Lightspeed Commerce (NYSE:LSPD) said it has divested its non-core Upserve U.S. hospitality product line to Skyview Equity in a move management said will sharpen the company’s focus on its primary growth engines and improve margins and profitability. The company discussed the transaction on a business update call led by CEO Dax Dasilva and CFO Asha Bakshani.
Deal terms and closing
Dasilva said the divestment is intended to “sharpen our focus” and “expand our gross margins,” while also strengthening the balance sheet and accelerating the company’s “path towards profitable growth.”
The transaction closed “yesterday at the close of business,” Dasilva said.
What Lightspeed is keeping: Upserve analytics technology
While Lightspeed is divesting the legacy Upserve merchant base, Dasilva emphasized that the analytics technology acquired with Upserve will remain with Lightspeed. He said the technology forms the foundation of Lightspeed Insights and will remain “a core component of Lightspeed’s flagship restaurant solution.”
According to Dasilva, that analytics capability is “a primary driver of new customer adoption,” “a strong contributor to software revenue,” and “a key competitive advantage” for the company’s restaurant platform, adding that Lightspeed plans to “retain and further develop this technology.”
Financial impacts and updated profitability outlook
Bakshani outlined expected financial impacts from removing Upserve. For fiscal 2026, she said Lightspeed expects removing the product line will reduce:
- Revenue by approximately $140 million
- Gross profit by approximately $26 million
- Gross payment volume (GPV) by roughly $5 billion
She also said approximately 3,200 U.S. hospitality customer locations and around 70 dedicated team members will transition as part of the deal.
Bakshani said the divestiture is expected to impact Lightspeed’s three-year financial goals introduced at its March 2025 Capital Markets Day by about 5% on the absolute value of gross profit, adjusted EBITDA, and free cash flow for fiscal 2028, while the compound annual growth rate forecast “remain[s] unchanged.” She said the company would provide a more thorough update on those goals when it reports fiscal Q4 results on May 21.
Discussing profitability, Bakshani said Upserve contributed “meaningfully” to fiscal 2026 adjusted EBITDA, but that contribution was “a diminishing one,” describing the asset as declining year-over-year. She added the company does not disclose EBITDA by product line due to allocations and indirect costs.
Following the divestiture, Bakshani said Lightspeed expects fiscal 2027 adjusted EBITDA in the range of $75 million to $95 million.
On margins, Bakshani told analysts that Upserve had a lower gross margin profile than Lightspeed’s corporate average. She said Lightspeed’s corporate average software margin is “about 80%, a little over,” while Upserve’s software margins were “in the 70% range.” She attributed much of the overall gross margin difference to the payments portfolio, noting Upserve payments revenue was “not with one of our main partners for the most part,” resulting in lower payments margins. She also said that as the asset declined, “the EBITDA margins were declining as well.”
Valuation approach and sale process
In response to questions about how the price was determined, Bakshani said Lightspeed valued Upserve using a discounted cash flow approach “among other methods,” reflecting what it was worth to Lightspeed on a standalone basis given its “declining growth trajectory” and non-core status.
Bakshani also said that based on the fiscal 2026 gross profit disclosed, Lightspeed was divesting the asset for “a 3x LTM gross profit” multiple, and said the multiple would be higher when looking at the next 12 months’ gross profit.
On the competitiveness of the process, Bakshani said Lightspeed “ran a thorough process,” engaged Stifel bankers, and “did engage with a number of parties,” with Skyview emerging as “the best value” and “the right home” for the Upserve team and customers.
Strategic focus, capital allocation, and go-to-market changes
Management repeatedly framed the divestiture as consistent with Lightspeed’s focus on two growth engines: retail in North America and hospitality in Europe. Dasilva said the transaction reflects a strategy of “doubling down on our core strengths of retail customers in North America and hospitality customers in Europe.”
Bakshani said removing the U.S. hospitality Upserve asset improves “strategic and managerial focus” for go-to-market, simplifies operations, and allows Lightspeed to deploy capital toward faster-growing and more profitable businesses. Dasilva added that during the last fiscal year, Lightspeed “doubled down” on outbound sales in European hospitality with more field reps across Europe, and on outbound remote reps in North America retail.
Bakshani said Upserve’s U.S. hospitality portfolio consisted of “high GTV customers,” described as bigger restaurants, but said Lightspeed decided “a couple years ago” not to focus on U.S. hospitality given the competitive landscape and better ROI in its chosen growth markets.
On capital allocation, Bakshani said about $200 million remains under Lightspeed’s board authorization to repurchase up to $400 million in shares, and said the company continues to evaluate buybacks opportunistically. She noted Lightspeed’s normal course issuer bid (NCIB) program is limited to 10% of public float over a 12-month period, that the company fully utilized its 2026 NCIB, and that it expects to renew the NCIB in May 2026 subject to board and TSX approval and market conditions.
Bakshani also highlighted the company’s merchant cash advance (MCA) business, saying there were $106 million in MCAs outstanding at the end of fiscal Q3 and that Lightspeed intends to continue growing that “high margin business.” Regarding M&A, she said Lightspeed will consider “small tuck-in acquisitions” to accelerate product development, but that large-scale acquisitions are “not a strategic priority.” Dasilva added that any tuck-in deals would be tied to the company’s two growth engines.
Lightspeed said it expects fiscal Q4 and full-year fiscal 2026 revenue and gross profit to come in ahead of its previous outlook, with adjusted EBITDA in line, though Bakshani noted the company was in a quiet period and asked that questions remain focused on the transaction. The company said it plans to report fiscal Q4 and fiscal 2026 results on May 21.
About Lightspeed Commerce (NYSE:LSPD)
Lightspeed Commerce Inc is a Canadian technology company that develops cloud-based point-of-sale (POS) and e-commerce software for small and medium-sized businesses across the retail and hospitality sectors. Its integrated platform enables merchants to manage sales, inventory, customer relationships and analytics through a single interface. By combining in-store and online channels, Lightspeed helps businesses streamline operations and improve customer engagement in an increasingly omnichannel marketplace.
The company’s product suite includes POS terminals, payment processing services, inventory management tools, customer loyalty programs and data reporting dashboards.
