TOST - Earnings call transcript Q2 2024

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Operator

Good afternoon. My name is Brika and I will be your conference operator today. At this time, I would like to welcome everyone to Toast's Second 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.

conference. your begin may You

Michael Senno

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

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

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

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

most intended our reconciliations GAAP These not for basis GAAP limited line to measures. Technology gross and subscription filings call, this are earnings streams. non-GAAP Solutions guidance. results. non-GAAP the These Please non-GAAP comparable refer which detailed we not to a financial be During to, profit our collectively substitute to we will but discuss gross top the our these recurring including, non-GAAP to for for gross profit release measures, SEC profit measures refer services as of non-GAAP and Financial certain 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 website the Finally, be our be can will call, the website. available press the investors.toasttab.com. release at on Investor a After on replay Relations

to turn that, with let call me over the Aman. And

Aman Narang

scale everyone, had Thank strong and second us this record afternoon. recurring you, streams a you, for increased at net and and team really We XX% added GAAP we've EBITDA in $XX million, second the thank have and adjusted half. joining locations, I'm Michael, to positioned strong profitability achieved of we're ahead performed, a year-over-year, gross We quarter. expectations. how income a X,XXX well profit continue of came our to proud

our Toast choice XX% behind their incredible and mission opportunity at out is At scale help drivers they At the of guests, industry. the love first opportunity, platform Investor restaurants, shared us. have share do strategy of amazing and become to and Day restaurants U.S. in in delight thrive. we this May, to Our what about serving we our momentum. an

location both teams, assets, drive long go-to-market and over the ARPU with and us engine data local and products and position Our growth customer combined success uniquely durable expansion sustained our to term.

and our our right to returns. in distracting us these the And win to to drive of as has have durable scaling support segments. and from done TAM beverage to our markets, great across core expand we're identifying ability expand key addition our foundation TAM the and In to restaurant enterprise U.S. without The investments to a growth team mid-market ability thoughtfully retail. segments SMB and laying across chains international as our we of shareholder where market restaurants, a well allow job scale food market

out in on market the three, earlier our and addressable performance this we expanding the new restaurants with we're for we four, scale. laid in our adjacencies; outlook our customers our love; first market scaling all our leverage ongoing strategic offering core company the into to half, products on and One, two, based share increased for year. locations as deliver setting operating focused and business; We've priorities year expanding up full the X

first, gaining in So our core and business. scaling restaurant locations share

net quarter record in our X,XXX Our go-to-market adds driven by [indiscernible] engine. and second local restaurant the our were platform

local rep to continue country, As effect productivity we share higher and gains. markets we gain momentum faster with a flywheel in the see market across

By growing guests and by concept kitchen and from prep stage our top times in XX we confidence have Toast saw a more the Bizoria for locations. with complementing our market In This country share drive that fact, spotlight they've gives non-flywheel time. terminals the kiosks minutes. wins markets. self-ordering fuel POS as on switched I'll highest provider one to XX% share, across QX value gains another help strong reduced bring. estimates our Great average order continue versus Bizoria, across flywheel impact recent ability we average in on us the Atlanta a growth. markets increased the see to to their market because next systems food lines, fast over we casual our share speaks that result, their they in example businesses. gaining to restaurants have And with by revenue to of we're can display And in across their X cloud XX%

gears. Switching

customers expanding our Our is offering to second restaurants with products priority love. and experiences

simplify our and adopt adopt platform our and our best see value suppliers guests, new how across and customers supporting the stakeholders, talked across simplifying serves suites including operations. impact. ecosystem product -- products products, employees streams, and driving quarter, operators, Our to sell how starting this partner have we're we revenue creates throughput an Last restaurant and of dimensions, how about many and launch better to years all the good, I

products rest build digital a And of to online in we since upgraded locations our website our website works to help XX% example, with digital Pro includes approximately presence. restaurants this the in the great suite which spring, new For suite, tier, launched our our concert storefront book product. of

As help attach turn, us which we confident across we to ARR. product product similar suites, mature our trends will, will drive continue in our we're see platform, in

across and Canada has both cards several first drive our Ireland, expectations. and launched including kiosk. surpassing to hard ordering, out Mobile and In building half, Internationally, differentiation platform we online the team & Attach gift products, the work U.K., ARPU. been are at rates Pay, Order the

