TOST - Earnings call transcript Q1 2024

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Operator

Good afternoon. My name is Cameron, and I will be your conference operator today. At this time, I would like to welcome everyone to Toast First Quarter 2024 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.

your begin now may conference. You

Michael Senno

Aman Welcome Thank Q&A prepared for call remarks, earnings Elena session. Co-Founder, call which will by Toast's first you, are who'll quarter our with and today's Cameron. the On ended conference XXXX. CFO, followed to March open and Narang; be CEO Gomez, XX,

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

impact the we'll make statements be statements related of business and performance our Act financial may guidance within of and other future expenditures, historical plan full All time call, growth of to share and repurchase considered growth, facts statements, that program, anticipated second business the the location year forward-looking expectations management's are financial our this regarding operational our of meaning statements Act. Securities and XXXX. outlook, the including expected restructuring line operational and forward-looking During Exchange profitability, those future quarter and including for outlook, and than margin

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

most intended our reconciliations GAAP These not for basis GAAP limited line to measures. technology gross and subscription filings During this are earnings streams. non-GAAP solutions guidance. results. non-GAAP the These Please but comparable refer which detailed call, not to a we be non-GAAP to, profit, our collectively substitute to we including will discuss gross top the our these recurring measures, non-GAAP to for for gross profit release certain SEC profit measures refer services as of non-GAAP and financial financial measures our are

revenue, are administrative references expense, gross cost on basis. development and sales non-GAAP this profit and a call and stated, margin, of expense and marketing on to gross general research otherwise all Unless and expense,

found me website the Finally, be let our be with can to And Aman. the that, will over call, the website. call available press the investors.toasttab.com. release turn at on Investor a After on replay Relations

Aman Narang

came Thank thank afternoon. is million, start year-over-year, profit our everyone, platform, a joining versus gross XX% added us for ahead $XX $XX you, first streams Michael, year. EBITDA increased of off locations net XXXX expectations over board. at and the last quarter a recurring you, this across in with results million great X,XXX improvement to We adjusted our and to QX

to the have I'm really well to and a we positioned and are proud of terrific how year. continue performed, team whole scale

is help love restaurants Our mission to at delight thrive. guests, what do Toast and they their

recent one our value storefront the a suite restaurant for customers management our AI of for and stay help time, our is We continue including innovate with to and first and leveraging marketing which to suite step restaurant launch drive the community, upgraded ahead. digital suite,

XX. into platform May about up and on market sharing our scale X four, our on the the the laid our two, strategic growth; February year new I and on to scaling through to earnings out and call: operating in outlook company one, full our business; expanding setting driving adjacencies; three, more QX, our based strategy longer-term ongoing locations ARR in core and Investor increased deliver share market priorities we leverage. We've in forward at addressable looking vision Day focused all and our are We're for performance

of driven locations our local the First, scaling and go-to-market combination and share in platform added by restaurant restaurant over engine. the core net locations quarter, purpose-built our our We gaining business. in X,XXX

productivity rep see growth. to markets momentum healthy us gain with local share sustaining and which faster gains, across a location market the country, continue we we pliable As confidence higher in gives effect in

that me downtown switched X create implementing Baltimore for Yards value and and M&T near momentum to Stadium. handle a Camden partner our customers. a we in customer Pickles Bank restaurant the stories speak busy Toast to that recent They with bar could technology full-service Let their to and share increase Handhelds, partner volume, sales Pub part Kitchen is streamline Display for Order operations record blew Systems. busy uplift & Mobile in service, credit service Pay game those Orioles, and their opening to speed speed particularly of of On and previous they the the day Toast on after Go and days. faster through

