Q4 2025 Lightspeed Commerce Inc Earnings Call

Operator: Good morning and welcome. My name is Aaron and I'll be your conference operator for today.

Good morning, and welcome my name is Aaron and I'll be your conference operator for today at this time I'd like to welcome everyone to the Lightspeed fourth quarter 2025 earnings call.

Operator: At this time, I'd like to welcome everyone to the Lightspeed fourth quarter 2025 earnings call. All lines have been placed on mute to prevent any background noise.

All lines have been placed on mute to prevent any background noise. After the speaker's remarks, we will have a question and answer session and at that point. If you would like to ask a question simply press star followed by the number one on your telephone keypad at any point, if you'd like to withdraw your question just press star followed by the number one again, we do.

Operator: After the speaker's remarks, we will have a question and answer session. And at that point, if you would like to ask a question, simply press star followed by the number one on your telephone. At any point, if you'd like to withdraw your question, just press star followed by the number one again.

Operator: We do ask that you please limit yourself to an initial question and then a single follow-up question when you're given the opportunity.

I ask that you. Please limit yourself to an initial question and then a single follow up question. When you were given the opportunity to speak thank you.

Gus Papageorgiou: With that, I am pleased to turn the call over to Gus Papageorgiou, Head of Investor Relations. Gus, please begin. Thank you, operator, and good morning, everyone.

With that I am pleased to turn the call over to two gas Papa George Schiele head of Investor Relations. Please begin.

George Schiele: Thank you operator, and good morning, everyone welcome to Lightspeed fiscal Q4 2025 conference call.

Gus Papageorgiou: Welcome to Lightspeed's fiscal Q4 2025 conference call. Joining me today are Dax Dasilva, Lightspeed's founder and CEO, Asha Bakshani, our CFO, and J.D. Saint-Martin, our president.

Speaker Change: Joining me today are taxed silver.

Speaker Change: <unk> founder and CEO.

Speaker Change: Johnny our CFO J D M. A S R.

Speaker Change: Our president.

Gus Papageorgiou: After prepared remarks from Dax and Asha, we will open it up for your questions.

Speaker Change: After prepared remarks from acts National we will open it up for your questions. We.

Gus Papageorgiou: We will make forward-looking statements on our call today that are subject to risks and uncertainties that could cause actual results to differ materially from those projected. Certain material factors and assumptions were applied in respect of conclusions, forecasts, and projections contained in these statements. We undertake no obligation to update these statements except as required by law. You should carefully review these factors, assumptions, risks, and uncertainties in our earnings press release issued earlier today, our fourth quarter fiscal 2025 results presentation available on our website, as well as in our filings with U.S. and Canadian securities regulators.

Speaker Change: We will make forward looking statements on our call today that are subject to risks and uncertainties that could cause actual results to differ materially from those.

Speaker Change: Certain material factors and assumptions were applied in respective conclusions forecast and projections contained in these statements.

Speaker Change: It takes no obligation to update these statements except as required by law.

Speaker Change: Carefully review these factors assumptions risks and uncertainties.

Speaker Change: Earnings press release issued earlier today, our fourth quarter of fiscal 2025 results presentation available on our website as well as in our filings with U S and Canadian Securities regulators.

Gus Papageorgiou: Also, our commentary today will include adjusted financial measures, which are non-IFRS measures, and ratios. These should be considered as a supplement to and not a substitute for IFRS financial measures. Reconciliations between the two can be found in our earnings press release, which is available on our website, on CedarPlus, and on the SEC's Hector system. Note that because we report in U.S. dollars, all amounts discussed today are in U.S. dollars unless otherwise indicated.

Speaker Change: Also our commentary today will include adjusted financial measures, which are non <unk> measures and ratios. These should be considered as a supplement to and not a substitute for <unk> financial measures.

Speaker Change: Conciliations between the two can be found in our earnings press release, which is available on our website on SEDAR plus and on the Sec's Edgar system.

Speaker Change: Note that because we report in U S dollars all amounts discussed today are in U S dollars unless otherwise indicated.

Dax Dasilva: With that, I will now turn the call over to Dax. Thank you, Gus, and welcome, everyone. Fiscal 2025 was a pivotal year for Lightspeed. We exceeded $1 billion in annual revenue for the first time in company history, delivered $53.7 million in adjusted EBITDA, and realigned the business around a focused strategy designed to drive long-term profitable growth. There were many things to be proud of in Fiscal 2025. Revenue grew 18%. Adjusted EBITDA rose substantially from $1.3 million to $53.7 million. We launched a series of industry-leading innovations, such as Retail Insights, in our kitchen display system. We refocused our efforts on two core growth markets, retail in North America and hospitality in Europe, where we have strong product market fit and a proven right to win.

Dax: I will now turn the call over to Dax. Thank you guys and welcome everyone.

Dax: 2025 was a pivotal year for lightspeed.

Dax: See this $1 billion in annual revenue for the first time in company history delivered $53 7 million and adjusted EBITDA and realign the business around the focus strategy designed to drive long term profitable growth.

Dax: There are many things to be proud of in fiscal 2025.

Dax: Revenue grew 18% adjusted.

Dax: Adjusted EBITDA rose substantially from $1 3 million to $53 7 billion, we licensed a series of industry, leading innovations such as retail insights and our kitchen display system.

Dax: We refocused our efforts on two core growth markets retail in North America, and hospitality in Europe, where we have strong product market fit and a proven rates when.

Dax Dasilva: We restructured the organization to better align with our new strategy and met our goal of profitable growth. And we completed a share repurchase program for 9.7 million shares, returning over $130 million of capital to investors. In addition, after the year-end, Lightspeed further executed its share repurchase program, buying back an additional 9 million shares. In the last 12 months, Lightspeed has repurchased approximately 18.7 million shares, or about 12% of the shares previously outstanding at the end of last year for about $219 million. In Q4, we continue to make meaningful progress towards our strategic priorities. Software ARPU grew 11% year-over-year, reflecting strong adoption of our new modules and ongoing price optimization.

Dax: We restructured the organization to better align with our new strategy and met our goal of profitable growth.

Dax: And we completed a share repurchase program for $9 7 million shares returning over $130 million of capital to investors.

Dax: In addition, after the year end Lightspeed further executed share repurchase program buying back an additional 9 million shares.

Dax: In the last 12 months <unk> repurchased approximately 18 7 million shares or about 12% of the shares previously outstanding at the end of last year for about $219 million.

Dax: In Q4, we continued to make meaningful progress towards our strategic priorities.

Dax: Software <unk> grew 11% year over year, reflecting strong adoption of our new modules and ongoing price optimization.

Dax Dasilva: Gross Margin reached 44%, driven by discipline, cost, foundation. We added quality customer locations in our growth markets, retail for North America and hospitality for Europe, supported by the growing effectiveness of our outbound sale teams. Importantly, March was a record month for outbound sales. These achievements reflect not only strong execution, but the foundational transformation we undertook this year.

Dax: Gross margin reached 44% driven by disciplined cost management.

Dax: We added quality customer locations in our growth markets retail for North America and hospitality for Europe.

Dax: Sorted by the growing effectiveness of our outbound sales teams importantly March was a record month for outbound sales.

Dax: These achievements reflect not only strong execution with the foundational transformation, we undertook this year.

Dax Dasilva: With many of the hard decisions behind us, Fiscal 2026 will be a year of executing on our plan and delivering on our potential. While macroeconomic conditions remain uncertain across our global footprint, our ongoing strategic execution and product capabilities position us well for continued resilience.

Dax: With many of the hard decisions behind us fiscal 2026 will be a year of executing on our plan and delivering on our potential.

Dax: While macroeconomic conditions remain uncertain across your global footprint, our ongoing strategic execution and product capabilities.

Dax: US well for continued resilience.

Dax Dasilva: from forecasting demand to sourcing inventory from the thousands of suppliers on our wholesale network. The Lightspeed commerce platform is built to help merchants thrive, no matter what conditions they face.

Dax: From forecasting demand to sourcing inventory from the 1002 suppliers on our wholesale network.

Dax: E Commerce platform is built to help merchants thrive matter what conditions they face.

Dax Dasilva: In late March, we hosted our Capital Markets Day in New York City, where we outlined our new strategy and financial goals. I want to recap some of the highlights from that day. Lightspeed is concentrating efforts on its growth markets, where we have a clear right to win. Our go-forward strategy is anchored in two high opportunity areas. North American Retail, where we serve complex, high-GDP retailers with differentiated tools and deep vertical expertise. European hospitality, a fragmented market where Lightspeed is already a leader with workflow automation, local support, and fiscal compliance. In these areas, we are doubling down on outbound sales capacity, product innovation, and customer experience.

Dax: In late March we hosted our capital markets Day in New York City, where.

Dax: When we outlined our new strategy and financial goals.

Dax: I want to recap some of the highlights from that date.

Dax: Like she just concentrating efforts on its growth markets, where we have a clear right to win.

Dax: Our go forward strategy is anchored in two high opportunity areas.

Dax: North American retail, where we serve complex <unk> retailers with differentiated tools and deep vertical expertise.

Dax: European hospitality, a fragmented market, where lightspeed is already a leader with workflow automation local support in fiscal compliance.

Dax: In these areas, we are doubling down on outbound sales capacity product innovation and customer experience.

Dax Dasilva: Elsewhere, we are focused on efficiency. Continuing to support existing customers while realigning our cost structure to maximize adjusted EBITDA for the whole business. The success of our efforts within these growth markets will be measured by our ability to grow customer locations and solve for RRP. while improving overall profitability.

Dax: Elsewhere, we are focused on efficiency.

Dax: To support existing customers, while realigning our cost structure to maximize adjusted EBITDA for the whole business.

Dax: The success of our efforts within these growth markets will be measured by our ability to grow customer locations in software art pool, while improving overall profitability.

Dax Dasilva: I want to highlight the progress we are making on the first two goals, and Asha will follow with a more thorough discussion on profitability and our financial... Go to MarketProgress. Customer locations in our growth markets grew over 3% in fiscal 25, and GDP for these customers grew 6%. Notably, this growth came despite the strategic pivot only beginning to ramp in December 2024, when we realigned our organization to execute on our profitable growth strategy. By making further investments in sales and product, we expect to accelerate net customer locations growth towards our targeted three-year CAGR of 10 to 15%.

Dax: I want to highlight the progress we are making on the first two goals and Ashley will follow with a more thorough discussion on profitability and our financials.

Ashley: Go to market progress.

Ashley: Customer locations in our growth markets grew over 3% in fiscal 'twenty, five and GTP for these customers grew 6%.

Ashley: Notably this growth came despite the strategic pivot only beginning to ramp in December 2024, when we realigned our organization to execute on our profitable growth strategy.

Ashley: Leasing further investments in sales and product, we expect to accelerate net customer locations growth towards our targeted three year CAGR of 10% to 15%.

