Financial Data and Key Metrics Changes - Total revenue in Q4 was $349 million, up 15.6% year-over-year [24] - Q4 non-GAAP operating income was $52 million, representing a non-GAAP operating margin of 15% [24] - Full year revenue growth was 15% with a non-GAAP operating margin expansion of 400 basis points [8][24] - Free cash flow for Q4 was $90 million, bringing full-year free cash flow to $215 million, representing 69% year-over-year growth [29] Business Line Data and Key Metrics Changes - The U.S. general contractors segment remains a cornerstone of growth, with 3 new ENR 400 logos added in Q4 [8] - Procore Pay saw strong momentum, ending the year with nearly 450 customers, representing over 70% year-over-year growth [27] - The number of customers spending more than $1 million in ARR grew by 34% year-over-year, totaling 115 customers [26] Market Data and Key Metrics Changes - International revenue grew 14% year-over-year, impacted by currency headwinds, but grew 15% on a constant currency basis [24] - Current RPO grew 22% year-over-year, and current deferred revenue grew 18% year-over-year [24] Company Strategy and Development Direction - The company aims to lead in the AI era, focusing on driving efficiency across the construction lifecycle [6][22] - Plans to launch a suite of specialized products for owners, including portfolio management and asset management, to meet evolving needs [12] - The acquisition of Datagrid is expected to enhance Procore's AI capabilities and product synergies [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in Procore's future, emphasizing the importance of customer relationships and operational efficiency [5][7] - The company is well-positioned for durable growth and margin expansion, with a focus on innovation and execution [22][23] - Management acknowledged ongoing headwinds in the construction environment but highlighted strong operational performance [8][30] Other Important Information - Procore for Government achieved FedRAMP Moderate authorization, opening opportunities with U.S. federal and state government customers [12] - The company is focused on limiting share count dilution, with a weighted average diluted share count growth of less than 1% in Q4 [29] Q&A Session Summary Question: Customer conversations regarding AI and competition - Management noted that customers are focused on construction and expect their tech vendor to leverage AI effectively, with clear adoption of Procore AI among customers [38][39] Question: Trends in volume commitments during the Q4 renewal cycle - Management indicated continued strength in ACV commitments, reflecting ongoing share gain and growth from a strong Q4 bookings quarter [62] Question: Monetization strategy for Procore AI - Management stated that establishing a compelling ROI is crucial, with plans to include AI offerings in upcoming bundles and explore consumption-based models [73] Question: Capacity and resource adequacy for future growth - Management confirmed sufficient capacity for fiscal 26, focusing on productivity increases and leveraging AI for operational improvements [75][76]

Financial Data and Key Metrics Changes - Twilio reported record revenue of $1.4 billion in Q4 2025, representing a 14% year-over-year increase on a reported basis and 12% on an organic basis [5][13] - For the full year, revenue reached $5.1 billion, reflecting a 14% reported growth and 13% organic growth [13] - Non-GAAP income from operations for Q4 was $256 million, up 30% year-over-year, while for the full year, it was $924 million, a 29% increase [14][17] - Free cash flow in Q4 was $256 million, and for the full year, it was $945 million, up 44% year-over-year [5][14] - The company achieved its first full year of GAAP profitability with $158 million in GAAP income from operations [14] Business Line Data and Key Metrics Changes - Voice revenue growth accelerated to the high teens in Q4, driven by strong growth from voice AI customers, which saw revenue growth above 60% year-over-year [14][16] - Messaging revenue growth was solid, aided by high volumes during Cyber Week and the holiday season [14] - Software add-on revenue grew over 20% year-over-year, with Verify growing more than 25% for the second consecutive quarter [15] - Self-serve revenue grew 21% for the full year, while ISV revenue grew 24% [15] Market Data and Key Metrics Changes - The number of large deals closed (over $500,000) increased by 36% year-over-year in Q4 [7] - During Cyber Week, Twilio sent 6.99 billion messages, a 34.5% year-over-year increase, handled 1.07 billion calls (up 58% year-over-year), and processed 75.1 billion emails, a 14.6% increase year-over-year [9] Company Strategy and Development Direction - Twilio aims to be a