Summary of Toast's Conference Call Company Overview - **Company**: Toast - **Industry**: Restaurant technology and payment solutions Key Highlights - **2025 Performance**: - Recurring gross profit is projected to grow by **32%** with a **33% margin** [3][4] - Achieved a significant milestone of crossing **$2 billion** in revenue [4] - Adjusted EBITDA margins expanded by over **600 basis points** [3] - **Market Expansion**: - Focus on penetrating core Total Addressable Market (TAM) and expanding into new TAMs, including enterprise, international, and food and beverage retail [5][7] - Successful launch in Australia and significant deals won [5][6] - **Emerging Businesses**: - Achieved over **$100 million** in Annual Recurring Revenue (ARR) from emerging businesses [5] - Different Average Revenue Per User (ARPU) profiles expected across new segments, with gradual expansion anticipated [10][11] Financial Metrics - **Net Location Adds**: - U.S. SMB net adds expected to remain stable in 2025 and 2026, despite potential tapering as the base grows [12][13] - Core business still has significant growth runway [14] - **SaaS ARR per Location**: - Expected to remain in the mid-single digits, with core ARPU growing faster than total ARPU [19][20] - **Gross Payment Volume (GPV)**: - Trends remain stable, with gradual impacts from new segments [21] - **Net Payments Take Rate**: - Increased year-over-year due to cost optimization, targeted pricing, and innovation in digital products [22][24] 2026 Outlook - **Growth Projections**: - Recurring gross profit growth expected to exceed **20%** with margins flat to slightly up [26][27] - Investments focused on both core and new TAMs, with a disciplined capital approach [30][32] - **Sales and Rep Capacity**: - Increased investment in sales rep capacity to drive growth in both core and emerging businesses [33][36] Product Innovations - **Toast IQ**: - New AI-driven product designed to assist restaurant operators with insights and performance management [41][42] - **Partnerships**: - Strategic partnerships with American Express and Uber aimed at enhancing customer experience and integration [44][46] Competitive Landscape - **Market Share Goals**: - Aim to double market share in the core business, with strong execution and win rates observed [15][17] - **Enterprise Payments Attach**: - Most enterprise customers are adopting payments as part of the overall platform, with ongoing opportunities for growth [47][48] Miscellaneous - **Visa/Mastercard Settlement**: - Potential long-term impact on interchange rates, but not expected to be material for Toast [51][52] This summary encapsulates the key points discussed during the conference call, highlighting Toast's performance, strategic initiatives, and outlook for the future.

Financial Data and Key Metrics Changes - The company achieved 34% top-line growth and 35% margins in Q3 2025, surpassing $2 billion in ARR for the first time, doubling from $1 billion in just two years [6][21] - Total fintech and subscription gross profit increased by 34% year-over-year, with adjusted EBITDA of $176 million and margins expanding by 5 percentage points to 35% [23][27] - GAAP operating income was $84 million, up from $34 million a year ago, with free cash flow growing to $153 million in Q3 [27][29] Business Line Data and Key Metrics Changes - SaaS ARR grew 28% year-over-year, driven by location growth and a mid-single-digit increase in SaaS ARPU [24] - Payments ARR increased by 31%, with GPV reaching $52 billion, growing 24% year-over-year [24][25] - Non-payments fintech solutions contributed $58 million in gross profit, with a net take rate of 61 basis points [25] Market Data and Key Metrics Changes - The company added approximately 7,500 net locations in Q3, ending the quarter with 156,000 total locations, a 23% increase from the previous year [24] - International SaaS ARPU increased by 20% year-over-year, indicating strong traction in international markets [12] Company Strategy and Development Direction - The company aims to double its market share in the U.S. SMB business and expand into new verticals and geographies [7][9] - Key priorities include scaling locations, demonstrating new market growth, increasing platform adoption, and investing with discipline while expanding margins [9][18] - The company is focused on building a durable growth business with a long-term goal of reaching $10 billion in ARR [21][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to sustain growth and expand margins, with expectations for continued net adds in 2025 and 2026 [18][30] - The company noted resilience in the restaurant sector despite macroeconomic concerns, with customers performing well [56] Other Important Information - The company has expanded its partnership with Uber to enhance restaurant demand and off-premise sales management [8] - Adjusted EBITDA margins are expected to remain flat to slightly up year-over-year, supported by a strong core margin of 40% [31] Q&A Session Summary Question: About GPV per location and its drivers - Management indicated that GPV per location exceeded expectations in Q3, attributing