TOST - Earnings call transcript Q2 2022

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Operator

Good afternoon. My name is Hannah, and I will be your conference operator today. At this time, I would like to welcome everyone to the Toast's Second Quarter 2022 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. you. Thank Instructions] [Operator turn Investor over Relations now Vice Michael President of and the will to call Senno, I Treasury.

You may begin your conference.

Michael Senno

Welcome ended by Aman Q&A On prepared remarks. Hannah. the our Elena Gomez, Chris COO, you, to will open conference CFO, earnings session. Thank with will call Comparato; second and quarter our call then June Narang, today's XXXX. They for who XX, are CEO, Toast's for be joined

harbor your we in statement I'd safe to to Before included draw press attention start, release. today's the like

performance During that this facts historical and other our expenditures, outlook, and and business within of we'll forward-looking our call, year guidance statements and financial growth make operational statements of Securities may of the including statements, are to related the regarding operational the management's business All expected statements forward-looking including those Exchange the Act. XXXX. expectations be full third for considered quarter and future financial than meaning

views today cause refer and to results to filings language statements these discussion to SEC Please update expectations. statements. only obligation risks a Forward-looking today's from uncertainties the press forward-looking and in as materially of or no for as our and required the could law, undertake our of our reflect revise we by that release except differ cautionary actual

release to reconciliations expense, earnings a During intended basis. revenue, margin, are references our cost substitute a comparable be results. of and this expense, call, otherwise measures all we this refer these on call will our selling to research discuss gross certain non-GAAP measures. for on and development and of expense Unless filings non-GAAP general measures profit most the financial are and administrative SEC gross financial GAAP measures. not and for marketing to non-GAAP Please through stated, These GAAP and non-GAAP detailed

that, let replay website Finally, available me be Chris. the With call, over call Investor at on investor Relations our both the and press including this to releases presentation, www.investors.toasttab.com. the of a accompanying will turn

Chris Comparato

our another our team management operational growth, our new record everyone. Michael, execution and growth, serve last their ability delivering deepening from front, afternoon, stems consistent you, core month, efficient QX, segments restaurant all Thank revenue momentum in product location relationship good for expectations, to further both the growth acquisition our momentum to family. to This welcome on strategy, suite and We're restaurants. and and the to restaurants the help Toast profit quarter of of of posting build additions. to announced delivering location and strong Sling Toast driving the continues deepen excited that our with of the team Sling we expand innovation On industry employees. exceeding

successfully navigated people at love and our times, how eating and Restaurants It's center restaurant economic COVID challenging unprecedented to have experience. the prior in from during adapted incredibly people back proven out, much conditions restaurants time. our communities. we're Restaurants for it we before environment, and operating a also many customers. challenges business, industry tremendous challenging and constraints, wages faced While in uncertainty have our momentum broader the higher backdrop this means cost But restaurant and of downturns. the are over Even cognizant times testament what a often and the most has heightened macroeconomic bounced facing economy. food in current across resilient labor of enjoy are the inflation,

XX% $XX year-over-year in year-over-year Revenue $XXX quarter, to to to second in results strong, to growing GPV $XXX the the up ARR was for increased Turning billion million. remains XX% million our QX. quarter. and XX%

pipeline a driven now quarter as time for just that as growth locations also net being new strong in continued in to locations drive net We on X,XXX we X,XXX first QX, growth. bookings QX, location low is new restaurant After restaurant continue incredible adding well exceeded over the churn. by in our

result X% profitability significant is are we Driving of guidance team, and the improvement raising a clear the full our priority key the consistent adjusted in midpoint execution progress year is by of in a our revenue growth. performance, XX% EBITDA QX. As at towards year-over-year for half first range, and our margin which implies the

adjusted increased outlook detail efficiency by of focus reflect to for Elena improvements, on shortly. the will prioritization we're investment and opportunities, raising XXXX expect these the and at midpoint to million provide $XX on more With our rigorous we our sustain outlook that. our EBITDA

on proven restaurant capitalize digital the industry to we of midst strategy opportunity. seamlessly generational in the cloud-based go-to-market our a shift With to execute that to solutions, continue

in drives the that more path share. At same from As traction gaining we and more density we developed to are we're territories, a benefit referrals flywheel leads, gain and driving inbound efficient productivity. less time, effect established on we increase and in that the markets effect as flywheel replicate higher

the to addition In locations, churn strong remains new growth customer low. in

helping all total grow. bringing restaurants. relationship more highlight of Jamba base. Toast grow XX passionate grow by expanded customer creating we the them few loyal than I'll Our partnership at a and to In our Juice success We of we value lie model. XXX tremendous customers, continue our our business locations. customers a QX, of The examples. our with In industry-leading we and and locations, support our platform heart adds as the restaurants to see formats success with enterprise, types to

