Lightspeed Commerce Q2 Earnings Call Highlights

Key Points

• Q2 revenue rose 15% to $323.8 million, while adjusted EBITDA increased to $22.7 million and the net loss narrowed to $4.2 million from $32.7 million a year earlier.
• Lightspeed’s focus on larger, higher-value merchants supported 14% growth in software revenue and GTV in its North American retail and European hospitality growth markets, while net location additions slowed to about 800. Payments penetration rose to 45% of GTV from 40% a year earlier.
• The company maintained its fiscal 2027 outlook, including revenue of $1.225 billion to $1.265 billion and adjusted EBITDA of $75 million to $95 million. It also reiterated its fiscal 2028 free cash flow target of $95 million and expects second-half EBITDA margin expansion.

Lightspeed Commerce NYSE: LSPD reported fiscal second-quarter revenue growth of 15% and a narrower net loss, as the company’s push toward larger customers lifted software revenue and payments adoption. Executives said the strategy also contributed to slower growth in customer locations.

Revenue rose to $323.8 million, near the high end of the company’s outlook, while adjusted EBITDA increased to $22.7 million from $21.3 million a year earlier. Lightspeed reported a net loss of $4.2 million, or 3 cents per share, compared with a loss of $32.7 million, or 24 cents per share, in the prior-year quarter.

Year-over-year revenue and gross profit comparisons were presented on an organic basis, excluding the impact of the Upserve divestment. The company reports in U.S. dollars.

Higher-value customers, fewer location additions

Founder and CEO Dax Dasilva said Lightspeed has tightened its deal criteria and reduced discounting as it targets larger merchants that are more likely to adopt additional software and remain customers longer. Net location additions were softer than in prior quarters, he said, but the company is not signaling a structural slowdown in its ability to attract customers.

In response to an analyst’s question, Chief Revenue Officer Gabriel Benavides said the approximately 800 net locations added in the quarter were comparable with roughly 2,000 added in the second quarter a year earlier. He encouraged investors to assess the quality and durability of growth rather than location volume alone.

Within Lightspeed’s North American retail and European hospitality growth markets, locations increased 8% year over year, while software revenue and gross transaction volume, or GTV, each grew 14%. New locations in those markets came on with an average of 27% more software revenue than a year earlier, according to the company.

Those two growth markets accounted for 77% of revenue, up from 67% a year earlier. Their combined revenue grew 17%.

Software and payments gains

Companywide software revenue increased 9% to $97.8 million, and organic software average revenue per user rose 7%. Transaction-based revenue grew 17% to $213.9 million. Payments penetration reached 45% of GTV, compared with 40% a year earlier, while total monthly revenue per user rose 12% to approximately $688.

CFO Asha Bakshani said Lightspeed has addressed some barriers to payments adoption through product improvements and continues to encourage existing customers to use its payments service. She added that every eligible new customer is taking payments.

Gross profit increased 11% to $143 million, although total gross margin declined to 44% from 46%, partly because transaction-based revenue accounted for a larger share of sales. Software gross margin rose to 84% from 82%, while transaction-based gross margin held at 32%.

Hardware gross margin remained negative but improved to negative 59% from negative 74% in the preceding quarter. Bakshani said better demand forecasting and inventory investments helped reduce shortages and expedited freight costs. She expects further improvement in the second half and into fiscal 2028.

Cost reductions and cash flow

Lightspeed eliminated approximately 250 roles across the organization after the quarter ended, including open vacancies, Bakshani said. The company also removed 10% of headcount within product and technology during the quarter.

Bakshani said the reductions were contemplated in Lightspeed’s guidance and that some savings would flow to the bottom line while some would be reinvested in growth markets. She expects EBITDA margins to expand in the second half of the fiscal year.

Adjusted free cash flow was $4 million, an $8.5 million improvement from the prior quarter. The company reiterated its fiscal 2028 free cash flow target of $95 million.

Lightspeed ended the quarter with approximately $343 million in cash, down from $372 million at the end of the preceding quarter. Bakshani attributed much of the decline to share buybacks and growth in merchant cash advances. The company spent $11.2 million on repurchases during the quarter and had $143 million in merchant cash advances outstanding at quarter-end.

Outlook and product investment

Lightspeed maintained its fiscal 2027 outlook for revenue of $1.225 billion to $1.265 billion, gross profit of $565 million to $585 million and adjusted EBITDA of $75 million to $95 million. For the fiscal third quarter, it forecast revenue of $310 million to $320 million and adjusted EBITDA of $25 million to $30 million.

Dasilva also highlighted new artificial-intelligence features for retailers that can prepare tasks such as inventory updates and stock transfers for customer approval. He said Lightspeed plans further development of proactive AI agents and expects the features to support growth in software revenue per user.

About Lightspeed Commerce (NYSE:LSPD)

Lightspeed Commerce Inc is a cloud-based commerce technology company that provides point-of-sale and business management software for small and midsized businesses. Its platform is designed for retailers, restaurants, hospitality operators and golf businesses, helping them manage sales, payments, inventory, customer relationships and day-to-day operations through integrated digital tools.

Lightspeed's products include point-of-sale systems, payment processing, e-commerce capabilities, inventory and order management, analytics, accounting integrations, customer loyalty features and tools for managing restaurants and golf courses.

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