part of the performance to the company's platform helping restaurants run more profitable businesses [34][35] Question: Concerns about competition and market share sustainability - Management highlighted improved win rates against competitors and emphasized the strength of their core platform as a differentiator [38][39] Question: Opportunities with consumer engagement and network density - Management discussed the potential of their growing restaurant network to enhance consumer experiences and drive new product opportunities [47][49] Question: Performance during AWS outage - Management confirmed that the business held up well during the AWS outage, allowing customers to operate offline without significant impact [67][68] Question: Sustainability of the improved take rate - Management expressed confidence in the ability to drive take rate up over time through targeted pricing moves and cost optimization [74][76] Question: Financial impact of Toast IQ and its adoption - Management noted strong early adoption of Toast IQ and its potential to drive product-led growth, with monetization strategies still being explored [83][84] Question: Pricing strategy and adjustments - Management clarified that recent pricing adjustments were intentional and targeted, with a focus on balancing market share and pricing optimization [90][91] Question: Confidence in increased net adds in 2026 - Management indicated that new TAMs are expected to contribute significantly to net adds, alongside continued performance in the core business [96][98]

Financial Data and Key Metrics Changes - The company achieved 34% top-line growth and 35% margins in Q3 2025, surpassing $2 billion in ARR for the first time, doubling from $1 billion in just two years [6][21] - Total fintech and subscription gross profit increased by 34% year-over-year, with adjusted EBITDA of $176 million and margins expanding by 5 percentage points to 35% [23][27] - GAAP operating income was $84 million, up from $34 million a year ago, with free cash flow growing to $153 million in Q3 [27][29] Business Line Data and Key Metrics Changes - SaaS ARR grew 28% year-over-year, driven by location growth and a mid-single-digit increase in SaaS ARPU [24] - Payments ARR increased by 31%, with fintech gross profit growing by 35% in Q3 compared to the previous year [24][25] - The company added approximately 7,500 net locations in Q3, ending the quarter with a total of 156,000 locations, a 23% increase from a year ago [24] Market Data and Key Metrics Changes - International SaaS ARPU increased by 20% year-over-year, indicating strong traction in international markets [12] - GPV (Gross Payment Volume) was $52 billion, growing 24% year-over-year, with GPV per location slightly up due to stronger same-store sales trends [24][25] Company Strategy and Development Direction - The company aims to double its market share in the core U.S. SMB business and expand into new verticals and geographies [7][9] - Key priorities include scaling locations, demonstrating growth in new markets, increasing customer adoption of the platform, and investing with discipline while expanding margins [9][18] - The company is focused on building a durable growth business that can scale to $5 billion and $10 billion in ARR over time [8][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to sustain strong growth and expand adjusted EBITDA margins, with expectations for continued net adds in 2025 and 2026 [20][29] - The management noted that restaurants tend to be resilient even in challenging economic conditions, with customers performing well [55][56] Other Important Information - The company has secured partnerships with major brands like Uber and Nordstrom, enhancing its market presence [8][12] - The company is investing in AI-driven capabilities, such as Toast IQ, to improve customer experience and operational efficiency [15][16] Q&A Session Summary Question: About GPV per location performance - Management noted that GPV per location exceeded expectations in Q3, attributing part of the success to the platform's ability to help restaurants run more profitable businesses [34][35] Question: Concerns about competition and market share sustainability - Management highlighted that win rates against major competitors are up year-over-year, and they are on track to double market share in the core market [38][39] Question: Opportunities with consumer engagement - Management discussed the potential of their dense network of restaurants to enhance consumer experiences and drive new product offerings [47][50] Question: Performance during AWS outage - Management confirmed that the business held up well during the AWS outage, allowing customers to operate offline and process orders once the system was restored [65][68] Question: Sustainability of the take rate increase - Management expressed confidence in the ability to drive take rate up over time through targeted pricing moves and cost optimization [72][74] Question: Financial impact of Toast IQ adoption - Management emphasized that the focus is currently on driving adoption and customer value, with monetization strategies being explored for the future [80][83] Question: Confidence in increased net adds for 2026 - Management indicated that new TAMs (Total Addressable Markets) are expected to contribute significantly to net adds, alongside continued performance in the core business [92][94]