Dax Dasilva: We're scaling our outbound sales organization rapidly. As of April, we filled over half of the 150 roles we committed to by fiscal 26. In Europe, field teams are now active across key cities in Germany, the UK, and France. In North America retail, our AI-powered outbound engine is helping reps target and convert high-value merchants. We are leveraging AI to feed the top of the sales funnel through outbound cold calling and our salespeople then convert those leads into active customers. Our AI engine helps us prioritize outbound calling to the highest value. We are moving quickly to fill all of our outbound positions.

Ashley: We're scaling our outbound sales organization rapidly as of April we filled over half of the 150 roles, we committed to by fiscal 'twenty six.

Ashley: In Europe field teams are now active across key cities in Germany, the UK and France.

Ashley: In North America retail our AI powered outbound engine is helping reps target and convert high value merchants, we are leveraging AI to feed the top of the sales funnel through outbound cold, calling and our salespeople then convert those leads into active customers are.

Ashley: Our AI engine helps us prioritize outbound calling to the highest value leads.

Ashley: We are moving quickly to fill all of our outbound positions outbound sales reps require some time to fully ramp usually around six months. So we will see a lag between hiring and results, but thus far the results are very encouraging.

Dax Dasilva: Outbound sales reps require some time to fully ramp, usually around 6 months, so we will see a lag between hiring and results. But thus far, the results are very encouraging. Outbound salespeople are much more efficient at targeting our ICP customers. And because these are generally more established customers, they tend to go live much faster because they do not need to clear hurdles such as financing or signing leases. March was our best month yet for outbound revenue, which was driven by faster grow lifetimes, higher average GDP per location, and higher productivity per rep.

Ashley: I'll bound salespeople are much more efficient and targeting our ICP customers and because these are generally more established customers. They tend to go live much faster because they do not need to clear hurdles such as financing are signing leases.

Ashley: March was our best month, yet for outbound revenue, which was driven by faster grow lifetimes hired average GTD per location and higher productivity per rep.

Dax Dasilva: Here are a few examples of such well-established customers signed in the quarter. Runner's Roost in Colorado, seven locations, carrying one of the most complete selections of fitness shoes and apparel in the USA. They had previously relied on separate POS and payments providers, and we were able to deliver an integrated solution. Tennis Plaza, with nine locations in Florida. Frequently ranked as the number one tennis specialty store in America, they had considered several cloud-based competitors but chose Lightspeed due to our inventory management, B2B, and the ability to sell on the Lightspeed scanner app that we announced last quarter.

Ashley: Here are a few examples of such well established customers signed in the quarter.

Ashley: Renters roost in Colorado, seven locations carrying one of the most complete selections of fitness shoes and apparel in the USA the.

Ashley: He had previously relied on separate payments providers, and we were able to deliver an integrated solution.

Ashley: Tenants Plaza with nine locations in Florida.

Ashley: Currently ranked as the number one tennis specialty store in America did considered several cloud based competitors, but chose <unk> due to our inventory management D to b and the ability to sell on the latest scanner app that we announced last quarter.

Dax Dasilva: Woodstack with seven locations in New York and New Jersey. A streetwear retailer known for its premium sneakers, apparel, and accessories, they chose Lightspeed as their end-to-end solution provider. Half Moon Bay Golf Links in California with two world-class championship golf courses connected to a luxury resort.

Ashley: Would stack with seven locations in New York, and New Jersey.

Ashley: Street wear retailer adult premiums acres apparel and accessories details later.

Ashley: The end solution provider.

Ashley: Has been vehicles links in California, with two World Class Championship golf courses connected to a luxury resorts.

Dax Dasilva: Finally, within Lightspeed New Order, we signed several new brands, including Birkenstock Australia, Crew Clothing in the UK, and the Children's Wear Brands Tee Collection. In the MIA hospitality, we also had great success during this quarter and signed a number of notable customers. We continued our winning streak amongst Michelin-starred restaurants and chefs by adding La Vie in Dusseldorf, Zet Joe in Bruges, and Restaurant Joelia in Rotterdam. High-Quality Restaurants with complex operations turn to Lightspeed to seamlessly power their operational flow. We added Group Eclor, with 8 restaurants in Paris, 5 of which have Michelin stars. They switched to Lightspeed from their legacy system, with an impressive 7 of them going live on the same day.

Speaker Change: Finally within Lightspeed, New order, we signed several new brands, including Birkenstocks, Australia crew clothing in the U K and the children's wear brands key collection.

Speaker Change: In EMEA hospitality, we also had great success during this quarter and signed a number of notable customers.

Ashley: We continued our winning streak among Michelin starred restaurants in chess by adding levy in dusseldorf that joined British and restaurants.

Ashley: In Rotterdam.

Speaker Change: Could you be restaurants with complex operations turned to lightspeed.

Ashley: Lee power their operational flow.

Ashley: We added group accord with eight restaurants in Paris.

Ashley: Neither of which had Michelin stars they switched to latency from their legacy system with an impressive seven of them going live on the same day.

Dax Dasilva: We signed Le Relais de Chambord, located within a luxury hotel in the Loire Valley. They chose Lightspeed for our centralized management system, modern tools, and integration with key partners.

Ashley: We signed at low relayed the soundboard located within the luxury hotel in the wire Valley.

Ashley: They chose <unk> for our centralized management system modern tools and integration with key partners.

Dax Dasilva: Finally, we also saw traction amongst the multi-location chains, signing burger and sauce with 18 restaurants in the UK. They were impressed with the flexibility of our platform and wanted a reliable partner to help them pursue their aggressive expansion.

Ashley: Finally, we also saw traction amongst multilocation chains, signing Burger and sauce with 18 restaurants in the U K.

Ashley: They were impressed with the flexibility of our platform and wanted a reliable partner to help them pursue their aggressive expansion plans.

Dax Dasilva: The second key metric by which we measure the success of our strategy is ARPU expansion, driven by product innovation and retention within our core market. In Q4, software ARPU grew 11% year-over-year, driven by deeper module adoption and recent pricing initiatives. Proof that our flagship platforms are resonating with the right customers. As part of our strategic pivot, in fiscal 2026, we are investing over 35% more in product development than in fiscal 2025 to accelerate innovation across our offerings for retail customers in North America and hospitality customers in Europe. These capabilities are now being translated into modular features that help complex merchants scale efficiently.

Ashley: The second key metric by which we measure the success of our strategy is ARPA expansion driven by product innovation and retention within our core markets.

Ashley: In Q4, sulfur ARPA grew 11% year over year, driven by deeper module adoption and recent pricing initiatives proof that our flagship platforms are resonating the right customers.

Ashley: As part of our strategic pivot in fiscal 2026, we are investing over 35% more in product development and in fiscal 2025 to accelerate innovation across our offerings for retail customers in North America and hospitality customers in Europe.

Ashley: These capabilities are now being translated into modular features that help complex merchants scale efficiently.

Dax Dasilva: In retail, we ship several key innovations to improve operational control and online reach for our customers, including seasonal trends to enhance inventory planning and insight for retailers to ensure accurate inventory levels. Sales Visualization so retailers can view data in an interactive graphic form to better understand their business. A generative AI-powered web builder, which allows our customers to simply show a screenshot of what they want their website to look like. And our web builder will deliver a fully integrated, professional-looking online store with no coding required. Omni gift cards, so retailers can sell and redeem gift cards across in-store and online selling channels.

Ashley: In retail we shipped several key innovations to improve operational control and online reach for our customers including.

Ashley: Seasonal trends to enhanced inventory planning and insight for retailers to ensure accurate inventory levels.

Ashley: Sales to the utilization so retailers can view data and the interactive graphic form to better understand their business.

Ashley: <unk> AI powered web builder, which allows our customers to simply show a screenshot of what they want the website to look like and our web builder will deliver a fully integrated professional looking online store with no coding required.

Ashley: Gift cards, so retailers can sell it and redeem gift cards across in store and online selling channels.

Dax Dasilva: and the New Order Catalog Portal, which creates a self-service portal for brands who want to share their catalogs with the thousands of merchants using the Lightspeed POS. In hospitality, we ship several key features, including Google integration with Order Anywhere. Restaurants can now make sure they're showing up in Google searches, increasing order volume, and offering a convenient ordering experience. And we launched Advanced Production Instructions and Consolidated Items. These releases allow kitchen staff to adjust menu items for variations, such as allergens, and it automatically queues multiple orders of identical items to minimize prep time. As we enter fiscal 2026 with our renewed focus on our growth engines, we expect even further acceleration in product innovation, which, along with our aggressive outbound strategy, will drive improved sales velocity.

Ashley: The new order catalog portal, which creates a self service portal for brands, who want to share the catalogs with thousands of merchants using the legacy P O S.

Ashley: In hospitality, we shipped several key features including Google integration with the order anywhere restaurants can now make sure they're showing up in Google searches, increasing order volume and offering a convenient ordering experience.

Ashley: And we launched advanced protection instructions and consolidated items.

Ashley: These releases allow kitchen staff to adjust menu items for variations such as allergens and is automatically queues multiple orders of identical items to minimize prep time.

Ashley: As we enter fiscal 2026 with a renewed focus on our growth engines, we expect even further acceleration in product innovation, which along with our aggressive outbound strategy will drive improved sales philosophy.

Dax Dasilva: Our goals for 2026 are clear. Increase customer locations within our growth markets, expand software ARPU, and enhance profitability for the entire business.

Ashley: Our goals for 2026 are clear.

Ashley: <unk> customer locations within our growth markets expand software <unk> and enhanced profitability for the entire business.

Asha Bakshani: I look forward to reporting on our progress throughout the year, and will now turn the call over to Asha. Thanks, Dax, and welcome, everyone. Fiscal 2025 was a milestone year for Lightspeed, not only in hitting $1 billion in revenue for the first time, but in laying the financial and operational groundwork for sustained profitable growth. We realize a company around markets with the strongest unit economics, increased pricing to better reflect the value of our platform, and doubled down on our payments and capital initiative. As a result, we entered fiscal 2026 with a leaner, more focused business, and significantly improved profitability.

Ashley: I look forward to reporting on our progress throughout the year and we will now turn the call over to Asia.

Speaker Change: Thanks, Dan and welcome everyone fiscal 2025 was a milestone year for like steam not only in hitting $1 billion in revenue for the first time, but in laying the financial and operational granular, especially.

Ashley: <unk> profitable growth.

Ashley: We realigned the company around markets with the strongest unit economics increased pricing to better reflect the value of our platform and doubled down on our payments and capital initiatives.

Ashley: As a result, we enter fiscal 2026 with a leaner more focused business and significantly improved profitability.