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to more Snooze needed Toast announce excited over the and their lunch support server they've could partner our agreement with And have their live, across handhelds They're a and a locations faster taken Toast increased they're locations leading XX nationwide. provide also growth to greater technology capacity, accurate tips out I'm sales, a better Eatery, footprint. already for higher experience earnings. higher rolling service. and breakfast with seeing benefits. concept plans with guest that Snooze and

customers on for continues our As stories growth. drive creating our that these products our focus drive X value to highlight,

launched driving customers for and and our process approach is simplifies to our ARPU that sales Earlier reps we Our year, packaging sales love. priority by building alike. products customers the second a experiences this suite-based ARR and

for to monetize new cover the as of management. a as path roll and Our suites supplier as as customers provide over well employee They a depth better, and needs across and our operations, out and us good, well guest and products of are designed time and framework to with more features. our platform restaurant experience, breadth customers' tiers best adopt creates for

the the time, operators version powerful our how restaurants value on benchmarking tools, for all multi-location our Let's our platform. for across above-store through are of suite data access walk latest suites management access restaurant first management The helps the adding customers. and

often. bring customers. suite Our Toast restaurants best back the control of leverage their our guests in business, take are can how one them suite data to digital storefront industry the value create their helps the These for of more scratching sets online of launches surface helps restaurant and marketing

To out guest of included the bring writing and only this great by engagement example, not a suite. life with adopted atmosphere, an The of to our Whisk more North it Whisk's campaign AI-powered recently is assistant has that marketing a a time to send half. food assistant Dallas does job describing than required restaurant writing cut neighborhood our in

over in Whisk for alone. April $X,XXX sales AI-enhanced in recent drove Our campaign marketing

Moving addressable into our our third expanding new priority, to adjacencies. market

remain received platform which product international has well experience. expect both the to confident the gain across well continue and markets X launched the We U.K., we our in, capability, of across internationally Ireland help of in-restaurant ARPU This we to the year expand further first more our operations differentiation integrated by customers. international been momentum to have platform across us and these as these expanded incredibly growth. with us potential our online help And launch markets. Canada, in the ordering as drive drive In launch progresses, countries we the the QX, and as should guest

scale a the tier to allows of manage workload continue reduce at our teams. to customers. our Within corporate enterprise on of across customers range the gain enterprise, management operations their and The their momentum of suite we administrative broad launch

to Our the up can we're team pipeline platform over local new enterprise, we'll that remains strong, we and penetration advantage. our and go-to-market open in a international to confidence investing also time. segment beyond where increase have vertical opportunities competitive our be continue And and

Our setting operating up our leverage to the fourth complement growth. ongoing priority company scale deliver is and to

in past versus million quarter, QX a delivered I adjusted year. in over As last $XX improvement the mentioned, EBITDA we $XX million

organization culture by innovation versus We have and and full across growth resources margins puts expand us our seriously. track is over points us are guidance everyone allowed midpoint our a without important initiatives. This XX our building important most percentage to to year most taking sacrificing on increase on efficiency last the priorities year and to where aligned the our

the thrilled To to to what in the wrap is you of two, Toaster few we're confident have and for leave we're I'll opportunity our It team; mission. this be ahead. how every up, one, be I this executing a innings early still you. to thoughts: their I'm and on in with and in thank want incredible capitalize wouldn't and without passion possible here foundation dedication place for continued leading

in in believing call entrusting our Our for you Thank potential this now Elena you, the all, about turn the this customers and quarter's us investors who more to share results. to over and are us to I'll support and business.

Elena Gomez

work hard successful and exceeded reiterate and to the team, for and In momentum grew you, joining to our subscription Thank of approach results and led profitability. our quarter, streams operating and you profit, growth disciplined profit entire increased total execution line ARR and recurring expectations, a XX% gross XX%, thank quarter. today. I'll Toast fintech whose evidence Aman, our gross everyone start, continued Top bottom year-over-year. and driving at both to another To

$XX estimated, the structure, better QX streams, XX% we a points Adjusted In in on last margin cost executed reshaping EBITDA QX, million from our aligning year. profit on percentage to in-year in priorities XX rate go was growth ourselves quarter, up our savings first annualized gross recurring our more including QX. in now run initially expect XXXX our key with slightly to highest We initiatives. investments on faster and and than higher positioning savings capture

outperformance The the restructuring. outlook. to adjusted led factors EBITDA in the benefits stronger-than-expected coupled quarter and contributed increase to in Those our first to with onetime the also full included QX progressed, year quarter as related cost significant GPV

