Lightspeed Commerce (TSX:LSPD) definitely gave traders one thing to cheer about this week. The most recent quarter gave traders precisely what they had been ready for: consistency. It was a powerful quarter after a beforehand sturdy quarter. But in an interview with CEO Dax Dasilva, it appears to be like like there may very well be extra to return.

“Each development metric was actually fairly good from Q1, however what the market needs to see was consistency,” Dasilva mentioned. “Are you able to do it once more? And so we did it once more, however it’s even higher than Q1.”

What occurred

After a powerful begin to the fiscal yr, Lightspeed’s Q2 FY2026 outcomes confirmed that the rebound is actual. Income rose 15% yr over yr to US$319 million, comfortably forward of steering. Transaction-based income climbed 17% and subscription gross sales grew 9%. In the meantime, adjusted earnings earlier than curiosity, taxes, depreciation and amortization (EBITDA) hit US$21.3 million and adjusted earnings landed at US$0.16 per share.

Free money circulate got here in at US$18 million, a milestone that pushed Lightspeed into optimistic territory for the yr. Even higher? Lightspeed raised its full-year outlook and guided for continued double-digit development and profitability enhancements by way of 2026. That blend of strong numbers, optimistic money circulate, and a steering enhance despatched shares up 11% as confidence returned to the story.

What’s driving this renewed pleasure is a transparent shift in how Lightspeed is rising. Dasilva says the corporate’s success this quarter stems from its new “outbound movement.” This meant a extra targeted gross sales technique geared toward small and mid-sized retailers in two high-return areas: North American retail and European hospitality. As a substitute of casting a large international web, Lightspeed now concentrates on these core areas. That shift translated into stronger retention, larger spending per buyer, and rising common income per consumer (ARPU), which jumped 15% this quarter.

So what?

Lightspeed’s give attention to high quality over amount is paying off. The tech inventory added round 2,000 new buyer areas in Q2, pushing whole location development from 5% in Q1 to 7% this quarter. These additions fed a 7% enhance in gross transaction worth (GTV) and a 22% surge in cost volumes. As extra prospects undertake Lightspeed Funds, the corporate earns the next take fee on each transaction. This helped elevate subscription margins to 82% and transaction margins to 30%, and whole gross margin improved to 42%. It’s all indicators that scale is starting to work in Lightspeed’s favour.

Manufacturing innovation can also be serving to. In retail, Lightspeed’s integration with its NuORDER platform permits retailers to order wholesale merchandise from prime manufacturers like Lululemon straight by way of the point-of-sale (POS) system. It’s a characteristic opponents merely don’t provide. In Europe, Lightspeed inventory is the one pan-European cloud platform for full-service eating places, the place it’s now gaining share quick.

“We’re going metropolis by metropolis. We’re within the UK…we’re in 4 cities in France, 5 cities in Germany. It’s the rock star gross sales numbers,” Dasilva mentioned. “We’ve acquired toes on the road…and we’ve acquired the correct product on the proper second, similar to we do in retail.”

Trying forward

The following catalyst might come from Lightspeed’s push into synthetic intelligence (AI). Dasilva confirmed Lightspeed inventory will roll out its Lightspeed AI Assistant at upcoming product occasions in Paris and New York. This builds on present AI instruments designed to assist retailers with benchmarking, development evaluation, and operational effectivity. The AI assistant goals to automate routine duties for retailers and restaurant house owners. By decreasing complexity, Lightspeed hopes to spice up retention and encourage adoption of higher-value modules, sustaining ARPU development.

For traders contemplating the inventory, the takeaway is that Lightspeed inventory has turned a nook. The corporate is not making an attempt to develop in every single place. As a substitute, it’s scaling the place it wins and displaying actual monetary progress whereas doing it. That self-discipline, paired with a cleaner steadiness sheet and US$462 million in money, makes it extra resilient than ever.

Backside line

Nonetheless, this development story stays tied to execution in funds and buyer retention. If Lightspeed inventory can ship one other few quarters of regular development and margin growth, its valuation might lastly catch as much as its fundamentals. Proper now, these fundamentals look priceless, buying and selling at 35 instances future earnings and 1.1 instances guide worth. For now, Q2 proved one factor clearly: it is a firm evolving from potential to efficiency.