Good morning and thank you for standing by. My name is John and I will be your conference operator for today. At this time, I would like to welcome everyone to the Lightspeed 5th quarter, 4th quarter, 2026 conference call. All lives have been placed in news to prevent any background noise. After the speaker remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press R followed by the number one on your telephone keypad. And to withdraw your question, simply press R when again. I would now like to turn the conference over to Gustav George's Head of Investor Relations for LifeSpeed. Please go ahead.

Thank you operator and good morning everyone. Welcome to LifeSpeed's fiscal Q4-2026 conference call. Joining me today are Dax Vasilva, LifeSpeed's founder and CEO, and Asha Bhakshani, LifeSpeed CFO. 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 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 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 too, and they are not a substitute for IFRS financial measures. Reconciliation between the two can be found in our earning specialties, which is available on our website, on CEDAR+, and on the SEC's Azure 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 Zach.

Good morning, everyone, and thank you for joining us. Fiscal 2026 was a pivotal year for Lightspeed. We pursued a disciplined strategy that focused our organization on the two areas where we have a proven right to win – retail in North America and hospitality in Europe. The results today show, unequivocally, that the strategy is working, like we delivered revenue and gross profit growth ahead of expectations, and gained momentum in the crucial areas of customer location and GTV growth. In Q4, we delivered another strong quarter with total revenue of $291 million and gross profit of $129 million, both up 15% year-over-year and coming in ahead of our previously established outlook. Adjusted EBITDA of $15 million was up 17% year-over-year. Our performance was bolstered by the strength of our growth engines, where we saw total revenue of 24%, GTE up 19%, and locations up 11%. After the divestment of Upserve, our growth engines now comprise approximately 75% of total revenues, and we expect them to grow towards 80% during the course of fiscal 2027. Our accomplishments for Fiscal 2026 were on track to meet the three-year targets we initially presented at our Capital Markets Day in March of last year. In the first year of our transformation, we delivered the following results relative to our CME commitments. Gross profit growth of 17% versus a target three-year CAGR of 15 to 18%. Gross margin of 43% versus a target gross margin of 42% to 45%. Adjusted EBITDA growth of 35% in line with our target 3-year CAGR. 24% gross profit growth in our growth engines versus a target 3-year CAGR of 20% to 25%. And 11% customer location growth within our growth engines versus a target 3-year CAGR of 10% to 15%. underpinning these targets are three priorities that will drive long-term value at Lightspeed. These are, one, growing customer locations in our growth engines, two, expanding subscription ARPU, and three, improving adjusted EBITDA and free cash flow. In Q4, we continue to make solid progress. Let me start with customer locations in our growth engines. We added approximately 3,200 net new locations in the quarter, growing 11% year over year. Q4 marks the fourth quarter in a row where customer location growth has accelerated, including growth and efficiency markets through to $150,000. We were very proud to welcome a host of new customers. Within retail, we added the luxury lifestyle brand Erin with locations in New York and Palm Beach. We also added Oshima Surf and Skate, a multi-location Hawaii-based retailer and an avid user of Lightspeed Wholesale. Lightspeed Wholesale connects retailers using our Lightspeed Retail POS to brands using our New Order by Lightspeed platform. With this integration, retailers can discover and order over 5 million products from over 4,000 brands all on one platform. In this quarter, we continue need to add world-class wholesale brands such as Pharrell, Nixon, Proenza Schuler, and BBC International Footwear to the LightSuite Wholesale ecosystem. Within golf, we added Redwater Golf, which utilizes our specialized tools across eight courses and five indoor simulators in European hospitality. We are becoming the standard for full-service dining. We added and 19 locations with Gaucho, the iconic Argentinian steakhouse chain across the UK. Navikov in London has also joined us to manage this complex 3-in-1 restaurant concept. And we added Oxfam Toster, the highly acclaimed modern Turkish restaurant in Berlin. Turning to software revenue in ARPU, we continue to innovate across our flagship platforms of Lightspeed Retail and Lightspeed Restaurants, which is key for long-term software ARC growth. Within Lightspeed Wholesale, we launched an integration with FAIR, a B2B marketplace that will give Lightspeed retailers direct access to over 100,000 lifestyle, home decor, apparel, and jewelry brands. Also within Lightspeed Wholesale, we launched AI-driven brand recommendations in our recently released Marketplace, which services personalized brand suggestions based on the buyer's profile, expanding discovery, and opening new revenue opportunities for brands on LightFeed Marketplace. We also launched our AI-powered OCR tool that automates the tedious task of product data entry, helping merchants onboard new inventory, produce stock, within LightFeed restaurant, we released AI menu imports, which significantly reduces setup time for new restaurants, by by allowing business owners to easily digitize and upload menus using photos, online documents, or even sketch notes. And a new promotion engine within Order Anywhere, our take-out and delivery offering with buy-one-get-one-free functionality, enabling restaurants to create time-limited offers to drive order volume and repeat visits. We also saw strong adoption of our more recent product launches. Almost 30% of our restaurant customers adopted Lightspeed Pulse, which provides live data on restaurant operations right to your mobile device. In recent release, over 20,000 reservations were made using Lightspeed reservations. Approximately 20% of our target restaurant locations have now adopted Lightspeed Restaurant And the number of customers using Retail Insights has increased over three times year over year. We add popular features to our top-tier plans that help drive higher... I am very proud of the innovations that have come out of our product teams this year, particularly around AI. Customers are using our AI agents to drive more productivity out of the LightSoup platform by delivering tangible results such as getting started faster with seamless onboarding, curating which products to carry an inventory, building an online showroom, or receiving on-the-fly reporting and insights to better understand business trends and opportunities. AI gives Lightspeed the capacity to deliver real product differentiation and sustainable competitive advantage. Every restaurant or retailer has a context and a complexity that is unique to their business. AI helps them solve problems that were previously too tough or too expensive to address, But in order to do so, requires deep, native foundational data to solve complex issues such as wholesale buying, inventory management, omni-channel selling, and business operations. We are in a very unique and advantageous position because we have the data derived from billions of dollars in transactions to build AI agents that can solve for these complex issues at That's to share fiscalized and proprietary data, stating wholesale, the merchant, and the consumer, comes from businesses that operate in physical spaces and use right-to-PoS solutions that integrate physical hardware and complex workflows seamlessly as their system of record. These businesses were engaged and onboarded by a scaled go-to-market motion, specifically crafted to make them successful on our platform. No one is better positioned to deliver AI-backed solutions that can help our customers run and grow their businesses. In the end, our SMB and mid-market merchants' priorities is to build better businesses, not build their own software. Now turning to profitability. In fiscal 2026, we achieved a landmark accomplishment as a company. For the full fiscal year, our operations generated $18 million in adjusted free cash flow, a mild film that underscores our commitment to profitable growth. I think this accomplishment is even more impressive when you consider that we did this while meaningfully scaling the business in our focus areas and launching a series of new product innovations, demonstrating our capacity for disciplined investment that results in enhanced financial performance. I also want to take a minute to highlight the changes we have made for our executive leadership within Lightspeed to drive the next phase of growth. Gabriel Benavides joined us as Chief Revenue Officer. Gabe brings a wealth of experience in scaling global sales organizations and will be instrumental in refining our go-to-market productivity. We have also appointed Leslie Mark as our new Chief Strategy and Transformation Officer. Leslie joins us from Boston Consulting Group with 18 years of experience advising on strategy, operational transformation, and performance improvement. And finally, we recently welcomed Badna Singh as our Chief Technology Officer. Bobna is a veteran technology executive with over 25 years of experience in scaling global engineering organizations and leading platform transformations at major firms like Glassdoor and Okta, where she pioneered AI adoption within the organization. She specializes in aligning technical strategy with business growth. I look forward to working with our entire executive team as we continue executing in fiscal 27 and beyond. At the beginning of this fiscal year, we launched a corporate transformation aimed at sharpening our focus, improving our execution, and delivering results. We laid out our clear three-year growth targets for locations, gross profit, and adjusted EBITDA. In fiscal 2026, we delivered against these goals on all fronts. And we are entering fiscal 2027 with growing momentum. With that, I will pass it over to Asha.