Our opportunity ever. ahead than conviction is in the stronger

areas. to savings up in will QX, XXX,XXX, incremental locations reinvest total in X,XXX the increasing part year-over-year. live of added We locations net growth over XX% key approximately We

and drive the as breadth across of focused engine, penetration strategy differentiated restaurant full continue coupled execution, vertical with we consistent location Our TAM. to deepen the go-to-market growth

our have basis. restaurants Toast with ARR just driven surface expect on share scratching XX% as increase mid-single continue ARR to basis XX% location continue grew a we in be near digits on and to U.S. strong of year-over-year, growth SaaS And and by to internationally, in the ARPU execute X% an the an SaaS SaaS to we the in an only increase ARPU opportunity term. we ARR significantly in playbook. And

billion with year-over-year. with similar XX% first down trends we $XX.X per and gross ARR consistent Payments in bounced a exiting GPV GPV location GPV and to levels related X% XXXX weather, profit both increased softer patterns. back After grew fintech saw seasonal January the to XX% to quarter.

basis rate take fintech contributed XX was Net points XX products basis points. other and

led to for fast, profit. business, driving their low-friction demand Our Toast access Toast by product. grow healthy Capital Capital million value capital contributed to Customers continues perform fintech $XX solutions well. in non-payments the gross to the

we As we program, broaden our will funding the and scale diversify sources.

we recently are model where model, existing Toast sold third of our to portion added a Capital In loans forward to addition flow a parties.

to sold loans do we For take a not credit third risk. party,

typically revenue a As result, and debt. a is lower take there bad no associated slightly rate

to our flow On risk-adjusted of models the plan gross current to model, returns. the to P&L, originations flow-through. maximizing originations continue to that forward both compared XXX% with optimize nearly scale for and for lower translates balance We profit recurring

Expense the to from savings growth and drive we moderated with efficiencies continue as cost in first the restructuring quarter actions. discipline, coupled

to drive and efficiency up areas, growth TAM. and prudently and Sales year-over-year. XX% in growth vectors our were we'll expenses we marketing innovation, highest expand our increase product go-to-market including As invest engine priority profitability, new our

penetration. business make team to new continue our teams sales to international and in and grow upsell targeted We U.S. deeper our drive investments

QX The growth other resetting trajectory actions expense the impacted these in parts and expense areas. than lines our the restructuring of business, R&D G&A more

Capital. and make excluding expect and expenses, value our million investments customers. G&A to primarily continue as R&D add grow of more drive debt We bad level XX% credit-related was for for to Toast reserves a down innovation year-over-year, expenses targeted product to at related moderate we will $XX

our We G&A reflecting continued on scale, including in efficiency diversification we workforce. of expect our ongoing operating driving leverage focus in and as global through automation G&A,

cash was severance timing QX. the payments quarter and cash Free flow negative of in bonus the payments in $XX due to million

broadly a and flow adjusted full positive mirror expect for cash year the the basis. We free EBITDA of to remainder year on be

Turning to guidance.

to total profit second in gross subscription $XX range fintech the million. to XX% expect increase year-over-year and and million the EBITDA we XX% adjusted to $XX quarter, For to be

small growth comping flow line negatively is by forward year. a a last top points benefit due adding impacted Our rate and to onetime few

growth to year, As start $XXX year the marking of gross our a expect XXXX. strong and the full XX% we of improvement result At and EBITDA, we million subscription outlook. our in midpoint, a fintech adjusted raised margin profit XX a point versus now percentage in XX%,

for the reset business on visibility have now expected higher This guidance and our also compensation, be by plans we than we the to to savings in progress in profit forward. end on restructuring, on year. close path breakeven areas the a higher expectations reinvest of the With to drive executing in-year operating key going factors income to After are and on of sustained stock-based increased the growth GAAP containing that. the year now reflect to our

