Toast (NYSE:TOST) 2025 Conference Transcript

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.