Toast (NYSE:TOST) 2025 Conference Transcript

Summary of Toast (NYSE: TOST) 2025 Conference Call Company Overview - Company: Toast, Inc. - Industry: Restaurant technology and point-of-sale solutions Key Points and Arguments Business Performance - Toast reported a 31% year-over-year growth in current gross profit for Q2 [3] - Achieved mid-term margin goals of 30% to 35% and is adding over $400 million in ARR annually [3] - The company is focused on establishing foundations for long-term growth, particularly in retail and international enterprise sectors [3] Market Penetration and Growth - The U.S. SMB and mid-market restaurant TAM is estimated at 600,000 restaurants, with Toast's penetration in the high teens [6] - In top markets with over 30% share, Toast is experiencing faster growth than average [6] - Record net adds of 8,500 in Q2, indicating strong momentum [9] Investment in Core and New Markets - Toast is strategically investing in markets that are not yet "flywheel" markets to increase density and market share [10] - The company is focusing on customer-focused innovation, particularly in AI, to enhance the platform and customer experience [10] New Vertical Expansion - Toast has launched operations in Canada, the UK, Ireland, and recently Australia, with positive early results [16] - The company is seeing significant growth in full-service restaurants, which now account for over 50% of net adds in international markets [17] - The total addressable market in food and beverage retail is estimated at 220,000 locations, with potential for significant growth [29] Enterprise Business Development - Toast is making strides in the enterprise sector, with notable wins such as Dine Brands and Marriott [21] - The company is optimistic about the ARR opportunity and pipeline visibility, with implementations expected within 18 to 24 months [24] Financial Metrics and Pricing Strategy - Toast maintains a disciplined approach to pricing, focusing on small, steady movements rather than large price changes [50] - The fintech take rate has seen a modest increase, with a focus on cost optimization and innovation to drive future growth [51] Challenges and Future Outlook - The company is monitoring the impact of tariffs on hardware costs, expecting manageable effects in 2025 and a full-year impact in 2026 [53] - Toast is open to M&A opportunities but maintains a high hurdle for acquisitions to ensure alignment with core business strategy [56] Customer Insights and AI Integration - Customer feedback indicates a preference for using Toast's integrated platform for ease of service and support [39] - The company is leveraging AI to enhance customer experience, including tools for data analysis and personalized dining experiences [44][48] Additional Important Content - Toast emphasizes the importance of maintaining a balance between expanding into new markets and ensuring a strong core business [30] - The company is focused on building a comprehensive suite of products to address various customer needs, including payroll and inventory management [38] - The ongoing development of AI-driven products is seen as a critical area for future monetization and customer satisfaction [46][48]