Montréal-based Lightspeed Commerce has upgraded its outlook slightly for the rest of the fiscal year after posting $319 million USD in revenue in its last quarter, beating internal forecasts.
The e-commerce and point-of-sales tech firm, which emerged from a strategic review early this year, raised guidance on revenue growth and profitability metrics as it added a solid number of new customers in its focus areas of North American retail and European hospitality and restaurants.
“All the growth metrics and the growth engines are really shining,” CEO and co-founder Dax Dasilva said in an interview with BetaKit.
When Dax Dasilva returned as CEO in 2024, he vowed that fiscal 2025 would be the year the company becomes “a profitability story.”
While growing its revenue 15 percent year-over-year, Lightspeed also saw a net loss of $32.7 million in fiscal Q2, which ended Sept. 30. This was slightly higher than $29.7 million it lost during the same period last year. However, the company noted that after adjusting for share-based compensation, adjusted income was $22.2 million, an 11.5-percent increase year over year.
The public market responded favourably to the results. Lightspeed’s share price on the Nasdaq rose nearly 10 percent and was trading around $12.70 USD at the time of publication.
Founded in 2005, Lightspeed sells point-of-sale and commerce software and hardware to restaurants, retailers, and hospitality providers. The company is dual-listed on the Toronto Stock Exchange and the New York Stock Exchange under the symbol ‘LSPD.’ The firm reached $1 billion in revenue this year, but its share price has struggled to regain its 2021 high. Its market capitalization is roughly $2.27 billion CAD.
When Dasilva returned as CEO in 2024, he vowed that fiscal 2025 would be the year the company becomes “a profitability story” and exceeds $1 billion in annual revenue. Lightspeed has hit that mark and has since attempted to strike the right balance between growth and profitability to win back public market investors.
“I think the main balancing act for Lightspeed is that the market also wants to see a tremendous amount of growth,” Dasilva told BetaKit in August. “We’re optimizing for profitability so we can fund the two growth markets.” He compared it to “building muscle and losing fat at the same time.”
Dasilva said Q2 delivered on part of that roadmap, with adjusted free cash flow of $18 million, up from $1.6 million during the same period last year. The company now expects to break even on adjusted free cash flow for the fiscal year, which Dasilva says is a key profitability metric. The firm closed the quarter with about $462.5 million in cash.
Due to “outperformance” this quarter, the company said it’s raising its outlook for the rest of the fiscal year. It now expects revenue growth of at least 12 percent year-over-year, gross profit growth of at least 15 percent, and adjusted EBITDA between $18 million and $20 million.
The company’s transaction-based revenue hit $215.8 million this quarter, an increase of 17 percent year-over-year, while subscription revenue grew nine percent to reach $93.5 million. Gross transaction volume (GTV), a measure of all payments processed through Lightspeed’s software platform, was $25.3 billion, up seven percent year-over-year.
Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) was $21.3 million for the quarter, up from $14 million. Growing profitability metrics while driving growth is part of a three-year plan that Lightspeed outlined in February, following a strategic review. That plan includes a focus on two areas of growth: retail in North America and hospitality in Europe. GTV grew 15 percent year-over-year in those areas, while software revenue increased by 20 percent.
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Martin Toner, analyst at ATB Financial, said Lightspeed’s addition of 2,000 locations in its two focus areas is an encouraging sign. In a note earlier this summer, analyst Richard Tse of National Bank wrote that Lightspeed “must demonstrate a meaningful re-acceleration” of customer location growth, which had dropped for its core customers in previous quarters.
Toner also highlighted Lightspeed’s gross profit growth of $135.2 million, an 18-percent year-over-year increase. However, he told BetaKit that the one-percent annual guidance upgrade was a “conservative” move on the company’s part given that it had already posted a three-percent increase on the year.
CFO Asha Bakshani said on the earnings call that the smaller projected EBITDA raise “is to continue to give ourselves the flexibility to continue to invest in growth.”
Lightspeed positioned its customer onboarding as a key driver of growth going forward. Its software average revenue per user (ARPU) was up 10 percent year-over-year, which Bakshani attributed to outbound sales teams landing larger, more sophisticated customers, and seeing churn rates concentrated among smaller customers.
Dasilva said the company plans to grow the outbound sales team from 130 to 150 before the end of the fiscal year to continue targeting small and medium-sized businesses, as well as mid-market customers.
Last quarter, Lightspeed added a number of new products, including an artificial intelligence (AI)-powered “showroom” and AI-generated product descriptions for retailers’ online stores. It also rolled out a business intelligence product for its golf division. The company also added two tech veterans to its board of directors: the president of Google’s Android ecosystem, Sameer Samat, and seasoned FinTech CEO Odilon Almeida.
Dasilva said the company will soon roll out Lightspeed AI, an agentic AI integration that will provide data insights and suggestions within the software platforms customers already use. He said more details are coming at product demo days at the end of November.
On the earnings call, Bakshani said increasing use of AI has cut costs on the customer support side, claiming that AI now resolves more than 80 percent of inbound chats and has allowed the company “to significantly reduce headcount in support.”
In an interview, Dasilva clarified that there have been no layoffs at Lightspeed, but that it’s “not increasing support heads as aggressively as we typically would,” despite a growing number of customers. He claimed that the company has seen success with its AI-driven support tools, but that humans need to staff support teams to deal with “thornier issues.”
Feature image courtesy Lightspeed.