Thanks, Jeff, and good morning, everyone. As you've seen in our results today, fiscal 2026 was a defining year for Lightspeed. By focusing the business on our highest conviction growth opportunities, we delivered strong performance across GTV, location growth, savings penetration, profitability, and cash flow. After the close of our fiscal year, we accelerated our transformation by divesting the Upserve US hospitality product line. The transaction has made Lightspeed a more streamlined company with our operations now even more tightly aligned to our growth engine. After the divestiture of Upserve, our growth engine, where we are highly focused, now accounts for approximately 75% of our total revenue versus approximately 67% in fiscal 2026. We are now a more focused, more scalable, and more efficient business. Before I review the financials, I want to highlight the two key trends we experienced in Fiscal 2026. First, our strategy to focus on our growth engine, retail customers in North America and hospitality customers in Europe, is clearly working. These are reasons characterized by tight product market fit, strong close rates, and a proven right to win. Our results for the year clearly demonstrate this momentum. Within our growth engines in Fiscal 2026, we saw total revenue grow 24%, software revenue grow 15%, GPB increase 15%, payment penetration reached 46% up from 41% last year, and we We added approximately 9,400 next customer locations for the year, driving an 11% year-over-year increase in ending location counts. And importantly, we are still early in monetization, which gives us a long runway ahead. Second, thanks to our disciplined execution, we're seeing the model become more predictable, more profitable, and more scalable for the full fiscal year across the company. We saw gross margin expand to 43%, up more than 100 basis points from fiscal 2025. Adjusted EBITDA growth 35% to $72.5 million, positive adjusted for cash flow of $18.2 million, and payment penetration increased to 42% from 37% a year ago. I will now discuss the quarter in more detail, and then provide our outlook for Q1 and fiscal 2027. Total revenue grew 15% to $290.8 million, exceeding our outlook, driven by an expanding location count, higher software ARPUs, and increased year-over-year payment penetration. Notably, we achieved 24% revenue growth within our growth engine. Software revenue for the quarter was $93.3 million, up 6% year-over-year and up 9% within our growth engine, with software ARPUs rising 4% year-over-year. As anticipated, software revenue growth moderated from the first half of the year due to lapping last year's price increases and our continued focus on annual contracts. Annual contracts result in modest upfront discounts, but attract higher quality merchants with lower churns and higher lifetime value. This reflects a deliberate shift toward higher quality revenue and long-term value creation. Transaction based revenue for the quarter was $185.3 million, up 17% year-over-year. GPV grew 22% year-over-year. GPB as a percentage of GTV came in at 42%, up from 38% in the same quarter last year. Capital revenue grew 73% year-over-year, while merchant cash advances outstanding grew a more modest 12% year-over-year, thanks to a payback period that declined to 7 months, a 13% improvement over last year. Overall, Q4 GTV grew 11% to $22.9 billion, and total average GTV per location continued to increase as we signed more higher value customers. Sandstone sales were up in both retail and hospitality and across all of our main geography. Within our growth engine, GTV grew 19%. Total monthly ARPUs reached approximately $602, up 10% year-over-year, driven by both higher software and payments monetization. With respect to our efficiency markets, overall revenue in Q4 was essentially flat year-over-year. When we adjust for the sale of UPSR, Q4 revenue was up modestly. Payments penetration in our efficiency market increased to 36% in the quarter from 33% in the same quarter last year, but remains below the overall business, giving us plenty of room to further increase payments revenue. Turning now to profitability and operating leverage. Total growth profit for the quarter was strong, growing 15% year-over-year, in line with revenue growth of 15%, driven by strong top-line performance and expanding gross margins in both subscription and transaction-based revenue. Total gross margins for the quarter were 44%, flat to last year, even with transaction-based revenue increasing to 64% of total revenue from 62% last year. For the quarter, we delivered strong software margins of 87%, up from 81% a year ago. Software gross margins benefited from a non-recurring rebate from a cloud provider. Normalized software gross margins would have been more in line with the first three quarters of the year, at approximately 82%. This improvement was largely driven by increased cost efficiency, consolidating our cloud vendors to renegotiate better terms, and using AI to dramatically reduce the cost of support and service delivery. AI now resolves over 80% of our support tickets. This is not theoretical. It is already embedded in our cost structure to date, and we're only just getting started. Gross margins for transaction-based revenue were 31%, up from 29% last year. This improvement reflects increased payments penetration in our international