Despite Q3 Loss, Lightspeed Optimistic on Executing Growth and Profitability Plan
•February 5, 2026
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Companies Mentioned
Why It Matters
The upgraded outlook and improving profitability metrics signal that Lightspeed’s transformation plan is gaining traction, which could restore investor confidence in a market wary of tech‑stock volatility. Success with AI and subscription models may give the firm a durable competitive edge in retail and hospitality SaaS.
Key Takeaways
- •Revenue $312.3M exceeds forecasts
- •Net loss $33.6M widens YoY
- •Gross profit margin up 15% YoY
- •Free cash flow positive $14.9M Q3
- •Annual revenue outlook raised to $1.22B
Pulse Analysis
Lightspeed Commerce’s Q3 results illustrate a classic growth‑profitability balancing act in the cloud‑based POS sector. While revenue modestly outpaced expectations, the widened loss underscores the cost of recent software acquisitions and aggressive hardware discounting aimed at expanding its merchant base. The company’s strategic pivot—focusing on high‑margin software subscriptions and leveraging its proprietary transaction data—has already lifted software margins to 82% and generated a second consecutive quarter of positive free cash flow, a milestone that reassures cash‑concerned investors.
The firm’s financial engineering extends beyond headline numbers. Gross profit margins rose 15% year‑over‑year, and adjusted EBITDA climbed to $20.2 million, reflecting operational efficiencies and a shift toward recurring revenue. Hardware margins remain negative as Lightspeed subsidizes terminals to win new locations, but this loss is intentional, targeting rapid market penetration in North‑American retail and European hospitality—segments now contributing two‑thirds of total revenue. The surge in annual software contracts, now covering half of North American retail merchants, stabilizes revenue streams and reduces churn, supporting the company’s pledge to deliver full‑year positive cash flow.
Looking ahead, Lightspeed’s AI initiative—Lightspeed AI—could become a differentiator, turning its extensive merchant data into actionable insights that competitors lack. Analysts view this data‑driven advantage as a potential moat, though the firm must still achieve “exit velocity” to lift its share price. With an upgraded $1.22 billion revenue target and a clear roadmap toward profitability, Lightspeed is positioned to capitalize on the broader digital‑commerce tailwinds while navigating the current software‑stock sell‑off. Its ability to convert growth investments into sustainable earnings will be the key test for investors seeking exposure to the evolving retail technology landscape.
Despite Q3 loss, Lightspeed optimistic on executing growth and profitability plan
Montréal-based Lightspeed Commerce upgraded its yearly outlook and slightly beat its revenue outlook last quarter, but markets reacted tepidly as the company posted another net loss.
The e-commerce and point-of-sales firm announced its fiscal Q3 earnings before the markets opened today. During a traditionally busy quarter for retailers, Lightspeed’s revenue of $312.3 million USD slightly exceeded internal and analyst expectations, as the company continued to execute a transformation plan it began a year ago. However, it posted a net loss of $33.6 million, wider than in the same period last year, as it continued discounting hardware to bring in new business.
The Q3 results are “an encouraging sign that Lightspeed’s new strategy…is working and that it’s seeing a good return on its recent investments in outbound sales.”
Thanos Moschopoulos,
BMO Capital Markets
In response to the earnings report, Lightspeed shares dipped by just over three percent today on the Toronto Stock Exchange and were trading at around $13.30 CAD at the time of publication. The stock was already down this week as part of a software sell-off triggered by fears of disruption from new AI capabilities, which has since expanded to broader volatility in tech that dragged down AI-related stocks like Nvidia.
In an interview after the earnings call today, CEO Dax Dasilva said the net losses over the past few quarters are representative of debts held over from software acquisitions Lightspeed made in 2023. He expects losses to be “dramatically smaller” by the new fiscal year.
Founded in 2005, Lightspeed sells point-of-sale and commerce software and hardware to restaurants, retailers, and hospitality providers. When Dasilva returned as CEO in 2024, he vowed that fiscal 2025 would be the year the company becomes “a profitability story” and exceeds $1 billion in annual revenue. Lightspeed has hit that mark and has since attempted to strike the right balance between growth and profitability to win back public-market investors, but its share price has struggled to regain its 2021 high.