To and XXXX. we deliver are executing results making line wrap progress strong bottom against goals top up, in significant to are positioned our and

team remains top delivering Our to drive be Investor which May across leadership will time growth on our we on will first plans. market positioned focus strategy, are hear and held value more our our and at you building opportunity, curves. core growth Day customers, to while durable We growth business our well announced new from XX,

you Toast with more look ahead lies what about sharing to forward excited incredibly are then. for We and

operator. to turn Now I'll over call you. the the Thank back

Operator

Your Morgan Stanley. Baer of question Instructions] the [Operator from with is Josh first line

Josh Baer

Congrats I select the you from as to the customers settlement off-market update comment ask on on as approach rates as price well how around back just tactical take as going X hoping far of about and that interchange should take to an was impact rates Wanted taking good have net quarter. a could perspectives. that contracts.

Elena Gomez

take that. I sure. can Yes,

So it's in terms really of and early final. the Visa-Mastercard settlement, not

the it's I the signal us would second entire the going at won't impact in volume And is impact it just comment of highest our that early That's most XXXX. Our GPV, early level. also to of likely read. also, half

of we've changes update the in of in in of context your that pricing keep take a as we're on have your going think this won't see over going mind particular, ongoing execute models. But in impact guys the be to price. in half question And customers pricing, us fintech out cadence rate, year. to XXXX. I step where as No a just the going with small pricing of start you it's said, just of market. cadence meaningful time, to But in take over function mind, steady So price adjustments, an against second in should keep We're year. in you it time, places in steady are change

Aman Narang

about we think we them we if pricing. in about innovation product three growth, it's of build of, Josh, And we're really to the on growth think that, about with Just combination think as attach of share a XX% algorithm, and it's you a are our combination product thinking where all market industry. rates, as about

Operator

question Baird. next Koning the line is The from David of with

David Koning

the growth I guess first be right? actually of what lower that all, it looked to for me like back It a like QX recurring than the is re-acceleration Is would in me And looks half. GP year. a to? calling that half back to attributed little you're

Elena Gomez

the few But XX% context couple a full at things. some me so of look for our and full QX, year, the year start One, guidance -- giving which grows at over recurring talked our in there's that, obviously, dynamics at play. Yes, at let we onetime is SaaS year if just One full flow, time. you yes, to the comping benefit dynamics and of GP the QX, play. this we're revenue implementation would QX. forward imply at midpoint about, there's a

lower So contributing those profit talked Then And of about gradual. to half are slight the targeted be QX. back will towards gross the and that recurring in fintech year. we pricing a

David Koning

in per GPV a is location Would What just obviously, June? maybe April, just just have you talked because of acceleration bit, of especially January. we don't as being And a you QX? expect because about you. May, follow-up, Got down January, kind

Elena Gomez

Yes.

weather -- so had happened a -- QX, think lighter a in right, impacted Josh. that pattern was What January. we So you're January I recall,

sort progressed, GPV levels of saw levels. seasonal or get back sustained to the As we quarter

per GPV X% So was a on QX. location, down, down in overall

we down As the of the first into enter enter QX, we single quarter. into part low digits as

the to the So I decrease back last half started on that's in what location. the that of to on half in back would per guidance GPV on a the mind, say. And keep of year, GPV, then just the year towards question back

GPV back look year, the when you'll of the So you compares see towards half improve. the

Operator

Canaccord from question David of next The with the Hynes Genuity. line is

David Hynes

suites to love ask marketing about the management storefront, I'd were rolled suite. suite, digital out, Aman, new that

about kind that? opportunity talk about there the incumbent you competitive greenfield installed of you sizing do And Is about, there? of As are the Like think a in could then maybe opportunity? think how it you base, technologies what the are more dynamics?