platform. and QX of more Toast is business. From to growth. Juice increase continue drive Cookies like its of Toast and part all-in-one our and delivery XX selected fast-casual heightened Chip Cookies is labor an modules, relationship, our solution using as Chip help is of Toast more it example to business efficiently leverage a product them Jamba to integrated Chip managing how and in more value management the of checkout growing streamline piloting point-of-sale xtraCHEF could XX-location they costs. throughput QSR grow kiosk By our to making the to customers increase the of high-volume of great expanded Payroll, designed showcases to the the their benefits that while and multi-location platform Cookies and more our efficient customers more support help our serve in how how adopt efficiently. back-of-house As to leveraging combat of with environments Toast Jamba some largest than more efficiency increase our of services products to customers, saw as addition

we more While our value expense new more to help find for full customers how to highlights platform Chip to the businesses. are platform, of our of using create significant customers have leverage opportunity their a ways also

products to SaaS a solely growth offering, Toast existing to e-commerce customers year, customers also add Our and seamlessly consistent started Last to a complement team, been an on efficient selling we self-service of options incremental focused sales has Shop, Shop. ARPU. provides our Toast source

team, our of a loyalty second to customers and locations. partner of entire Maize our quarter platform. to invest – group. can of benefit example growth good marked team our enables fast to growth time breadth good with efficiently our adding selling example This the continue evolve product A initially first Maize with teams our in the growth of casual bring across on our the reps the benefit about a full We its Mexican Grill, restaurant inquired set. that is that each full team the utilize the and ways product of customers

platform. led the to as and showcases our adopting of and well guest platform, Our focused full worked to of our customers take This power integrated the several team them having of growth the xtraCHEF. products benefits advantage reps with to of as Payroll highlight a on team customer equipped of which upsell power our the full help

opportunity pleased with are the a of big While we we're our area. initial this early adoption still on drive existing platform among to in broader We customers. see results,

needs One serve format. customer seamlessly regardless for of Toast hotel integrating Earlier Toast and Restaurants, this size year, solution or designed restaurants management on of key to announced operators unique powerful ability focus to meet Toast's of hotel Hotel system a leading our differentiators deeply new restaurant segments property is platform. we with by the different the our

capability, kitchen locations. much have is opportunity our table-side menus. with chain and concept to full-service systems hotel result segment will for handheld signed Shifting hotel and for we hotel over regional chain use in restaurant a orders that new a manage order our to the As This point-of-sale efficiently This go the of offering. XX we management products. expedite its in display new QX, our pay, restaurant to deeper across our to multi-location of evidence

challenging our example build how, the specific our map how rate team team to better also a PayCard, platform, other Toast we the of Integrating differentiated than prior scheduling employee more last than leading more team This on help customers. the suite than and employees products, partner enhance with communications enhance makes also higher our team our our needs product, our to we As relationship alignment to a acquisition was The for with connect to as communications platform management features into With complements important platform want our suite the suite view launched when relationship management product customers million ever. of started enable efficiently experience. restaurant to labor product touch we year. Tips the thrive labor no the customers to Manager Payroll, deepen employees. our our on is to The is offering of it's high-engagement their the in create restaurants and focus touch extremely scheduling point and customers quoting with together plan new with is the acquisitions, robust family, an informed Sling development our alongside U.S. when allows Employee communications into suite. and point. will to can team another which existing our and our built signal deeply of the value After industry continue targeted compared more part workers seamless announced evaluated more for only employee stakeholders, Sling Similar to their into including and our and partnership, integrate experience. Sling XX road strong a early sales restaurant Last management management to and to Sling our proof how Sling scheduling provide solution. proposition important and and fully and in our Payroll. adapt with Toast, midst can their to cloud-based of employees, winning continue win entire as our offers a hearts for help overall minds a is market, early positioned month, and Payroll employee with us meet management manage customers restaurants, customer Sling, the acquisition an all specifically of of I accelerate critical purpose incorporating Toast. In motion, the the Sling and of

menu bounced restaurants levels, on has While We an invoice processing restaurants help fully the restaurant Inflation they on real-time multi-decade their constraints. pricing as are on what and increase noted data to automate environment the guests to provides managers are and employees. food Labor the and restaurant across earlier, pressure I focus are – it so matters to biggest restaurants automates high, provide But industry levels, sales for prepandemic can the on and of management, above profitability. their cost with platform with most, have navigate only built current about inventory the challenges. restaurant XXXX amplified staff from manual back expenses a efficiency two is restaurants, products two preserve and the and food facing also sourcing COVID both. processes and help trends X% our below inform food, is their these and not workflows to array xtraCHEF workforce decisions creating is and still are challenges. at

kiosks allows fast guests operators preferences. to And that seek over under increase was their xtraCHEF levels, Group year. tool to by the across Products This X% per our mobile and costs of as and Toast food with adoption we With Texas is at saving optimize seeing to xtraCHEF, handheld, on restaurants margins. Valley while and leading manage rising of Go overcome $XXX,XXX able help costs reduce average QSR are employees in an savvy and is order like well historic invaluable more Hospitality are out for a higher to tests orders guest lead shortages handle staffing expenses these also better providing touch hour, and customer rolling experience. points Toast to while to restaurants to meeting transition. evolving positioned casual pay labor digital better per More locations,

