Lightspeed Commerce Inc. Subordinate Voting Shares

Thank you for standing by. My name is Van and I will be your conference operator today. At this time, I would like to welcome everyone to the Lightspeed First Quarter 2026 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to draw your question, press star one again. Thank you. I would now like to turn the call over to Gas Papayoryu, head of investor relations. Please go ahead.

Thank you, operator, and good morning, everyone. Welcome to Lightspeed's fiscal Q1 2026 conference call. Joining me today are Dax De Silva, Lightspeed's founder and CEO, Asher Bakshani, our CFO, and JD Saint-Martin, our president. After prepared remarks from Dax and Asha, we will open it up for your questions. 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 first quarter fiscal 2026 results presentation available on our website, as well as in our filings with U.S. and Canadian securities regulators. 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. Reconciliation between the two can be found in our earnings press release, which is available on our website, on Cedar Plus, and on the SEC's Edgar system. Note that because we report in U.S. dollars, all amounts discussed today are in U.S. dollars unless otherwise indicated. With that, I will now turn the call over to Dax. Thank you, Gus, and good

morning, everyone. Last year, we made the strategic decision to focus Lightspeed on two core growth engines, retail in North America and hospitality in Europe. These are markets where we have a proven right to win, strong product market fit, and significant headroom for growth. We refocused our product roadmap, revamped our -to-market strategy, and aligned our organization to execute on that strategy. That strategy is working. Our revenue of $305 million increased 15% year over year and exceeded the high end of our outlook. Gross profit of $129 million increased 19%, also significantly above our outlook of 13%. Payments penetration reached 41%, up from 36% in the same quarter last year. Adjusted EBITDA came in at $16 million, up 55% year over year. And we added approximately 1,700 new customer locations in our growth engines in the quarter, with total growth engine locations up 5% year over year. Total locations at the end of the quarter were approximately 145,000 and were up year over year. This morning, I want to share how we are progressing against the three strategic priorities we laid out at our capital markets day. As a reminder, those priorities are, one, growing customer locations in our growth engines, two, expanding subscription ARPU, and three, improving adjusted EBITDA and free cash flow. On growing customer locations, at Capital Market's day, we committed to growing customer locations in our core growth engines, North American retail and European hospitality, with a targeted three-year customer location CAGR of 10 to 15%. In Q1, total growth engine locations were up 5% year over year, with approximately 1,700 net new customer locations added in the quarter, a clear acceleration from 3% last quarter. As our -to-market and product investments continue to scale, this location growth will converge towards the 10 to 15% target we laid out during the CMD. Overall, customer location count was net positive for the quarter. Location growth was driven by a -to-market engine that's becoming best in class, anchored in disciplined funnel management across both outbound and inbound channels. Outbound driven bookings were the double year over year for our growth engines, and we now have over 130 of our 150 planned outbound reps in seat, the majority of which are still ramping as it takes approximately six months for an outbound rep to become fully productive. We also had a strong quarter in vertical brand marketing, growing our presence in trade shows and customer events. Thanks to our strong outbound and vertical brand marketing efforts, we are seeing a halo effect on inbound, with inbound bookings up 15% year over year. We had many notable customer wins this quarter. In retail, we added premium streetwear retailer Last Stop with 10 locations in Maryland and Virginia, Shades of Charleston, a foreign location of eyewear retailer in South Carolina. Within the order by Lightspeed, we added Neiman Marcus and Bergdorf Goodman and Marquee Brands, Fabletics and Tory Burch, displacing key competitors and forcing our position as dominant B2B platform in retail. And in golf, we signed Western Golf Properties with 11 locations in California and Nevada. In hospitality, we added Le Petite Ches, the oldest restaurant in Paris, and DePole, a two Michelin star restaurant in Amsterdam, and the Corrigan Collection with seven locations across the UK and Ireland by Michelin star chef Richard Corrigan. On driving software revenue at ARPU, Q1 software revenue grew 9% year over year, and software ARPU increased 10% driven by product innovation as well as sales of our flagships, primarily to retail customers in North America and hospitality customers in Europe. In retail, we launched custom inventory adjustments, allowing for detailed tracking of stock changes. We added inventory turns and a gross margin return on investment metric within retail insights. We further improved the Lightspeed Scanner app to allow for product search, inventory checks, and pricing. And within the order by Lightspeed, we launched Order Trends that helps merchants identify the top selling products by brand. Early adopters have seen a 10% increase in average order value. In hospitality, we launched our AI-powered benchmarks and trends in Europe, giving restaurateurs visibility into how their performance compares to peers by region, cuisine, and price point, a feature already proven in North America.