Aman Narang

DJ, Yes. for question. the thanks

driver If you of And really, suites a look the simplify. the lot was behind back to years, past couple products. we've of launched these

example, suites these team customers and platform. The as package more good, team let more best into is more our value, framework more in adopt products adopt to it to capabilities easy better, off, leverage tier for our also our organized customers they are and where and sales as tiers without over time both then, a suites start team driving launch products. terms introduced really at we've it. both so go-to-market for And just to our and can continuing more of And simplify see of deliver one to and having the is and our our the how process, help innovation,

there, commerce, AI very experience, tracking and that I have restaurant operations, simplifies areas to for of think invest a in, it experience, and is launched we and products offer. in in to does fintech This products course, like lot play role. types we're we're think supplier the employee products data guest a is we're thing the it other the everyone. And continue business across well. And I of closely of as and lines of investing of going how terms then

restaurant most the powerful one that the is data if think got really set we've the things we powerful is not the in So industry. most, of of one

more management suite. added in suite, help so them put how we're that understand again guest better data data, be drive benchmarking peers, you campaigns, platform. they to to AI One smarter data successful? menu to to then things by our how we've leveraging like help leveraging We've guest that our example And data. And what their and to all so in relative on restaurant sales menus suite, helping data, management both is added restaurants on leveraging just be even in benchmark our the leverage that's do restaurants management

So big for team. of that's focus another the area

Operator

is from Bernstein. Your Rawat with line next of question Harshita the

Harshita Rawat

of talked you Elena, term margin as about to So percentage think XX% about long XX% target profit. gross you

about we business the As component, that think well? profitability as there driving thinking in think now how leverage of about gradual change long-term adjustment a the is also should the kind about achieving and operating also, you're target? a profitability we long-term as GAAP And in

Elena Gomez

great Sure, question.

profile progress I'll financial provide And to several on over scale significant seen long-term Analyst of our that So efficiency deliver you've of Day. and on guidance context sort But us pivoting shows just back the the at our XXXX, quarters. last course margin.

discipline. that So you growth going his we're to continue as balancing with that and drive the we're And operating laid We're with out. Aman ongoing while he's leverage heard about to innovation. strategic positioning talk really priorities company

update a had Analyst at have question on you good Day. And don't you I point. that's So today update really but we'll an GAAP, a actually,

You had GAAP. that. as we've heard you've as mind, talk on stock-based in us keep just a Overall, question very comp focused on well been about

updated what's driving call. really GAAP confidence in on that's So guidance this our on the

Operator

Your with question JPMorgan. line from is Tien-Tsin the next of Huang

Tien-Tsin Huang

Sorry, me? can hear you

Elena Gomez

Yes.

Now can. we

Tien-Tsin Huang

per on up following location. Dave's was GPV question I -- the on Just on

on know per well. as on of mix beyond We Beyond the given and sort macro? downmarket, But second GPV some will some different of our the location that just upmarket, compares any do of structurally the see the side I view shifts directional focus quarter, help.

Aman Narang

think a by the we've seeing still if SMB you trends, the our small that's in the thanks effect market, we SMB to year-over-year, internationally I business. is of think the while driving driven as I saw. the flywheel share, we're And about effect. the mean, growth, It's we've I a what's this GPV. is segments And about some same that was core potential any material to at question. sales changes of there. business mean, of get you in about materially excited some our they're look is Tien-Tsin, enterprise business. talked our not being other we that us Yes, for restaurant taken but Nothing if in -- build same gain report bulk just stable, there we're decade and built decel

Now in it's stabilized band. a narrow

Elena Gomez

the gradual just shift any of mix add as period over very would time. I that parts extend will and different we the Yes, TAM, of a be long

Tien-Tsin Huang

you Makes sense. got Yes, a here. big base

quick follow-up maybe Aman. my Okay, you, just for

questions around of change your seeing tech competitive these a more or content Just And get verticals. product we velocity any into your focus adjacencies, kind adding and upgrading verticalizing you that lot of on a software and Are intensity peers of it lot sort around are and thing? change there? going does of

Aman Narang

and also look, I'll mean, continue good our just this asset saying data for great with investing that a quarter. talked customer about to in we're leveraging this really we a a I to some -- had community maybe customers. big I we're start with to Yes. AI unique by how that have. innovate way And we data examples help