foundational infrastructure layer in the age of AI, moving beyond just providing communication channels [6][12] - The company is focused on delivering essential infrastructure powered by contextual data and evolving automation, such as Voice AI, to help customers build personalized relationships [7][12] - A strategic partnership with AEG was signed to enhance real-time, personalized communications for live events [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to sustain momentum into 2026, supported by a robust innovation roadmap [12][23] - The company anticipates reported revenue growth of 11.5%-12.5% and organic revenue growth of 8%-9% for the full year 2026 [21] - Management noted that while pass-through fees from U.S. carriers will impact margin rates, they will not affect the ability to generate profit dollars [22] Other Important Information - Twilio's stock-based compensation as a percentage of revenue decreased to 11.3% in Q4, down 180 basis points year-over-year [18] - The company completed $198 million in share repurchases in Q4 and $855 million for the full year, representing 90% of 2025 free cash flow [18][19] Q&A Session Summary Question: What drove the voice strength in Q4? - Management noted broad adoption of voice across customer cohorts, with significant strength in self-service and ISV communities [27][28] Question: Can you provide visibility on the Q1 guidance? - Management expressed confidence in the Q1 guidance, citing broad-based strength across products and sales channels [30][31] Question: What is driving the growth in messaging? - Management indicated broad-based strength across multiple products, contributing to messaging growth [42] Question: How is Twilio positioned regarding RCS adoption? - Management acknowledged rapid growth in RCS, emphasizing its potential for marketing-oriented use cases and high open rates [46][48] Question: What differentiates Twilio from competitors? - Management highlighted Twilio's differentiated technology, strong developer experience, and continuous innovation as key competitive advantages [51][52]

JFrog (NasdaqGS:FROG) Q4 2025 Earnings call February 12, 2026 05:00 PM ET Company ParticipantsAndrew Sherman - DirectorBrian Essex - Executive DirectorEamon Coughlin - VP in Software Equity ResearchEd Grabscheid - CFOJason Ader - Partner and Co-Group Head of Technology, Media, and CommunicationsJeffrey Schreiner - Head of Investor RelationsJonathan Ruykhaver - Managing DirectorMiller Jump - Equity Research AssociateOscar Saavedra - Equity Research Associate in SoftwareRadi Sultan - Director in Software Equi ...

Financial Data and Key Metrics Changes - Recurring gross profits increased by 33% in 2025, with adjusted EBITDA margins expanding to 34% [5][26] - Annual recurring revenue (ARR) grew by 26%, reaching over $2 billion, with payment volume hitting $195 billion [26] - GAAP operating income rose to $292 million from $16 million a year ago, driven by strong adjusted EBITDA and effective management of stock-based compensation [27][30] Business Line Data and Key Metrics Changes - SaaS ARR and subscription revenue each grew by 28% year-over-year, with SaaS ARPU in the core growing even faster than total SaaS ARPU [29] - Subscription gross profit increased by 33%, with SaaS gross margin expanding by 300 basis points year-over-year to 80% in Q4 [30] - Payments ARR grew by 24%, while fintech gross profit increased by 25% in Q4 [30] Market Data and Key Metrics Changes - The company added a record 30,000 net locations in 2025, ending the year with 164,000 locations [26] - The net retention rate remained healthy at 109% in 2025, supported by upsell and location expansion from existing customers [30] - The company powers 20% of SMB and mid-market restaurants in the U.S., nearly doubling over the past three years [8] Company Strategy and Development Direction - The company aims to double market share in its core U.S. SMB and mid-market restaurants, while also expanding into new markets [8][12] - Investments will focus on product differentiation, particularly in AI and customer support, to enhance operational efficiency [10][21] - The company plans to launch new products, including a drive-thru solution, to capture additional market segments [14][73] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining high growth for the next 5-10 years, driven by strong customer signals and market opportunities [38] - The company anticipates a 20%-22% growth in recurring gross profit streams for 2026, with adjusted EBITDA expected to be between $775 million and $795 million [36] - Management highlighted the importance of disciplined capital allocation while investing in high-priority initiatives [24][35] Other Important Information - The company has repurchased approximately 8 million shares for $235 million since the inception of its buyback authorization in 2024 [35] - The company is experiencing cost pressures from higher memory chip costs, which are expected to impact margins in the second half of 2026 [36][37] Q&A Session Summary Question: SaaS ARR per location and enterprise metrics - Management confirmed confidence in mid-single-digit SaaS ARPU growth for 2026, with core SaaS ARPU growing faster than total company metrics [41][44] - Enterprise sales cycles are different, and management evaluates them on a deal-by-deal basis, focusing on total ARR [44] Question: Net adds and new verticals - Management indicated that net add growth in 2026 is expected to be higher than in 2025, with a similar pattern of growth from core and new towns [48][50] Question: AI disruption and competitive landscape - Management views AI as an opportunity to enhance the platform rather than a threat, emphasizing the unique value Toast provides through its integrated solutions [51][56] Question: R&D investment and margin framework - Management confirmed that the margin framework allows for increased R&D investment to capitalize on AI opportunities while targeting long-term margins of 40% [60][62] Question: Drive-through product rollout - The company plans to launch a drive-through product this year, which will significantly expand its market reach [73][74]

Financial Data and Key Metrics Changes - Total revenue for Q2 fiscal 2026 was $11.8 million, a slight decrease from $11.9 million in Q2 fiscal 2025 [7] - Platform subscription revenue increased by approximately 14% to $5.2 million, driven by a net increase of 47 platform deployments [7] - Annual recurring revenue (ARR) reached $21.8 million, up 14% year-over-year, with B2B ARR at approximately $15.3 million and B2C ARR at about $6.4 million [7][8] - Gross profit for the quarter was $6.2 million, a 6% increase from the prior year, with a gross margin of 52.4%, reflecting a 350 basis point improvement [9] - Net income for the quarter was $547,000, or $0.02 per diluted share, compared to a net loss of $2 million in the prior year [11] Business Line Data and Key Metrics Changes - The B2B segment saw strong results in ARR bookings and net ARR bookings, with 47 net new deployments [5] - Transaction revenue for Q2 was $6.6 million, down from $7.3 million in the prior year, primarily due to churned accounts and volume reductions from larger customers [8] - The platform business recorded a gross margin of 88.1%, a 160 basis point increase compared to the prior year [10] Market Data and Key Metrics Changes - The total active customer count decreased to 1,321 from 1,384 year-over-year [8] - The company experienced increased competition in the B2C segment, impacting growth and conversion rates [4][8] Company Strategy and Development Direction - The company is focusing on B2B annual and multiyear agreements as the primary growth driver, while also making product and sales process improvements [5] - There is a strategic shift towards API and AI integration, evolving from a document delivery company to an answers and access platform [20][25] - The company aims to leverage its unique capabilities in data and rights management to support AI tools and enhance research efficiency [17][30] Management's Comments on Operating Environment and Future Outlook - Management expects continued pressure in B2C and transaction segments but anticipates stronger performance in B2B and overall profitability in the second half of the fiscal year [14][16] - The company is optimistic about its ability to grow cash balances while funding obligations from operating cash flow [12][14] - Management acknowledges the potential disruption from AI but believes their unique data capabilities will provide a competitive advantage [16][30] Other Important Information - The company has no outstanding borrowings on its revolving line of credit, providing additional balance sheet flexibility [13] - Cash flow from operations was $1.4 million, a 35% increase from the previous year, reflecting higher profitability and disciplined working capital management [12] Q&A Session Summary Question: Can you discuss the pipeline for B2B deals? - The pipeline has grown consistently, with many deals now being API integrations with larger customers, resulting in larger contracts [32] Question: What are the trends in B2C business? - There is increased competition in digital marketing, leading to lower conversion rates from trials to subscribers [33][34] Question: What are the top priorities for improvement? - Focus areas include operating expense management, understanding churn causes, and working capital management [38] Question: How is AI being utilized internally? - AI is being leveraged for software development and productivity improvements, enhancing efficiency across teams [44][50] Question: What is the market opportunity for infrastructure sales? - The ASP for infrastructure sales could be 20%-30% higher, with new pricing models being explored [53] Question: How is the relationship with smaller publishers developing? - There is a growing interest from smaller publishers in rights deals, with ongoing discussions to enhance collaboration [76][78]