Asha Bakshani: My comments today will walk through our financial performance for the year and our fiscal Q4, outline our progress on capital return as well as margin expansion, and finally I will provide our outlook for the upcoming quarter and full fiscal year. Total annual revenue of $1.077 billion through 18% year-over-year with a positive net retention rate and surpassing the $1 billion milestone on a fiscal year basis for the first Annual gross margins held steady at 42%, despite an increase in transaction-based revenue from 60% to 65% of our total revenue. Adjusted EBITDA grew from $1.3 million a year ago to $53.7 million in fiscal 2025, reflecting both revenue growth and discipline cost Growth payments volume increased by 40% in the year and GPV as a percentage of GTV increased from 32% in Q4 of last year to 38% in Q4 of this year, demonstrating growing adoption of Lightspeed Payments.

Ashley: My comments today I'll walk through our financial performance for the year in our fiscal Q4.

Ashley: Wine on progress on capital return as well as margin expansion and finally, I will provide our outlook for the upcoming quarter and full fiscal year.

Ashley: Total annual revenue of $1.077 billion.

Ashley: 18% year over year with a positive net retention rate.

Ashley: And surpassing the $1 billion milestone.

Ashley: Full year basis for the first time.

Ashley: Annual gross margin held steady at 42% despite an increase in transaction based revenue per.

Ashley: And 65% of our total revenue.

Ashley: And EBITDA grew from $1 $3 million, a year ago to $53 7 million in fiscal 2025.

Ashley: So I think both revenue growth and disciplined cost control.

Ashley: Gross payments volume increased by 40% EMEA and NPV as a percentage of increase.

Ashley: Increased from 82% in Q4 of last year.

Ashley: 38% in Q4 of this year demonstrating growing adoption of license.

Asha Bakshani: We ended the year with $558 million in cash after repurchasing 9.7 million shares and funding a net amount of $45 million in merchant cash advances in the year. Excluding these two outflows, our cash position increased year over year. These results illustrate our commitment to profitable growth and our focus on opportunistically returning capital to our shareholders. With respect to fiscal Q4, total revenue grew 10%, driven by software ARPU expansion and continued payments penetration. Despite macro headwinds impacting same-source sales and transaction-based revenue in a subset of our portfolio, gross margin performance was strong at 44%. Software ARPU grew 11% year over year, driven by new module adoption, price optimization, and our continued shift towards high-GTV customers.

Ashley: We ended the year with $528 million in cash.

Ashley: Cash after repurchasing $9 7 million shares and funding a net amount of $45 million in merchant cash advances in the year.

Ashley: Excluding these two outflows our cash position increased year over year.

Ashley: These results illustrate our commitment to profitable growth and our focus on Opportunistically returning capital to our shareholders.

Ashley: With respect to fiscal Q4 total revenue grew 10% driven by software Armful expansion and continued payments penetration.

Ashley: Despite macro headwinds impacting same store sales and transaction based revenue.

Ashley: As part of our portfolio.

Ashley: Margin performance was strong at 44%.

Ashley: So also grew 11% year over year, driven by new module adoption.

Ashley: This optimization and our continued shift towards high G TV customers.

Asha Bakshani: Software revenue was $87.9 million, up 8% year-over-year, supported by new software releases and Fiscal Q4 pricing act. Transaction-based revenue was $157.8 million, up 14% year-over-year. GPV rose 19% year-over-year to $7.9 billion. And capital grew 28%, benefiting from our unique visibility into merchant cash flow and real-time repayments through Lightspeed Payments. GTV from our growth engines grew 6% year-over-year, despite the strategic pivot only beginning to run in December 2024. validating our go-forward strategy to focus on North America retail and European hospitality. Overall, GTV remained flat at $20.6 billion due to same-store sales softness, primarily in our rest of world markets.

Ashley: Software revenue was $87 9 million up.

Ashley: At 8% year over year supported by new software releases in fiscal Q4 pricing action.

Ashley: Transaction based revenue was $157 $8 million up 14% year over year.

Ashley: P D rose, 19% year over year to $7 9 billion and capital grew 28% benefiting from our unique visibility into merchant cash flow and real time repayments through lightspeed payments.

Ashley: <unk> from our growth engines grew 6% year over year. Despite the strategic pivot only beginning to run in December 2020 for valley.

Ashley: Validating our go forward strategy is focused on North America retail and European hospitality.

Ashley: Overall GTS remained flat at $26 billion did the same store sales softness primarily in our rest of world market.

Asha Bakshani: In line with our strategy, our customer mix continued to shift toward higher GTV margins. Locations with over $1 million in GTV. while locations with sub 200,000 in GTP declined. Importantly, customer locations in our growth markets of North America retail and European hospitality grew over 3% year-over-year. We primarily target ICPs, although many customers are opening new locations and it takes time for them to ramp to higher GTV. Despite this ramp, on average, customer locations across our customer base, excluding e-commerce sites, process in excess of $500,000 a year in annual GTV, which is evidence of our successful move up market.

Ashley: In line with our strategy, our customer mix continued to shift toward higher GTD merchant.

Ashley: Locations with over $1 million in GDP increase.

Ashley: All locations with sub 200000 in TTP declined.

Ashley: Importantly, customer locations in our growth markets of North America, retail and European hospitality through offering 3% year over year.

Ashley: We primarily target ICP, although many customers are opening new locations and it takes time for them to ramp to high HGTV.

Ashley: Despite this ban on average customer locations.

Ashley: Excluding E Commerce site process and expense of 500000, a year in annual G. T D, which is evidence of our successful move upmarket.

Asha Bakshani: All of our go-to-market and product development efforts are focused on these customers. GPV as a percentage of GTV remained flat to last quarter at 38%, given same-store softness in certain highly penetrated verticals, such as hospitality customers in North America. We expect total GPV as a percentage of GTV to continue to trend upward as our customer location ads in our growth markets accelerate. In April of this year, we saw total GPB as a percentage of GTV rise to 40%, and we expect this will continue to improve throughout the year. ARPU, excluding equity standalone, reached a record $489, up 13% year-over-year, driven by both higher software and payments monetization.

Ashley: All of our go to market and product development efforts are focused on these customers.

Ashley: <unk> as a percentage of GTD remained flat to last quarter at 38% given the same store softness in certain highly penetrated verticals such as hospitality customers in North America.

Ashley: We expect total G. P D as a percentage of GTT to continue to trend upward as our customer location.

Ashley: Our growth markets accelerate.

Ashley: In April of this year, we got total G. P D. As a percentage of GTP rise to 40% and we expect this will continue to improve throughout the year.

Ashley: Arco, excluding <unk> standalone.

Ashley: A record $489.

Ashley: 13% year over year, driven by both higher software and payments monetization.

Asha Bakshani: With respect to profitability and operating leverage, in Fiscal Q4, gross profit grew 12% year-over-year, outpacing revenue growth. Total gross margin was 44%, up from both the same quarter last year, as well as our fiscal Q3. Despite transaction-based revenue increasing from 60% to 62% of sales compared to last year, we were able to improve our gross margin through effective spend management, targeted price increases, and the growth in higher margin revenue from items such as Lightspeed Capital. We delivered strong software gross margins at 81%, up from 77% a year ago, driven by pricing uplift and cost. Our customer turn remained in line with historical levels, despite our price increases, demonstrating the strength of our platform and the value it brings to our customers.

Ashley: With respect to profitability and operating leverage in fiscal Q4 gross profit grew 12% year over year outpacing revenue growth.

Ashley: Total gross margin was 44% up from both the same quarter last year as well as our fiscal Q3.

Ashley: Despite transaction based revenue increasing from 60% to 62% of sales compared to last year, we were able to improve our gross margin.

Ashley: And management targeted price increases and the growth and higher margin revenue from items such as licensing capitals.

Ashley: We delivered strong software gross margins at 81% up from 77% a year ago, driven by pricing uplift and cost discipline.

Ashley: Our customer churn remained in line with historical levels, Despite a price increase.

Ashley: Kevin straining the strength of our platform and the value it brings to our customers.

Asha Bakshani: Gross margins for transaction-based revenue were at $29,000. up slightly from the previous quarter and flat to the same quarter last year. and includes gross margins from our capital program, which continues to deliver healthy margins of over 90%. As we convert customers to Lightspeed Payments, we increase our overall net gross profit dollars, and in the quarter, we saw transaction-based gross profit grow 11% year-over-year. Adjusted EBITDA in the quarter came in at $12.9 million. nearly tripled the $4.4 million delivered in Q4 of last year, driven partially by early successes from our transformation. Total adjusted research and development, sales and marketing, and general and administrative expenses rose just 3% year-over-year, well below gross profit.

Ashley: Gross margins for transaction based revenues were up 29% up slightly from the previous quarter and flat to the same quarter last year and includes gross margin from our capital program, which continues to deliver healthy margins at over 90%.

Ashley: As we convert customers to lightspeed payments, we increased our overall net gross profit dollars and in the quarter. We saw transaction means gross profit grew 11% year over year.

Ashley: Adjusted EBITDA in the quarter came in at 12 9 million nearly triple the $4 $4 million delivered in Q4 of last year driven partially by early success from our transformation plan.

Ashley: Total adjusted research and development sales and marketing and general and administrative expenses rose just 3% year over year, while the lower gross profit growth.

Asha Bakshani: As we scale within our growth engine, we expect this leverage to continue. We continue to actively manage our share-based compensation and related payroll taxes, which were $11.8 million, or 5% of revenue for the quarter, versus $10.1 million, or 4% in the same quarter last year. We continue to manage equity usage prudently. Adjusted income rose to $15 million from $8.5 million last year.

Ashley: As we scale within our growth engine, we expect this leverage to continue.

Ashley: We continue to actively manage our share based compensation and related payroll taxes, which were $11 8 million or 5% of revenue for the quarter versus $10 1 million or 4% in the same quarter last year.

Ashley: We continue to manage equity usage prudently.

Ashley: Adjusted income rose to $15 million from $8 $5 million last year.

Asha Bakshani: With respect to capital allocation and our balance sheet, we executed aggressively on our buyback program, as you heard from Dax. Since March 31st, 2024, we have repurchased 18.7 million shares, approximately 12% of outstanding shares as of March 31st, 2024, for $219 million. $84 million of these share repurchases were made after the As of now, approximately $200 million remains under our broader board authorization to repurchase up to $400 million in Lightspeed shares, and we continue to remain opportunistic on further share repurchase. We ended Q4 with $558 million in cash, down from $662 million in the prior quarter, almost entirely due to the $92 million used for buybacks in the quarter and $7.6 million used to fund our merchant cash advances.

Ashley: With respect to capital allocation and our balance sheet, we executed aggressively on our buyback program as you heard from Dax.

Ashley: Since March 31, 2024, we have repurchased $18 7 million shares.

Speaker Change: And at least 12% Andy.

Speaker Change: Sure as at March 31, 2024 for $219 million.

Speaker Change: $84 million of these share repurchases were made after the quarter.

Speaker Change: As of now approximately $200 million remains under our broader board authorization to repurchase up to $400 million and lightspeed shares and we continue to remain opportunistic on further share repurchases.

Ashley: We ended Q4 with $558 million in cash down from $662 million in the prior quarter almost entirely due to the $92 million used for buybacks and acquire and $7 $6 million used to fund our merchant cash advances.