We

rolled out Mobile Tap on Lightspeed tablesides in the UK, Netherlands, and Belgium, improving table turnover and service speed. We further enhanced Kitchen Display system with features such as Prep Insights and Menu Updates, and added deeper insights to the Lightspeed Pulse app, such as best sellers and top staff. And we introduced a new Sales Report Dashboard, consolidating all key metrics into a customizable, real-time view to help operators plan smarter and optimize margins. This kind of innovation, tailored to high-value merchant needs, helps drive higher win rates, our pool expansion, and grow customer lifetime value. On expanding profitability, Ash will walk through the numbers in more detail, but I want to underscore a few things. First, Lightspeed continues to deliver strong, soft, or gross margins of 81%, a reflection of the mission-critical nature of our platform. Our customers run established businesses, and they value technology that helps them manage their inventory, organize staff, access capital, and improve the customer experience. That value is evident in both our industry-leading software margins and our other growth metrics. Second, our adjusted EBITDA performance in Q1 of $16 million increased 55% -over-year, and is a clear sign that our model is working. Importantly, we were able to significantly improve adjusted EBITDA while continuing to invest in outbound sales, vertical marketing, and in product and technology. We're proving that Lightspeed can invest meaningfully in growth while improving profitability. In closing, we laid out a bold strategy, and in Q1, we delivered. I want to thank the entire Lightspeed team for a strong start to fiscal 26. With that, I'll turn it over to Asha.

