Lightspeed Commerce Inc.

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.