markets, where margins exceed those in North America, as well as growth in our Lightspeed capital revenue. As we convert customers to Lightspeed payments, we increase our overall net gross profit dollars, And in the quarter, we saw transaction-based growth profits grow 26% year-over-year. Total adjusted R&D, sales and marketing, and G&A expenses grew 15% year-over-year. This was primarily driven by meaningful investments in yield and outbound sales, as well as product innovation within our growth engine. In Q4, we made a conscious decision to pull forward additional hiring for our outbound team. And as we move into fiscal 2027, we will leverage the investments made last year by deploying AI solutions to further enhance productivity across both R&D and sales and marketing. Adjusted EBITDA in the quarter came in at $15.1 million, increasing 17% from $12.9 million in Q4 last year. This was driven by continued success from our strategic shift and our focus on AI and automation to accelerate operating efficiency. As a percentage of gross profit, adjusted EBITDA was 12%. This level of profitability enables us to continue investing in our growth engine while maintaining strong capital discipline, including funding product innovation, scaling outbound sales and supporting our capital return priorities. For the year, we generated positive adjusted free cash flow of $18.2 million. We delivered negative adjusted free cash flow in the quarter of $13 million due almost entirely to timing of working capital. We continued to actively manage our share-based compensation and related payroll taxes, which were $11 million for the quarter versus $11.8 million in the prior year quarter, slightly declining as a percentage of revenue compared to Q4 last year. Turning now to capital allocations and our balance sheet. Our balance sheet remains exceptionally healthy. We ended Q4 with approximately $454 million in cash. Approximately $200 million remains under a broader board authorization to repurchase up to $400 million in Lightspeed shares. Lightspeed's board has approved the renewal of our normal course issuer bid for the repurchase of an additional 8.5 million shares, representing approximately 10% of the public close. Total shares outstanding in the quarter were down 6% versus the same quarter last year, due primarily to the $86 million in shares repurchased and canceled over the last 12-month period. Aside from potential buybacks, our largest use of cash will be growing our Merchant Cash Advance program. There were $118 million in MTAs outstanding at year-end and we intend to continue growing this high-margin program over time. With respect to M&A, we remain opportunistic in evaluating small token acquisitions to help accelerate product development. However, large-scale acquisitions are not a strategic priority for us. Our balance sheet remains healthy and positions us well as we continue executing against our strategic focus. Looking ahead to Fiscal 2027, Divesting Observe allows us to better focus on our growth engines, expand our growth margins, and has relatively minor impacts on adjusted EBITDA. This is structural improvement in the business, not short-term optimization. Before turning to our Fiscal 2027 outlook, please note that the only update we are making to our three-year target is to incorporate the divestiture of UPSR. You can refer to the outlook section of our press release for more detail. On a consolidated basis, we expect our three-year fiscal 25 to fiscal 28 gross profit CAGR of 15 to 18 percent to remain intact but we will report numbers excluding UPSRF for comparability going forward. With the UPSRF divestiture we expect total gross profit of approximately 665 to 685 million dollars in fiscal 2028 versus our initial guide of $700 million before the divestiture. Excluding offshore from historical financials results in a target gross profit factor between fiscal 2025 and fiscal 2028 of 16 to 17 percent. We also expect gross margins to now be in the range of 43 to 46 percent, an improvement from our original estimate of 42 to 45%. We expect adjusted EBITDA to be approximately 20% of gross profit by Fiscal 2028. Excluding UPSR from historical financials results in an adjusted EBITDA category between Fiscal 25 and Fiscal 28 of over 50% versus the 35% we presented at capital market space. In terms of free cash flow for Fiscal 2028, we now expect adjusted free cash flow of approximately $95 million, a slight decrease from our original outlook of $100 million, again, due to the divestiture of Oster. Our outlook for our growth engines does not change. We continue to expect first profit to grow at a three-year CAGR between Fiscal 25 and Fiscal 28 of 20-25% and locations to grow at a three-year tagger of 10-15%. Now, turning to Fiscal 2027 Outlook. For the full Fiscal 2027 year, we expect total revenue of $1.225 billion to $1.265 billion, representing organic growth of 12-15%. Total gross profit of $565,000,000 to $585,000,000, representing organic growth of 12% to 16%. And adjusted EBITDA of $75,000,000 to $95,000,000. For Q1 of Fiscal 2027, we expect total revenue of $305,000,000 to $315,000,000, representing organic growth of 10% to 14%. total gross profit of $136 million to $141 million, representing organic growth of 10% to 14%, and adjusted EBITDA of $15 to $20 million. With that, we will now take your questions.