Thanks, Dex, and welcome everyone. Lightspeed had a great start to the year, with revenue and gross profit coming in well ahead of our initial outlook, thanks largely to expanding locations within our growth markets, increasing software ARPU, strong payments penetration, and relentless operating efficiency, which is now a part of Lightspeed DNA. I will walk you through a detailed look at our financials and then provide our Q2 and fiscal 2026 outlook. Total revenue grew 15% ahead of our outlook, driven by software ARPU expansion and increasing payments penetration. Revenue growth was primarily generated by our growth markets of North America retail and European hospitality as more and more customers move on to our platforms and attach new software modules. In addition, we benefited from improving same-store sales thanks to a more stable macro environment. Software revenue was $90.9 million, up 9% year over year, with software ARPU up 10% year over year. Software ARPU increased due to new software releases, along with the benefit of pricing action taken last year. Transaction-based revenue was $204.6 million, up 18% year over year. Gross payments volume grew 21% year over year, and capital revenue grew 34% year over year. Gross payments volume as a percentage of gross transaction volume came in at 41% up from last quarter and year over year. Overall GTV grew by 24% to $24.6 billion, and total average GTV per location continued to climb as we continued to sign more high-value customers. We saw GTV in our growth engines accelerate this quarter to 12% year over year, with growth engine locations up by 5% year over year. ARPU reached a record $655, up 16% year over year, driven by both higher software and payments monetization. ARPU grew across both our growth and efficiency markets, with growth markets outpacing the overall average. ARPU in our growth markets is higher than our efficiency markets, and as those locations grow, I expect it to have a positive influence on overall ARPU. With respect to profitability and operating leverage, total gross profit grew 19% year over year, exceeding both revenue growth and our 13% outlook, driven by strong top-line performance and expanding gross margins in both subscription and transaction-based revenues. Q1 gross profit benefited from new software modules released last year, as well as the price increases that were put through mid-last year. Total gross margin was 42%, up from 41% last year. Despite transaction-based revenue increasing to 67% of sales from 65% of sales last year, gross margins improved through initiatives including effective spend management and the growth in higher margin revenue, such as Q1 gross profit. This improvement reflects growth in our capital business and the expansion of payments in international markets, where margins exceed those in North America. As we convert customers to light sleep payments, we are able to increase our revenue growth by up to $1.5 million, we increase our overall net gross profit dollars, and in the quarter, we saw transaction-based gross profit grow 30% year over year. Total adjusted R&D, sales and marketing, and G&A expenses grew 15% year over year, primarily due to meaningful investments we are making in field and outbound sales, as well as product innovation in our growth engine. Adjusted EBITDA in the quarter came in at $15.9 million, increasing 55% from the $10.2 million we delivered in Q1 last year, driven by continued success from our strategic shift and our relentless focus on operating efficiency. Adjusted free cash flow is nearing breakeven and came in at $1.7 million used in the quarter. Free cash flow adjusts for cash related to our merchant cash advance business and includes our capital expenditures. We continue to actively manage our share-based compensation and related payroll taxes, which were $14 million or 5% of revenue for the quarter, versus $11.7 million or 4% of revenue in the same quarter last year. We continue to manage equity usage prudently. With respect to capital allocation and our balance sheet, we completed our fiscal 2026 normal course issuer bid of approximately 9 million shares, returning $85 million back to $30 million to repurchase our stock in the open market to fund future RSU settlement obligations, limiting share dilution upon settlements. Excluding these two items, which were elective, our cash balance would have increased over the previous quarter. We ended Q1 with approximately $448 million in cash. Approximately $200 million remains under our broader board authorization to repurchase up to $400 million in light speed shares, and we continue to be opportunistic on further share repurchases. Our balance sheet remains healthy and positions us well as we continue our strategic focus. With respect to our efficiency market, we continue to retain revenue with location turn largely offset by continued strength in payment penetration, capital revenue growth, and higher ARPU. It's worth highlighting that payment penetration for these markets is 35%, below our global average, which we view as a meaningful opportunity. We believe there's strong potential to increase adoption among these customers. Now, turning to our outlook. Despite a fluid macro environment, we maintain strong conviction in our strategy and ability to execute. This financial outlook is consistent with our targeted three-year gross profit CAGR of approximately 15 to 18%, and our three-year adjusted EBITDA CAGR of approximately 35% that we presented at our capital market stage in March. For the second quarter, we expect total revenue in the range of approximately $305 to $310 million, total gross profit growth of approximately 14% year over year, total adjusted EBITDA to be in the range of approximately $17 to $19 million. For fiscal 2026, we continue to expect revenue growth of approximately $10 million. For fiscal 2020, we expect revenue growth of $10 to $12 million year over year, gross profit growth of approximately 14% year over year, and adjusted EBITDA to be in the range of approximately $68 million to $72 million. With that, I'll turn the call back to the operator.

At this time, I would like to remind everyone, in order to ask a question, press star then the number one on your telephone keypad. Please limit your questions to one and one follow-up. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Dan Perlin from RBC Capital Markets. Please go ahead.

Thanks. Good morning and good to see the results trending in line with the strategy here. The question I have around subscription revenue growth of nine, I think subscription ARPU, kind of 10% growth. Sounds like the pricing initiatives from last year were a part of that incremental growth versus, let's say, location growth. I'm wondering if you could just speak to much of an opportunity that you might still see within the pricing metrics that you have when you think about incremental new signings as well as maybe some of the backbones. Thank you.

Thanks for the question. So yeah, we view the 9% software growth in Q1 as a solid result. We saw 7% last fiscal year. Ultimately, subscription revenues is tied to new customer ads where we showed location growth in our growth engines this quarter. Really excited to show that momentum as well as product adoption. And both of these are trending in the right direction. So we did see the impact of price increases this quarter from last fiscal year that are rolling through this fiscal year. But that said, our growth engines are growing. We're seeing stronger ARPU and we made large investments in sales and product. And so we will see software growth continue to grow. It won't be overnight, but we're definitely headed in the right direction.

Yep. And just a quick follow up in particular on the new location growth. Also very good to see that 5% year over year. You did talk about, I guess, expecting that to continue to ramp towards, let's say, the 10% growth rate over time. I'm wondering if you have any kind of contextual expectations about the duration it might take in order to achieve the double digit growth rates there. Thank you.