Based on today’s results, the firm is upgrading its yearly outlook for the second consecutive quarter. It now expects $4 million more in annual revenue—up to $1.22 billion—and $2 million more in gross profit.
Asha Bakshani, Lightspeed’s CFO, said on the earnings call that the sunnier outlook reaffirms the company’s commitment to the plan it outlined after its strategic review, which entails “balancing disciplined investment” in its growth markets and “continued profitability and cash generation.”
Thanos Moschopoulos, an analyst at BMO Capital Markets, agreed with this assessment. In an analyst note today, he wrote that the Q3 results were “an encouraging sign that Lightspeed’s new strategy…is working and that it’s seeing a good return on its recent investments in outbound sales.”
Moschopoulos added in an interview with BetaKit that he sees the company as “underappreciated” by investors, considering its size and scale. The firm’s market capitalization is roughly $1.9 billion CAD, and its gross transaction volume last year surpassed $90 billion USD.
RELATED: Lightspeed upgrades yearly forecast with revenue beat in fiscal Q2 earnings
Lightspeed’s gross profit margins grew by 15 percent year-over-year, and its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) hit $20.2 million for the quarter, up from $16.6 million last year. It also recorded positive free cash flow for the second straight quarter, at $14.9 million; Bakshani said the firm expects to deliver positive free cash flow for the whole year, calling it a “significant milestone.” The firm finished the quarter with $479 million in cash and equivalents.
Growing profitability metrics while driving growth is part of a three-year plan that Lightspeed outlined a year ago, following a strategic review. That plan includes a focus on two areas of growth: retail in North America and hospitality in Europe, which now drive two-thirds of Lightspeed’s total revenue. In these areas, gross transaction volume grew by 16 percent year-over-year, and the company added 2,600 net new customer locations.
However, hardware gross margins declined as the company offered discounts and incentives to spur new business, such as free payment terminals and discounts on point-of-sales hardware. Bakshani said the company will continue this practice, and hardware margins will range from negative 50 to 60 percent, depending on how quickly it onboards customers.
This quarter, Lightspeed also appointed Gabriel Benavides as its chief revenue officer. The current quarter, ending March 31, 2026, is the final one for Lightspeed’s president JD Saint-Martin, who announced in November he would step down from the firm to join Montréal venture capital firm Boreal Ventures.
“Competitive advantage” with merchant data
Despite the fears surrounding software in the market, Dasilva told BetaKit in a post-earnings call interview that he sees “tremendous potential” for AI tools to give Lightspeed merchants competitive advantages and set its platform apart.
This past quarter, the company launched Lightspeed AI, a conversational AI feature added to its management software that allows retailers and managers to query and get answers and insights based on transaction data. It also introduced a marketplace for retailers within its wholesale platform, NuORDER.
“What’s unique about Lightspeed is our proprietary datasets,” Dasilva said, referring to the payments data from restaurant clients, and retail data tracking wholesale orders to in-store customer purchases. “We can build workflows that no other retail player can.”
Martin Toner, an analyst at ATB Financial, told BetaKit that this could “prove to be a durable competitive advantage.” However, he noted that Lightspeed hasn’t “hit exit velocity” quite yet and needs to prove more growth to get investors excited and lift its share price.
Dasilva said Lightspeed has shifted its strategy to incentivize merchants to sign up for annual contracts instead of monthly ones. This quarter, he said 50 percent of its North American retail merchants were on an annual software subscription plan, compared to 25 percent of them a few quarters ago. Subscription revenue was $93 million, six percent higher than last year’s Q3.
The company recorded software margins of 82 percent, Bakshani said, driven by increased cost efficiency, and said she doesn’t expect Lightspeed’s AI usage to have a significant impact.
Feature image courtesy Lightspeed Commerce.
The post Despite Q3 loss, Lightspeed optimistic on executing growth and profitability plan first appeared on BetaKit.
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