Ladies and gentlemen, we will now begin the question and answer session. At this time, I would like to remind everyone, in order to ask a question, please press star followed by the number 1 on your telephone keypad. In the interest of time, we kindly ask that you please limit yourself to one question and one follow-up. Thank you. Our first question comes from the line of Dan Perlin with RBC Capital Markets. Please go ahead.

Thanks. Actually, if you could just maybe talk a little bit about the cadence of revenue growth throughout the year. Obviously, the 1Q guide kind of points to an organic growth of 10% to 14% and the full years, you know, 12% to 15%. So there's an accelerant there, and I'm just wondering what those key drivers are going to be.

Yeah, thanks. Thanks for the question, Dan. You're absolutely right. When you think about the revenue growth, we are expecting, you know, uplifts as we move throughout the year. There's quite a bit of work that we continue to put into growing the growth engine in retail in North America and hospitality in Europe. You've heard about all the product releases Zach talked about as well. so that, you know, coming to fruition throughout the quarter should drive top-line growth, continued payments penetration as well. So, you know, all the things that you've seen from us as before based into the accelerating growth as we move into the quarters of fiscal 27 and into 28.

Okay. And then just quickly as a follow-up on Lake Speed Capital, I mean, it was up 73% this quarter, so it's clearly growing very quickly. You talked about using some of the proceeds from Upserve to maybe accelerate that growth. I'm just wondering how much are you thinking about pointing towards lights-by capital, and how should we be thinking about potential acceleration there?

Yeah, thanks for the question. You know, we expect capital to continue to accelerate into fiscal 27. We do need to keep in mind that Upserve was, you know, an entity that was heavy on usage of Lightspeed Capital. But when we look at the growth of Lightspeed Capital on a pro forma basis, we still see, you know, about 35-plus percent growth in that business. What we have to keep in mind at the end of the day, Dan, is we want to make sure that our default rates remain in the low single digits. We've done a really good job at accelerating ROI on light-speed capital, you know, reducing the month's payback with which we get repaid. And that's resulted in very low default rates, you know, the lowest we've seen in the industry, to be honest. So what's important to us is, you know, to grow this business prudently, and we expect to continue to do that with some nice 35-plus percent growth in fiscal 27.

Our next question comes from the law. It's Kevin Kirsten Ravne with Scotiabank. Please go ahead.

Hey there. Good morning. First, just a question on the growth engine net ads. Good to see the acceleration. I think you mentioned four quarters in a row there. I'm wondering if there's any difference that you want to call out between what you're seeing in North America retail and European hospitality, and do we expect another quarter of, you know, acceleration in the coming quarter?