Yeah, the CAGR is for three years. So we'll see that growth rate for locations converge towards 10 to 15% towards fiscal 28. But yeah, I believe we're off to a strong start in the growth engine. And this is our first quarter of the transformation. We are ramping our sales organization. So we have 130 of the 150 outbound reps in seat. Many of them are ramping towards being going towards full quota. We're also seeing from the outbound, efforts and vertical brand marketing efforts, a halo effect on inbound. So we were feeling positive about location growth. In addition to the investments we're making in the sales organization, we're making significant investment in product and technology in the growth engines. That's being funded by efficiency and funds from the efficiency market. So that all is going to pay in the quarters to come and result in further location growth.

Dan, can we go to the next question,

please? Our next question comes from the lines of Trevor Williams from Jeffries. Please go ahead.

Great. Thanks very much. I just want to go back. Maybe we could revisit some of the upside drivers for Q1 both on revenue and gross profit. And then just in terms of the shape of the year, I think last quarter, at least with how the year had been laid out, we were building to a progressive acceleration over the course of the year. Then just based on the Q1 outperformance and keeping the full year guide where it is, it's just a slightly different shape with what's implied deceleration wise off of Q1. So just curious if there was anything unsustainable in the first quarter or if maybe now there's maybe a bit more embedded conservatism for the balance of the year. That'd be helpful. Thanks.

Yeah, thanks for the question, Trevor. I'll take that one. Q1, you're right. We did see solid execution and that's what you're seeing in the results. Our strategy is really starting to pay off. But with respect to the guide, what we need to keep in mind, as Dax just mentioned, is we're very early days in our transformation. We're four months into the year. And as Dax said, we have 130 of 150 reps in seat, but less than half of them are fully ramped. So we just want to make sure that we give them the time to ramp before we start to increase the guide for the year. The guide for the year is a range. While we're confident we're trending at the high end of that range, we're not going to increase the guide at this time. Outside of that, really no one-time things in Q1. I mean, Dax talked a little bit about the price increase, which we did midway through the year last year. You're seeing the full benefit of that in Q1. But as our outbound reps continue to ramp, we expect this solid execution to continue. Okay. I appreciate

that. And then just any color on how quarter to date trends have looked in July on some of the key drivers would be helpful. Thank you, guys.

Yeah, we did see the macro stabilize in April in Q1, and we continue to see that in July. And then from an internal execution perspective, we're really excited and encouraged by what we're seeing. July continues to look a lot like the first quarter, and we're excited about the execution internally as well.

Your next question comes from the lines of Thanos Muscopoulos from BMO please go ahead.

Hi, good morning. Can you talk about the same store sale dynamic in retail versus hospitality? Was there any meaningful difference there? Were they similar?

Thanks, Thanos. Yeah, the same store sales in European hospitality were better than North America retail. We actually saw double-digit growth in European hospitality and low single-digit in retail. A part of that in Europe, however, is also FX. But from an FX neutral perspective, we did see stronger growth in same store sales in Europe. But outside of that, no other major differences in both of those markets.

Great. And then in terms of the vertical marketing strategy, any specific verticals you'd call out where that's especially resonating or would it be across your main key verticals you talked about historically?

Yeah, we have our eight key verticals in retail. Some examples of some trade shows that we've done are the running shows, outdoor sports shows. We're integrated, of course, with the brands through new order in those verticals. So we're pitching Lightspeed solutions both from the merchant side as well as the brand side. And it all comes together at these trade shows. So that makes a ton of sense for Lightspeed. In addition to doing trade shows as well for European hospitality, we also did Lightspeed Edge, which was a customer event that's one of many customer events we have planned, both sides of the pond for retail and in the hospital. And just connecting with the thought leaders and influencers and prospects, customer prospects in these markets through vertical brand marketing, there's definitely a halo effect that's both for outbound and for inbound channels. And that's what's going to fuel our acceleration in customer location count over the coming quarters.

Your next question comes from the line of Josh Byer from Morgan Stanley. Please go ahead.

