Lightspeed Commerce (NYSE:LSPD) reported fiscal third-quarter 2026 results that management said reflected continued execution of its strategy centered on two “growth engines”: retail in North America and hospitality in Europe. On the call, the company said both revenue and adjusted EBITDA exceeded its outlook, while it posted its second consecutive quarter of positive free cash flow.
Quarterly results topped outlook as growth engines led performance
Founder and CEO Dax Dasilva said the quarter showed “disciplined execution” against priorities introduced at the company’s Capital Markets Day: growing customer locations in the two growth engines, expanding subscription ARPU, and improving adjusted EBITDA and free cash flow.
Management repeatedly highlighted the performance of its two targeted markets. Bakshani said North America retail and European hospitality generated 21% year-over-year revenue growth, 13% software revenue growth, and 16% GTV growth in the quarter. Those markets represented roughly two-thirds of consolidated revenue, and Bakshani said they are expected to account for an increasing portion of revenue, GTV, and payments volume over time.
Customer locations accelerated, supported by outbound sales expansion
One of the strongest operating metrics discussed on the call was customer location growth. Dasilva said customer locations in the growth engines rose 9% year-over-year in Q3, with approximately 2,600 net new locations added during the quarter—an acceleration management described as the fastest pace since Lightspeed’s “business transformation” began. Total customer locations reached approximately 148,000.
Dasilva attributed the acceleration to a larger outbound sales effort, increased vertical brand marketing, and more effective inbound spending. He said Lightspeed “fully hired” a team of 150 outbound representatives planned for the year and is now ramping them to full productivity. In the Q&A, he added that Lightspeed chose to pull forward some hiring into Q4, particularly in retail outbound, to position the company for what it called a strong start to fiscal 2027.
Asked about the sources of new locations, Dasilva said about one-third come from brand-new businesses, one-third from merchants switching off existing cloud vendors that are “insufficient,” and one-third from legacy systems.
The company also highlighted new customer wins across both growth engines, including global brands joining its wholesale ecosystem in retail and multi-location hospitality operators in Europe. Dasilva said the integration of Lightspeed Retail POS with NuORDER by Lightspeed enables retailers to discover and order products across thousands of brands, and he described that wholesale offering as a differentiator in outbound sales conversations.
Software revenue grew 6% as ARPU increased; company emphasized product innovation
Software revenue was $93 million, up 6% year-over-year, while software ARPU increased 4% year-over-year. Bakshani said growth moderated sequentially due to lapping last year’s pricing actions, seasonal softness in the company’s golf business, and a strategic shift toward annual contracts. She said annual contracts can include modest upfront discounts but are intended to improve merchant quality, reduce churn, increase lifetime value, and support longer-term cash flow durability. Later in the call, she noted that about 50% of Lightspeed’s retail North America contracts in the quarter were annual, up from about 25% a few quarters ago.
Total monthly ARPU reached $660, up 11% year-over-year, driven by higher software and payments monetization, with ARPU growth across both “growth” and “efficiency” markets.
Management also described a slate of product launches and enhancements. Dasilva said Lightspeed introduced Lightspeed AI, bringing what he called “agentic AI” into retail and hospitality workflows, including capabilities to identify best sellers, optimize inventory decisions, and improve kitchen execution. He also pointed to Marketplace within Lightspeed Wholesale, Tap to Pay for Android on Lightspeed Scanner, and customer-facing displays on Lightspeed payment terminals.
In European hospitality, the company highlighted new offerings such as Lightspeed Tempo for pacing intelligence in service flow, Lightspeed Reservations, and Lightspeed Tasks. Management said these releases are designed to drive higher module attachment, deeper engagement, and improved win rates with more complex merchants.
In response to questions about AI-driven disruption in software, Dasilva said Lightspeed’s proprietary payments and wholesale data help differentiate its AI workflows and analytics tools. He also cited anonymized, network-based benchmarking tools in hospitality and said the company is evaluating how to package different levels of AI insights and agentic tooling as part of ongoing pricing and packaging work.
Payments and capital growth supported margins; free cash flow remained positive
Transaction-based revenue grew 15% year-over-year to $209.4 million. Bakshani said gross payment volume (GPV) increased 19% and capital revenue rose 34%. GPV as a percentage of GTV was 42%, up from 38% in the same quarter last year, though she noted payments penetration dipped slightly from Q2 due to GTV mix and seasonality in highly penetrated verticals such as bike and golf. Payments penetration in the growth engines was cited at 46%, up from 42% last year, and Bakshani said management expects penetration to continue rising over time as Lightspeed attaches payments to new customers and converts existing merchants during renewals.
Gross margins improved across key lines: software gross margin was 82% (up from 79%), which Bakshani attributed to cost efficiencies such as cloud vendor consolidation and renegotiations, organizational restructuring, and using AI to reduce support and service delivery costs. Transaction-based gross margin was 31%, up from 28%, which she said reflected higher international payments penetration (where margins are higher than North America) and growth in the capital business.
Hardware gross margins, however, declined due to discounts and incentives intended to drive new business, including providing free payment terminals to support adoption of Lightspeed Payments. Bakshani said hardware margins are expected to range between -50% and -60% depending on the pace of new business.
On cash generation, management gave two different figures during prepared remarks: Dasilva said positive free cash flow was $15 million in the quarter, while Bakshani said adjusted free cash flow was $50 million, aided by improving adjusted EBITDA, disciplined expense management, and favorable working capital movements. Bakshani said Lightspeed expects to generate positive free cash flow for the full fiscal year, which she called a “significant milestone.”
Balance sheet, capital allocation, and updated guidance
Lightspeed ended Q3 with approximately $479 million in cash, up about $16 million from the prior quarter, according to Bakshani. She said about $200 million remained under a broader board authorization to repurchase up to $400 million of shares, though the company has already exhausted its fiscal 2026 buyback program under its Normal Course Issuer Bid and intends to seek renewal in fiscal 2027, subject to approvals and market conditions. She added that total shares outstanding were down 10% year-over-year, primarily due to $179 million of shares repurchased and canceled over the last twelve months.
Bakshani also said the company plans to continue growing its merchant cash advance business, with $106 million outstanding, and described M&A as focused on small “tuck-in” opportunities rather than large-scale acquisitions.
For guidance, Lightspeed raised its outlook for revenue, gross profit, and adjusted EBITDA. Bakshani said the company expects fiscal Q4 revenue of approximately $280 million to $284 million, gross profit of $125 million to $127 million, and adjusted EBITDA of approximately $50 million. For fiscal 2026, Lightspeed guided to revenue of approximately $1.216 billion to $1.22 billion, gross profit of $523 million to $525 million, and adjusted EBITDA of approximately $72 million. She said Q4 is typically the company’s lowest GTV quarter due to seasonality, with industry-wide spending softening in the January-to-March period.
In corporate updates, Dasilva welcomed Gabriel Benavides as chief revenue officer, appointed in November, and said President JD Saint-Martin will step down in March.
About Lightspeed Commerce (NYSE:LSPD)
Lightspeed Commerce Inc is a Canadian technology company that develops cloud-based point-of-sale (POS) and e-commerce software for small and medium-sized businesses across the retail and hospitality sectors. Its integrated platform enables merchants to manage sales, inventory, customer relationships and analytics through a single interface. By combining in-store and online channels, Lightspeed helps businesses streamline operations and improve customer engagement in an increasingly omnichannel marketplace.
The company’s product suite includes POS terminals, payment processing services, inventory management tools, customer loyalty programs and data reporting dashboards.