on-premise restaurant, of England Eatery, its fast pay example, For New transactions. mobile Market the majority Lobster order our & solution a for is casual and using

doubled conditions. Toast than and and tips they In relevant addition our automatically less have turnover are without the to wage changing split ever these significantly In to helping valuable incremental summary, platform is staff, employees, than restaurant pressure. requiring the as more more amongst navigate customers reduce

to platform, is to effort efficiency flourish, year. continuing more value to costs our proud a our business closing, mitigate restaurants of less want As and a where advocate a I'm executing offer and adapt that how our employees while Simply experience. and partner partner across to all customers time delighting guest use our thank helps the for I the our of vision goal partner. industry who great of half they customers. a first tireless who drive entire time get the restaurant their In can who we're put, and shares businesses for thrive. a to the add the tools Restaurants team's they trusted for spend thrives, need their great deserve and more partner for a will confused technology, restaurants Toast to future their by in industry, customers is

Now I'll turn to the Elena. call over

Elena Gomez

results work software Thanks, dedication and power thank great quarter big model, led only we're of adjusted to to results. payments cost The customers joining. serving revenue integrated Toast. everyone, your And team. Sling this to our continue in strong and discipline our excited proud came to hard commitment the thank in and to with EBITDA improvement. industry-leading our margin of and quarter, of Chris, our was in Not adjusted strong the Both you, ahead the to another platform, expectations you we EBITDA of And top evident welcome also a Toast drive growth. significant are QX. team All line our together to for

our industry. backbone strengthens restaurant Sling serve technology the on our mentioned, the management we will focus product platform Chris differentiate suite to As as team and being for further

continued switch platform that our increasing XX,XXX. approximately team the total we clearly proven location platforms We've and seasonally to QX quarter of add pattern likely than fewer on to in positioned over go-to-market our Our QX for which during locations value seasonal is season low peak adds. the our provides tremendous gains live sales expect Net new our Summer churn And well years off. to restaurants. share the and our their the busiest our business less strong. new That period, worth It's we in scale to continues in for market adds The X,XXX, this QX. momentum. accelerated over the said, same seen strategy rate. location with investments sustain remains the to pay noting further some to year. typically contributes to platform QX locations net several strongest pipeline resonating, value restaurants, The consistently proposition our is are is highlight also number in

growth XX% which for QX million, to QX. is and up from year-over-year Subscription increased first Total in recurring revenue second ARPU – XX,XXX year-over-year existing $XXX to both million. XXX% of stream, ARR, strong platform. at by product the operational compared metric, ended payments. eclipsed quarter, time Turning location customers increased ended our Total results. our more quarterly growth $XXX the year-over-year services revenue our our both grew at new to XX% core leverage as XX% and our adoption revenue and benefiting driven and SaaS in

our our products. of even new of Toast or POS of end four or customers solution, top payment locations the more QX, a XX% with of integrated join four products on platform higher As but the of more live percentage use and

the of to As cohort customers increase average each continues new is our SaaS for a for platform. result, above ARPU live and quarterly

believe about ARPU be upsell long-term contributor. big a potential, we will also we As our think

store the xtraCHEF QX, mentioned, our contributed of an all As more across integrated Toast ARPU team like our in and for selling products. complementing opportunity create value our our have see business. incremental their unlock and products, e-commerce growth for growth big shop the channel and of now to SaaS customers existing products over team has XX% sales to opportunity customers Toast Total add of Payroll of leverage deeper adoption a help incremental been efficient our ARR to those drive sales over Chris With full an we array our upsell and gross platform reps we shop to solution e-commerce and time.

side, On to was revenue XX% to solutions the grew $XXX the fintech gross million, $XXX million profit XX% year-over-year in and up quarter.

benefited rate in line and levels range net operationally As view XX as take from Debit which profit seasonal revenue a typical $XX was SaaS reminder, we the Fintech revenue. XX% efforts. XX.X%. strength cost in per offset what result million. GPV, million, slightly basis sustained profit in our location to growth benefit the and in profit which optimization Total within in grew per in transaction, processing gross of resulting up gross to billion fintech ticket mix by points GPV gross increased term. comprise XX% with below QX. recurring customer processing in higher partly QX. the $X.X margin quarter-over-quarter XX% XX% The year-over-year The a average patterns, was XXXX year-over-year both was rebound expect quarter-over-quarter, location Average annualized the in declined GPV of is continued continued we near of to $XXX of and gross

up and fintech strong and both and recurring at Looking location our ARPU fintech gross driven continued million, stream, XX% SaaS by across totaled increases our solutions. subscription profit year-over-year, $XXX growth

Looking customer at acquisition costs.