Financial Data and Key Metrics Changes - In fiscal year 2025, total revenue was $531.8 million, up 24% year-over-year [7][18] - Q4 total revenues reached $145.3 million, a 25% increase year-over-year [18] - Cloud revenue for 2025 was $243.3 million, representing 45% year-over-year growth [7][19] - Q4 cloud revenues grew to $70.2 million, up 42% year-over-year, accounting for 48% of total revenues [18][19] - Gross profit in Q4 was $121.6 million, with a gross margin of 83.7% [22] - Non-GAAP earnings per share for 2025 was $0.82, a 26% increase year-over-year [23] Business Line Data and Key Metrics Changes - Greater than $1 million customers grew to 74%, a 42% year-over-year increase [7] - Customers spending more than $100,000 annually increased to 1,168, a 15% year-over-year growth [7] - Security Core products represented 16% of ending remaining performance obligation (RPO), up from 12% the previous year [11][21] - Security Core revenue was 7% of total revenues for 2025, with significant growth in customer adoption [20] Market Data and Key Metrics Changes - JFrog's customer count in fiscal year 2025 was approximately 6,600 [21] - The company reported a net dollar retention rate of 119%, indicating strong customer commitment [21] - The company ended 2025 with $704 million in cash and short-term investments, compared to $522 million at the end of 2024 [24] Company Strategy and Development Direction - JFrog aims to be the foundational infrastructure for software delivery in an AI-driven world, focusing on security and governance of software supply chains [8][10] - The company is expanding its product portfolio and building partnerships with leading companies to enhance value for enterprise customers [6][7] - JFrog is committed to transitioning customers from on-premises solutions to cloud-based offerings, aligning with market trends [19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of the pipeline and a stabilized purchasing environment as they enter 2026 [25] - The company anticipates full-year 2026 baseline cloud growth to be in the range of 30%-32% [26] - Management highlighted the increasing threat environment as a driver for sustained customer adoption of security solutions [12][40] Other Important Information - JFrog's cash flow from operations for the full year 2025 was $145.7 million, with a free cash flow margin of 27% [24] - The company is focused on disciplined spending while investing in innovation across its platform [26] Q&A Session Summary Question: Customer count transition and focus on larger customers - Management confirmed a strategy focused on larger enterprise customers, resulting in a decrease in lower ASP customers while increasing spending from larger clients [36][37] Question: Structural growth drivers from security incidents - Management acknowledged the increasing frequency of security incidents as a structural growth driver, emphasizing the need for robust security solutions [40][42] Question: Revenue parallels from security incidents - Management indicated that potential revenue growth correlates with the number of enterprise customers adopting JFrog Security, highlighting multiple avenues for growth [45] Question: Consumption trends from AI-driven deployments - Management noted a significant increase in software artifacts and binaries due to AI-driven development, indicating a growing need for JFrog's solutions [49][50] Question: Governance and regulatory pressure in AI adoption - Management confirmed that JFrog's AppTrust is designed to address governance challenges arising from AI and automated code generation [54][55] Question: Partnerships with NVIDIA and Hugging Face - Management highlighted that partnerships with NVIDIA and Hugging Face validate JFrog's position as a secure model registry and are expected to drive new customer acquisitions [71][72]