Asha Bakshani: Adjusted free cash flow used was $9.3 million in Q4.

Ashley: Adjusted free cash flow use was $9 3 million in Q4.

Asha Bakshani: We had a goodwill impairment charge in the quarter of $556 million. I'll walk you through the mechanics of it. Goodwill is required to be tested for impairment at least annually. Given the recent volatility in the valuations of technology companies broadly, and Lightspeed's share price specifically, our net assets exceeded our market cap at March 31, 2025. This was a goodwill impairment trigger for us, and our test resulted in a $556 million charge in the court. This goodwill charge is a non-cash accounting entry that has no impact on our liquidity or execution capability.

Ashley: We had a goodwill impairment charge in the quarter of $556 million.

Ashley: I'll walk you through the mechanics of it.

Ashley: Goodwill is required to be tested for impairment at least annually.

Ashley: Given the recent volatility in the valuations of technology companies broadly and lightspeed share price specifically.

Ashley: It's exceeded our market cap at March 31, 2025.

Ashley: This was a goodwill impairment trigger for us.

Ashley: This resulted in a $556 million charge an employer is.

Ashley: Goodwill charge is a non cash accounting entry that has no impact on our liquidity or execution capability.

Asha Bakshani: Our balance sheet remains healthy and positions us well for this upcoming year of profitable growth. With respect to our efficiency markets, while our core focus is on retail in North America and hospitality in Europe, we maintain many happy customers in other markets, with the revenue from our efficiency markets increasing year-over-year in fiscal 2025, and GPV as a percentage of GTV in our efficiency markets increasing from our fiscal Q3 to Q4. We will continue to add software value, drive adoption of financial services such as payments and capital, and of course continue to drive efficiency in these markets while minimizing the distraction from our core.

Ashley: Our balance sheet remains healthy and positions us well for the upcoming year unprofitable growth.

Ashley: With respect to our efficiency market, while our core focus is on retail in North America and hospitality in Europe, we maintained many happy customers and other market when that revenue from our efficiency markets increasing year over year in fiscal 2025 and G. P D as a person.

Ashley: Wanted to GTA V and our efficiency markets, increasing from our fiscal Q3 to Q4.

Ashley: We will continue to add software value drive adoption of financial services, such as payments and capital and of course continue to drive efficiency in these markets, while minimizing the distraction from our core.

Asha Bakshani: Before I move on to Outlook, I would like to draw everyone's attention to the fact that going forward, from a total locations perspective, we are changing the definition of what constitutes a customer location. We have historically emphasized that a single unique customer can have multiple customer locations, including physical and e-commerce sites. So e-commerce sites used by customers alongside a physical site have been counted as separate customer locations from the POS. As our POS and e-commerce solutions are bundled as a single, omni-channel product, we believe this distinction has become less meaningful. Going forward, we consider this bundled product to be a single customer location.

Ashley: Before I move on to outlook I would like to draw everyone's attention to the fact that going forward and the total locations perspective, we are changing the definition of what constitutes a customer location.

Ashley: We have historically emphasized that as single unique customer can have multiple customer location, including physical and E Commerce site.

Ashley: E Commerce sites used by customers alongside a physical site have been counted and separate customer locations from the P. O S.

Ashley: P O N E Commerce solutions are bundled.

Ashley: Omnichannel product, we believe this distinction has become less meaningful.

Ashley: Going forward, we consider this bundled product can be single customer location.

Asha Bakshani: The end result is that the total number of customer locations changes from approximately $162,000 to approximately $144,000 as of March 31, 2025, while the monthly ARPU moves from $489 to $545. Going forward, we will consider stand-alone e-commerce sites, those that are not bundled with any physical site, separately, as we have always done for Equid e-commerce stand-alone sites.

Ashley: End result is that the total number of customer locations changes from our approximately 162000 to approximately 144000 as at March 31, 2025, while the monthly our promos from $489 $545 going.

Ashley: Forward, we will consider a standalone E com site.

Ashley: Those that are not bundled with any physical site separately as we have always done for equity E Commerce Standalone site. Please.

Asha Bakshani: please see our MD&A or press release for details.

Ashley: Please see our MD&A and press release for details.

Asha Bakshani: Now, turning to our out... Despite continued macro-volatility, we enter fiscal 2026 with strong conviction in our strategy and in our ability to execute. We're on track to scale our outbound team to 150 reps by year-end, and expect the continued rollout of new features to support both software and transaction-based revenue growth. This financial outlook reflects our most recent view of the macroeconomic environment and is consistent with our three-year gross profit CAGR of approximately 15% to 18% and three-year adjusted EBITDA CAGR of approximately 35% that we presented at our capital market state in March. For fiscal 2026, we expect total revenue growth of approximately 10 to 12% year over year.

Ashley: Now turning to our outlook.

Ashley: Despite continued macro volatility we enter fiscal 2026 with strong conviction in our strategy and in our ability to execute well on track to scale. Our outbound team to 150 reps by year end and expect the continued rollout of new features to support on software and transaction day.

Ashley: This revenue growth.

Ashley: This financial outlook reflects our most recent view of the macroeconomic environment.

Ashley: And is consistent with our three year gross profit kicker of approximately 15% to 18% and three year adjusted EBITDA CAGR of approximately 35% that we presented at our capital markets day in March.

Ashley: For fiscal 2026, we expect total revenue growth of approximately 10% to 12% year over year.

Asha Bakshani: total gross profit growth of approximately 14%. Total adjusted EBITDA to be in the range of approximately $68 million to $72 million. For the first quarter, we expect total revenue in the range of approximately $285 million to $290 million. Total gross profit growth of approximately 13%. Total adjusted EBITDA to be in the range of approximately $14 to $16 million.

Ashley: Total gross profit growth of approximately 14%.

Ashley: Total adjusted EBITDA to be in the range of approximately 68 million to $72 million.

Ashley: For the first quarter, we expect total revenue in the range of approximately 285 million to $290 million.

Ashley: Total gross profit growth of approximately 13%.

Ashley: Total adjusted EBITDA to be in the range of approximately $14 million to $16 million.

Asha Bakshani: With that, I'll turn the call back to the office. Thank you very much.

Ashley: With that I'll turn the call back to the operator.

Ashley: Thank you very much ladies and gentlemen, once again, we will start our Q&A session now and please remember if you would like to ask a question. It is star followed by the number one on your telephone keypad and once again, we do respectfully ask that you limit yourself to one question followed by a single follow up question.

Operator: Ladies and gentlemen, once again, we'll start our Q&A session now. And please remember, if you would like to ask a question, it is star followed by the number one on your telephone keypad. And once again, we do respectfully ask that you limit yourself to one question followed by a single follow-up question when you're given the opportunity.

Speaker Change: When you were given the opportunity to speak.

Speaker Change: Yeah.

Trevor Williams: Our first question for today comes from the line of Trevor Williams from Jeffreys. or Linus Life. Thanks very much.

Speaker Change: Our first question for today comes from the line of Trevor Williams from Jefferies. Your line is live.

Asha Bakshani: I wanted to go back to the full year guide, if we could, and just the embedded acceleration in revenue growth beyond the first quarter, if you guys just could talk to kind of the primary drivers behind that, the level of visibility, and then any kind of underlying macro assumptions that we should be aware of. Yeah, hey, Trevor, thanks for the question. What's built in our fiscal 2026 guide is, as you know, we're investing quite a bit in go to market. We're hiring 250 outbound reps. We're over half of the way there already. And so once those outbound reps ramp, we expect them to start, you know, showing acceleration on both software and locations, and then the payments revenue that comes with that.

Trevor Williams: Thanks, very much I wanted to go back to the full year guide if we could it just be embedded acceleration and revenue growth beyond the first quarter. If you guys could talk to kind of the primary drivers behind that the level of visibility.

Speaker Change: And then any kind of underlying macro assumptions that we should be aware of within that thank you.

Trevor: Yeah, Hey, Trevor Thanks for the question.

Trevor: What's built into our fiscal 2026th guide is as you know, we're investing quite a bit and go to market or hiring to 150 outbound reps where over half of the way there already and so once those are outbound reps ramp we expect them to start.

Trevor: Showing acceleration on both software and location and then the payments revenue that comes with that.

Asha Bakshani: In addition to that, what's built in fiscal 26 is the incremental 35% of OPEX that we've 35% growth on total R&D spend that we've baked into fiscal 26, you know, for product innovation, that's going to start to be reflected in additional modules being released, and upsell as well. So that is really what's baked into fiscal 26 from a revenue acceleration perspective and gross profit growth acceleration perspective. With respect to the macro, you know, we have seen some softness in the fourth quarter, as you know, from the same store sales perspective. And we do expect or we are baking into our guide at that macro that we saw in Q4.

Trevor: In addition to that what's built in fiscal 'twenty six is the incremental 35% of Opex that we the 35% growth on total R&D spend that we've baked into fiscal 'twenty. Six you know for product innovation, that's going to start to be reflected in additional modules being released and ups.

Trevor: Sal as well so that is really what's baked into fiscal 'twenty six from a revenue acceleration perspective, and gross profit growth acceleration perspective with respect to the macro.

Trevor: <unk> seen some softness in the fourth quarter as you know from the same store sales perspective, and we do expect or we are baking into our guidance.

Asha Bakshani: Now, we did see the same store sales stabilize in April and in early May. But we're still being conservative on the guide. Just given the uncertainty that's out there today, we want to put a guide out that we're very confident that we can hit. Okay, got it. Thanks very much.

Trevor: That macro that we saw in Q4 now we did see the same store sales stabilize in April and in early may but.

Trevor: But we're still being conservative on the guide just given the uncertainty that's out there today, we wanted to put a guide out that we're very confident that we can hit.

Trevor: Okay.

Trevor: Okay got it thanks, very much and then on the payments penetration rate or should I heard you give the 40% number for April and the expectation for that to go up over the course of the year.

Asha Bakshani: And then on the payments penetration rate, Asha, I heard you give the 40% number for April and the expectation for that to go up over the course of the year. If you could just put a finer point on maybe the range we should be thinking about by the end of the fiscal year and kind of key variables within that. Thank you. Yeah, for sure. So I'll start with talking about payments penetration overall in the quarter. You know, there was a slight growth from Q3 to our fiscal Q4. And the reason penetration didn't rise more sharply is really just a mixed shift.

Trevor: If you could just put a finer point on maybe the range, we should be thinking about by the end of the fiscal year and you kind of key variables within that thank you.

Trevor: Yeah for sure so I'll start with talking about payments penetration overall in the quarter. You know there was a slight growth from Q3 to our fiscal Q4.

Trevor: Isn't penetration didn't rise more sharply is really just a mix shift we saw the same store softness that I talked about but that happened in certain highly penetrated verticals such as hospitality in North America, but overall you know payments penetration is really not a concern for us the underlying trend is very healthy.