Financial Data and Key Metrics Changes - The company achieved a 34% year-over-year growth in top-line revenue, with adjusted EBITDA margins expanding to 35% [5][20][25] - Annual Recurring Revenue (ARR) surpassed $2 billion for the first time, doubling from $1 billion in just two years [18][20] - Total fintech and subscription gross profit increased by 34% year-over-year, with a total take rate of 98 basis points, up 7 basis points from the previous year [20][22] Business Line Data and Key Metrics Changes - SaaS ARR grew 28% year-over-year, driven by location growth and a mid-single-digit increase in SaaS ARPU [21][22] - Payments ARR increased by 31%, with fintech gross profit growing 35% year-over-year [22][23] - The company added approximately 7,500 net locations in Q3, bringing the total to 156,000, a 23% increase from the previous year [21][22] Market Data and Key Metrics Changes - International SaaS ARPU rose by 20% year-over-year, indicating strong traction in international markets [11] - The company is expanding its presence in food and beverage retail, with new customer acquisitions contributing to growth [12] Company Strategy and Development Direction - The company aims to double its market share in the core U.S. SMB business while expanding into new verticals and geographies [5][6][16] - Key priorities include scaling locations, demonstrating growth in new markets, increasing platform adoption, and investing in high-priority areas [7][16] - The company is focused on leveraging AI and data to enhance its platform, with products like Toast IQ driving customer engagement and operational efficiency [14][15][48] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining strong growth and expanding margins, with a target of reaching $10 billion in ARR over the next decade [18][19][26] - The company remains optimistic about its ability to navigate macroeconomic challenges, citing resilience in the restaurant sector [38] Other Important Information - Free cash flow grew to $153 million in Q3, with nearly 100% conversion from adjusted EBITDA [25] - The company repurchased 1.5 million shares, totaling $54 million, as part of its capital allocation strategy [25] Q&A Session Summary Question: How much of the GPV per location increase was driven by customer mix versus Toast's technology? - Management noted that GPV per location exceeded expectations, attributing part of the success to the platform's ability to help restaurants operate more profitably [30] Question: What are the competitive concerns regarding market share? - Management highlighted improved win rates against competitors and emphasized the strength of their core platform as a differentiator [31][33] Question: What opportunities does the dense restaurant network provide? - Management discussed the potential for enhanced consumer experiences and new product offerings due to the growing network of restaurants [36][37] Question: How did the business perform during the AWS outage? - Management confirmed that the platform's design allowed restaurants to operate effectively during the outage, minimizing impact on operations [42][43] Question: What is the outlook for net adds in 2026? - Management expects continued strong performance in net adds, driven by both core business growth and contributions from new TAMs [52]

Core Insights - Toast (TOST) is valued at $21.6 billion and is establishing itself as a digital backbone for the restaurant industry through its all-in-one technology platform [1] - The company has seen a year-to-date stock increase of 1.55%, outperforming the broader market [1] Company Overview - Toast specializes in providing POS systems, banking services, and software solutions specifically for restaurants, generating revenue primarily from payment processing and subscription fees for its software [4] - The company also earns income from hardware sales [4] Financial Performance - In Q2, Toast added 8,500 net new locations, increasing its total to 148,000 locations worldwide, a 24% increase from the previous year [5] - Annual recurring revenue (ARR) rose 31% year-over-year to $1.9 billion, while Gross Payment Volume (GPV) increased by 23% to $49.9 billion [5] - SaaS ARR grew by 30%, and Payments ARR rose by 32% in the same quarter [5] Operational Metrics - Operating expenses increased by 18%, driven by sales and marketing efforts as the company expands globally and into retail [6] - Research and development expenses rose by 9% to support innovations like Toast Go 3 and Toast IQ, which utilizes AI [6] - Adjusted EBITDA reached $161 million, with margins expanding to 35% [6] - GAAP net income for Q2 was reported at $80 million, a significant increase from $14 million in the same quarter last year [6] - The company generated $208 million in free cash flow despite rising expenditures [6]