Financial Data and Key Metrics Changes - Recurring gross profits increased by 33% in 2025, with adjusted EBITDA margins expanding to 34% [5][26] - Annual recurring revenue (ARR) grew by 26%, reaching over $2 billion, while payment volume hit $195 billion [26] - GAAP operating income rose to $292 million from $16 million a year ago, driven by strong adjusted EBITDA and tight management of stock-based compensation [27][30] Business Line Data and Key Metrics Changes - SaaS ARR and subscription revenue each grew by 28% year-over-year, with SaaS ARPU in the core growing even faster than total SaaS ARPU [29] - Subscription gross profit increased by 33%, with SaaS gross margin expanding by 300 basis points year-over-year to 80% in Q4 [30] - Payments ARR grew by 24%, and fintech gross profit increased by 25% in Q4 [30] Market Data and Key Metrics Changes - The company added a record 30,000 net locations in 2025, ending the year with 164,000 locations [26] - The SaaS net retention rate remained healthy at 109% in 2025, supported by upsell and location expansion from existing customers [30] - The company continues to gain market share in its core U.S. SMB and mid-market restaurants, now powering 20% of these restaurants [8][9] Company Strategy and Development Direction - The company aims to double its market share and ARR over time, with a focus on growing market share in its core and demonstrating that new markets will be material growth drivers [8][12] - Investments in product differentiation and AI are prioritized to enhance customer adoption and drive differentiation [18][21] - The company plans to launch new products, including a drive-thru solution, to capture additional market segments [72] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining high growth for the next 5-10 years, with a focus on reinvesting in growth initiatives [38] - The company anticipates 20%-22% growth in recurring gross profit streams and adjusted EBITDA of $775 million-$795 million for 2026 [36] - Management highlighted the importance of disciplined capital allocation while expanding margins over time [24][35] Other Important Information - The company has repurchased approximately 8 million shares for $235 million since the inception of its buyback authorization in 2024 [35] - The company is experiencing cost pressures from higher memory chip costs, which are expected to impact margins in the second half of 2026 [36][37] Q&A Session Summary Question: SaaS ARR per location and enterprise metrics - Management confirmed confidence in mid-single-digit SaaS ARPU growth for 2026, with core SaaS ARPU growing faster than total company metrics [41][43] Question: Net adds and new verticals contribution - Management indicated that net add growth in 2026 is expected to be higher than in 2025, with new TAMs contributing significantly to this growth [47][49] Question: AI disruption and competitive landscape - Management views AI as an opportunity to enhance the platform and drive innovation rather than a threat, emphasizing the unique value Toast provides [50][54] Question: R&D investment and margin framework - Management confirmed that the margin framework allows for increased R&D investment to capitalize on AI opportunities while targeting long-term margin goals [58][62] Question: Drive-through product rollout - Management stated that the upcoming drive-through product will open up new market opportunities, particularly in enterprise [72][73]

Financial Data and Key Metrics Changes - In fiscal year 2025, total revenue was $531.8 million, up 24% year-over-year [6][19] - Q4 total revenues reached $145.3 million, a 25% increase year-over-year [19] - Cloud revenue for 2025 was $243.3 million, representing 45% year-over-year growth [6][20] - Q4 cloud revenues grew to $70.2 million, up 42% year-over-year, accounting for 48% of total revenues [19][20] - Gross profit in Q4 was $121.6 million, with a gross margin of 83.7% [24] - Non-GAAP earnings per share for 2025 was $0.82, a 26% increase year-over-year [25] Business Line Data and Key Metrics Changes - Customers spending more than $100,000 annually grew to 1,168, a 15% increase year-over-year [6] - Enterprise Plus subscriptions contributed 57% of total revenues in Q4, up from 54% in the prior year [21] - Security Core products represented 16% of remaining performance obligation (RPO) as of December 31, 2025, compared to 12% in the prior year [23] Market Data and Key Metrics Changes - JFrog's customer count in fiscal year 2025 was approximately 6,600 [23] - Net Dollar Retention for the four trailing quarters was 119%, indicating strong customer adoption [23] Company Strategy and Development Direction - JFrog aims to be the system of record for managing and securing software supply chains, particularly in the context of AI [10][18] - The company is focusing on expanding its security offerings and enhancing partnerships with major cloud providers [14][18] - JFrog is committed to quality growth and responsible investments while addressing emerging needs in the software supply chain [33] Management's Comments on Operating Environment