Great. Thanks for the question. And congrats on a great quarter. To ask a two-parter on AI, I just wanted to ask how you expect AI to impact retail and hospitality at a high level and then what is Lightspeed's AI strategy?

AI is certainly contributing to the progress that we've made in efficiency in Q1 and to the continuation of what we saw last fiscal year. We use AI at Lightspeed primarily to automate the repetitive, predictable tasks and also to drive insights for the business. So from a Lightspeed company perspective, we've deployed AI across support. Almost 70% of chat interactions are now answered by AI. It's being implemented across our sales funnels. As we scale our sales organization, development teams are using co-pilots to increase efficiency and velocity. So we've seen a lot of benefit from that with more to come. From the product side, we're excited to have released AI features all throughout last year. We have a very high velocity across our development teams. Some examples are AI web builder for our Econ product using generative AI as well as benchmarking trends and AI-powered tool for hospitality as well as tools to enhance photos, configure menus, write product descriptions in Econ. Throughout the product, I think we can save merchants time. At the end of the day, retailers and restaurateurs go into these businesses because they're passionate about cuisine, they're passionate about the vertical that they're in in retail, and all of the backend admin tasks. They didn't join these businesses or start these businesses to administrate Lightspeed's back office. That's where AI can come in and really remove some of the repetitive tasks and give them more leverage to add value, where they best add value to their businesses.

Okay, thank you.

Your next question comes from the line of Timothy Chiodo from UBS. Please go ahead.

Great, thank you for taking the question. So, Dax, I think you mentioned earlier that for the investment behind sales, you're already at 130 of the 150. You also mentioned some of the timeline to get productive, and many of those are ramping up and takes about six months to hit those quotas. I was wondering if you could talk a little bit about those quotas, meaning, are we talking about locations per month, and if you could put some rough numbers around what the expectations are. Is it based on volume broadening, is it based on an expected lifetime value or gross profit levels, or any other metrics that you could put around what the expectations are on a per sales representative basis? Thanks a lot.

Yeah, I'll just start by saying Outbound is a very important area for our TV customers. We expect to see strong unit economics and payback ratios in our growth markets for reps that are fully ramped. I'll let JD jump into a little bit of what we expect from each ramp.

Yeah, ultimately, every single Outbound rep is measured in a very diligent way. We look at a number of demos booked, number of demos attended, and bookings per month, and then we triangulate the bookings back to the cost of the motion. What we're really pleased to see is that we continue to see the same strong payback ratios that we saw last year. Even if we're hiring a lot more reps this year, we're very, very focused on that payback and efficiency metric, and we continue to see the progress there. We're very, very enthusiastic with the progress we're making across the board, not just in EMEA hospitality, but also in Noam retail with our Outbound efforts.

Perfect. Thank you. As a related follow-up, can you just recap some of what those expected either payback periods are and or the LTV to CAC levels that are sort of expected from this initiative?

Yeah, we've seen last year high single digits, low double digits payback ratios, so months payback on the cost of the motion, and we continue to see that when we look at RAM prep. Best in class as far as what we see in SAS, and so that's what we're hyper-focused on, and we continue to see that.

Your next question comes from the line of Tianjin Wang from JP Morgan.

Hi, thanks. Good results here. Just wanted to ask for you, Dax, just thinking about products and product philosophy. I know it's a big theme for the sector right now. What products are attaching well from the last 12 months? What are you excited about next that's coming out? I'm just curious what's on the product pipeline.

Yeah, I mean, we're really excited on both the retail. We've seen a lot of success with insights. These are insights into how to turn inventory so businesses can be more profitable. We approach that from the in-store level, but also from the ordering side. I mean, that's something really unique about the Light Feed retail offering is how we integrate with New Order. We're really starting to see benefit from that integration with New Order in our key eight verticals because no other competitor offers that -to-end solution for inventory. You'll see a lot of acceleration in terms of product roadmap around inventory from the store level and also from ordering for brands. A lot of our announcements this quarter are around inventory and around New Order. You'll see we're attracting really, really big brands and big retailers to the solution as a result. Expect to see more in that direction on the retail side. And since we have a wealth of data, more AI-powered insights to capitalize on the unique position that Light Feed has in this ecosystem for those verticals. On the hospitality side, we have an amazing suite effect. That means we have a great tool to serve customers with Light Feed Table side, KDS, our kitchen display system coordinates the kitchen side. And then our pulse app is the third part of the solution. And that's for the management administration layer. And that's a really unique set of features that we're building upon. We're adding AI insights to that we have some really, really exciting things in the roadmap to really just take what we have, which is the industry-leading solution and pan-European solution, the only pan-European solution for hospitality, and just continue to build out that lead with further enhancements to this incredible suite.

