An employee works at Lightspeed Commerce in Montreal in 2024. The company reported quarterly revenue of US$312.3-million on Thursday.Christinne Muschi/The Canadian Press
Investors shrugged off better-than-expected third-quarter results from Lightspeed Commerce Inc. LSPD-T Thursday as well as an increase to its full-year financial forecast, as software stocks continued a broad sell-off.
The Montreal point-of-sale software company delivered the latest in a string of earnings beats since founder Dax Dasilva returned to the chief executive role two years ago. Lightspeed generated US$312.3-million in revenue in the quarter ended Dec. 31, up 11 per cent and slightly above the high end of its forecast range for the period.
Adjusted operating earnings were also slightly ahead of forecast at US$20.2-million, up from US$16.6-million a year earlier, while the company posted its second straight quarter of positive free cash flow. Lightspeed posted a net loss of US$33.6-million.
Lightspeed also slightly increased its forecast for the full fiscal year ending March 31, saying it expected to post revenue of between US$1.216-billion and US$1.22-billion and approximately US$72-million in adjusted operating earnings.
“It was another quarter of disciplined execution,” Mr. Dasilva said in an interview.
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Lightspeed is in the early stages of a strategic pivot to focus efforts on improving revenue growth in its two core areas: North American retail and European hospitality. That has started to pay off – the company added about 2,600 locations using its software in those two areas during the quarter to reach at total of 94,000 locations, up 9 per cent from the same period a year earlier. That year-over-year growth was up from 7 per cent in the second quarter and 5 per cent in the first.
Software revenue from those two areas also increased by 13 per cent year-over-year, and the company said that could accelerate as it sells more offerings to new customers. The company has promised average growth of 10 per cent to 15 per cent in those two areas over three years, and hired 150 sales representatives to deliver that growth.
But its location count declined by 600 in the rest of its business, which Lightspeed labels its “efficiency portfolio,” and stands at about 54,000 locations. That includes generally smaller, legacy customers in areas where it is less competitive, such as the U.S. restaurant business. Overall, Lightspeed ended the quarter with 148,000 locations, up 1 per cent, while total software revenue increased by 6 per cent.
Mr. Dasilva said the higher-growth businesses now account for two-thirds of increase and that shares would continue to grow, pulling up its overall numbers. Meanwhile, the efficiency portfolio is stable and contributing positively to earnings, he added. “The overall strategy is working well.”
But the drag from its non-core business continues to make Lightspeed a tougher sell for software investors drawn to faster-growing companies. Despite its determination to proceed prudently, the combined “subdued” results are “holding back the stock,” said BMO Capital Markets analyst Thanos Moschopoulos in an interview. “For the stock to work we’ll need to see more progress on that combined growth.”
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National Bank of Canada Financial Markets analyst Richard Tse said while Lightspeed’s core target growth markets are doing well, the company is “reined in” by the non-core segment. He added that given overall investor concerns that new artificial intelligence companies could threaten older software vendors – a big reason for the recent overall tech market swoon – “that moderating offset on the all-in results makes it tough for investors to give Lightspeed a full pass.”
Mr. Dasilva brushed off concerns about the threat of AI on his company. He said Lightspeed has introduced AI tools to help its customers run their businesses more efficiently, adding that they are trained on proprietary data running through its system that are not publicly accessible to potential competitors.
He also said Lightspeed, which abandoned a sale process early last year, could consider divesting parts of its efficiency portfolio in the longer-term. “It’s not off the table,” he said. But “for now, there is a lot of benefit to Lightspeed” of holding onto the legacy business.
Mr. Moschopoulos said he views a divestiture of the non-core efficiency segment as “unlikely over the next year or two” as it contributes to funding Lightspeed’s faster-growing segments. “After that, anything is possible.”
Lightspeed stock closed down 7.3 per cent Thursday on the Toronto Stock Exchange at $12.76. The stock has lost more than 23 per cent of its value so far in 2026.