and Future Outlook - Management noted a growing threat environment in software supply chains, which is driving demand for JFrog's security solutions [12][44] - The company anticipates continued durable growth in cloud revenue, estimating a baseline growth of 30%-32% for 2026 [28] - Management expressed confidence in the strength of the pipeline and a stabilized purchasing environment as they enter 2026 [27] Other Important Information - JFrog's cash and short-term investments totaled $704 million at the end of 2025, up from $522 million at the end of 2024 [26] - The company is focused on maintaining disciplined spending while investing in innovation across its platform [29] Q&A Session Summary Question: Customer count transition and focus on larger customers - Management confirmed a strategy focused on larger enterprise customers, resulting in a decrease in lower ASP customers while increasing spending from larger clients [39][40] Question: Structural growth drivers from security incidents - Management acknowledged the increasing frequency of security incidents as a structural growth driver, emphasizing the need for robust security solutions [43][44] Question: Revenue parallels from security incidents - Management indicated that potential revenue growth should be assessed based on the number of enterprise customers yet to adopt JFrog Security, highlighting multiple avenues for growth [48] Question: Consumption trends from AI-driven deployments - Management noted a significant increase in binaries created due to AI agents, indicating a growing need for JFrog's solutions to manage this surge [52] Question: Governance and regulatory pressure with AI adoption - Management confirmed that JFrog's AppTrust is designed to address governance challenges arising from AI and generative tools [56] Question: Partnerships with AI companies and new logos - Management highlighted that partnerships with NVIDIA and Hugging Face are driving new customer acquisitions and enhancing JFrog's position in the market [72][73] Question: Risks associated with AI - Management identified the risk of becoming distracted by trends rather than focusing on delivering value to enterprise customers as a key concern [80]

Financial Data and Key Metrics Changes - Total revenue in Q4 was $349 million, up 15.6% year-over-year [26] - Full year revenue growth was 15%, with a non-GAAP operating margin of 14%, representing a year-over-year expansion of 400 basis points [7][30] - Q4 non-GAAP operating income was $52 million, with a non-GAAP operating margin of 15% [26] - Free cash flow for Q4 was $90 million, bringing full-year free cash flow to $215 million, representing 69% year-over-year growth [30] Business Line Data and Key Metrics Changes - The U.S. general contractors segment remains a cornerstone of growth, with 3 new ENR 400 logos added in Q4 and over 70 ENR 400 customers expanding their run rate [8][10] - Procore Pay saw strong momentum, ending the year with nearly 450 customers, representing over 70% year-over-year growth [28] - The total number of customers spending over $100K in ARR exceeded 2,700, with 115 customers spending more than $1 million in ARR, reflecting 34% year-over-year growth [27] Market Data and Key Metrics Changes - International revenue grew 14% year-over-year, impacted by currency headwinds, but grew 15% on a constant currency basis [26] - The owners segment continues to scale, with plans to launch specialized products to meet evolving needs [12] Company Strategy and Development Direction - The company aims to lead in the AI era, focusing on driving efficiency gains across the construction lifecycle [6][14] - Procore's strategy includes leveraging its position as a system of record and collaboration to enhance AI capabilities [19][20] - The acquisition of Datagrid is expected to accelerate Procore's AI strategy, enhancing product synergies [16][45] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in Procore's future, emphasizing the importance of customer relationships and the potential for durable growth and margin expansion [5][25] - The company anticipates continued strength in free cash flow per share and plans to maintain a focus on productivity increases [30][77] - Management acknowledged ongoing headwinds in the construction environment but remains optimistic about the company's ability to navigate these challenges [7][32] Other Important Information - Procore for Government achieved FedRAMP Moderate authorization, expanding opportunities with U.S. federal and state government customers [12] - The company is focused on limiting share count dilution, with a weighted average diluted share count growing less than 1% in Q4 [30] Q&A Session Summary Question: Customer conversations