manage invest as the the maintain economics we navigate unit and scale healthy hardware to We business. even headwinds periods to to on tightly payback continue side

quarter, last we noted margin As quarter-over-quarter. declined hardware

to shift lower hardware we to half cost from the second shipping of in improve expect the margins methods. the benefit We as year

insulates our us seamlessly on continue chain short-term increase Our drives to serve only inventory disruptions, customers. supply cost to decision us shipping, from strategically also savings not but to allowing

cost context want our of pace our operating lines, expense overall other Before to I on discussing growth. provide the

improving reflected year, hiring staff early in the the Toast business teams the to from business. past the profitability the capitalize invest line as accelerated across key XXXX sustain our and reductions Sales of in With Over opportunity to continue rapidly believe forward. percentage to we to positions while with trajectory us the position a cost growth and top to following going to our align now areas of growth the sustain team momentum past and will this to as expense evident scale we sales recurring scales location marketing We're rebuild business already further ramp our The hiring. go-to-market declined revenue That benefit momentum outlook the Last largely a initial what's in growth. scaling QX. how we ahead. our creates for is in structure ARPU our and on in strategy flywheel XXXX, of effect. in strong large updated discussed quarter, that rest our

reps we deliver in referrals our and As productivity. a increased market inbound higher and sales territory, traffic share grow

tailwind traction We to gain expect penetrated particularly that investing less in going territories be a the into. we're as we forward, that

productivity. In our naturally has gain of as sales ramping average By the our to and hiring tenure we which become experience. increase, base state they With at led force rep increased sales expect level, past addition, historically over declined. productive sales tenure our the increase average year, the reps a to more more naturally to our team our target closer to plan steady

over time. year. past and and sales incredible another to area the and includes we've scaling development support marketing our efficiency the to where over We over to This platform the expect to two increased growth strategy. expenses the hundreds have team is develop Product platform now continuing and these in number innovation build investment we Research and over than in both experienced investing past COVID, doubled years. restaurants remains thousands contribute coming accelerated have core grown of to the to broaden significantly. than scalability order our locations more support the We're stability to of ambitions platform of and our growth onset of our of also the We on dynamics years.

features deeply on a and functionality have restaurants we and our today. more gives conviction and R&D penetrate that growth TAM. less enable add products provide still ROI went of investments. half us our opportunity approximately strong X% to product of initiatives want both broaden more the Our to our than In of XXXX, ARR XX% us will first of towards products that ARPU the huge our And spend that and represent

we important initial is towards We skewed expect Payroll. over the expand meaningful suite, like products be increase and notably already to portion to R&D capital that a medium to A innovation years. high core our our the our in to and seen have drivers investment where continued smaller drivers is team to our to while areas that expect platform [indiscernible] to become few we've market traction allocating allocated balanced drive scale conviction next management That opportunity. potential in committed term. profile, We're ARPU products maintaining investing can emerging we our initiatives

down year. in negative was expenses last in starting We steady-state to remain company-related step-up XXXX. P&L. adjusted well growth of The leverage points guidance, QX margins basis million, the EBITDA $XX and decline quarter-over-quarter should fully expect expenses. public in to our the X.X%. and deliver improved The Total managing general intend to overhead negative be as G&A initial XXX year-over-year related level from a in lap to ahead late in continue disciplined to operating to administrative QX Moving G&A primarily and in more growth we

to on discipline and focus cost beat. increased efficiency the Our contributed

we GPV with was amplified Additionally, and with quarter-over-quarter margin exceeding QX, in GPV greater typically improvement higher, see that seasonally expectations.

turning to Now guidance.

the quarter, $XXX represents million of range expect growth million, revenue range $XX $XXX midpoint, in be adjusted third of million year-over-year expected the in to the negative For EBITDA to at the to to $XX which be with million. negative we XX%

midpoint. the year year-over-year X% the of now for the to half at Following increasing year revenue XX% revenue billion a to midpoint. at in our $X.XX billion, full range expect full by be We strong we the year, first $X.XX our are increase expectations the of

basis integration negative range guidance February. modest midpoint our to The is We is gave This of and a are $XXX updated XXX drag also to raising on Sling, for initial a EBITDA. our EBITDA $XX $XXX adjusted we improvement of XXXX. million million to the which million the compared 'XX point includes guidance margin negative range in

and continued focus delivering line increased hiring efficient on In durable to momentum, top of our our strong cost discipline and current as improvement growth. the we addition reflects pace execution

outlook track the half current us Improving key to profitability areas second the year while of Toast a to improvement to the Our puts a compared the margin growth make in ARPU company. for in location position priority for to on come. point across years basis growth investments XXX first for continuing sustained and targeted is a top

Our results toward enable and our drive efficiency our cost of indicative efforts on These to focus improved faster. outlook are and discipline. us will profitability

we mixed. while healthy is the the we outlook As into remains economic look ahead, in U.S. recognize our QX, business

Given momentum. also operating on been that in the move potential positioning and trends. faster to opportunities environment. the Overall, our us we've adapt for us business, factor that, of enable on our even structure in It uncertainty any and we the leverage slower will for scale business made guidance deliver to top and of to growth change quickly year to growth have gives great progress the rest line the macro in profile measured or sustain which cost flexibility to consumer our for the

back at half. first Looking the

and and help add platform that value. location technology them customers this our we're for outperform backbone remain industry, our X% in are with their our we innings, on growth pleased as we're long-term focused drive confident to and performance, the the billion early We ARPU of to competitors. market penetration with to value significant very for the opportunity. products and still our our continually $XX goal create continuing bolstering to restaurant While only sustained with early serve shareholder features massive – execute will on And mission more

Now our the start I'll operator the to turn back to over call Q&A session.