Asha Bakshani: We saw the same source softness that I talked about, but that happened in certain highly penetrated verticals, such as hospitality in North America. But overall, you know, payment penetration is really not a concern for us. The underlying trend is very healthy. As you mentioned, and as we said in our prepared remarks, we're already at 40% in the month of April. And so as we scale our broader market reps and continue to focus on payments attached, we have a pretty high attach rate, given that we, you know, we sell the product as an integrated solution today, we do expect penetration to continue trending upward.

Trevor: You mentioned and as we said in our prepared remarks, we're already up 40% in the month of April and so as we scale our go to market and continue to focus on payments attached with a pretty high attach rate given that we you know we sell the product as an integrated solution today.

Trevor: We do expect penetration to continue trending upward we're not guiding on payments penetration because as you know you know with the uncertain macro and the impact on same store sales you know that goes up and down we use we really use payments penetration more as a there's tons of opportunity out there for us if we're at 40% in <unk>.

Asha Bakshani: We're not guiding on payments penetration, because as you know, you know, with the uncertain macro and the impact on same store sales, you know, that goes up and down. We use, we really use payments penetration more as a, there's tons of opportunity out there for us. If we're at 40%, in April, you know, there's still a lot of upside for us there. And we expect that 40% to continue to grow through fiscal 26. Thanks very much. for your questions.

Trevor: April you know, there's still a lot of upside for us there.

Trevor: And we expect that 40% to continue to grow through fiscal 'twenty six.

Trevor: Thanks very much.

Trevor: Thanks for your questions.

Koji Ikeda: Our next question is from the line of Koji Ikeda with Bank of America. Your line is. Yeah, hey guys, thanks so much for taking the question. I wanted to go back to that prior question about the guide. And it sounds like there's two key levers here that are kind of informing your guidance for 2026. Ramping sales capacity, balance against an uncertain macro.

Speaker Change: Our next question is from the line of Koji Ikeda with Bank of America. Your line is live.

Koji Ikeda: Yeah, Hey, guys. Thanks, so much for taking the question I wanted to go back to that prior question about the guide.

Speaker Change: And it sounds like there's two key levers here that are kind of informing your guidance for 2026 ramping sales capacity balanced against an uncertain macro and so thinking about those two levers are both of those levers stay tuned meaningfully for the guide or is one of those factors more conservative versus the other thank you.

Asha Bakshani: And so thinking about those two levers, are both of those levers detuned meaningfully for the guide or is one of those factors more conservative versus the other? Yeah, thanks for the question, Koji. If we go back to the guide, you know, when we look at outbound, if we take the catalyst for revenue acceleration, and we start with that, when we look at outbound, we have seen very encouraging signs to date. You know, these are the reps that give us the highest unit economics, the lowest payback period. And so scaling the outbound is something that we have high confidence in.

Speaker Change: Yeah. Thanks for the question Koji if we go back to the guide you know when we look at outbound if we take the the catalysts for revenue acceleration and we start with that when we look at outbound we have seen very encouraging signs to date. You know these are the reps that give us the highest unit economics.

Speaker Change: The lowest payback periods and so scaling the outbound is something that we have high confidence in and that's what's baked into the plan from a macro perspective as I mentioned, there is a fair bit of conservatism baked in just given that you know there. There is still a is still a fluid macro out there and like I said, we wanted to put a guide.

Asha Bakshani: And that's what's baked into the plan. From a macro perspective, as I mentioned, there is a fair bit of conservatism baked in, just given that, you know, there is still a fluid macro out there. And like I said, we want to put a guide out there that we're confident we can hit. The macro is less in our control. So we've baked more conservatism into that factor. Whereas the outbound, the hiring is going very well, you know, we feel that that is very much in our control. And so, you know, we're being, you know, we're very confident in the outbound and that ramp that we've assumed in our guide.

Speaker Change: Out there that we're confident we can hit the macro is less in our control. So we've baked more conservatism into that factor, whereas the outbound the hiring is going very well you know we feel that that is very much in our control and so you know we're being.

Speaker Change: We're very confident in the outbound and that ramp that we've assumed in our in our guide.

Asha Bakshani: Thanks, thanks, Asha. And then when looking at the guide, it looks like gross profit is growing faster than revenue. So maybe walk us through what are the levers there for that for 2026? And then how to think about gross profit growth versus revenue in 2026 and beyond? Just thinking, is this a one time, you know, faster growth in 2026, and it'll normalize after that?

Speaker Change: Got it. Thanks, Thanks, Alisha and then when looking at the guide it looks like gross profit is growing faster than revenue. So.

Speaker Change: Maybe walk us through what are the levers there for that for 2026, and then how to think about gross profit growth versus revenue in 2026 and beyond just thinking is this a one time faster growth in 2006, and it'll normalize after that or is this something that could continue in the out years. Thank you.

Asha Bakshani: Or and The Outeers. Yeah, thanks for the question. Great question, Koji. We do expect, and you see that in our guide, that gross profit growth outpaces top-line growth. And that's really coming from the fact that the majority of the growth that you're going to see from Lightspeed in fiscal 26 and beyond is from location ads and from software. And that's because, you know, the big ramp of unified payments and getting the back book onto payments is behind us. There's still some opportunity there for sure, because we're only 40% penetrated as of April. But the majority of the growth that you're going to see is going to come from very high margin software, which, as you've seen from us, comes in at over 80%.

Koji Ikeda: Yes. Thanks for thanks for the question Great question Koji.

Koji Ikeda: We do expect and you'll see that in our guide that gross profit growth outpaces topline growth and that's really coming from the fact that.

Koji Ikeda: The majority of the growth that you're going to see from Lightspeed in fiscal 'twenty six and beyond is from location adds and from software and that's because you know the big ramp of unified payments and getting the backlog onto payments is behind us there's still some opportunity there for sure because we're only 40% penetrated is that April.

Koji Ikeda: But the majority of the growth that youre going to see is going to come from very high margin software, which and as you've seen from us comes in at over 80% and so we actually expect the gross profit growth to outpace topline growth.

Asha Bakshani: And so we actually expect the gross profit growth to outpace top-line growth. And as consistent with what we said at Capital Markets Day, overall gross profit growth, we expect to be growing at a CAGR of 15% to 18% between now and fiscal 28. And so, you know, you should expect to see the 13% we outlined in Q1 to continue to grow every quarter into F26 and even F27 and beyond.

Koji Ikeda: As consistent with what we said at capital markets day overall gross profit growth, we expect to be growing at a CAGR of 15% to 18% between now and fiscal 'twenty eight and so you know we you should expect to see the 13% we outlined in Q1 to continue to grow every quarter into F. 'twenty, six and even F 'twenty seven and beyond.

Koji Ikeda: Thank you.

Asha Bakshani: for your questions.

Speaker Change: Thanks for your questions. Our next question is from the line of Andrew <unk> with Wells Fargo Securities. Your line is live.

Andrew Bauch: Our next question is from the line of Andrew Bauch with Wells Fargo Securities. Your line is live. Hey, thanks for taking the question. In the press release, you talked about, you know, product and technology development investments being up, I think 35% this year.

Speaker Change: Hey, Thanks for taking the question.

Speaker Change: And the pressures you talked about.

Koji Ikeda: Product and technology development investments being up I think 35%. This year can you help us understand.

Asha Bakshani: Can you help us understand, you know, better understand the Places that you are investing, maybe a finer point on what is being enhanced and how that translates to your confidence in the software uptake over time. Yeah, so thanks for the question. These are the two best platforms for retail and hospitality that in Lightspeed's history, as you've seen from the last quarters, we've had a tremendous amount of product velocity, adding software modules and software value on our retail flagship and on our hospitality flagship. And of course, those products play extremely well in our two growth markets, Noam Retail and EMEA Hospo.

Koji Ikeda: Better understand the.

Koji Ikeda: Places that you are investing maybe a finer point on what is being enhanced and how that translates to your confidence in the software uptake over time.

Koji Ikeda: Yeah. So.

Speaker Change: Thanks for the question.

Koji Ikeda: These are these are the two best.

Speaker Change: Platforms for retail hospitality that then let's use history as you've seen for the last quarters.

Koji Ikeda: We had a tremendous amount of product velocity, adding software modules and software value on our retail on a retail flagship at INR and on our hospitality flagship and of course, those those products play extremely well in our two growth markets no I'm retail in EMEA in EMEA Hospital.

Asha Bakshani: Our focuses for retail are to go deeper into and add software value for our key eight verticals, make sure that we are going deep into inventory management, deep into connections to the brands that those verticals rely on, and increasing the online presence aspect for these businesses, which many are physical first. On the hospitality side, front of house, back of house and administrative tools, we have an incredible suite of products that works seamlessly together. So enhancing that and making sure that that is a great fit for hospitality businesses that are pan-European. We are the best pan-European solution for hospitality businesses with big ambition.

Koji Ikeda: Our focus is for retail or to go deeper into that.

Koji Ikeda: That's all for value for our key verticals.

Koji Ikeda: Make sure that we are.

Koji Ikeda: Going deep into inventory management deep connections to the brands that those verticals rely on and.

Koji Ikeda: Increasing the <unk>.

Koji Ikeda: The online presence aspect for these businesses, which are many of our physical first on the hospital.

Koji Ikeda: <unk> side, our front of house back of house administrative tools, we have an incredible suite of products that work seamlessly together.

Koji Ikeda: So enhancing that and making sure that that that that is a.

Koji Ikeda: Great fit for hospitality businesses that are pan European where the.

Koji Ikeda: The best Pan European solution for for hospitality businesses with Big ambition. So that's sort of the focus but as you've seen in Q4, delivering a lot of a lot of value along those themes.

Asha Bakshani: So that's sort of the focus. But as you see in Q4, delivering a lot of value along those themes, a very, very aggressive. That's great.

Koji Ikeda: A very very aggressively.

Asha Bakshani: And maybe if you just get a refresh on, you know, the mix between the flagship businesses, retail and restaurant, and how should we think about the growth across each of those verticals into 26? Is one kind of trending stronger than the other? And how do you think that progressed? Yeah, I'll take that one. Well, from a mixed perspective, you know, retail is about 60% of our portfolio. Hospitality is about 40%. As you know, our new focus is, you know, our new strategy focuses on Noam Retail and EMEA Hospitality. We are, when we talk about outbound the 150 reps that we're hiring in the year, that does contemplate both retail and hospitality.

Koji Ikeda: That's great.

Koji Ikeda: Can you just kind of refresh on the.

Koji Ikeda: Mix between the flagship businesses retail and restaurants.

Koji Ikeda: And how should we think about the growth across each of those verticals into 'twenty six.

Koji Ikeda: One kind of trending stronger than the other and how do you think that progresses.

Koji Ikeda: Yeah, I'll take that one well from a mix perspective, you know retail is about 60% of our portfolio hospitality is about 40% as you know our new focus.