regarding AI - Management noted that customers are not inclined to become AI experts and prefer their tech vendor to leverage the latest technologies, including AI [39][40] Question: Glide path for CRPO growth - Management indicated that CRPO growth will normalize with revenue growth as contract duration stabilizes, expected towards the latter part of fiscal 2026 [46][47] Question: Competitive landscape and Procore's position - Management highlighted strong competitive win rates and positive customer relationships, reflecting confidence in Procore's technology and platform [50][57] Question: International growth opportunities - Management acknowledged macroeconomic challenges but remains optimistic about the long-term potential for international growth [60][61] Question: Monetization strategy for AI - Management discussed establishing a compelling ROI for AI and indicated plans to include AI offerings in upcoming bundles and explore consumption-based models [75][76]

Financial Data and Key Metrics Changes - Recurring gross profits increased by 33% in 2025, with adjusted EBITDA margins expanding to 34% [5][26] - The company added over 30,000 net locations, ending the year with 164,000 locations [26] - Annual recurring revenue (ARR) grew by 26%, reaching over $2 billion, with payment volume at $195 billion [26] - Adjusted EBITDA for 2025 was $633 million, with free cash flow of $608 million [27] - GAAP operating income rose to $292 million from $16 million a year ago [27] - Total monetization, measured by recurring gross profit as a percentage of gross payment volume (GPV), hit 98 basis points, a 5 basis point increase year-over-year [28] Business Line Data and Key Metrics Changes - SaaS ARR and subscription revenue each grew by 28% year-over-year [28] - Subscription gross profit increased by 33%, with SaaS gross margin expanding by 300 basis points to 80% in Q4 [29] - Payments ARR grew by 24%, while fintech gross profit increased by 25% in Q4 [29] - Hardware and professional services gross profit was -12% of recurring gross profit streams, impacted by higher tariff costs [31] Market Data and Key Metrics Changes - The company powers 20% of SMB and mid-market restaurants in the U.S., nearly doubling over the past three years [8] - The sales productivity in the top 10 geographies continues to outperform the average, indicating room for further market share gains [9] - New markets, including international expansions, are growing faster than the core market at similar time periods [12] Company Strategy and Development Direction - The company aims to double market share in its core U.S. SMB and mid-market restaurants while expanding into new markets [7][12] - Investments in AI and product enhancements are expected to drive efficiency and customer adoption [20][24] - The company plans to launch a drive-thru product and improve support for non-native English-speaking operators in 2026 [11][17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining high growth for the next 5-10 years, driven by new TAMs and product innovations [38] - The company anticipates a 20%-22% growth in recurring gross profit streams for 2026, with adjusted EBITDA guidance of $775 million-$795 million [36] - Management highlighted the importance of disciplined capital allocation while investing in high-conviction opportunities [24][35] Other Important Information - The company has repurchased approximately 8 million shares for $235 million since the inception of its buyback authorization in 2024 [35] - The dollar-based payback period for the portfolio remained in the mid-teen months, with expectations to improve as new towns mature [33] Q&A Session Summary Question: SaaS ARR per location and enterprise metrics - Management expressed confidence in mid-single-digit SaaS ARR growth for 2026, with core SaaS ARPU growing faster than total company metrics [41][43] Question: Net adds and new verticals contribution - The company expects a similar pattern in net adds for 2026, with incremental growth from new towns and verticals [48][50] Question: AI disruption and competitive landscape - Management views AI as an opportunity to enhance the platform rather than a threat, emphasizing the unique value Toast provides [51][56] Question: R&D investment and margin framework - The company is committed to investing in R&D to sustain long-term growth while targeting 40% margins over time [60][64] Question: Drive-through product rollout - The company plans to launch a drive-thru product this year, which will open up new market opportunities [75] Question: Overall investment strategy and guidance - Management indicated that 2026 reflects a long-term vision for growth, with a balanced approach to guiding expectations [82][84]