Gomez said SaaS ARR and subscription revenue each grew 28% year-over-year in Q4, alongside “consistent mid-single-digit increases in SaaS ARPU on an ARR basis.” Subscription gross profit increased 33% and SaaS gross margin expanded 300 basis points to 80% in Q4. She also said the SaaS net retention rate was 109% in 2025, driven by upsell and location expansion.In the fourth quarter, Toast’s recurring gross profit streams increased 28%, and the company added approximately 8,000 net locations. Gomez said tota ...

Toast (NYSE:TOST) Q4 2025 Earnings call February 12, 2026 05:00 PM ET Company ParticipantsAdam Frisch - Senior Managing DirectorAman Narang - CEODominic Ball - Equity Research AssociateElena Gomez - CFOMatt Coad - DirectorMichael Senno - Senior VP of FinanceTimothy Chiodo - Managing DirectorWill Nance - VPConference Call ParticipantsDan Dolev - Senior AnalystJosh Baer - Executive Director and Software Equity Research AnalystTien-tsin Huang - Senior AnalystOperatorGood afternoon. My name is Tiffany, and I wi ...

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]

Toast (NYSE:TOST) Q4 2025 Earnings call February 12, 2026 05:00 PM ET Speaker8Good afternoon. My name is Tiffany, and I will be your conference operator today. At this time, I would like to welcome everyone to Toast's fourth quarter and full year 2025 earnings conference call. Today's call will be 45 minutes. I'll now turn the call over to Michael Senno, Senior Vice President of Finance. You may begin your conference.Speaker7Thank you, operator. Welcome to Toast's earnings conference call for the fourth qua ...

Key Takeaways Toast reports Q4 earnings Feb. 12, with results shaped by ARR highs, revenue momentum and AI adoption.TOST partnered with Uber to deepen POS-delivery integration, with promotions tools set for 2026.Toast added about 7,500 net locations in Q3, while higher tariffs might weigh on it.Toast Inc. (TOST) is slated to report fourth-quarter 2025 earnings on Feb. 12, after the closing bell.The Zacks Consensus Estimate for revenue is $1.62 billion, up 21% from a year ago.The Zacks Consensus Estimate for ...

Company Overview - Toast, Inc. is a Boston-based cloud software provider focused on the restaurant industry, offering an integrated point-of-sale and management platform built on Android. The company has positioned itself as a technology partner rather than just a payments provider, with an expanding suite of software, payments, and AI tools supporting long-term growth narratives [4]. Financial Performance - In the third quarter of 2025, Toast surpassed $2 billion in annual recurring revenue (ARR) for the first time, effectively doubling ARR in just two years, highlighting the scalability and resilience of its platform [3]. - DA Davidson analyst Peter Heckmann lowered the price target on Toast to $36 from $42 while maintaining a Neutral rating, expecting the company to modestly exceed its own forecasts and broader consensus, although growth and margin expansion are anticipated to be more measured than in the past four to six quarters [1]. Product Development - The rollout of AI-driven products such as Toast IQ and Toast Advertising has seen strong early adoption, with over 25,000 restaurants using Toast IQ more than 235,000 times since early October, reinforcing engagement across its customer base [3]. Market Position - Despite the normalization of near-term expectations, Toast's recurring Gross Payment Volume remains a key area of strength that could provide incremental upside [1].

Core Insights - Toast is a fintech company that has established a strong recurring revenue model, particularly in the restaurant sector, which is often overlooked by long-term investors [1][2] - The company’s Annualized Recurring Revenue (ARR) has grown approximately 30% year-over-year, surpassing $1.9 billion in mid-2025 and expected to exceed $2 billion by Q3 2025 [3] - Toast has achieved GAAP profitability for the first time in full-year 2024, reporting a net income of $19 million and Adjusted EBITDA of $373 million [5][6] Revenue Model - Toast's platform includes essential services for small business owners, such as point-of-sale software, payment processing, payroll, and analytics, which contribute to its recurring revenue [3][4] - The company has a significant market opportunity, with a total addressable market of approximately 1.4 million potential locations, while currently servicing around 156,000 restaurant locations [8] Growth and Expansion - Toast's new offerings, such as Toast IQ and Toast Advertising, are designed to enhance customer engagement and increase revenue per customer over time, indicating a strategy of expansion revenue [9] - The company is positioned as a subscription-first fintech with real earnings and improving margins, suggesting a long runway for growth and market share acquisition [10] Market Position and Strategy - Toast's business model is less dependent on restaurant sales volume, as its revenue is derived from software and payment fees, providing a more stable cash flow even during economic downturns [11] - The company is viewed as a long-term compounder, with a focus on deepening monetization rather than merely increasing the number of locations [12] Investment Considerations - Investors are advised to consider average entry points during market volatility, as restaurant spending is cyclical and sensitive to macroeconomic conditions [12] - Monitoring Toast's progress in enterprise and international expansion could be crucial for long-term valuation growth [12]

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]