Tehini As year. already The an double of ordering. out that's plan example, international adopted line restaurant locations. nearly to a quick-serve bookings Canadian June across count half Toast XX rolled next is Toast location our is

this their beautiful images goals. growth has They to via go upsells credit of increase invest POS data-driven their in custom for revenue kiosk them ability back better helped our to at terminal. this has a business for XX% to prompt ordering ambitious One into together. Tehini in items kiosks on their highlights And more increase that support of been growth a dishes the check versus for their sizes

are Our potential well to out we as marketing, our in given we team more continue guest and tables how integration. as hotel on restaurant with excited international opportunity. the year, Toast is And X,XXX PMS to planned progress our roll the remain long-term QX, of bullish as about this early locations retail, are products internationally including live

for food adjacencies, pretzels the addressable an enterprise with already our another priority retail. expanding mussels third to including new platform. into on partnership XXX is in signing and market our XXX extension by addition our beverage expanded We and Next, stores locations our recently

have wet to to steadily the in MPY fast-growing strong continue us our And Toast We a holdings, including brands. over number gives our confidence made marquee enterprise of roll are we improvements barbecue across which brands, combined and soils our platform, penetration time. with increasing part of pipeline

in As allowed in I including us the on decade grocery, to alone we've in the Investor has stores locations in markets spend $XXX these bottle mentioned and There the over our past are platform enter new in put Day convenience our and building work U.S. XXX,XXX shops. May, in verticals, billion

And we've using this of here, market the so still X,XXX far, customers. a part an because solutions and much integrated in growth is on-prem so benefits new legacy platform. of cloud significant opportunity We see booked see

business of been early customers. Maine, segment. in as to addition X capital their by guests And management, service including leverage making our across both our better operating their confidence market adding recently tasks, Toast, and markets back-office can and drive priority retail into in nascent Hospitality see our Toast Group have the able many Since deliver like we available the in Victory core on this of offer have has growth us XXXX. scale to shareholder inventory example, returns, portfolio For we have is fourth to segments. that finally, invest to examples the significant that to We with drive our staff launched to award-winning been restaurants much Portland, streamlined. in since more

short of And improvement adjusted we ago. Our our strong of of in of business to this margin in $XX the very I'm growth was support back long-term margin drive while from level quarter, will to year both our year, look $XX working towards EBITDA a team's the expansion a growth the period half into our second the a second as time. invest goals. proud and million ability more we to million plans

confident to and on our for and innings continued I'm prepared dedication in thank To opportunity want are coaster how We're wrap ahead. every in for capitalize executing. early I the we're up, mission. to the their still passion

support them. to us entrusting for customers Our

course, of potential investors helping Our believing enable the our and this in great and for ecosystem in partners us business. us for this

the more Now this about quarter's to I'll results. share over Elena turn call to

Elena Gomez

for increased your driven to subscription our $XX recurring with Aman, quarter than a have you, the on and to our I strong joining reached a recurring further our been XX%, ARR thank ARPU profit and growth. We on focus Thank and bottom continued also GAAP earlier XX% Total drive working above profit evidence and on profitability EBITDA durable, to second totaled another expansion. quarter, an important also of line Adjusted we fintech location stream, continued growth $XXX XX% milestone million. want million, gross execution profit and streams. delivered strong expected, recurring ability gross grew top was efficient and results employees, are margin by expectations. In gross towards year-over-year representing everyone

segment, we added growth complemented new beverage and mid-market U.S. contributions retail. primarily international, net to driven a customer continued XXX,XXX, gains quarterly core year-over-year. in up Location by approximately across locations was and XX% our food SMB enterprise and X,XXX the locations, increasing QX, about In record, share our by total

see prior the as year-over-year, restaurants QX for in season, and quarter As a seasonally grew basis. is increase XX% year, fintech SaaS mid-single-digit consistent GPV our year. typically XX% in adds quarterly second up grew an versus growth per XX% ARPU and down year-over-year, QX. by strongest driven GPV was in recent peak half. increased $XX.X and ARR SaaS with strong profit location with reminder, Payments of ARR a about on net billion, trends. we lower ARR gross quarterly location repair X% the XX%

flat Net core take with net basis basis rate XX rate was XX points. year-over-year at take points

solutions comes by but which $XX profit slightly is of carries flow, fintech basis diverse points us Toast risk-adjusted risk. no rate credit to grow a and prudently lower take net Our funding origination, Capital dollar of with prior forward maximize due lower program across nonpayment with take models to take and per led contribution gross million optimize contributed the to rate. sources capacity the than The enables periods returns. Expanding introduction X to rate the net in

core the expected track we've in net on discussed We half increase pricing and small the are year. for targeted impact rate take to of payments the second have a on