Great. That's good. Thanks for that. Just my quick follow-up. I know Tim asked about the sales growth and productivity. I'm curious, is there any updates on leveraging indirect sales or selling through partners?

Yeah, I think partnerships is the third part of the puzzle. Inbound is where Light Feed has been traditionally really, really strong. We're investing a lot in outbound, but we're still growing inbound. Inbound has also seen a 15% halo effect from all of our investment in outbound and vertical ground marketing. The partnerships is the third part of the puzzle. That's an area of the business that over the coming years is going to will contribute a lot to the overall revenue. I'll let JD talk a little bit more about what we're doing there.

To build on Dax's answer, we've always actually been strong in partnerships since day one when the product was originally built on the retail side. That was a big channel for us. Here we leverage two types of partners. We have referral partners that send leads to our team internally that we close. We also have a strong reseller network, particularly in Europe. Obviously, a strong focus this year is on outbound, given our ability to target high GTV ICP customers. You can expect that we'll continue to see growth as well from partnerships. That will be a story for years to come too.

Your next question comes from the line of Dominic Ball from Rothschild. Please go ahead.

Hey guys, thank you very much for my question. Great numbers on GTV growth. It's the best since Q2 2022. As an understanding for the balance for what's driving this growth, it seems to be a mixture of improved same store sales, more outbound sales, which then also help inbound, and then potential cross selling from new order as well. Just to help us understand this better, is there any one channel there that's driving incremental GTV over the others?

I think overall GTV grows when we grow locations. That's one of the key drivers. We grew GTV 4% overall, but in the growth market, we grew GTV 12%. In our growth engines, where we're adding locations and where we're investing, GTV is growing even faster. I'll let Asha dive a little bit deeper into some of the dynamics around GTV.

Yeah, sure. Thanks for the question, Dominic. Just to add on to what Dak said, the GTV growth is coming primarily from the growth portfolio, given how well we're doing on locations there. If we look at North America retail versus EMEA hospitality, we're seeing stronger growth in EMEA hospitality, in particular from a same store sales perspective. There are also several verticals in retail that have been quite strong this quarter. We're seeing bike come back to positive single digits from being down for several quarters. We're seeing toys, for example, have a very strong same store sales quarter in retail. Several verticals in norm retail are doing very well, but quite a bit of the growth did also come from EMEA hospitality.

That's great. If I can just sneak one more in, if that's okay. There seems to be maybe a little bit of a step up in investment from peers right now. In the US retail POS market, Clovis is stepping up themselves in marketing, Shopify is investing more. In the European restaurant market, Shift 4 and Global Blue, Toast one day will probably expand there as well. Do you expect maybe a little bit of a higher cost of growth from here onwards as well?

Certainly, there's always going to be competition in the market. We're hyper-focused on our particular verticals, the eight key verticals in North America retail and the key cities in Europe, where we're expanding our European hospitality customer base. I think we have a good differentiated position in these markets and we're going after a particular customer that's higher GTV than a lot of these competitors. There's a lot of names in the space, but there's a lot of different segmentation in retail and hospitality. That's what we built our strategy on and that's where we have the ability to have real customer wins.

Your next question comes from the line of Kevin Krishnarathne from Scotia. Let's go ahead.

Hey there, thank you. Good morning. The first question you mentioned in the growth markets that ARPU outpaced the broader average. How about software ARPU? How's that trending? I guess related to that, your 9% software revenue that you printed, how do you think about how that evolves over the coming quarters in the context of your 10 to 12% total revenue guidance?