Yeah, thanks for the question. Yeah, we're obviously super pleased. with the acceleration in location growth from 5% to 7% to 9% to now 11% growth, 3,200 locations in Q4. We have doubled down on our growth strategies and our growth engines, outbound sales, field motions in Europe. We're seeing a lot of new customers come on board in Europe through the field motions. We're also really excited about the progress we've made with the new order-led outbound motions that are outbound remote, so, you know, in-call centers but doing outbound for retail. You know, it's grown, you know, from a nascent motion to one that has a large contribution now on the retail side. So very enthusiastic about that. You know, we are projecting that both of those motions will continue to bear fruit and become even more efficient and more productive throughout the year. I would think about growth in FY27 as staying in that 10% to 15% CAGR and, yeah, continuing on this path or in this range.

Still on the growth engine, but specifically the software growth, I think you saw the 9% this quarter, it was 13% in the previous quarter. One, was that within your expectations? And just broadly, how do we think about software growth trends in 2027?

Yeah, so software growth, 6% year-over-year this quarter, 8% for the year. In the growth engines, I think it was 15% for the full year. Yeah, we're really focused on, you know, on building up the software business. The software growth in the growth engines is a strong point, but we're, you know, we brought on Gabe as our new CRO. We're really, you know, building out the capability in our cross-sell, up-sell and account management, as well as new business growth has always been very strong. That's, you know, supported by a lot of the product innovation that you're seeing. You know, there's a strong cadence of product release velocity, a lot of innovation on AI. We published some adoption stats, you know, along with, you know, we shared those in the script. And that was, you know, I think that's really landing with customers. So, you know, we're seeing that, the outcome of that in the location growth, but we'll also see that in software growth for the year. We're also, you know, really looking, doubling down on the partner and channel strategies. You know, we have a great partner channel, great channel strategy, but we're, you know, we're going to be putting even more effort into that as the year goes on.

Okay. Thanks, Zach. Our next question comes from the latest Josh. They are reporting family. Please go ahead.

Great. Thanks for the question. One topic, a couple parts to it on the divestiture. I thought it was interesting. It's not that you'd potentially sell, like, U.S. hospitality or rest-of-world retail assets, but that you were able to package, up-serve, just given timing of the deal. So I guess I'm wondering, for companies from 2018 to 2020 that still operate under the legacy brand and operations and not integrated Lightspeed, and then second, was there any potential of the acquisitions? It seems like ChronoGolf, Iken2, Kunta, GastroFix are all in the growth engines. If you could just correct me if I'm off there. But then I'm wondering if there's parts of ShopKeep as far as U.S. restaurants and Vend, which had a large retail presence in Asia and Europe, which could potentially be divested.

Yeah, you know, Vend, of course, is the foundation of our flagship X series in retail. So that's a core part of our strategy. It's sold, of course, in our growth engines. We also sell it in the international efficiency markets as well. You know, we're always looking, evaluating all options for a future of the best share through that lens of creating a long-term shareholder value. So, you know, Upserve, I think, was a great candidate for the event of the best share. We're not focused on U.S. hospitality. And so that made a lot of sense that they can grow that business. the new buyer has a lot more able to give it the focus, whereas for us, our priority is European hospitality where we are a career leader.

Question comes from the latest market owner with APB Cornwall Capital Markets. Please go ahead.

Good morning. Thank you very much for my question. Just looking at the 25 to 2028 targets, can you kind of walk us through the change to 20% growth in gross profit? Is it just a function of the divestiture? And can you kind of talk about how location growth being stronger helps you guys meet those goals?

Yeah, thanks for the question, Mark. Yeah, all of the Capital Market Day Guide adjustments we made are solely to take into account the divestiture. So the 20% of gross profit target that we outlined for adjusted EBITDA is only simply factored to remove the gross profit and the EBITDA contribution of Upserve. So that's totally accurate.

When I look at that location growth in the quarter, it makes your 2027 REV target based on the organic growth look kind of conservative. Can you guys talk a little bit about that? And if you agree it's conservative, of why were you conservative?

Yeah, yeah. There are several factors at play here, Martin. You know, as you heard from us in our prepared remarks, the macro was strong in fiscal 26, both from a same-store sales perspective and from an FX perspective. And, you know, EMEA Hospitality specifically, we have a pretty thriving business there. Our guide takes into account the factors that are in our control, which means that if the macro continues strong, that will land well for us. And if it doesn't, you know, we're confident that we're going to hit those numbers in the guide. I think that's really the main factor that, you know, that's causing a slight discrepancy in what you're looking at.

That's great. Thank you very much.

Our next question comes from the line of 10C, along with J.P. Morgan. Please go ahead.

Thanks so much. Thank you for the update. I want to ask two questions. First, on go-to-market and quota-carrying salespeople, just curious if there's been any change in your growth plan on headcount from go-to-market, and if you're seeing any changes in ROI there, then I have a follow-up.

Hey, Tenzin. Thanks for the question. We're continuing to double down on growth in our growth engines in, you know, retail North America, hospitality in Europe. Outbound is a big part of that strategy. And, you know, as we open new markets, we're looking to, you know, grow our headcount in those markets. We are very, very prudent on the metrics that we track, however, to ensure salesperson effectiveness so that we can ensure profitable growth. And, you know, you see that in the growth in EBITDA. Some of the key metrics we track from a sales perspective are, you know, per seller productivity, productivity, quota achievement, CAC, payback, all the things that you would imagine. You know, we even look at customer outreach volume, demos, booked, leads, disposition, and we have seen a swift impact from the launch of these outbound motions in our growth markets. And where that seller effectiveness is going super well, we will double down and pivot from areas where, you know, they're less effective. We're definitely optimizing these motions as part of the foundations for sustainable growth.