Operator

The Will Instructions] line Sachs. first with Goldman of question proceed Nance Please is [Operator the from

Will Nance

kind you've think I made controlling I Nice progress of the next latest ask particularly as you margin over EBITDA comments lot leverage flow in think target, you you of the as to and us operating XXXX well have to the given a quarters, year-to-date last getting talked afternoon. cash I would in that guys profitability costs we update look expectations guys thoughts starting the to on your get over of some a the kind of wondering guys can kind the and, you signaling Good the more expect out to next for around on but near year obviously, leverage term. couple results of guys. quarter, Hi, there year. about today. when you're as made if that you operating on I'm long-term raising of breakeven don't wanted come.

Elena Gomez

Yes. Thanks for the question.

to be improving of on and our and can of half priorities. position And you I this want first profitability So believe growth mindful in made investments of margin the hopefully, tell reflected one the macro. that improvement. And guidance. that great we exit we'll see is just year in you of a to our year biggest in progress we've balance And the the can EBITDA,

want and market believe have of be mentioned innings. we XXXX we is take us. in ton part frankly, also, And a balanced prepared that, that's that in this opportunity we also to which in some We advantage that the didn't we're our of presented my remarks of guidance incredibly there's to beyond that. want give want still come, I of to to reason guidance So growth and because reflected the a to of conviction early lot

we're guys results. to our as also see So balance discipline, trying you can in growth cost with that

Will Nance

kind take rate? that just interchange guys mentioned I in – dynamics how of of then maybe on the changes much that quarter. recent some the follow-up then small And take mix Any the helpful. That's of meaningful on business it. a And color know and some networks to you going how optimization on. the you rate Got things of announced? was net the

Elena Gomez

from – impact biggest credit debit really The from credit. the Yes. mix shift was to

offset primary of by So optimization efforts. some driver, really our cost the own that's

would story. There say I So that's the different on report primary to that. is nothing

Will Nance

I it. questions. appreciate for the Got taking

Operator

Stanley. Baer The of line you. next is from proceed. the with Thank Josh Please Morgan question

Josh Baer

about the additions context ask looking restaurant the X,XXX-plus for question that the success any driving Thanks big regions that restaurant more the on location more of quarter. to commentary Any for segments market on or or on were Wanted additions. chains? Just location and great strength location number. groups,

Chris Comparato

Yes, Josh. Good question.

specific whole, product is some sales the announcements. the demand And The FSR pretty And encouraged breakout. I'd there's do pleased with across we're it's QSR. the as board. board. segment we're really really growth the well across bookings and in quite the as from team with board. of continues no broad been say solid, well across recent to our the incremental On executing the just And how team remain trends It's

Josh Baer

it. Sling. to on impact model then the And Got to call out? Any Okay. financial one

Elena Gomez

The material just to today. of numbers is Sling impact the not

out. not going we're it So to call

Josh Baer

Okay, Thank great. you.

Operator

you. The question of Sheldon line proceed. from the with Please Blair. comes Stephen next William Thank

Stephen Sheldon

afternoon on really strong good the and Hi, behavior. consumer to Wanted ask performance about here. congrats

as weakened there general said July? in consumer sentiment environment have, you gotten with shifts think assumptions your the are quarter with here? out has there as clients there a changes you I been guidance. just have the you're consumers your tougher, being the to visibility during engaging the But based into macro Any cautious restaurant on little the way any in has call and

Chris Comparato

Stephen. Thanks, Sure.

are macroeconomic of consumer any during past signals, the pretty for in we've consumer demand seeing seeing confident strong. through and what we're I'd on back immune, And spend That dining, drop to pullback restaurant valuable will and GPV Consumers make And in even mixed has demand. like said, spend pretty we And we're the mindful feel at monitoring not relatively on restaurants market. the have we're held demand. pull signs any and – we then spending even well been First, Restaurants we're a the last and business. past our in consumers up July, at seen closely. point within still in We in are a spend our or consumer while recessions, recessions. restaurants, becomes trends services healthy platform looking market. of haven't tough not is more continue

navigate uncertainty. restaurants spot help and did could feel planned, scenarios assured we a and that like if to got our rest So signal, platform in you we've we good is see adapt

pretty feel on good consumer that we So dimension.