We'll several long-term second reflecting half sustained year-over-year highest product, areas on we've efficiencies a drive employed earlier full Over as investment will and the operating investments growth expansion. taken of TAM expenses go-to-market, savings and will actions adjustments operating approach across in drive algorithm. in increase into growth. same were time, expansion quarter reinvest in margin restructuring expense the the disciplined one driving fund focused maintain priority the the across business remain drivers to our ongoing we of long-term Total to X% the of year. be anticipate We up price from quarter, savings our growth

increased upsell international teams expenses and year-over-year U.S. our to as go-to-market Sales in make penetration. our year-over-year to and R&D XX% continue in X% motion grow declined and QX. in drive marketing expenses we QX targeted sales deeper investments

create with into see investments differentiated expand new reinvestment to for making platform We're our aligned to expect that customers new mid-market a value strategy QX. impact SMB and customers. product core TAMs. We targeted our the starting in provide for innovate products our of and

Excluding was $XX million debt expenses, of bad year-over-year. down credit-related G&A and XX%

debt workforce optimization automation will to drive We of leverage. benefiting of forward of the G&A, continue associated program. lower ongoing global and relative prior our flow Bad the addition diversification operating within from the including continued with periods, Toast to and was efficiency through expect and capital

EBITDA $X resulted of business. benefit Free seasonality in progress payments driven the Our by flow income quarter combined operating growing million to adjusted capital quarter, our our with expenses, stock-based strong a GAAP in quarter. in million totaled first $XXX compensation adjusted of in working containing cash due the from profit reaching the EBITDA and second

repurchases. Moving start also our accelerated, cash share to At $XX repurchase part in maximize opportunistically would to the strategy XXXX in otherwise $XX million broader allocation We stock shares and it capital of we by as QX, for million X.X use an shares. value, with view capital allocation. Year-to-date, dilution. in we shareholder aligns warrant have opportunistic reducing repurchased we allocated efficient repurchase repurchased of warrant for a for expiring million. The have

result, a of opportunistic slower the we although remain conditions. pace year. a of through based we buyback market will anticipate balance As on the

guidance. to turning Now

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

Following year We it margin, full improvement to our represents outlook. midpoint, million million strong first profit gross fintech At and are EBITDA. a the XX% $XXX and subscription XX $XXX performance, XX% in expect growth point to adjusted percentage XX% a increasing in versus XXXX. our we half now

includes savings GAAP This key year, EBITDA margins. around the adjusted first investment also are back on We of the After guidance half areas breakeven business, expect in of the from benefiting in for quarterly year. to the of which the year. remainder driving the be the of our half the the a basis concentrated restructuring in fluctuations in is

the of progress margin plan are targets. XXXX off representative year We gains. year and and and our our of build steadily for growth managing investment expectations capture full business Our medium- we how our margins are efficiency to long-term towards full and the

of our momentum we through first To the up, proud half are wrap of XXXX. extremely execution and

to We the on positioned second of a term. and well are sustain the track for high half over expansion growth strong long year and margin

back I to call Now the operator will begin to the over turn Q&A.

Operator

question first with Huang Your Tien-Tsin comes Instructions] JPMorgan. from [Operator

Tien-Tsin Huang

here. results Good

location change the half know on in in seasonality addition second if last you health of comment, side? wanted couple on together, Just just the any ask macro since to restaurant understand any months I mentioned, the that and we the there's been got observations last I but other

Elena Gomez

Yes. Thanks, question. Tien-Tsin, for the

per location it's as that GPV down was And our QX, head we in So X%. into in QX, same range.