Financial Data and Key Metrics Changes - In Q2 2025, the company reported a 31% growth in Annual Recurring Revenue (ARR) and a 35% increase in total FinTech and subscription gross profit year over year [25][27] - Adjusted EBITDA reached $161 million with margins expanding by 8 percentage points year over year to 35% [25][26] - GAAP operating income was $80 million, significantly up from $14 million a year ago [33] Business Line Data and Key Metrics Changes - The company added a record 8,500 net new locations, ending Q2 with 148,000 locations, a 24% increase from the previous year [27] - SaaS ARR grew by 30% year over year, driven by location growth and a 5% increase in SaaS ARPU [29] - Payments ARR increased by 32%, while FinTech gross profit grew by 30% in Q2 [30] Market Data and Key Metrics Changes - The company crossed 10,000 live locations across enterprise, food and beverage retail, and international markets [27][15] - Total Gross Payment Volume (GPV) was $50 billion, growing 23% year over year, with GPV per location down 1% [30] - The net take rate for FinTech was 57 basis points, and for Payments, it was 49 basis points, both showing a slight increase from the previous year [30] Company Strategy and Development Direction - The company aims to scale locations and market share in its core US restaurant business while expanding into new customer segments [11][12] - Key priorities include increasing customer adoption of the platform, driving differentiation through data and AI, and investing in high-priority areas while gradually expanding margins [11][12][23] - The partnership with American Express aims to enhance customer experiences and broaden the platform's capabilities [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth opportunities, citing strong execution and market share gains [9][23] - The company plans to continue investing in its core business and new segments, with expectations for sustained long-term growth [28][36] - Management acknowledged the impact of tariffs and seasonal dynamics on margins in the second half of the year [55][36] Other Important Information - The company launched in Australia, marking its fourth international market, and plans to leverage learnings from previous launches [10][18] - The introduction of Toast Go 3 and Toast IQ reflects the company's commitment to innovation and enhancing customer service [20][32] Q&A Session Summary Question: Can you provide context on retail ARPUs and product enhancements? - Management highlighted that retail ARPU is over $10,000, indicating strong growth potential and ongoing investments in sales capacity [41][42] Question: What are the trends in GPV per location? - Management noted that GPV trends have been largely flat, with a slight decrease in GPV per location, but expressed confidence in unit economics across segments [47][48] Question: Can you elaborate on the expected EBITDA for Q3? - Management indicated that increased investments and tariff expenses would impact margins, but emphasized the importance of these investments for long-term growth [54][55] Question: How does the Amex partnership enhance the business? - The partnership aims to create personalized dining experiences by integrating reservation listings and leveraging customer data [118] Question: What feedback has been received on the AI-powered assistant, SUSHAF? - Positive customer feedback has been received, with the product providing valuable insights and recommendations for restaurant operators [124]

Financial Data and Key Metrics Changes - In Q2 2025, the company reported a 31% growth in Annual Recurring Revenue (ARR) and a 35% increase in total FinTech and subscription gross profit year over year [23][24] - Adjusted EBITDA reached $161 million with margins expanding by 8 percentage points year over year to 35% [23][24] - GAAP operating income was $80 million, significantly up from $14 million a year ago [31][32] Business Line Data and Key Metrics Changes - The company added a record 8,500 net new locations, ending Q2 with 148,000 locations, a 24% increase from the previous year [24][27] - The enterprise, food and beverage retail, and international segments collectively surpassed 10,000 live locations in Q2 [24][27] - SaaS ARR grew by 30% year over year, driven by location growth and a 5% increase in SaaS ARPU [27][30] Market Data and Key Metrics Changes - Total Gross Payment Volume (GPV) was $50 billion, growing 23% year over year, with GPV per location down 1% [28][30] - The take rate across SaaS and FinTech gross profit was 93 basis points, an increase of 8 basis points from a year ago [23][28] Company Strategy and Development Direction - The company aims to scale locations and market share in its core US restaurant business while expanding into new customer segments [9][10] - Key priorities include increasing customer adoption of the platform, driving differentiation through data and AI, and maintaining disciplined investment while expanding margins [9][10][21] - The partnership with American Express aims to enhance customer experiences and broaden the platform's reach [8][9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth opportunities, citing