Stephen Sheldon

And as Thanks. helpful. follow-up. then Very just a

sure about margins, Is – absolute As you and think make also to just continue stabilize? want there. as are margins and to how losses plan to you a more Or we profit on expecting beyond? will things understand focus talk about moderate manage XXXX the I that you to bigger

Elena Gomez

about areas. I prioritization today I incredibly Yes. really to think hiring inspection in and think a we're high revenue there. the ROI in areas being our our see don't way don't deep guys We're investments in taking that you mean drive ruthless focusing is what it on metering is and probably

a as about the And should near steady improvement see term. and from this you get think team over so time commitment breakeven profitability over a and we to to margins, management

Operator

Hynes the is Please question next The DJ from of line you. Thank with proceed. Canaccord.

DJ Hynes

strategically question results. tons on the guys Hi, guys. the have congrats challenges the industry right, Chris, of and you taking in for just Thanks of data. thinking context you mentioned,

of You have regional areas concentration.

make purchasing well sense just to suite? Like solution? You finance talked guys would really others would about an of are be a that participate food that the you positioned heightened know but there that in as part to there cost. opportunity. do that Is think this, I I group create opportunity

Chris Comparato

It's medium- includes within that sit that initiatives. not as mentioned specifically our going DJ. R&D her opportunity. opportunities This longer-term to had Elena of But comment script, about question. XX% investment our goes portfolios. product existing in on and Yes, a good I'm growth towards

term. example, and with we doing For the xtraCHEF could be xtraCHEF what over long

with with and in the we Card look with management and future. at be Sling You team could now Pay doing what Payroll,

in of So substantial not I'm of ventures. on invest things ahead to about the going then business that the lines are seeds and but experiment we each today, next will planting top how think restaurants restaurants for how And these thrive product for talking future. And in continue innovation talk to we're new we we're XX road, will that, have within the basically operate. the of years of down the them. to our platform And acts X

I'm because important customers to purchasing not speak specifically experiment, to listen XX% you'll us then adapt this an going super But idea. to So see R&D our needs. continue to and our to their of group as is

DJ Hynes

GPV locations, and full feeds mix service that location? serve Yes. per We'll us you just on quick XX,XXX can ballpark of Yes. the tuned of into versus curve how the stay distribution the remind Elena, Understood. there.

Aman Narang

segment the time. market, better. you DJ, segment capability quick long Okay. so serve Aman, help serve added been look And look, – our have for our core is at quick in That's this by the to this platform grown. have serve way. if of had a had we within We customers we've how to time, over we

saw of a and things. overall can confident couple in going well. we're And QSR continue that, our increase, that as that so we bookings, forward One, percentage QX, as a of

guest through Jamba, of space, to see right, some we you Jamba Toast coffee to offer, saw ability add dessert order that ordering QSR a online in I you the QSRs – buzzer and display that solutions. to are kiosk services, – one, fulfillment from things mentioned, our ready. on if the highlight, instead add are look our delivery the really, at to kiosk, facing piloting platform the capabilities our promo codes. And Toast to ability our kitchen piloting then that that on, loyalty. things a of but is pick, then that single-use online is think a their our core or and [indiscernible] for depend delivery unique right? want someone like bit right, go partly I'll we text line the add Chris integrated some self-ordering display, to capabilities example, you to the a As ordering screens, really And benefit enterprise the later, of the and little Mobile for ability food when or so text have order specific,

accessible that's a us in that's And ahead so segment. that easily the opportunity there's what platform for our within in gives and QSR, confidence lot

DJ Hynes

color I guys. Okay, the for thanks appreciate it.

Operator

Thank you. next with of proceed. from Timothy Credit Suisse. the Please The question line is Chiodo

Timothy Chiodo

that within restaurant time? has what just another Thank existing context your more given a either is to when adds, environment, if we And around changed restaurant from what and some that the company no adds, not operating or give the think pretty those gross was I us about see the want the Or has then talk it but versus that gross restaurant to you. using we the a could about brand-new system the net question. your are over in I you started, portion gross want is, – appreciate is trend taking follow-up the an so just system, of adds, I brand-new stable? coming that comments mix of your adds? either look been mix at

Chris Comparato

Yes.

a go-to-market they our that are how in we believe tap to It's Toast. knows across and digital balanced see it's good platform. that a restaurants into, and are a Tim, hyper Toast, those question. growth certainly operating We really So our local are net adds. restaurants bookings team, And these existing already see to restaurants move move to and

restaurants on net as seeing expand, we're already and Secondly, are adds Toast well. those

those So sort quite across a expansion within certainly a our customers. we thirdly, of portfolio it's And net the we're balanced in a And of from new then three. form seeing attack existing new constructions. bit been of see always locations

Dip] remind I think total addressable only you U.S. of market. as want still a that I [Audio the to reminder, we're

to after, a to and have penetrating these of the markets innings them we're create, area it, So lot market. markets surface call go these of early in reps in our flywheel

of So three these it's in attack bit a across little balancing those dimensions. markets a

lever – adds is net we only thing on that locations that other mention The just remember is I'll that beyond play one with. net adds

is lever second ARPU. The

we average and build really the customer adopting for and of important platform us lever more that's So modules. trust, our the a because a as And is restaurants restaurant are that growing we're of win more using. more

little attack growth across of balanced levers. it's bit a those So a

Timothy Chiodo

Chris. you Thank Thanks, context. for the

Operator

you. Thank

with next the of Beck Our question KeyBanc. Josh line from is Please proceed.