Right, perfect. And then maybe for that, just thinking about product roadmap and velocity, I'm curious with all this AI stuff changing and definitely seems like a bigger focus on product velocity, especially from the larger incumbent processors, has that changed your strategy in any way?

I'm curious just to hear your riff on big-picture product roadmap, product velocity, and where you're – Yeah, if you look at the products released this quarter, almost all of them are AI-powered. Lightseed AI has been a really big launch for us across retail and hospitality. We're seeing great adoption. You know, we're starting to really double down on building the authentic workflows, particularly as we build out wholesale buying within your order, within the wholesale platform. And we brought on Bhatna Singh as our new CTO. She's built, you know, done incredible authentic work at Okta and is going to be, you know, working with John Shapiro, our CPO, to really build up that AI roadmap. I think the reality is that the complex SMBs and mid-market merchants that we serve, They have laborious, tedious workflows that require a lot of time, a lot of staff, like wholesale buying. You know, we're sitting with customers now, watching them in their buying processes. You know, it could be well served by agents that were doing, you know, offering them options for assortment, for negotiation, for all the different aspects that require all of the data that Lightspeed brings together, all the foundational data across wholesale, the merchant, and the consumer. We have a view across all of that, which is very, very unique in the market since we have all those components, you know, with the wholesale platform, with the retail POS platform, and with all of the consumer payments piece. And so we can bring that together in a unique way and craft a workflow that benefits from the visibility across all of that proprietary and unique data, and in addition provide value back to the brands that are, you know, fueling all of that wholesale buying. So, yeah, I think we're really excited, and I think that we're in a really unique position to be able to build really, really differentiated agentic workflows on retail and as well on hospitality. We've got a really unique network, you know, We're the leading player for full-service hospitality in Europe. And so, therefore, tools like Benchmark and Trends, where we really draw upon that density we have per city to be able to benchmark and offer restaurants insights into what's trending at restaurants and what time of days to offer different kinds of items and when to staff, we can do that because of the density of restaurants that we have and all of that data. So all of these elements offer us a very – a lot of exciting possibilities for roadmap that's driven by AI.

Our next question comes from the LogosMaps. They're listening to Dank of America. Please go ahead.

Thanks for taking the question. Great to see the continued acceleration of core location growth. It sounds like we can expect that to be in the 10% to 15% range for the year, But given the pull forward in some of the outbound hiring, I was hoping you could provide some color on the expected glide path of year-over-year growth for core location. Should we expect that to level out throughout the back half of the year, or how should we think about it?

So there's certainly, you know, it's correct. Like I said earlier, we're going to stay within that 10% to 15%. I'm really proud that we, you know, that's a three-year CAG or 10% to 15%. We reached that within year one of the transformation. So this is going well for Lightspeed. And, you know, just spoke about some of the product things that we're releasing. We have a compelling platform for folks in our growth engines. So that, I think, is, you know, for us, you know, a lot of wind in our sails. So what I will say, though, is that as we go through the quarters of next year, there is seasonality. So the, you know, the number of locations will fluctuate. There's definitely some stronger quarters in, you know, the raw location number, but the percentage, the growth rate will, you know, we're expecting it to stay within 10 to 15%.

Got it. Thank you very much. Our next question comes from the line of research. Thank you. National Bank Capital Markets. Please go ahead.

Yes, thank you. You know, good work on the locations here. I was wondering if you could maybe help us understand, like, the mix of those wins from, is, let's say, new logos versus expansions or anything related to sort of price, just to give us a sense of what that would be.

So, you know, as I was saying earlier, new business is, you know, a very, very strong point for the company. We're bringing on a lot of new logos. We shared some of them in the earlier remarks. Of course, a lot of our customers are multi-location, and so it's restaurants adding additional locations. It's retail stores adding additional locations. But I believe the vast majority of locations is coming from new business, new logos.

And with respect to sort of the outbound, I think last quarter you had like 150 reps. As you sort of look at these new wins relative to the install base, how is that sort of LTE tech trending kind of in contrast? Like are you seeing, you know, increasing efficiencies, you know, by the numbers you're putting up here? Maybe give us some sense of how that's playing out.

Yeah. Hey, Richard. Thanks for the question. As I said earlier, we do track LTV2CAC very closely. And, you know, as you would expect, our outbound motion drives better LTV2CAC than any other motion inside the company. We, you know, if you think of feet on the street, an outbound rep is walking into a restaurant, hand-choosing the restaurant based on, you know, the lifetime value or the GTV of that restaurant. And so definitely the best motion from an LTV to CAC perspective. So we're really happy with the progress we're seeing there. And, you know, in Europe, hospitality in particular, where feet on the street is super popular, we are, you know, entering new cities, et cetera, with that motion.