Koji Ikeda: Is where our new strategy focused on focuses on no I'm retail and EMEA hospitality.

Koji Ikeda: We are when we talk about outbound 150 reps that we're hiring in the year that does contemplate both retail and hospitality, they're different outbound motions, but their outbound reps. Nevertheless.

Asha Bakshani: They're different outbound motions, but they're outbound reps nevertheless. So, you know, when we think about fiscal 26 and beyond, that 60-40 mix stays relatively the same from a retail versus hospitality perspective. And, you know, when we think about the growth markets, we are gross profit to grow at a CAGR of 20-25%, as we outlined at Capital Markets Day. And from an overall business, the gross profit growth to be in the 15-18%. And so we are maintaining that value. That's the Salisbury Bells. Thank you.

Koji Ikeda: So when we think about fiscal 'twenty six and beyond that 60 40 mix stays relatively the same from a retail versus hospitality perspective, and you know when we think about the growth markets. We are expecting gross profit to grow at a CAGR of 20% to 25% as we as we outline.

Koji Ikeda: At capital markets day, and from an overall business the gross profit growth to be in the 15% to 18% and so so we are maintaining that guide.

Koji Ikeda: So it sounds pretty balanced thank you.

Koji Ikeda: Thank you.

Dominic Ball: Our next question is from the line of Dominic Ball with Redburn Rothschild & Co. Your line is live. Hey Dominic, thanks for the question. Yeah, Lightspeed Capital is fully funded on our balance sheet today. As you can imagine, the economics are, you know, quite a lot different when we're off balance sheet. The economics are very favorable today. We have a take rate of between 12 to 15% on these merchant cash advances and our payback is 6 to 7 months. So, from an APR perspective, the take rate is well over 20%. And given that we've got, you know, pretty good insight into our customers, into their cash flows, into what folks in their demographic are doing from a sales perspective, and we pay ourselves back through Lightspeed payments, we actually have a very low default rate in the low single digit percent.

Speaker Change: Our next question is from the line of Dominic ball with Redburn Rothschild and company. Your line is live.

Dominic Ball: Hey, guys. Thank you very much.

Koji Ikeda: Question on the guidance on the tennis is quite clear when.

Koji Ikeda: When it comes to the Lightspeed capital. This offers quite attractive gross margins can you.

Koji Ikeda: I'll remind also clarify how this is currently funded is the on balance sheet, how much of your cash balance that you. So called school deploying here and looking forward would you ever consider a forward flow arrangement.

Dominic Ball: Hey, Dominic Thanks for the question Yeah, Lightspeed capital is fully funded on our balance sheet today.

Dominic Ball: As you can imagine the economics are you know quite a lot different when we off balance sheet are the economics are very favorable today, we have a take rate of between 12% to 15% on these merchant cash advances in our payback is six to seven months. So from an APR perspective, the take rate is well over 20.

Koji Ikeda: Percent.

Koji Ikeda: And given that we've got you know.

Koji Ikeda: Pretty good insight into our customers into their cash flows into what folks in their demographic are doing from a sales perspective, and we pay ourselves back through lightspeed payments, we actually have a very low default rate in the low single digits percent.

Asha Bakshani: And so, for today that is funded on our own balance sheet, we have $560 million almost of cash still on the balance sheet and we're nearing cash flow break even. So, you know, from a cash flow perspective, we can afford to keep it on our balance sheet.

Koji Ikeda: And so for today that is funded on our own balance sheet, we have $560 million almost of cash still on the balance sheet and we're nearing cash flow breakeven. So from a cash flow perspective, we can afford to keep it on our balance sheet.

Asha Bakshani: However, from a risk perspective, you know, there is a point at which we will contemplate pulling this off the balance sheet or at least a part of it. But for now, you know, if I look at the end of Q4, we have about $69 million outstanding at the end of the quarter. So, still very palatable from where we sit.

Koji Ikeda: However from a risk perspective, you know we there there is a point at which we will contemplate pulling this off the balance sheet or at least a part of it but for now you know if I look at at the end of Q4, we have about $69 million outstanding at the end of the quarter, So still very palatable from where we sit.

Asha Bakshani: As that grows, we're definitely looking at how we off-balance sheet that and still keep some of the economics for ourselves. Yeah, that makes sense. Seems like there's plenty of sort of growth there.

Koji Ikeda: As that grows we were definitely looking at how we off balance sheet that and still keep some of the economics for ourselves.

Speaker Change: Yeah that makes sense. Thanks, a lot it's plenty of slow growth and I'm just one on maybe the lightspeed payments adoption.

Asha Bakshani: And just one on maybe Lightspeed Payments adoption. When that's been expanded to Europe, has this adoption curve been a little bit different to the US? And is there a higher or lower structural ceiling to Lightspeed Payments in the European market? Thank you for the question. Payments in Europe, from an attach rate perspective, is as strong as we see in North America. So when we go to market in our key markets in Europe, we really lead with the combined solution of software and payments, and we're really pleased to see that our attach rate remains as high as what we've seen in North America.

Speaker Change: And that's been expanded to Europe has this adoption curve.

Koji Ikeda: <unk> been a little bit different to the U S and has a higher or lower structural ceiling to loss of the patents in the European markets.

Koji Ikeda: Thank you for the question from a payments in Europe from an attach rate perspective.

Koji Ikeda: Is as strong as we see in North America. So when we go to market in our key markets in Europe.

Koji Ikeda: We really lead with the combined solution of software and payments and we're really pleased to see that.

Koji Ikeda: Our attach rate remains as high as what we've seen in North America.

Koji Ikeda: Yes.

Operator: Alright, thank you guys.

Koji Ikeda: Alright, Thank you guys.

Operator: Thank you for your questions.

Speaker Change: Thank you for your questions. Our next question is from the line of panels Moscow pull us with BMO capital markets. Your line is live.

Thanos Moschopoulos: Our next question is from the line of Thanos Moschopoulos with BMO Capital Markets. Your line is live. Hi, good morning.

Speaker Change: Hi, good morning.

Asha Bakshani: With respect to seeing store sales growth, can you provide some color in terms of the dynamic across the different markets and verticals and how that's being impacted by Yeah, I hate Thanos. Thanks for the question. We did see same store sales pressure pretty much across the board when we think about, you know, the high level geography and vertical. Of course, there were some, you know, same store sales, there was more softening in certain verticals, in particular, North America hospitality, which, as you know, is a very highly penetrated vertical. And so when we see softness in a highly penetrated vertical, that impacts our overall revenue, you know, the impact is quite significant.

Speaker Change: With respect to same store sales growth can you provide some color in terms of the day and then make across the different end markets and verticals.

Speaker Change: How that's being impacted by the macro.

Speaker Change: Yeah, Hey, thanks for the question.

Speaker Change: We did see same store sales pressure pretty much across the board when we think about that.

Speaker Change: High level geography, and vertical of course, there were some same store sales there was more softening in certain verticals in particular, North America hospitality, which as you know is a very highly penetrated vertical and so when we see softness in our highly penetrated vertical that impacts our overall.

Speaker Change: Revenue the impact is.

Asha Bakshani: But I would say, outside of North America hospitality, which is where we saw the highest level of softness, we did see softness in retail North American European hospital as well. That said, however, trends did begin to stabilize in April and in early May. And while it's too early to call a rebound, we're really not seeing further deterioration either. But as I said earlier, we did plan for fiscal 26 quite conservatively. So that we hit our guidance despite the macro uncertainty.

Speaker Change: Quite significant but I would say outside of North America, hospitality, which is where we saw the highest level of softness we did see softness in retail North America and European Hospital as well.

Speaker Change: That said, however trends did begin to stabilize in April and in early May and while it's too early to call a rebound, we're really not seeing further deterioration either.

Speaker Change: As I said earlier, we did plan for fiscal 'twenty six quite conservatively, so that we hit our guidance despite the macro uncertainty.

Asha Bakshani: Great. And with respect to software ARPU, obviously a combination of your pricing adjustments, and to get some extension in upsell. I know you've released some new modules recently. So maybe just speak to what you're seeing from an upsell perspective and the trajectory you're anticipating on that over the coming year. Yes, thank you for the question, Thanos. I'd say overall, we're really pleased with the progress we're making here. We've seen significant improvement from where we were in the first half of the fiscal year. And the momentum that you see in the back half, we expect to see continue in fiscal year 26.

Speaker Change: Great.

Speaker Change: With respect to software Arcane, obviously, a combination of your pricing adjustments in and get some expansion and upsell I know you've recently some new modules recently, so maybe just speak to what Youre seeing from an upsell perspective, and the trajectory you are anticipating on that over the coming year.

Speaker Change: Yes. Thank you for the question Thanos I'd say overall, we're really pleased with the progress we're making here.

Speaker Change: Seen significant improvement from where we were in the first half of the fiscal year.

Speaker Change: And the momentum that you see in the back half we expect to see continue in fiscal year 'twenty six.

Asha Bakshani: From a software module perspective, the new modules that we released on the hospitality side, KDS, table side devices, what we have upcoming on the benchmark and trend side, we expect that this will continue to be very strong from an attach rate perspective. And then similarly on retail, whether if it's insights or the evolution of our mobile scanner to become a true mobile POS, we also see significant improvement there. And that's contributed to our software ARPU growing 11% year over year in Q4. So we're really pleased with the progress there. And as you highlighted, we had some courts of customers that had to be adjusted from a pricing perspective.

Speaker Change: From a software module perspective, the new modules that we released on the hospitality side Tds Tableside devices, where we have upcoming on the on the benchmark and trend side.

Speaker Change: We expect that this will continue to be very strong from an attach rate perspective, and then similarly on retail whether it fits insights or the evolution of our mobile sky scanner to become a true mobile Pos.

Speaker Change: We also see.

Speaker Change: Significant improvement there and that's contributed to our softer <unk> growth.

Speaker Change: Growing 11% year over year in Q4, so we're really pleased with the progress there and as you highlighted we had some cohorts of customers that had to be adjusted from a pricing perspective.

Asha Bakshani: Those waves have gone through now and we're pleased with the progress on that front as well. So what you can expect from us is continued momentum going into fiscal year 26 from that point of view.

Speaker Change: Those those ways has gone through now.

Speaker Change: And we're pleased with the progress on that front as well. So what you can expect from US is continued momentum going into fiscal year 'twenty six from that point of view.

Asha Bakshani: Great, that's the one.

Speaker Change: Great Best of luck. Thank you.

Speaker Change: Thank you.

Tien-Hsien Hwang: Our next question is from the line of Tien-Hsien Hwang with JP Morgan. Your line is live. Hey, thank you so much.

Speaker Change: Our next question is from the line of Tien Tsin Huang with Jpmorgan. Your line is live.

Speaker Change: Okay.

Speaker Change: Hey, Thank you so much I ask my two questions together, the 35% more impulse development is that just investments in people tools backs I heard the you have the.