Josh Beck

question. you're the to little you the the lot a have about industry. a seeing ask input wanted like secondary some Thank costs. bit what record in I inflation in restaurants, you effects of Obviously, their of for of taking said,

So effectively activity either for automation the any the or I'm pressing way, it's improve way. the case of cycle just curious any in and in if sales that top helping the is funnel if,

Chris Comparato

Yes.

start with I'll macro. So

a the And unified secular fundamentally years, the that shift been to to come. XX for we been so to at for digital many going continue all it's and years stakeholders macro, years. to restaurant we've industry platform a And And that going shift. landscape. That's in existence believe this at of the for it's across powers is the XX

office. drive digital, both to restaurants same-store drive seeing staff to then drive in back transition efficiency, operational productivity to sales, we're automation So to and to drive the

and opportunity the xtraCHEF, office, the with xtraCHEF think food Josh. seeing And unique why I across we're for to can but their money, understand innovations as understand I they're It that's better really starts spectrum, where go xtraCHEF, office cost momentum a it's that going wasting really better they with costs, food menu optimization. restaurants help it's drive mentioned. in understand So back there's back restaurants to pricing understand with beyond profitability, in and the where

Aman, we're else anything add xtraCHEF. really us I we're adapt the that. you exciting and back I in to for to of adapt in just early think helping And in So around office. because want opportunity it's restaurants quickly the the stages don't and know if

Aman Narang

and Chris purchase really to the top just find Toast. a be able is of to at cost provider our And they the on different they on allows to beef that it been QX. potatoes easy doing right? XX% what what's we're is reporting profit the get less. all phones, mentioned, bulk with able the I of picture and looked restaurateurs start is seeing, inflation of of has accountants XX%, only strong saw with for actually getting increase in their were they invoices, a launch given customers all food and pay for xtraCHEF allows really to exciting one attention that it, just spend – in that by beef. is And efficiently. out item for to we're of We xtraCHEF sense notice food. as – they're example them visibility And up scanning our they and They on taking cost the Chris, this it's restaurateurs – as Elena and to through with XX%, And just And Cincinnati, xtraCHEF is a how the think think, one restaurant much increase meaningful, I started which to just right, how sell. for invoices ways burgers the by process selling a look, to about

Josh Beck

of was coming out Maybe on certainly this as just maybe the functionality. would subscription the of quarter. pandemic ARPU. nice adoption a slow follow-up more My office-oriented It – more Very sequential jump down bit thought maybe had maybe types from, back-office and say, helpful. that a front have that during went to another seems we to

be we would should how of quarter. to unpack moving the just curious And So the forward? really, think about pace that expansion within then,

Elena Gomez

think I good out. No, call it's Yes. a

that of our our continue reps about tell from such as the very team ARPU execute. to upfront. that and and our team. positioning then our are part strategy. important we team, can team And the increasing our entirety do go-to-market of good prepared is remarks, been growth position to see And sell to really, talked We really Shop. talked platform. at our Toast you growth an sales trained So They've the We about

outcome innovation that and So all drive you're xtraCHEF, of is team to together that, really coming combined that seeing. you're the management seeing in with that

higher confident to ARPU I progress continue to my you guide see remarks. – having I continue in mentioned as add actually as feel that won't to it which specifically, we'll we customers prepared see we well, customers, newer but new on So ARPU. our are

encouraging. are our core that, Payroll, combination it's what's our core products early which And a really I if also really us. xtraCHEF of So at commerce very – for but look driving products, and

encouraging really that So growth. to see

Operator

Thank you.

is Baird. of Please line the proceed. David Our next Koning question from with

David Koning

Or you Thanks imagine guess, so think we guys. should if some give rapidly fast now see has ask that are Do grow that how for insight, five yield insight way there quite while in that ARPU row that job. could you XX% a to about into going sequentially say And point ARPU just could we a subscription how have the But to I that? Or in of a consistently, grows up I I future? grow almost at growth, X% the line. Hi, – growth still? like to for yes. – continuing X% basis. I in Nice a is Oh, could you been on so can't quarters it maybe a sequential much. think

Elena Gomez

customers going Yes. on. that. to are as not the you highest level, guide, tell future. focused that's on newer obviously, I I'm more, products. we're completely obviously, something But on to locations, what the But that on answered is, at bringing the more can coming I are we're just more that with coming

growing we're sign give a So we're you'll and over that time. fast, you that should improve growing, start see as to that

David Koning

Okay. time. faster? that maybe hardware pretty Thank up future? to should the secondly, quarter give And inventory the see a long stable, isn't XX grown And But revenue. been just per revenue think then sequentially, growing on how XX up XX% we hardware That's you. in significantly, has XXX% I for Why or so or year-over-year, take.

