, with transaction-based revenue also contributing, and growth markets showing positive growth trends.

• Fiscal 2026 revenue growth expected to be approximately 10% to 12% year-over-year. - Total gross profit growth expected to be approximately 14%. - Adjusted EBITDA expected to be in the range of $68 million to $72 million. - Q1 2026 total revenue expected in the range of $285 million to $290 million, total gross profit growth approximately 13%, and adjusted EBITDA in the range of $14 million to $16 million. - Outbound sales team scaling to 150 reps by year-end, with product development investment up 35% to accelerate innovation.

• Macroeconomic uncertainties that could impact same-store sales and overall revenue. - Goodwill impairment risk due to recent volatility in technology company valuations. - Uncertainty around off-balancing Lightspeed Capital and potential risks associated with growing that business.

Q: Trevor Williams from Jefferies on full year guide and revenue drivers A: Asha Bakshani mentioned that the guide is built on ramping outbound sales to 150 reps (over half the way there) and a 35% increase in product development spend for innovation, with conservatism baked in due to macro uncertainties Q: Trevor Williams on payments penetration rate A: Asha Bakshani stated payments penetration was 40% in April and expected to continue trending up, but not guiding specifically due to macro uncertainty Q: Koji Ikeda on guide levers and gross profit growth A: Asha Bakshani said gross profit growth will outpace top-line due to high-margin software growth, with a CAGR of 15%-18% expected through fiscal '28 Q: Andrew Bauch on product development investments A: Dax Dasilva explained investments are in retail and hospitality platforms to enhance modules and drive software uptake Q: Dominic Ball on Lightspeed Capital funding and payments adoption in Europe A: Asha Bakshani said Lightspeed Capital is funded on balance sheet with low default rates, and payments adoption in Europe is strong with high attach rate similar to North America Q: Thanos Moschopoulos on same-store sales impact by market A: Asha Bakshani noted same-store sales pressure across markets, with more softening in North America Hospitality, but trends stabilizing in April/May Q: Tien-Tsin Huang on product development and location growth A: Dax Dasilva said product development is in people for retail and hospitality teams, and location growth is ~one-third new businesses, one-third legacy switches, one-third outgrowing modern platforms Q: Josh Baer on EMEA hospitality strategy and free cash flow A: Dax Dasilva talked about pan-European hospitality TAM opportunity, and Asha Bakshani said free cash flow expected to improve in fiscal '26 with adjusted EBITDA growth Q: Raimo Lenschow on non-focused markets and outbound sales count A: Asha Bakshani said non-focused markets are profitable with net retention, and J.D. Saint-Martin explained outbound sales scaling due to strong Q4 results and unit economics Q: Timothy Chiodo on capital revenue deceleration A: Asha Bakshani said macro softness in Q4 impacted capital revenue as it's tied to customer same-store sales, with stabilization in April/May expected to boost capital revenue in Q1