Our next question comes from the line of Andrew Hark with BDIG. Please, go ahead.

Hey, thanks for the question. Sasha, can we just kind of get the latest thoughts on payment penetration? Just thinking about where it can get to this year and longer term. I know in the past there's been some contractual holdups on the ability for people to take Lightspeed payments, so I'd just like to hear where you see opportunities to continue pushing the payment penetration number higher.

Thanks for the question, Andrew. Yeah, payment penetration increased to 42% in Q4, up from 38% a year ago. For the full year, payment penetration was in the 42% range versus 37% the year before. Something to keep in mind is that once we remove Upserve, which, you know, we did divest at the beginning of this quarter, payment penetration is slightly under 40% for the company, still 46% in the growth engines. So when we think of opportunity, there's, you know, there's opportunity everywhere, you know, still a ways to go, which is, you know, we expect quite a nice uplift in payments revenue from that opportunity. When I think about the efficiency portfolio or the rest of the world portfolio, that's where the biggest opportunity lies. The payment penetration is lower than the growth portfolio. And so when we think about things like the non-solicit, et cetera, that we've been talking about, we're seeing a lot of those things come up to the end of their contracts and, you know, are ripe for the taking from a payments perspective. We're undertaking several efforts in fiscal 27 to convert both the back book and continuing to add new locations on payments. You know, going after the back book more aggressively, you know, we've taken care of a lot of the friction points that merchants had in the past through product enhancement. So we're really confident that we're gonna move the needle on that in the coming quarters and years.

Thanks. And then, Dax, following up on some of the questions earlier about bringing AI to your customers, can you just talk a bit about what the appetite of these SMBs are to add AI? Are they curious to do it themselves, or do they want to look to you as their POS provider to integrate around that? And then if you could also talk about, like, is there any ROI or tangible evidence or return you can point us to of why they want to be adopting it, and then how do you plan to really think about monetizing it longer term as well?

Yeah, I think it's because we house all that proprietary data, we can give insights that other AI tools wouldn't be able to, and it's not just that we have visibility into their retail POS data. We have also all that data from the wholesale buying piece with the brands as well as all of the payments, transactions. And then we have comparative data, you know, with all the other merchants that are similar or in other verticals or geographically. So we can provide a lot more insight than a general AI tool can that's looking at general information out in the Internet. So we can provide compelling reasons to want to use AI. And I think what we're seeing is, I'll just give you one example. You know, we've seen, you know, a three-fold, you know, increase in the use of our insights tools, which we're now, you know, extending with AI. And people are starting to use reporting in a very different way and access those insights in a very different way. They can do that in a natural language way. So if they're a newer business owner or they don't know how to ask for or they don't know how to look for a type of report, they can ask that in a natural language way, and we can create a visualization for them that's exactly what they had in mind, as opposed to knowing how to navigate a reporting product or knowing how to build a custom report. So it really goes from, you know, maybe an administrator being able to, you know, having to navigate that or knowing how to do that, to more actionable insights being at everybody who has, you know, the permissions to query the system and get immediate results. Maybe there's immediate action that needs to be taken. You know, maybe there's stock that needs to be bought, you know, in a timely way, you know, for which they might need to, you know, initiate a conversation with our capital department to bring that stock in right away. So I think it's going to allow businesses to become a lot more competitive because they've got the insights at their fingertips and then they've got access to other things on the platform like capital so that they can, you know, order inventory that's being recommended to them, you know, because they can be that much more profitable. So I think that we're going to see the activation of a lot of the elements of the product suite, you know, that come from the fact that people are using reporting and insights in a whole different way and it's allowing them to do all new things with their business or generate a lot of new ideas on how to generate revenue. And remember, we are, of course, we're going to, you know, be able to sell upgraded plans that include more and more AI-driven features. But if any of these new functionalities generate more income and more revenue for the business, you know, we are an outcomes-based business. You know, we generate more revenue for these businesses and they generate more payments volume and potentially more capital volume. So, you know, there's a lot of discussion about, you know, the new model for software is going to be outcomes-based. For us, we are an outcomes-based business. You know, 70% of our revenue is payments, payments of financial services. So we drive more success for our customers through AI-driven tools and we'll drive more payments revenue.

Our next question comes from the Lawn of Cigar Car and the CMO's ethical markets. Please go ahead.

Hi, good morning. This is Sagar on behalf of Thanos. My first question is for your wins in the growth markets. You know, for situations where you are displacing legacy or other modern solutions, what are some of the top reasons you heard why merchants are picking the right speed or other options? Is it pricing, is it features, better support, and all of the above? Maybe could you speak to that, please?