You we've think the business. always calls saw execution this a I always -- this our Back but engine. And speaks net it's platform competitive team's in also to been said before our is the adds, -- go-to-market in and our momentum but to market. great really this X,XXX

great can I is term our thing, getting see our more the customer to to long into is productivity word-of-mouth, these the And drive strong. getting to think going the good biggest biggest getting from rates, it our be best execution, be. growth continue team own markets we continue experience execution, believe we win that's of to factor flywheel,

report the to of closely So competitors, nothing a at moment. nothing We very report. material to track lot across this material

Operator

of Davidson. comes line with Heckmann question the D.A. from next Peter Your

Peter Heckmann

displace your how my when restaurant that you roughly locations already Some about for upmarket I you modern turnkey be about current hardware questions what players? of payment U.S., XXX,XXX as how heard, echo software is guess not it will the I in but solution, software, we've but feel payments? difficult more addressable think is -- more either to by modern the move of with how you option or do it guess, or much that

Aman Narang

in think the for nascent mid think, the grow And these course, it's to we XX% Pete. high if our higher most Toast of TAM, early. Even look restaurants, are still as are still where net markets TAM. Within in is see we've bit for Yes. I to the a teens. and the us talked Thanks these Look, in you continue penetrated a mid-market, the Elena that room those lot that of about, is there's is Overall, flywheel core little we U.S. in enterprise question, I and terms got at some we XX%, mentioned. see strongest of XX% adds to share, SMB markets. growth markets overall in about, of of penetration

so the And all flywheel state. of #X our is get markets focus the to into of team

can buy, that more of customers more make ways platform build that course, we're hundreds well on upmarket asked is platform cloud part top our is As what well. think accessible platform And adoption the the think least of we we we think about why more a I of There's is legacy in enterprise, upmarket FreedomPay see that solution have on support partner of to based about as we've are of of to our need. flexible lower. at on want our as partners you in customers like our what that upmarket, to solutions. And got expanded I so

going But the is we're think think also progress momentum want -- with it's So as we certainly, take balanced that happy we and in going. where line about with -- I making the we're be to upmarket, customers platform about sure the it's making. we like on are the

over want for example. our to we So map, any don't take one customer road

Peter Heckmann

have then And the basis XXXX? think downtick in in retention what's helpful. you talked about from annual we can revenue after guidance that net see uptick that a that's Okay, implied you your

Elena Gomez

Yes.

We report that haven't specifically on new on today. so commented nothing that to

Operator

question next from line William Stephen of Your with Blair. Sheldon is the

Stephen Sheldon

on relative analytics. Maybe you, your your robust could vendors? does to differentiation some benchmarking, How how a Want capabilities for detail even become? more favorable start been buying like I seems this to scale. want for competing with given those Aman. very support benchmarking And spot It you've get the and size platform more to

important capabilities your they've how capability that operators? this to restaurant is these So could asking owners, And a been for? be

Aman Narang

Yes. They have been for it. Thanks for the asking question, Stephen.

I best sets in at, at think likely got of data we've that industry. the we're one the restaurant scale the

And menu, like, in data sales we better apply their adjustments? terms zip understand price the geographies, really about are value that, nationally. where can on what's of this use What customers the the up codes, you across ways frankly, use of is years And what is team understanding you thinking and so pricing are of add that this seeing to for cases a terms so to terms leverage have in trends? data our which value inflation come What of of on in cases thinking you how you are at menu? And are our in there's point whole what host can restaurants. one for things seeing

we're And have. we but it's leveraging our product still really that feedback the customer positive. iterating customers that's what's early so And driving benchmarking so it's data upon initiative. early the has Again, based been on very signs that the from

Stephen Sheldon

track And on helpful. surpass then the quick that, to Very for What's quarter a location on first follow-up level the in outperformance maybe able the still you adds? in now given and seeing Elena XXXX being you're in pipeline? net for growth. Are of what your confidence

Elena Gomez

Yes. No, Stephen. absolutely,

good believe reason lot start different. locations the sales momentum really we reason strong, have great overall, be did seeing is strong had Seen funnel no a XXXX the we're As to that so QX, ground. that don't any in why and than more we from we'll XXXX. demand the will a and in add we is see still we Aman team QX typically -- on and of said, we seasonally stronger

