Lightspeed Commerce Inc. Q1 FY2026 earnings call

Management Statement and Operational Highlights

• Strategic Focus: Focused on two core growth engines: North American retail and European hospitality, with a proven right to win, strong product market fit, and significant growth headroom.
• Customer Locations Growth: Q1 saw 5% year-over-year growth in growth engines, with approximately 1,700 net new customer locations added; outbound-driven bookings more than doubled year-over-year, and inbound bookings up 15% year-over-year. Notable customer wins in retail (e.g., Last Stop, Shades of Charleston) and hospitality (e.g., La Petite Chaise, Aan de Poel).
• Software and ARPU Growth: Software revenue grew 9% year-over-year, driven by product innovation. Retail launched features like Customer Inventory Adjustments; Hospitality launched AI-powered Benchmarks & Trends, Mobile Tap, etc. ARPU increased due to higher software and payments monetization.
• Profitability: Adjusted EBITDA $16 million, up 55% year-over-year; strong software margins (81%); transaction-based gross profit up 30% year-over-year.

Segment Performance

• Revenue: Total revenue was $305 million, up 15% year-over-year.
• Gross Profit: Gross profit was $129 million, up 19% year-over-year.
• Payments Penetration: Reached 41%, up from 36% in the same quarter last year.
• Adjusted EBITDA: Came in at $16 million, up 55% year-over-year.
• Customer Locations: Added approximately 1,700 net new customer locations in growth engines, with total growth engine locations up 5% year-over-year; total locations at the end of the quarter were approximately 145,000.
• Software Revenue: $90.9 million, up 9% year-over-year; Software ARPU increased 10% year-over-year.
• ARPU: Reached a record $655, up 16% year-over-year.
• Gross Margin: Total gross margin was 42%; software margins were 81%; transaction-based revenue gross margin was 29%.

Guidance

• Q2 Outlook: Expect total revenue in the range of approximately $305 million to $310 million, total gross profit growth of approximately 14% year-over-year, and total adjusted EBITDA to be in the range of approximately $17 million to $19 million.
• Fiscal 2026 Outlook: Continue to expect revenue growth of approximately 10% to 12% year-over-year, gross profit growth of approximately 14% year-over-year, and adjusted EBITDA to be in the range of approximately $68 million to $72 million.

Risks

• Macro Environment: Volatility and regulatory factors (e.g., tariffs) could impact financial results.
• Competition: Increased competition in retail and hospitality markets may affect growth and profitability.
• Sales Ramp-Up: Outbound sales reps take time to ramp, and full impact may not be immediate.

Question and Answer

Q: About subscription revenue growth and pricing initiatives A: Dax mentioned 9% software growth, impact of price increases from last year, and growth engines driving software growth.

Q: New location growth and duration to double-digit growth A: Dax stated CAGR target for 3 years, ramping sales organization with 130 of 150 outbound reps in seat, expecting location growth to converge to 10%-15% by fiscal '28.

Q: Upside drivers in Q1 and year shape A: Asha noted solid execution, early days of transformation, outbound reps ramping, no unsustainable factors in Q1, July trends similar to Q1.

Q: Same-store sales in retail vs hospitality A: Asha said European hospitality had double-digit growth, North American retail had low single-digit growth, with FX impacting EMEA hospitality.

Q: AI impact on retail and hospitality A: Dax discussed AI automating tasks, deploying across support, sales funnels, product features like AI Web Builder, Benchmarks & Trends, etc.

Q: Sales reps quotas and payback periods A: J.D. mentioned measuring by demos booked, attended, and bookings per month, strong payback ratios, hyper-focused on efficiency metrics.

Q: Products attaching well and product pipeline A: Dax talked about retail insights, NuORDER integration, hospitality suite effect, AI-powered insights, and future product enhancements.

Q: GTV growth drivers and competition A: Dax and Asha discussed GTV growth from location growth, stronger growth in EMEA hospitality, and competition leading to potential higher growth costs.

Q: Software ARPU and FX impact A: Asha said software ARPU higher in growth portfolio, 10% growth YOY, FX a couple of percentage points on 15% revenue growth.

Q: Growth vs profitability balance A: Dax emphasized 3-year transformation, aggressive growth strategy funded by efficiency markets, planning further growth initiatives.

Q: Rep count and payment penetration A: Dax and Asha discussed rep count ramping to 150, payment penetration at 35% in efficiency markets, expected upward trajectory.

Q: AI impact on retailers/restaurateurs A: Dax talked about AI enabling merchants to save time, generate websites, enhance photos, and provide benchmark insights.

Q: Customer win mix and buyback pace A: J.D. said wins are 1/3 displacing incumbents, 1/3 modern peers, 1/3 new business; Asha said buyback pace to remain opportunistic with $200M remaining on authorization.