Lightspeed's Q3 Beat Bolsters Profitable Growth Thesis Amid Lingering Skepticism

What happened

Lightspeed Commerce reported fiscal Q3 2026 results, with management highlighting continued execution on its core growth engines in North American retail and European hospitality. Revenue and adjusted EBITDA exceeded the company's outlook, reinforcing a trend of outperformance that aligns with the DeepValue report's emphasis on sustainable profitability. This marks the second consecutive quarter of positive free cash flow, a key inflection point noted in the report as evidence of a strengthening cash generation model. Despite these operational improvements, the stock remains valued near 1.0x book, reflecting persistent market doubts about macro risks and the durability of growth in SMB sectors. The results support progress toward FY26 guidance of ≥12% revenue growth and ≥$70m Adjusted EBITDA, but critical metrics like payments penetration and ARPU require ongoing scrutiny.

Implication

The revenue and EBITDA beats reinforce the DeepValue report's base case of 12-14% annual growth, suggesting Lightspeed is on track to meet its FY26 targets. Positive free cash flow for two consecutive quarters enhances the margin of safety from the company's substantial net cash balance, providing flexibility for buybacks or strategic investments. However, the market's skepticism, evident in the depressed valuation, indicates that multiple expansion may require sustained outperformance over several more quarters. Investors should monitor the report's 90-day checkpoints, particularly payments penetration and ARPU trends, to confirm the software-plus-payments strategy is gaining traction. Given the mixed analyst ratings and exposure to SMB cyclicality, a disciplined approach with entry points near the report's attractive level of $10 could balance risk and reward.

Thesis delta

The Q3 results strengthen the investment thesis by demonstrating consistent revenue growth and positive free cash flow, reducing near-term execution risk and bolstering confidence in achieving FY26 guidance. No material shift is needed, as the core narrative of a software-plus-payments model remains intact, but the results highlight the importance of maintaining vigilance on macro headwinds and competitive pressures that could threaten long-term targets.