Dax Dasilva: I'll ask my two questions just together. The 35% more in product development, is that just investments in people or tools, Dax? I heard the detail across the two platforms. I just want to understand what exactly you're investing in and if that continues on a run rate basis. And just on the location growth side and the growth markets, is that any change in where that's coming from? Is it more new business starts? Are you seeing more flips of legacy? Any interesting call-outs as you grow your go-to-market thing?

Speaker Change: A detailed cross the two platform so just want to understand.

Speaker Change: What exactly you're investing in.

Speaker Change: <unk> on a run rate basis, just under location growth side and the growth markets is that any change in where that's coming from is it more new business starts or are you seeing more clips of legacy any interesting callouts as you've as you grow your go to market.

Dax Dasilva: Yeah, on product development, it is increasing headcount on both our retail and hospitality development teams so that we can have more squads to be building out different product modules and enhance the product. Yeah, as you know, we got it at our Capital Markets Day, you know, customer location count growing at 10 to 15% from a Kegel perspective. So, you know, we're, we're really excited for that. And we're already seeing some really strong momentum in that direction. To answer your question specifically, it can it continues to be about a third, a third, a third. So a third are brand new businesses opening, going with us, about a third are switching from legacy and about a third are switching from more modern platforms that they've that our merchants or our prospects have outgrown, because too basic in functionality, and they need something more robust that Lightspeed can provide.

Speaker Change: Yeah on product development. It is increasing head count on both our retail and hospitality development teams.

Speaker Change: So that we can we can we can have more squads to be building out different product modules.

Speaker Change: And then you have some product.

Speaker Change: On locations.

Speaker Change: As you know, we guided at our capital markets day customer location count growing at 10% to 15% from a CAGR perspective so.

Speaker Change: We're really excited for that and where we are already seeing some really strong momentum in that direction.

Speaker Change: To answer your question, specifically, but can you just continues to be about a third a third a third so a third or <unk>.

Speaker Change: Brand new businesses opening going with us about a third are switching from legacy and about a third are switching from more modern platforms that they have that our merchants or our prospects have outgrown cause too basic in functionality and they need something more robust that lightspeed can provide.

Dax Dasilva: So we continue to see that that trend.

Speaker Change: So we continue to see that trend.

Dax Dasilva: Great, thank you.

Speaker Change: Great. Thank you.

Dax Dasilva: Thank you.

Speaker Change: Thank you.

Joshua Baer: Our next question is from the line of Josh Baer with Morgan Stanley. Your line is live. Thanks for the question. One on strategy, one quick one on financials. Just on on strategy, I was hoping you could talk through some of the advantages of being a pan-European when it comes to EMEA hospitality. Just wondering any sense for the number of restaurant groups that would fit into the pan-European category versus, you know, more country specific or Yeah, we really say thank you for the question, Josh. We see the diversification that Lightspeed has playing in multiple markets as a key strength for us.

Speaker Change: Our next question is from the line of Josh Baer with Morgan Stanley. Your line is live.

Speaker Change: Thanks for the question.

Speaker Change: One on strategy one quick one on financials just on.

Speaker Change: On strategy I was hoping you could talk through some of the advantages of being a pan.

Speaker Change: Our Pan European when it comes to EMEA hospitality just.

Speaker Change: Wondering any sense for the number of restaurant groups that would fit.

Speaker Change: Fit into the Pan European category versus you know.

Speaker Change: More country specific or independent.

Speaker Change: Yes, we really see thank you for the question Josh we see.

Speaker Change: The diversification that Lightspeed has playing in multiple markets is a key strength for us and specifically in hospitality in Europe as you heard from us at capital markets day, we.

Dax Dasilva: And specifically in hospitality in Europe, as you heard from us at Capital Markets Day, we see the revenue opportunity to be in the $3 billion range from a TAM perspective in the direct markets where we operate today, with an additional $2 billion in revenue for adjacent countries that we intend to expand into in the coming years. So there's a lot of TAM to capture for us. And we really have an amazing product in Europe, in hospitality, it is the best product for the market. And, you know, we're hearing it from our customers, we're hearing it from our reps.

Speaker Change: We see the revenue opportunity to be in the $3 billion range from a Tam perspective in the direct markets, where we operate today with an additional $2 billion in revenue for allergists and countries that we intend to expand into in the coming years. So there's a lot of time to capture for us.

Speaker Change: And we really haven't.

Speaker Change: I have an amazing product.

Speaker Change: In Europe and hospitality it is the best product for the market.

Speaker Change: And we're hearing from our customers we're hearing it from our reps and so were really stepping on the gas there so quite a quite excited for the for the revenue that we can we can tap into in the coming years.

Dax Dasilva: And so we're really stepping on the gas there. So quite excited for the revenue that we can tap into in the coming years. Okay, got it.

Speaker Change: Okay got it.

Asha Bakshani: And just on the financial side was hoping we could talk about free cash flow for this for this year, maybe a review of the gap between EBITDA and free cash flow and fiscal 25 and how what we should expect Yeah, thanks for the question, Josh. When we think about, you know, free cash flow, you saw us nearing break-even in fiscal 2025. And, you know, you should see that improve even further in fiscal 2026. As you mentioned, it's really driven by the majority of the items driving the improvement in adjusted EBITDA, where, you know, we're forecasting we're going from about $54 million in fiscal 2025 to about $70 million in fiscal 2026.

Speaker Change: And just on the financial side I was hoping we could talk about free cash flow for this for this year, maybe a review of the gap between EBITDA and free cash flow in fiscal 'twenty, five and how what we should expect for fiscal 'twenty six thanks.

Speaker Change: Yes. Thanks for the question, Josh when we think about free cash flow.

Speaker Change: You saw us nearing breakeven in fiscal 2025, and you should see that improve even further in fiscal 2026 as you mentioned, it's really driven by the majority of the items driving the improvement in adjusted EBITDA, where we're forecasting were going from about $54 million in fiscal 'twenty five two.

Asha Bakshani: And so we do expect to see the free cash flow of fiscal 2025 of minus 11 improve. With respect to the items that are driving the difference, it's, you know, the typical working capital type items, prepayment, accounts payable and receivable. Obviously, they don't hit the P&L at the same rate as they hit the cash flow. You know, we have other things like taxes on the large buybacks that we did recently. But it's nothing out of the ordinary that are the reconciling items between adjusted EBITDA and free cash flow. And we do expect with the improvements in adjusted EBITDA that we're going to near break-even or better in fiscal 2026.

Speaker Change: That $70 million in fiscal 2000, and so we do expect to see the free cash flow fiscal 2000, <unk> thousand minus 11 improve.

Speaker Change: With respect to the items that are driving the different it's the typical working capital type items prepay.

Speaker Change: Prepayment our accounts payable and receivable obviously, they don't they don't hit the P&L at the same rate as they hit the cash flow.

Speaker Change: We have other things like taxes on the bay that the large buybacks that we did recently, but it's nothing out of the ordinary that are the reconciling items between adjusted EBITDA and free cash flow.

Speaker Change: We do expect with the improvements in adjusted EBITDA that were getting to near breakeven or better in fiscal 'twenty six.

Asha Bakshani: Thank you for your questions.

Speaker Change: Thank you for your questions.

Richard Tse: Our next question is from the line of Richard Tse with National Bank, your line is live. Hi, good morning.

Richard Tse: Our next question is from the line of Richard Tse with National Bank. Your line is live.

Mike Stevens: Hi, Good morning, This is Mike Stevens on for rich.

Mike Stephens: This is Mike Stephens on for Rich. Just wanted to revisit, you guys have talked in the past about new order payments opportunity and the volume that's running through that platform. Just wondering if we could revisit that and how efforts are going to monetize that and are there any challenges in doing so on that platform? Hey Mike, thanks for the question.

Richard Tse: Just wanted to revisit you guys have talked in the past about new order payments opportunity in the volume.

Richard Tse: Running through that platform I'm, just wondering if we could revisit that and how efforts are going to monetize that and are there any challenges in doing so on that platform.

Mike Stevens: Hey, Mike Thanks for the question I'll take that one.

Mike Stephens: I'll take that one. You're right, there is a pretty large payments opportunity for the B2B volume that we have today. There's about $10 billion of B2B volume that flows through our New Order Districts and that's not in the $90 billion of GTV that we talk about for Lightspeed. We have started the monetization, although on a small scale. I would say today it's low single-digit millions in terms of revenue and we expect that's going to be growing in fiscal 26 and beyond. So, still at the beginning of that journey, but we have started the monetization and we expect that to continue in the coming months.

Mike Stevens: There is a pretty large payments opportunity for the <unk> volume that we have today, there's about $10 billion of BTB volume that flows through our new orders just spend that's not in the $90 billion of GTA V that we talked about for Lightspeed. We have started the monetization although on a small scale I would say today.

Mike Stevens: Low single digit millions in terms of revenue.

Mike Stevens: And we expect that's going to be growing in fiscal 'twenty six and beyond so still at the beginning of that journey, but we have started the monetization and we expect that to continue in the coming quarters.

Mike Stephens: Okay, great.

Asha Bakshani: And then just wanted to dig in a little further on the Lightspeed Capital. You kind of touched on some of the puts and takes on that business. What, you know, generated about $35 million this year. What can we maybe expect in, you know, near term as a target for that business? I know, I think you guys are launching some other high margin financial products as well. But, yeah, any kind of near term growth targets that we can... Thanks, Mike.

Speaker Change: Okay, Great and then just wanted to dig in a little further on the Lightspeed capital you kind of touched on some of the.

Richard Tse: The puts and takes on that business.

Richard Tse: What you know.

Richard Tse: Generally about $35 million this year, what can we maybe expect.

Richard Tse: In near term as a target for that business I know I think you guys are launching some other high margin financial products as well, but.

Richard Tse: Yes, any kind of near term growth targets that we can.

Richard Tse: Gather yet.

Asha Bakshani: I'll take that one. So when we think about Lightspeed Capital and what's baked in Fiscal 26, you know, around 30% or more growth on the top line, that comes in at about 95% gross margin, and quite a bit of that falls down to the EBITDA line. There is a lot of opportunity. We can move faster if we wanted to. When we look at our peers, for example, they're giving out 1% of their GTV in merchant cash advance. Lightspeed is well below that. 1% of our GTV would be almost a billion in merchant cash advance. So when we think about the opportunity, it's there.

Speaker Change: Thanks, Mike I'll take that one so when we think about lightspeed capital and whats baked in fiscal 'twenty six.

Richard Tse: Around 30% or more growth on the topline that comes in at about 95% gross margin and quite a bit of that falls down to the EBITDA line. There is a lot of opportunity. We can move faster. If we wanted to we look at our peers. For example, they are giving out 1% of their GTD in merchant cash advance ice cream as well.

Richard Tse: Below that 1% of our GTD would be almost a $1 billion in merchant cash event. So when we think about the opportunity is there.