Elena Gomez

Yes.

things. couple there's So a of

growth couple customers. a – One of there's things going So on we did new in we year-over-year lower had our is there.

our So QX QX was net quarter in for mind, ever year depressed location still by last COVID. But keep strongest adds. was

allocate And proportionately meaningfully in revenue So the then while us higher. even improved, year-over-year requires to bundled products. accounting growth for GAAP sales was across our rate hardware price realized QX

revenue in we out revenue this So of hardware meant and say shifted on you look it's the the But some when at QX. take consistent. out noise, whole, I relatively the been

Operator

next And question... Thank you. our

Elena Gomez

and this I I'll – also that my remarks. I in mentioned would – I'll add also add prepared that

to We supply insulate issues. – near-term from have chain supply adding inventory chain strategically been us

confident our feel that all that. guide of reflects I So

Operator

Thank you.

Please SMBC next line proceed. of the Our question Andrew from with Nikko. Bauch is

Andrew Bauch

SaaS? Hi, wanted gross pricing color it flexibility or in little to to for understand Solutions. a us questions. SaaS efficiency drive hone on of trying margin the And can Nice then the on revenue and you cost give have of I specifically, and in side, can you results here. side, set on guys. more on in be FinTech you taking kind of Thanks the fintech in bit where

Elena Gomez

Yes.

think really because to on to business on opportunity both question love you're model, the the side the monetize which is reinforcing important we that our something is and I SaaS. So the fintech

important So time. part our over that's model of an

we side, to on platform, at more fintech drive opportunities continue rates. drive more which platform same obviously take and our have then On volume higher would the to GPV But our the to time, scenes, focused a team and have things R&D these we've mentioned cost optimization. cetera. behind some the operational they're times, doing this on et are that really we including efforts, few a And

time the then And on obviously, of to the two of two to time monetization on going those continue we ability those drive SaaS about to continue of side, over we're grow. combination really sort to impacts the innovate. fintech. our think So how and combination over pricing is the the And

Andrew Bauch

still asked And of questions early then I it. lot but Got have a it's days, know here. been

on the and in may you've learned So or any working thus far you made be what international back? update scaling investments that's

Elena Gomez

to committed international. very still we're No, Yes.

Our guys perceiving wasn't significant as a investment, you investment, planned. but as know, it's

We is some early XXXX good with customers. have those The customers. foundation. initial year really really is And of just REIT a reminder a as building the

like customers for the initial we have. said, encouraged So this innings, you is a very by but multiyear journey us. we with we're what And early see

Operator

you. Thank

Please from proceed. will Our Wells last question Cantwell line Fargo. come with the of Jeff

Jeff Cantwell

one guys. partner from coming me a I talks of And Hi, Slide locations and ask quick inbound coming you from Thank are you about X/X your XX in. to referrals. your new on wanted X/X are for restaurant channels, efficiency. squeezing

of over ability like that how because the sense get two scale I to years what have us implications ago, and year time. to want that just has remind efficient continue over just a about is more a you I to time for grow think can might your So looked ago? trend

might that. So for you additional just on provide hoping any Thank was color I you.

Aman Narang

team we the on our of I that's for know sales the And referrals increase driver as our focused mentioned has of Sure. think continue customer-facing because invest percentage density, that percentage and on increase consistent. tenure business. the Chris and across earlier. segments, of we're in seeing thing we we're reps that is and the our market most question. Thanks consistency inbound, teams Look, growth efficiency The one our to think funnel, in go-to-market I we as in number whether remained

Jeff Cantwell

can ARR, Because your Okay. that the pretty from come talk year from on this we year. impressive about was last a that? bit quarter growth little just more last you of growth off then growth Great. noticed a And come

what remind again. us should we seasonality, be XQ, expectations typical look you of can for So XQ, just we can ARR XQ, as aware so ahead? Thanks, just be about

Elena Gomez

Yes.

think – is comes QX things. way in from QX, think it seasonally our about both or I is a two typically, it back higher the to then standpoint, than QX. location and is highest One

location the tends side. per that's So in summer GPV to location also be higher the months.

just keep mind. So that in

say So seasonality. that's probably about two the things I'd

Jeff Cantwell

congrats the Okay, on results. very great. Thanks and it. Got much

Elena Gomez

Thanks.

Operator

Thank you. I the now presenters. back over to the to would turn call like

Chris Comparato

everyone. your appreciate we'll be We Okay. appreciate questions, We time. in you, the touch. good and Thank

a So have night. great

Operator

This concludes call. conference today's

now may You disconnect.

Toast (TOST) 12 Aug 222022 Q2 Earnings call transcript