strong execution and market share gains [6][21] - The company anticipates continued growth in new market segments, expecting them to become significant contributors to overall business [24][25] - Management acknowledged the impact of tariffs and planned investments to drive sustained growth in the second half of the year [50][51] Other Important Information - The company launched in Australia, marking its fourth international market, and plans to leverage learnings from previous markets for a successful rollout [8][15] - The introduction of Toast Go 3 handhelds is expected to enhance customer service and operational efficiency [19][20] Q&A Session Summary Question: Can you provide context on retail ARPUs and product enhancements? - Management noted that retail ARPU is above $10,000, indicating strong growth potential and ongoing investments in sales capacity [36][38] Question: What are the latest trends in GPV per location? - Management clarified that GPV trends have been largely flat, with retail GPVs higher than restaurants, but overall GPV per location was down 1% [41][43] Question: Can you elaborate on the expected sequential decline in Q3 EBITDA? - Management explained that increased investments in customer segments and tariff impacts are contributing to the expected decline [48][50] Question: How does the Amex partnership enhance the business? - The partnership combines reservation listings and aims to create personalized dining experiences for customers [107][110] Question: What feedback is being received on the AI-powered assistant, SUSHAF? - Positive feedback has been received, with customers appreciating the human interface for insights and recommendations [113][115]

Summary of Toast (TOST) FY Conference Call - May 13, 2025 Company Overview - **Company**: Toast, Inc. (TOST) - **Industry**: Payments and IT services, specifically focused on restaurant management software and point of sale systems Key Points and Arguments Market Share and Growth - Toast has increased its market share in the U.S. restaurant sector from **10% to 15%** over the last two years [12][16] - The company aims to continue expanding its market share by leveraging social proof and increasing visibility among restaurant owners [16][18] - Productivity among account executives (AEs) has improved, indicating effective execution and product performance [19][22] Focus on Restaurants - Toast maintains a strong focus on the restaurant sector, having chosen to specialize rather than diversify into other areas [20] - The company has seen success in enterprise solutions, with notable clients like Applebee's and Topgolf, indicating growth potential in larger chains [21][42] Macro Environment and Resilience - Toast tracks various metrics such as same-store sales, new openings, and churn to gauge the health of the restaurant industry [24][25] - Historical data suggests that restaurants tend to perform better than retail during economic downturns, providing confidence in Toast's resilience [26][27] Profitability and Capital Allocation - The leadership team emphasizes long-term growth and capital allocation aligned with strategic goals, focusing on core business while exploring new opportunities [31][32] - Toast is prepared to adjust discretionary spending in response to economic pressures while ensuring long-term investments are not compromised [32][33] Competitive Landscape - Toast is enhancing its pricing strategy and sales approach to maintain a competitive edge in the market [34][35] - The company tracks win rates and customer satisfaction metrics to assess product effectiveness and market positioning [40] AI and Technological Innovations - Toast is investing in AI technologies, such as Sous Chef and Toast IQ, to enhance operational efficiency and customer experience [61][71] - The AI initiatives aim to provide restaurant operators with tools to optimize operations and improve customer interactions [69][70] Consumer Opportunities - The company sees potential in consumer-facing applications, leveraging data to enhance customer experiences and drive demand for restaurants [75][79] - Toast is exploring ways to integrate consumer services with its existing platform to create a seamless experience for users [81][82] International Expansion - Toast aspires to grow its international presence, focusing on markets with high potential for restaurant operations [91][92] - The company aims to achieve product parity with the U.S. offerings in international markets while being strategic about market entry [93] Additional Important Insights - Toast's capital business is designed to balance risk while providing necessary funding to SMB restaurants, especially in challenging economic conditions [86][88] - The company is committed to maintaining strong relationships with restaurant staff and franchisees, which helps drive its growth through word-of-mouth and community support [48][49] This summary encapsulates the key insights and strategic directions discussed during the Toast FY Conference Call, highlighting the company's focus on growth, innovation, and resilience in the restaurant technology sector.