Thanks for the question, Kevin. Software and the growth portfolio, software ARPU was higher than in the efficiency or the rest of world portfolio just by virtue of the fact that the primary product in our growth portfolio are our flagships in EMEA, Haspa, Noam Retail and that's where all the product innovation is happening. When you think from a software module attached perspective, we're seeing much higher software ARPU in the growth portfolio, but consolidated we're seeing a 10% growth year over year, which is still very healthy. From a software growth perspective, the 9% year over year, we're very pleased with that growth. We do expect that growth to continue to improve. We just need to keep a few dynamics in mind such as price increases midway through the year last year, but at the same time, we're expecting outbound to continue to ramp. We expect software growth to continue. It's not going to happen overnight, as Dax mentioned earlier, but over time, absolutely.

Thank you for that, Ash. The second question you'd mentioned, double digit same-source sales growth in Europe, Apex might have helped there. Just on your overall top line revenue, 15%, you have a number of what your revenue growth would have been on a constant currency basis?

Yeah, I would say a couple points under that. It wasn't too much of an impact because European hospitality, when you think about 100% of the light speed revenue is not the most significant part, but it definitely did help the top line. I would say FX is a couple of percentage points on the 15%.

Your next question comes from the line of Koji Ikeda from Bank of America. Let's go ahead.

Yeah, hey guys. Thanks so much for taking the question. I wanted to ask you, maybe take a huge step back and ask you a bit of a more philosophical question of how you're thinking about growth and profitability, really your focus on profitable growth. It does feel like we're heading into a period of more certainty with regulatory noise, especially around tariffs, maybe even a potentially better macro over the next 12 months. I know your focus, like hyper focus on profitable growth, but how do you balance that against a potentially improving demand environment? I guess the question here is, how do you make sure you're not leaving anything on the table?

Yeah, I think that's a great question. I think our strategy is designed so that we are leaving anything on the table. We're investing a tremendous amount in growing outbound, ramping outbound. It's going to take time, but we're already seeing results, as well as product investments to grow that competitive mode. I think you're right. I think that we've seen the macro stabilize, although there is volatility and tariffs are a factor, but we've also seen the retailers in our customer base that imports their inventory, we've seen them have strategies often using light speed new order to manage their suppliers. They have strategies to manage that since the beginning of the year. I think that for us, we have an aggressive growth strategy from our perspective. I think what we're able to show with these results is that we're able to make those investments in the growth engines funded by our efficiency markets, make significant investments, our product and technology investments, more than $50 million more this year. We've never had a ramp like this in our sales organization in our history in this short amount of time. I think all of those exercises are new for light speed in terms of their scale, but they're going to give us confidence to plan further growth initiatives that are as aggressive in future years. We're in a three-year transformation. This is our year one plan, and we're always cognizant that we want to capture as much demand as possible and grow market share and have as many customer locations as we can.

Thanks, Dak. All for

me. Thank you. Your next question comes from the line of Todd Kupland from CIBC. Please go ahead.

Yeah. Good morning, everyone. A lot of questions on growing the rep count. I'm just wondering, when you get to the 150 and they are performing at your targeted levels, does that get you into that 10 to 15% location growth, or would you need to build on that team?

Yeah. The 10 to 15% CAGR is a three-year CAGR. We do expect that our 5% at the end of Q1 to converge to 10 to 15% between now and fiscal 28. But yeah, as these reps ramp, you're going to see acceleration in the customer location growth and that growth number.

Okay. My second question has to do with payments attached and the very strong transaction growth. That seemed a little bit stronger than expected. Was that a favorable mix relative to where light speed payments are attached, or are you attaching at a higher rate and we should expect that to actually trend even higher as we go through the year? Just talk about expectations there. Thanks for that one.

Yeah. Thanks, Todd. I'll take that one. So the penetration rate at the end of Q1, or in Q1 was quite healthy. We saw 6% growth year over year. That's really a result of solid execution on our part. Every eligible customer must take payments now, as you know. But also, payments penetration is a function of what's happening in the underlying macro. And so, the payments penetration rate, rather than being a measurement barometer for performance, is more an opportunity metric. That's the opportunity in front of us, what's not yet monetized. But we're very excited about where payment penetration is going. We expect that march upwards to continue. Depending on what's happening in the underlying macro, the rates vary quarter to quarter, but very, very confident in an upward trajectory here.