Asha Bakshani: It's just that in this macro, we want to move carefully on a product like capital. Like I mentioned earlier, our default rates are in the very low single digits, and we want to keep it there. So while there is a lot of opportunity, what we are baking into our Fiscal 26 guide is about 30% growth on the top line.

Richard Tse: It's just that in this macro we wanted to move carefully on a product like capital like I mentioned earlier, our default rates or are in the very low single digits and we want to keep it there.

Richard Tse: So while there is a lot of opportunity what we're baking into our fiscal 'twenty six guidance is about 30% growth on the top line.

Richard Tse: Yeah.

Asha Bakshani: Okay, excellent.

Richard Tse: Okay excellent I appreciate that.

Asha Bakshani: Appreciate that insight.

Asha Bakshani: Thank you.

Richard Tse: Thank you.

Raimo Lenschow: Our next question is from the line of Raimo Lenschow with Barclays, your line is live. Hey, thanks for screening me. And two quick questions. First of all, what you obviously, as you mentioned, you're focused on Question 2 is on the 150 sales count, there was an option that was available to you before. Like, how did we go and did we discover, like, the sales guys are so important? And how did you come up with a number of 150 if they're kind of so amazing? Why not hire more on that one? Thank you.

Speaker Change: Our next question is from the line of Raimo Lynch Chow with Barclays. Your line is live.

Speaker Change: Thanks for squeezing me in two quick questions first of all what.

Speaker Change: You, obviously as you mentioned you're focused on.

Speaker Change: Like retail hospitality Europe, but you still have the offer businesses like what is your what are your planning assumptions in terms of.

Speaker Change: But thats the rate of decline is that you reported the non focus parts question. One question two is.

Speaker Change: On the 150 sales count.

Speaker Change: Obviously, you have kind of with an option that was available to you like before like how do we go in to rediscover. The Felix guys are so important and how did you come up with a number 250, if theyre kind of so why not hire more on that one thank you.

Dax Dasilva: Thanks Raimo, I'll take the rest of the world markets and then I'll hand it over to J.D. to talk about outbound. So our non-core areas do remain important for us, you know, we call them the rest of the world market. We're not prioritizing them where growth capital is concerned, but ultimately, you know, we're running them for efficiency. We're running them in a more streamlined way. We have very happy, profitable customers in that rest of the world portfolio, and we've optimized our team to support those regions and verticals so that these customers continue to be taken care of.

Speaker Change: Thanks, very much I'll take the rest of the world markets and then I'll hand, it over to J D to talk about outbound. So our noncore areas do remain important for US we call them the rest of the world market.

Speaker Change: We're not prioritizing them where growth capital is concerned, but ultimately you know we're running them for efficiency, we're running them in a more streamlined way, we have very happy profitable customers and not rest of the world portfolio and.

Speaker Change: And we've optimized our team to support those regions and verticals. So that these customers continued to be taken care of these.

Dax Dasilva: These markets offer still lots of upside or growth opportunity from a net retention perspective. For example, you know, we're still rolling out capital in those markets. Payment penetration is still lower in those markets. Payments does come in at a 30 plus percent margin in those markets as well. And, you know, we are happy with the progress there. Our revenue in the rest of the world markets grew year over year. Our payment penetration grew year over year. Our GPV as well grew 22 percent year over year. So, again, you know, very, you know, profitable markets for us.

Speaker Change: These markets offer still lots of upside or growth opportunity from a net retention perspective. For example, you know we're still rolling out capital in those markets payment penetration is still lower in those markets payments does come in at a 30 plus percent margin in those markets as well and you know we are happy with the progress their revenue in the rest.

Speaker Change: The world markets grew year over year, our payment penetration grew year over year. Our G. P V as well grew 22% year over year. So again very profitable markets for us. We're just not focusing on those markets from a growth perspective, but we are growing that customer base through net retention and it's going well.

Dax Dasilva: We're just not focusing on those markets from a growth perspective, but we are growing that customer base through net retention and it's going well.

J.D. Saint-Martin: As for outbound, thank you for the question. We dived into that in our presentation at Capital Markets Day. But to summarize, fiscal year 2025 for us was really the first year where we did outbound at scale. And we're really happy with the results that we saw, as you pointed out as well in your question. That's why we're really doubling down there. We're effectively essentially tripling the sales force on that side in that funnel or in that motion. And if you look at our progress in Q4, it was a record quarter from a bookings perspective in outbound March, as we highlighted in our prepared remarks, was really, really strong.

Speaker Change: As for outbound. Thank you for the question.

Speaker Change: We dive into that in the in our presentation at capital markets day.

Speaker Change: But to summarize fiscal year 'twenty five for US was really the first year, where we did hold down at scale.

Speaker Change: We're really happy with the results that we that we saw as you pointed out as well in your question. That's why we're really doubling down there where effectively essentially tripling the sales force on that on that side and that in that funnel or in that motion.

Speaker Change: And if you look at our progress in Q4 was a record quarter from a bookings perspective and outbound March as we highlighted in our prepared remarks was really really strong. So we're really happy with the momentum as far as why higher why not hire more than that there was about a six month ramp.

J.D. Saint-Martin: So we're really happy with the momentum. As far as why not hire more than that, there is about a six-month ramp from hired to full production from our outbound reps. And so while we see really strong unit economics, we see bookings relative to OPEX being very strong and stronger than all our acquisition motions, we also want to be conscious that there is a ramp. So we're taking that into account in our model and into our build for the year. But what you can expect from us going forward is that you'll see and you'll continue to see outbound becoming more and more of a driving force as far as how we acquire customers.

Speaker Change: From from hired to full production from our outbound reps and so while we see really strong unit economics, we see bookings relative to opex being very strong and stronger than all of our acquisition motions.

Speaker Change: We also want to be conscious that there is a ramp right. So we're taking that into account in our model and to our build for the year, but what you can expect from US going forward is that youll see and Youll continue to see outbound becoming.

Speaker Change: More and more of a driving force as far as how we acquire customers and why we like outbound as well is that we're able to be very targeted when we acquired customers via outbound we acquired the right customer the customer that's generating the right.

J.D. Saint-Martin: And why we like outbound as well is that we're able to be very targeted. When we acquire customers via outbound, we acquire the right customer, the customer that's generating the right GTV, the right unit economics that are a great fit for our product. Churn is lower when we go through outbound. So for all of these reasons, we're really pleased with the progress that we're seeing here.

Speaker Change: <unk> the right unit economics that are a great fit for our product churn is lower when we we go through outbound. So for all of these reasons, we're really pleased with where.

Speaker Change: With the progress that are that we're seeing here and I think as per why we didn't do it before it's really the evolution of our product our product has really matured as dax highlighted on both retail and hospitality and allows us now to offer a full suite that really caters to the more sophisticated retailers and restaurants or is out there and two.

Dax Dasilva: And I think as per why we didn't do it before, it's really the evolution of our product. Our product has really matured as Dax highlighted on both retail and hospitality and allows us now to offer a full suite that really caters to the more sophisticated retailers and restaurateurs out there. And to really focus on those retailers and restaurateurs, outbound is the way to go. So it's really all these things are kind of come to fruition and are clicking for us. And now we're doubling down on it.

Speaker Change: We really focus on those retailers and Restauranteurs outbound as is the way to go. So it's really all of these things are kind of come to fruition and are clicking for us and now we're doubling down on it.

Dax Dasilva: Perfect. Thank you.

Speaker Change: Perfect. Thank you.

Timothy Chiodo: Thank you for your questions and we have a final question for today from the line of Timothy Chiodo with UBS. Your line is live. Great. Thank you. I think all the answers, Asha, around capital were really, really helpful. A minor follow-up there, it looks like in the quarter, capital revenue growth decelerated from 90 into the high 20s, if I'm not mistaken, and I think it was helpful that you gave the implied guidance for capital next year would be a little bit of an acceleration. Was there any kind of nuance around this quarter's capital revenue growth, either just lapping dynamics or something else that would have made the growth decelerate to that extent this quarter?

Speaker Change: Thank you for your questions and we have a final question for today from the line of Timothy Chiodo with UBS. Your line is live.

Speaker Change: Great. Thank you I think all of the answers Usher around capital we are really really helpful.

Timothy Chiodo: Minor follow up there it looks like in the quarter capital revenue growth decelerated from 90 into the high Twenty's, if I'm not mistaken and I think it was really it was helpful. That you gave the implied guidance for capital next year will be a little bit of an acceleration was there any kind of nuance around this quarters capital revenue growth, either just lapping dynamics or something else that would have made the.

Timothy Chiodo: Growth decelerate to.

Timothy Chiodo: To that extent this quarter.

Asha Bakshani: Yeah, for sure. Thanks, Tim. Thanks for the question. As we talked about, we did see the macro softness in Q4 on same-store sales, and that directly impacts capital revenue. As you know, capital revenue basically comes from the collections that we make from our customers' sales. So we get paid back through Lightspeed payments. So when our customers' same-store sales are declining or lower in terms of GTV versus the prior quarter, we get paid on a slower pace, and that directly impacts capital revenue. As I mentioned, though, in April and May, we started to see the same-store sales stabilize, so we should see that capital revenue come back in the first quarter.

Speaker Change: Yeah for sure. Thanks, Thanks, Tim Thanks for the question as we talked about we did see the macro softness in Q4 on same store sales and that directly impacts capital revenue as you know capital revenue basically comes from the collections that we make from our customers sales. So we get paid back through life.

Speaker Change: So when our customers same store sales are declining or lower in terms of GTA V versus the prior quarter, we get paid on a slower pace and that directly impacts capital revenue as I mentioned, though in April and May we started to see the same store sales stabilize so we should see that capital revenue.

Speaker Change: Come back in the first quarter.

Asha Bakshani: Okay, great. Thank you. Okay, that really helps. It wasn't clear to me that that would explain going from 90 to high 20s, but I was wondering if there was anything else there, but it sounds like no, but I appreciate the answer. Thank you.

Speaker Change: Okay, great. Thank you, Okay, that's really helpful.

Speaker Change: It wasn't clear to me that that would explain going from 90 to high Twenty's, but I was wondering if there was anything else there, but it sounds like no but I appreciate the answers. Thanks.

Gus Papageorgiou: Thank you for your questions, and ladies and gentlemen, that will conclude our Q&A session for today's call. I'd like to turn it back over to Gus for any closing comments. That's it. Thanks for joining us this morning. The IR team will be around if anybody has any further questions, and we look forward to speaking to you at our next conference call. Thanks, everyone. Thank you.

Gus: Thank you for your questions and ladies and gentlemen that will conclude our Q&A session for today's call I'd like to turn it back over to Gus for any closing comments.

Gus: Yes.

Speaker Change: Thanks for joining us this morning, the IR team will be around if anybody has any further questions and we look forward to speaking to you at our next conference call. Thanks, everyone.

Speaker Change: Thank you.

Operator: Please wait, the conference will begin shortly.

Speaker Change: Please wait the conference will begin shortly.

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