Lightspeed is a wait-and-see stock, ATB says

ATB Capital Markets analyst Martin Toner maintained a “Sector Perform” rating on Lightspeed Commerce (Lightspeed Commerce Stock Quote, Chart, News, Analysts, Financials TSX:LSPD) but lowered his price target to C$18.00 from C$19.00 in a Feb. 6 report following the company’s third-quarter fiscal 2026 results.

Lightspeed reported Q3/FY26 revenue of US$312.3-million, up 11% year over year and above company guidance, while Adjusted EBITDA of US$20.2-million exceeded consensus expectations of US$19.0-million. Toner said the quarter showed continued momentum in the company’s core growth engines — North American retail and European hospitality — which grew 21% year over year and now account for roughly two-thirds of consolidated revenue.

“Despite the location growth, we are lowering our price target to reflect moderated total software revenue growth and lower payments penetration and take rate,” Toner said, adding that ATB remains “encouraged by the top-of-house progress in the results” but wants to see further execution before becoming more constructive on the shares.

Operationally, Lightspeed added roughly 2,600 net customer locations within its growth engines during the quarter, the fastest pace since its business transformation began. Total monthly ARPU rose to about US$660, up 11% year over year, supported by deeper payments adoption and a shift toward larger, more sophisticated merchants. GTV grew 7% year over year, reflecting stable demand in more mature markets and the contribution from 5,200 net new locations added over the past two quarters.

The company also posted its second consecutive quarter of positive free cash flow, generating US$15-million, while software gross margins expanded to 82% from 79% a year earlier, driven by cloud cost discipline and AI-enabled support tools. Lightspeed introduced new AI assistants across retail, restaurant and NuORDER platforms, allowing merchants to surface real-time insights through natural-language queries.

On capital allocation, Toner noted that Lightspeed has approximately US$200-million remaining under its broader US$400-million share repurchase authorization, although its current NCIB capacity for fiscal 2026 has been fully utilized. Management is expected to seek board and TSX approval to renew the program in March 2026.

Following the quarter, Toner trimmed his fiscal 2026 revenue estimate to US$1,215.4-million while raising his Adjusted EBITDA forecast to US$72.5-million. For fiscal 2027, he now expects revenue of US$1,304.0-million and Adjusted EBITDA of US$97.1-million, reflecting a more conservative view on payments penetration and slightly higher operating expenses as Lightspeed accelerates growth investments.

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