business laid just that's consistent. out, So to through cycles. I But through about couple it. of various and we restaurants. a proven that have about cycles. the also we in going we're our data quarter, our monitor of continue course, a economic know manage ability We're zooming think it's to just been -- the growing lot call. And as GPV, XX%, relatively to to guidance to billion reflects That We've we on confidence our this the $XX macro various economic and of out the points said, dynamic, as resilient be is

Operator

question comes with next Mizuho. Your Dolev Dan from

Dan Dolev

wanted subscription I about ask to ARR.

sales good. allocation annual context it here actually think what looks good [indiscernible]. with your today what of at are from of same-store looks as wondered number I the pretty [indiscernible] I pretty the seeing the upsell and we're products least strong performance, in customers looks kind really resonating

Aman Narang

another and we benchmarking there's data Thanks at across AI, for been the of Yes. from all [indiscernible] has be in CRM Day. for our this AI our our innovations. range shafts to platform Analyst positive. from tool like excited umbrella our of Look, is things help area the we're that how we and question, an about AI shared tool. a capabilities Dan. Generative feedback broad shared everything leverage And customers our and

there's we've So that's help is are then across talked platform team work continue refine iterate team to -- cloud products. there fintech. the that platform, has the how And excited guests, to areas, one commerce, about. of the is all area employee and those about putting across the our in on and And

our So product. online been on. or website stables on example, good Toast CRM, There's guess, ordering, catering, new product, for feedback

term. ARPU a as lot recognize of product, we're driver long business. the And conjunction cloud for in our the market growth medium the focus and a have our we all TIPS just fit side, product. On doing scheduling make the is payroll a driving We're we're focus our and lot product is of working by with what our the I'll in strong important continuing work supplier an suites team, to to that wrap this sure accounting in employee there's We and on on saying product. really in growth

Operator

Your comes from William with Goldman Sachs. Nance next question

William Nance

to some the on from macro to I ask make see a question decisions wanted Tien-Tsin's incremental a another Nice to investments. maybe strong the just of quarter. sticking ago, second with

the mix there how with of the I the the when in guess adding accelerate on seen do new new you restaurant lot in adds impact is sort think -- actually Are restaurant the do been seeing that you you decision head have count versus genesis a half? of competitive formation of slows? sort opportunity about you net like takeaways? the of how there's location on investments think just sort back the you I sort of question of sort go-to-market from as the kind to macro numbers? of think And marry of out that those and functions, additional openings to of coming focus And about guess recently. I are And any that

Aman Narang

thanks Well, Yes. Great asking. question. for

to I team our just is think QX. is In on like want If terms fundamentally continued start both and made, MROs. about -- existing thing was pattern. milestone NROs is just proud see a reflecting had us. existing, has to mix XK net and convert the like I of we've in of X,XXX it And ability like, progress out, you for the how one the by to sign zoom restaurants I'm the different in we've a of record performance. really not team's And saying adds important an We

If you you in level plus, decade. look at quarter. we think quarter $XXX ARPU that growth sustaining about XX,XXX for in million our at of after added next quarter approaching this the the And we're ARR and

core outcome. net it's think from our a a SMB U.S. business. the mid-market adds great I QX, lot and came In specifically, of

As you on top And our one continue the the mentioned our proud to productive. build decade taken markets I of to I'm us is call, can of really SMB a as business. imagine, it's things XX really be cyber

In fact, flywheel it's X last versus the in markets at XX% non-flywheel years. have and Xx more wins markets expanded

So question, that look progress excited place And second fair ultimately, really in of retail, of in business. your question made Really do investing, to will into. in we we're half. that nice capacity, in core see sales we like segments adding think while a the our SMB we've about getting uneconomic I our new some about see international in proud it's And drivers to healthy in we're capacity we and the business. these core growth

And we're so unit invest. to as to see to to healthy, be look as going long continue our we continue economics

Operator

from next Blair. Stephen Sheldon William with question Your comes

Stephen Sheldon

quarter. Nice in work the

markets of et solutions. I kind of you think grocery, As adjacent opportunities convenience talked the to expanded these legacy big on-prem cetera, replace stores, about Aman some in

where and those in markets look restaurants, legacy you is end -- again, broaden on at as than replacement international hit SMB specific there which I if restaurants, you do you there there's and to about your that comments. markets, are the -- enterprise to think you think bigger adjacent portions opportunities wanted others just So ask prepared pursuing,