Operator

of the with line Tim Chiodo is next UBS. Your question from

Timothy Chiodo

I want the bit sales little a to about talk team.

on the So time that of grown quota-carrying marketing just the sales the people behind give might be size color size the teams. the time of have breadth was sales the overall on disclosed XXX investing would actual that How believe you you a subset have Anything about IPO. some the sales and the mentioned salespeople. Could been international that team directional It formally large the may the the large to? now? and XXX of and us at organization of you team? give upsell some overall context I was how last team, to

Elena Gomez

Yes.

locations So allows adding team, this of around Tim, grown. We've dynamic to add to without the since as continued grow keep mind, ARR us flywheels you've as reps. to IPO for seen thanks, question. course, our the the But in

So productivity to made, all we're international you the the our our and reps gaining that and behind upsell efficiency enterprise. sales from investing growing team, point while,

I really while can't we're across team, specificity these give upsell and level, early like international. at we both team, in our investments our highest now balanced new So business feel the

periods thinking managing how we're that's the we're overall, So time. payback about to surgically and we as over force adding our always sales do,

Timothy Chiodo

higher you of been bit for would speaking or mind, of year, The that a have recurring would roughly gross for for impact Capital, QX. the follow-up. just just if broadly an mentioned But And a a you don't the Great. change? the little i.e., Toast point brief rest numbers forward of what profit two impact, absent been terms forward recurring gross gross or flow guide the have profit profit in flow

Elena Gomez

for the of the that as meaningful Tim, it's would context I early, as be won't XXXX give balance so year. you Yes, the impact in

Operator

of Kupferberg Jason of question with Bank from the next line America. is Your

Jason Kupferberg

net upside. adds. your market Was guide wanted you for beat of the up location first I segments to there, your what drove think, hoping by QX Obviously, follow expectation about the XX%. quarter which about you end And adds? is the specific talk could Just on

Aman Narang

just good our I'd more teams, international within so can are, from and enterprise this viable as that state that momentum early. scale the to we're keep compared well. had, see, more benefiting early we Within on continue as we say, we those our our SMB growth We the business, I team's focus business. our core came mentioned And driving Jason. of our Thanks, the bulk getting Yes. get with more earlier, share, core markets from And into really and of markets business, productivity. to it's as is at. Seeing our higher

while SMB this our and good at a business, we've you So think momentum, about core for zoom there's been could decade. out

businesses, should from to our contribute new bulk you the still is SMB and more percentage, these a time, contributing of they're as core growth really them so the over business. And while coming expect today

Elena Gomez

of terms nothing but seasonally momentum But QX, Jason, higher, our is in specific. And strong. Yes. it's

Jason Kupferberg

on think, just of know you've Any I each kind of are recall, update using half And or stabilized I year. locations giving the the it that if been quarter. I around the more second that percent products? of of elective last X

updates any just how So trending? that's on

Aman Narang

Jason. Yes. Sure,

is overall one adopt. these add example, take for and version, online tiers sell, suite, We've start more metric then where versions We they with the can advanced best as added like an can you ordering. websites I relevant now up, start because good, that that, less packaged capabilities and customers better, to digital storefront of version with simpler advanced suites to us. more reps products it's sales added as just think to for that our our and we've just I these mentioned,

so now adoption tracking the course, suites metric we're is And really, levels. different at of with ARPU. that of And better

Operator

with line Coad from is next question the Matt Autonomous. of Your

Matthew Coad

will thinking profit margin, I kind wanted the we margin ask to more one gross think forward less that you perspective of dollars at Curious, grow profit of so if different looked going do margin capital. dollars build, of percentage contribution expand the a like your help contribution so not on but contribution from rather gross forward? and you this reserve flow agreement it

Elena Gomez

we flow, such model out about risk-adjusted forward profile zooming the the optimize level so maximize think And highest our kind that of don't returns. just or you we're to the healthy. program, capital margin the risk when really At trying is credit is Yes. take

offers we business we're more partners, going as as case, build in this workflow and margin a scale, and to healthy still scale the us allows us to So really well. profile

answers hopefully, your So question. that

Matthew Coad

annualized repeating sorry Yes, helpful. XQ? my And risk, million this cost just then for curious is that's did much you how savings of of of Elena, in but see from update, the if we provide an that follow-up. the you if yourself, $XXX could

