Lightspeed Commerce (TSX: LSPD) held its latest quarterly earnings call, and the company didn’t just beat expectations. Instead, it showed the tech stock is doubling down on a more focused, high-conviction growth strategy. Founder and CEO Dax Dasilva calls Fiscal 2025 a “transformative year” in an interview with Motley Fool Canada, but he’s already looking ahead, confident that Fiscal 2026 will prove this was the right call.
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What happened
The Montreal-based point-of-sale (POS) and payments platform has been on a stock market rollercoaster, peaking during the pandemic’s e-commerce boom before tumbling as growth slowed and losses piled up. Now, with shares around $16.82 and a market cap near $2.2 billion, Lightspeed stock aims to show it can deliver both growth and discipline.
In the first quarter of Fiscal 2026, revenue rose 15% year over year to $304.9 million, above the company’s outlook. Gross profit climbed 19% to $129.1 million, while gross margin improved to 42%. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) came in at $15.9 million, up from $10.2 million a year ago. Customer location growth accelerated, ARPU rose 16%, and payments penetration hit a record 41%. Lightspeed stock still posted a net loss of $49.6 million, largely due to non-cash items, but operationally it’s tightening the gap.
Seismic shift
The shift is clear. Lightspeed stock is concentrating on North American retail and European hospitality, two markets where Dasilva says the company’s advanced POS, analytics, and fiscal compliance tools give it a “clear competitive edge and huge TAM potential.” It’s not abandoning other customers, but new growth initiatives are laser-focused where close rates and returns are highest. Early results, like 1,700 net new customer locations this quarter, suggest the bet is paying off.
A big part of the push is outbound sales. Lightspeed stock hired more than 130 of its planned 150 reps, targeting merchants most likely to benefit from its platform. Dasilva says the payoff will skew toward the back half of Fiscal 2026 as these reps ramp, but the long-term value per customer justifies the upfront investment. The goal will be 10% to 15% compound annual growth in customer locations in its core markets over the next three years.
Considerations
Competition in point-of-sale is fierce, with Shopify, Toast, and Square all vying for small-to-medium business (SMB) wallets. But Dasilva argues Lightspeed’s depth and integration give it the edge. For complex retailers, the platform offers omnichannel capabilities, wholesale connections, and advanced analytics competitors can’t match. In European hospitality, it handles multi-language, multi-currency, and local tax compliance. These are hurdles U.S.-centric rivals struggle with. Integrated payments are another lever, though cash-heavy European markets cap penetration for now.
One lever management isn’t shy about pulling is buybacks. Lightspeed stock repurchased over $290 million in shares over the past year, using a strong cash position of $447.6 million to do so without cutting into growth plans. With authorization for up to $400 million, buybacks could continue if management sees the stock trading below intrinsic value.
There’s still work to do. While adjusted income was $7.9 million, free cash flow was slightly negative. Sustained free cash flow positivity will be the milestone many investors want before rewarding the stock with a higher multiple. And with a forward price-to-earnings (P/E) over 35, expectations remain high.
Bottom line
For now, Lightspeed stock delivers on what it can control. Product innovation is rolling out fast from artificial-intelligence (AI) powered hospitality insights in Europe to upgraded retail analytics, and seeing early wins with high-profile brands. These include Neiman Marcus, Fabletics, and Michelin-starred restaurants, showing it’s punching above its weight.
Investors who bailed after the post-initial public offering (IPO) hype may need more proof before jumping back in. But for those willing to take a long view, Dasilva’s message is simple: the story is about consistent execution in the markets where Lightspeed wins. If the company can keep growing locations, boosting ARPU, and inching toward sustainable cash generation, the transformation he’s promising might actually stick.