Aman Narang

the Stephen. for Yes. Thanks question,

slower. past mentioned calls conversion the the that cycles the segment, enterprise are I think the we've in in

more So legacy there is upmarket.

retail, see space. needs, there that some also there taken are isn't over has and a that very provider We within great cloud specific the

years me reminds a ago. XX fact, restaurant the what bit of In little was business like

GPV, And even of segments there. out international a see of markets, is if But look pattern higher the you I that in still the at so opportunity we X those legacy restaurants are lot a see lot the for with trend larger in.

to across so of across right are growth all really think focused getting, are your vectors, growth of about ultimately some us customer determine thing vectors. allocate one we economics? these we're is and feedback -- biggest allocation big us market long What term, we're the segments. is the where challenges the our those that see growth help our asset different what payback And is periods? what the of how for What And are that potential the across is these and on drivers these we capital

Operator

comes question UBS. next from Your Tim Chiodo

Timothy Chiodo

expand, half upfront if was I hoping for question you don't to in guidance. around upsell have second land teams the clarify but mind, something and I an the also

talk folks the in For the about you location are you mind. more with could maybe second or productive. half. location think might little little the If things expand. better half in it's last land And maybe been quarter, year, the I clarifier, that last the slightly Those per AR and And have that I'll the the in heads implied you X Now year, a in guidance bit to don't have not prior bit a that year SaaS as guidance contributing being on and the would about teams additional believe. of there. a upsell And becoming the fourth hiring beyond. progress as I'm those mistaken, per teams SaaS focused of probably seeing we GPV actually, upsell throw just downtick later those you're back if then on them more just brought the in ARPU

fair it you guidance a is pressure still absorbing were guide to macro little pressure? the incremental raise more able despite is So macro the that bit that and to actually say

Elena Gomez

of narrow And -- relatively think GPV latest our me we've does in that's thinking. Tim, guidance been what Yes. location. band it's our think a mean to is I'm in terms fair about about this that's But been let assessment, a fair seen QX. per trying consistent I -- sales. same-store reflect It's

but in it, the year-over-year a factored about half a band into the be narrow of back to how basis. and that's guidance anticipate year, on we for it that's we our So think

Aman Narang

we And by on component locations. saying new learning with continue business as the are years because driving we're is easier. of let to on growth to and last this team. and upsell, continues is very on, the product activate upsell, especially I'll that growth. we question to your continue upsell talked optimize is this and past great -- in we we're is, team about that to to is Tim, we're make shop to And start the thing the That's And We'll lot. X location our the for then, thing critical question platform a new to seeing. business a conjunction ARPU in products drive customers growth our how is drive team, And easier suites growing sell. I mature ability about our and improve, as foremost, focused we've products on talked portfolio that platform continue about continue Toast first our team ARPU for critical earlier focused adopt R&D and sure to as to invest growth team complement making to looking in product the think another about the buy we This do what the to to where

team and our sure X committed and team we're to work The made. in, the upsell we're new refine team. business do, expand we across pleased our making progress. to land and has think So continue There's our with years I still upsell that motion to

Operator

comes question with Bernstein. Harshita from next Your Rawat

Harshita Rawat

year. second new like Can in Very Elena, upon driven in food the and the to from also beverage And know location kind you then, headwind of you've I strong retail areas should the also seasonality expand contribution how XQ? mentioned maybe half at of location we want about international? think adds.

Aman Narang

U.S., growing we lives making said to as Yes. at that's the X,XXX we've in of are to got resonating expand international customers. more platform been Analyst more bag, share the platform, Sure. locations of with And Thanks, shared really -- we see bring we're in these Day, Harshita. quickly. really continue think retail, we're team proud investments again, to the our sell locations really markets the a made. International This which that to And for if XX this was that X,XXX But doesn't at relatively zoom have out core about the progress level to sales of that's the on gotten business it are project in in go-to-market new relative you our to years these the if we And the in our same well to businesses and still our on past, has internationally pedal you product. the Stockworks some nicely Retail as going now been maturity we've early same put remember to invest has booked the great. their down of before team's start capacity, capacity.

so next growth. on think next business, and our aspirations to more to of as especially you areas contributors, that. are we the still the And continue wheel core think our few the about decade, bulk And not thing from just And in significant adds the our the also expand talked are about but of coming of the make these about X core you business. driver about new effect is and the working primary years course, our we're