One thing to add is that in our efficiency markets, we're only 35% penetrated due to non-competes. And so, we are going to focus on growing the payment penetration in that market. And so, there's no real impediment to getting to the corporate average there. I think that will get some attention from us and drive the overall rate.

Your next question comes from the line of Raimo Lanzcho from Barclays. Please go ahead.

Perfect. Can I stay on that one? If you think about that, as you said, payment penetration is more an output. And the 35% is obviously a low point that you can go further. How much of a, on a more quarterly level, how to drive that higher? Is that something that we look at milestones when non-competes come out and then there's going to be a step change? Or how do you see that evolving this year and going forward?

Yeah, thanks for the question, Raimo. The way we should think about it is a gradual improvement quarter to quarter. There's going to be non-competes rolling off. There's going to be more opportunity in one region versus another. And then there's the dynamics of the underlying GTV. So, I would say from a modeling perspective, gradual improvement quarter to quarter is what we should expect.

Okay, perfect. And one for Daxby, obviously the world is changing with GEN.AI. Surge as a way for e-commerce guys to kind of get their business done is kind of maybe changing and doing more JET, GPT, etc. You talked earlier about how you're kind of using AI, but it sounded more like internal. How do you think about you need to change and your retailers need to change to kind of do well in this new world?

Yeah, I mean, certainly I did cover a little bit about what we are doing on the product side. So, that is really enabling our merchants, whether they're retailers or restaurateurs, to save time in the backend. So, that's being able to generate a website using AI that's already in our retail product, as well as doing photo enhancement, product descriptions on the hospitality side, configuring menus, which can be onerous. We have a tool called benchmark and trends on hospitality that's powered by AI that lets you as a restaurant compare your menus, your results, your staffing to other restaurants in the neighbourhood so that you have the right pricing, the right staffing. So, I think it's going to transform the way that retailers and restaurateurs operate their business. I think it's going to give them more leverage, allow them to be more profitable, and allow them to spend less time on the low value portion of their business in terms of what takes up their time and in terms of admin, and spend more time on the high value differentiated things that they do in regards to curating product, curating menus, and the things where they add the most value as entrepreneurs.

Your final question comes from the line of Richard Tse from National Bank Financial. Please go ahead.

Oh, thanks for speaking in here. With respect to your wins in your target markets, can you give us maybe a sense of the mix of those wins from newly formed businesses versus established merchants? And on the latter here, is it still largely displacing the incumbents? Yeah, I'll pass that to JT.

Yeah, honestly, thank you for the question, Richard. The trend remains very similar to our answer last quarter. So as far as displacements, what we see is about a third, a third, a third. So we displace a third from legacy providers in the space, a third from more, let's say, modern peers. And then we also see a third coming from new business formation. And so we continue to see that trend. Obviously, as I highlighted with the strategy, we're hyper, hyper focused on the key verticals in retail, any mere hospitality. And so we expect that trend to continue as we continue to focus on those, on those segments.

Okay, and my second question, you've been incredibly aggressive on capital allocation on the buyback side. Obviously, with the scaling profitability here, should we expect that pace to continue through the rest of this year?

Yeah, yeah, thanks for the question. We've completed our NCIB, our normal course issue bid for this fiscal year. That was done in the first quarter, we returned about 86 million to shareholders in the quarter. For with respect to future buybacks, we're going to continue to remain opportunistic. There are other avenues with which we can continue to buy back outside of an NCIB, we're going to remain opportunistic. And you know, we still have 200 million left on our board authorization. So we'll, we'll have a look at what's happening in the market and make sure that that you know, we take advantage of the opportunity when and if it arises.

I will now turn the call back over to Gus for closing remarks.

Thank you, Van. Thanks everyone for joining us today. If anyone has any further questions, please reach out to myself. I'll be around all day. And we look forward to speak to you at our next conference call and have a great day,

everyone. Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.