I think it's all of the above. You know, you've got legacy systems where it's very hard to manage in multiple locations. You know, that's a basic benefit of the cloud. But now when you think about the AI era and an era where a lot of the value of the business is driven through data, which relates to my last answer around, you know, how important it is for that foundational data in your core platform, your operating platform, your system of record, to be able to provide you value, you know, to be able to give you the ability to drive your business to the next level. You know, no business wants to lose that competitive advantage that they're seeing other businesses enjoy, right? And that's how we think about how we want to build new modules and new functionality into Lightspeed is, you know, accelerating different revenue opportunities for these businesses. It's a competitive economy. It's got all kinds of challenges around cost. And if they don't have a platform where their data is actually benefiting them to be able to navigate that and also, you know, generate opportunity, then the system is just merely recording transactions. You know, it's just a cash register replacement. And that's not what Lightseed is. You know, we are a high-powered, you know, light ERP for these businesses to be able to accelerate. And so that matches the ambition of the customers that we're talking to. And that's the whole rationale for everything that we do. Perfect.

That's great. And just switching over to a question that's maybe a bit topical for the coming months, With the World Cup coming up, how are you thinking that may impact your hospitality, GTV, for the summer months? And just generally, how is the health of your end markets?

Sorry, the World Cup in LA?

Yeah, so if you have a lot of the European crowd coming over to North America, how are you thinking that may impact your hospitality, GMB, in Europe?

Yeah, listen, European hospitality has had a lot, several really great seasons since COVID. We've seen it's a major, major tourist destination for the world. I mean, it's, you know, there's a lot of commentary that there's too many tourists in Europe, you know, and I think we have a very, very privileged position that, you know, one of the main reasons to go to Europe is to eat at some of the best places in the world, you know, some of the best Michelin star restaurants, and these are on Lightspeed. These restaurants and resorts are by and large on our platform, And I think this is – I don't think that this is going to be a disappointing summer in terms of, you know, those restaurants doing – those hospitality businesses doing very, very well.

Our next question comes from the line of Zimmar Clark with Freedom Capital Markets. Please go ahead.

Good morning. Thanks for taking the question. Some of your competitors have called up precious margins from rising memory costs and brought up tariff exposure. And you've been in this negative 70% hardware gross profit margins in the last two quarters versus negative 60% or so on average in previous quarters. So maybe provide some color on the negative drivers there. Is this a deliberate loss? Do you have a strategy tied to payments attached or are tariffs compressed in that line? And if so, could you quantify the headwind to margins?

Thanks for the question. We have actually seen a big impact inside our business from a tariff perspective. The negative margins are really due to discounts and incentives that we provide to encourage new business, just given the competitive nature of our industry, and also, you know, the payment terminals that we provide to assist customers in transitioning toward unified payments and POS offering. So, it's quite normal for hardware to be generally discounted to facilitate the adoption of our other revenue streams, but having said that, we are not happy with the level of discounting that we saw in, you know, the last couple of quarters, and we are implementing and have already actually implemented measures that we expect will improve those margins in F27, but, you know, no real impact felt inside the company from a tariff perspective.

Thank you, guys.

This question comes from the line of defense. Kumar with Stifel.

Good morning, and thanks for taking my questions. For the first one, I wanted to touch on New Order. I believe you mentioned some progress on the outbound side of that business, but it does feel like there are a number of levers, early-day levers here with this opportunity. Can you speak a little bit about what your priorities are for investment this year and how should we think about impact and contribution from New Order over fiscal 27? Yeah, you know, the New Order effort is really firing on all fronts. If you looked at some of the product announcements, you know, that were in this quarter, integrating fair, bringing 100,000, you know, brands to the platform, millions of products, as well as AI-driven recommendations. The outbound has just been a star. I think we talked about last quarter how we were pulling, you know, but you are pulling some dollars from this quarter into last to hire ahead for those retail outbound folks. They're highly efficient. They're calling some of the leads provided from some of the brands, new brands that we're signing, like Carhartt, and we've signed a number of great new brands this quarter, like Sorelle and Nixon. So a lot of amazing progress, and I think that we really believe in that outbound model, you know, for retail. and, yeah, I think that we'll continue to monitor it, continue to monitor all the metrics and all the seller metrics around it, and I think that we'll continue to grow this team and grow investment in that new order-led outbound motion.

Great. Thank you.

And just on the growth engines, you know, it looks like you guys are hitting your stride there with the improving organic growth visibility. How do you look at market expansion overall from that lens? Do you see opportunity to expand into net new deals and verticals over time?

Yes, absolutely. You know, our growth engine growth, honestly, is what we're seeing is structural. You know, it's not cyclical. We had revenue growth of 24% in the growth engines for both quarter of a year, and we're really excited about the traction we're seeing in both of those markets. NOAM retail and European hospitality. We have strong product market fit, the highest close rates across the company, and increasing attach of both payments and capital. So lots of opportunity, like I said in the prepared remarks, you know, we're still early in monetization, and we expect that we're gonna continue to take advantage of that TAM, and yes, we are opening a couple of new GOs this year.

Thank you. Ladies and gentlemen, that concludes our Q&A session. I will now turn the call back over to Gus for closing remarks.

Great. Thanks everyone for joining us today. We will be around all day if anyone has any follow-up questions and we look forward to speaking to everyone on our next call when we report our fiscal Q1. Have a great day everyone.

This was today's conference call. You may now disconnect your lines.