Elena Gomez

all, the had we track il on Yes. funnel a we're question -- half, first location the strong, to your strong Aman's comments, Aman of year demand remains second on echo on as and still And and first the Harshita, on half just of that quarterly in rest 'XX higher seasonality. to QX adds in than the we locations base. a the script, I'll 'XX, said obviously net which be new bigger that's the is tend more than off did what year just given of in reiterate I add and

for but confident second the So team the plan your just half, about well. think you is . as models that executing

Operator

Stanley. Josh Morgan have with now Baer We

Josh Baer

bit GPV ticket of just -- seeing changing And items unpack number Any trends dig mix sizes. could I that and hoping then you exceeded the impact across more. into diner just could hoping mix Was per you're was location check on from you metric? a

Elena Gomez

to I'm that. unpack Yes. happy

So just that's the QX the declining that of And to was driver mentioned. same-store as in year-over-year. primary August put it of zone, same year-to-date is in I most context, down X% sales

a different different in consistent. There's small but sales notable it's relatively portion has our pattern terms driver. our that primary the across segments. that's really of we a to China the declining. of that's been And seen mostly same-store haven't And So segments, mix, related pockets

Aman Narang

a And past we've terms Elena seen fundamental order think just band. been or to add are side, to and gradual there that, you the change. any pattern very these look hasn't been think, if that the of as And a over size in I in I at in these And have mentioned, changes, check narrow year.

Operator

with next Your question comes Matt from Auto. Coad

Matthew Coad

get little food dig more already made to and how and product the out it of investments talked need, the needed parity sounds beverage like the there of you I that all you've on retail but a Day, you a still lot bit At of Investor investment and in to good done. the that build and be about kind to needs modules amount wanted investments international. the there's platforms a in

for So terms that baseball the I new inning Like hoping use out was we verticals analogy, right and on in, are platform could maybe those now? in touch what building X you like of a right?

Aman Narang

Yes.

I'll the this really been the is the hospitality year lot I of for X some X look, or see all to across business fair amazing. businesses in big these I'll analogy, in baseball that base. space. think context. year And the reception a Matt. going call, think you not in our that core XX like say and question, other history with But in by It's stories the the it's I'm our there's I U.S. customers saying we're has but solutions these your of think XX I story the to give to ability we I drivers been in really and that we're approach and start use in move shared lot it one our it customer of legacy to cloud, a The resonates positive. a the in customer one

the on In Analyst is think we to to the a I inventory terms features, resonate continues of Day of that ability shared the floor. the at ones lot one manage

think the also retailers staff. e-commerce capabilities We continue that, some e-commerce there's a and efficiency I that's that important. to On and adds hear feedback, a offering is a of capability feature capability around for lot but because

integrated built end back so really valuable. And having into is and that the

do. on question And there's work map, your then, Matt, to road

If you some scale like deli think payroll supporting SNAP do management. integrations platform. XX,XXX the on working lot But in payment EBT. on a across reused. there's our out, really grocery work and be that work also get we're think area on. lot we locations in of and about things the and We're the an on around laid platform, we fuel we There's the When that's a built get scheduling can you payments that's side, to working

lift to talked I nearly but But not we've products, the decade a this in to bring about taken it's lot to the the same to products -- to And can U.S. a imagine, I be opportunity not this so return the as it's then in the same I international, see really we is investment a our build And of internationally. lift able great market in we think ability as really, high. where see know segment these platform you build

internationalization, support that And gradual team working it's the on. is so process to a

Elena Gomez

The as a said, as mentioned Analyst and thing is, we upon allocation, I Aman, businesses. capital guiding -- think about And as at Day, take principles. very you we what Yes. some would obviously, strategy these emerging we I only build a take

thoughtful We that gated approach we way have a investing. very

just see continue you'll businesses. we that have, we so so incrementally we And -- these and to a that's before to grow we discipline wait as see signal invest

Operator

Canaccord next Your comes question David from Genuity. with Hynes

David Hynes

some from contribute could interest chef get financial you And time? these you have Excellent initiatives with over with to I'd AI, customers the and hearing opportunity that's love model from respect whether underway? results. how you you're update I think guess sue Aman, what or of other to an the to on your