Elena Gomez

that I from say some on we've higher think -- stock-based than related just of -- the savings of I I given fact about a And you, We will benefits. to quarterly $XX million But the $XXX had bit to the be did In the incremental script tell savings of don't onetime talked it mind, comp. roughly we I we XQ, is X/X anticipated, because in had million. honest. little around keep guidance,

Operator

from is question next Redburn Atlantic. Your with the line Dominic of Ball

Dominic Ball

job Great on always. taking market share as

upper the to would by mid-market be that question the So was Toast gaps is My it I suite seems or because there the release, enterprise, any and offered benchmarking recent is management are market-leading. larger asked product merchants, you the interesting. for put fill? of really this breadth that like restaurant SMB, products clearly like depth in tool

the should releases more to larger So merchants? specifically in geared we product future expect

Aman Narang

question. gradually start we Dominic, The provide and to That to across into drop capability the the we invest enterprise. in continue as was the the the to TAM, including suite the more of whole plan capabilities restaurant thanks is a goal can where more for of management suite.

above-store our and And and there's of well way, our security host make product to the including, APIs, tools, it's as in our so investing whether drive-through food capabilities a whether compliance, we're over fit whole config it's our time. that by management a extensibility upmarket, capabilities better management,

long all the the is plan this used a the it management package so term. And us into allows can And restaurant that of suite in up be suite upmarket. to

Dominic Ball

one That's more, okay. that's And super interesting. just if

higher that? parity because the about with the U.S. go a or isn't markets lower initial product think build is, growth, For the So case you products we I of the then from international cost how growth growth? to OpEx in subsequent cost a and what product that of is you because mean attached international, pipeline, when scratch there the and the of that are U.S., there's sort should these different actually now

Aman Narang

Yes.

expand our base. experience A I from continue it's support think, standpoint maybe well looked by And been to -- feature and to online to invest is our online in big of received. announced ordering, map customer internationally, customers integrated international lot say is and a if road that this a quarter, that operations which we look, our ordering, really driven request the I'll restaurant there's we customers. just you the guest product both perspective from a

product incremental I'll certainly market. requirements, decade. thing we've reusable for the the -- one, for same go to is example, building build across And of U.S. also, not location-specific framework here on the to we're given the here or investment out more one a what product, think as capabilities I built the built market, think call past the currency whether top building over it's is I where new payments, language or out the we've

So as scale we markets go it allow faster. us next even to enter time, over of the should actually

Operator

last We question will ISI. Sheriq of line take our with the now Sumar Evercore from

Sheriq Sumar

wanted ARPU thinking this trend wanted too the potential XXXX, to the from to on I of And fluctuation ARPU sense cadence kind -- see kind is there mean, here? any early the strategy a ask beyond could I SaaS just that kind around mean, probably it's but that I Like about of any for improvement expect we growth just bit get SaaS the a to upsell could expect? in I year. of know we

Elena Gomez

I'll that. Sheriq, Yes, take

our long working our we fit, One term. there's -- growing in through delivering breadth on that's we're course, on on confident mid-single basis, though upsell the an innovation think that's So innovation. really you're talked side, things about, in attach, optimizing we still continuing the have then side about on changes, about ARR but in right? know Zooming packaging. And we've even drive R&D SaaS our on few of to SaaS when a the of think team, asking and ongoing an products the to we about. and out, term, that's cadence I time, we've as pricing will that near digits is future fintech feel our invest implement said the and market small ARPU. -- steady we both team product over of opportunity term, also And then, near you there's in And even pricing

time So But ARR basis. over opportunity mid-single our digits on we the an to in is have near term, an right the ARPU. proxy grow

Michael Senno

I think today. up ramps that for Operator, call our

Operator

today's concludes This call. conference

may disconnect. now You

Toast (TOST) 7 May 242024 Q1 Earnings call transcript