Aman Narang

the question, think Look, I still DJ. it's early. Thanks Yes. for

is customers. the landing over of we our team the of things marketing in think sure example did we That's the think is great with on And one for value really focused that tools. is I been world do and guest we the our create AI, over of a reinforcing mantra really work how our that the customers. we're with AI doing one make just team to this leverage of is and work to that we've

think marketers. you restauranteurs, of not So they're

is ability this campaigns. send on floor create campaigns and generative when for great all they're these so the them AI for them. text their drive have and And And that demand to have out ability actually to the the

actually And of the create of adoption create restaurants. help examples generative value it's the seen example a already -- to AI -- we've great actually As impact on for leveraging AI create and where product. demand early it's a activation having big

benchmarking. Another example on data the is side

we've can plus you as restaurants platform. on got the imagine, XXX,XXX So

that one restaurants the just team them are set help data add through thinking leveraging amazing smarter. to the all can this got in can And of we've what we the data And is so value. is which we leverage. ways be And

put how about how think or You think what that's been simple inflation. historically. menus, lot like there about how think not of data to to There's to a on things of restaurants menus price

the chef ability tell like has it's received. prompts. a an actually where say, of And to idea get Zip really going specifically, ChatGPT, is with the on, my really, it you and so umbrella, well what's Toast log an in sue Think can code been me it's umbrella And

You recommendations. can get

can can terms in over get to you to restaurant. time, run You how feedback better also, search a of

so with team on can to of are work benchmarking how considering or demand. is drive we're the prompt to that data are CRM and within give many of the there recommendations examples you umbrella to or doing where leverage ideas some And smarter that be this

David Hynes

down York, in did slick. the New product . benchmarking Yes, pretty the it of makes demo it's We and sense.

Operator

Jefferies. have now a Samana with We Samad

Samad Samana

what are the you to installed what you I gross any inside base? the look you assumptions on I what the around retention quarter net -- in half or guidance back half your as saw on adds the second Elena, net I commentary. ask like? just the about metrics adds observation -- the on you're I you And I ultimately think retention guess, changing any back of know just around in expecting churn of wanted for hear around

Elena Gomez

last -- I executing Broadly to continues low, few how of the material range it on so churn, in impact we're well. speaking No similar relative XX% business to be is quarters. been year no to but on the basis, to been business. has And think ago, And an slightly which above a it's the up now, right, change the out ARR where very annualized is an churn, basis. team predominantly ARR Yes. we're slightly the on thinking about

churn So in we no built that into we the net change our adds see, that assumptions . material there. and build you

Samad Samana

you. I net than more the have do year you'll Got add had but this year. guys last I you adds still view if this, missed And that apologize

I on I'm think that that. previously not said if you'd or not. sure And I this call heard

Elena Gomez

Yes. I answered that ago. a few minutes

yes, you hear . did So that.

Operator

now take will with Andrew Wells We our the Bauch Fargo. of from last question line

on in for macro to the Konin a wanted is I bit little again. focus This on Andrew.

see or Just materialize to can spend restaurant And of offsets back half term? the levers into you in the environment side we near pull the the some impacts built the that the case slower are cost you manage embedding from throughout what into business guide?

Elena Gomez

thank Toast adapt tough we've of for to question, business is me that level, quickly. platform -- value that start let cycles. able Andrew. the over during more proven highest the the proven Yes. the Andrew No, times, importantly, we've durable saying and at or Look, But Konin we're by

year, us more a move So and us we faster in in as the macro positions became earlier if to. changes company it absorb to just [indiscernible] to we the need enables

to we and zone we needed action, was sales the same-store the QX. we GPV macro down we're in same restaurants we really We're is dynamic, guidance We know is decline seeing to here proven reflects of as course, seeing quarter driving know is resilient. that. said, also would. what have So start and take That -- if per X% right our location be the that what's now, but

continue and monitor. So we'll in confident the gave, guide to just that we

Operator

to like for remarks. final some management your to back would hand team I

Elena Gomez

the for everyone. time Thanks

Operator

call. for joining. today's Thank all you conclude does This

now may the your your day. rest You lines, enjoy and disconnect of

Toast (TOST) 6 Aug 242024 Q2 Earnings call transcript