Toast, Inc. Q4 FY2024 earnings call

• 2024 was a strong year with 28,000 net locations added, recurring gross profit streams growing 34%, adjusted EBITDA at $373 million, and GAAP profitability achieved.
• Core US restaurant business has 15% market share with room to scale; 2025 plans to increase sales and marketing investments, including the 'It's the Little Things' campaign.
• New markets progress: Enterprise had strong wins like Hilton Hotels and Ascent brands; international SaaS ARPU for Q4 2024 up 50% with Loyalty and Restaurant Retail products launched; retail in 2024 was a testing year with a dedicated sales team scaled.
• Leveraging data and AI: Enhancements to POS, guest engagement tools, reporting, and benchmarking tool for customers.
• Maintaining margins while investing: Disciplined approach to investments in growth areas while gradually expanding margins.

In the fourth quarter, Toast's recurring gross profit streams increased 39%. SaaS ARR grew 32% year-over-year due to strong location growth and a 5% increase in SaaS ARPU on an ARR basis. Subscription revenue increased 41% and gross profit 47%. Payments ARR and fintech gross profit both increased 35% in Q4. GPV was $42 billion, up 25% year-over-year. Non-payments fintech solutions, led by Toast Capital, contributed $43 million in gross profit in Q4. For the full year 2024, recurring gross profit streams grew 34%, adjusted EBITDA was $373 million, and the company achieved GAAP profitability for the first time.

• Q1 2025: Total subscription and fintech gross profit growth expected in 27%-30% range, adjusted EBITDA $100M-$110M.
• Full year 2025: Recurring gross profit streams growth 23%-25%, adjusted EBITDA $510M-$530M with 30% margin at midpoint, anticipating higher growth in first half and lapping one-time benefits in second half.

Forward-looking statements reflect views as of today, and actual results may differ due to risks and uncertainties discussed in SEC filings, including factors that could cause actual performance to differ from expectations.

Q: Will Nance asked about retail progress and strategic priorities based on feedback, and how the thought process has changed around the surface area Toast addresses over time.

A: Aman Narang stated the bulk of focus is core US restaurant segment, but new segments like retail, enterprise, and international show positive signals with 10,000 locations expected this year in new segments.

Q: Will Nance followed up on SaaS ARPU and same store sales, asking about trends and near-term expectations.

A: Elena Gomez said SaaS ARPU is in a healthy zone, same store sales saw Q4 improvement with Q1 expected to be affected by weather and leap year differences.

Q: Joshua Baer asked about AI products and customer reception, and retail economics.

A: Aman Narang discussed AI focus on service improvement and personalized experiences; Elena Gomez said retail economics are healthy with higher ARPU potential than restaurant averages but early days.

Q: David Hynes asked about enterprise pipeline and retail ARPU contribution.

A: Aman Narang talked about strong enterprise pipeline and product composability; Elena Gomez said retail economics are healthy with higher initial ARPU potential.

Q: Timothy Chiodo asked about ARR per location and medium-term outlook.

A: Aman Narang said near-term mid-single-digit growth expected, with focus on land-and-expand and TAM expansion.

Q: Dan Dolev asked about payments ARR acceleration in Q4.

A: Elena Gomez explained Q4 take rate increase due to cost optimization and September price change.

Q: Samad Samana asked about enterprise wins rollout cadence and Marriott/Potbelly lessons.

A: Aman Narang said enterprise wins vary, with focus on franchisee overlap and rollout plans.

Q: Harshita Rawat asked about market share gains in core US and international distribution strategy.

A: Aman Narang said flywheel markets perform well, and international focus is on scaling existing markets with GPV and ARPU potential driving strategy.

Q: Bryan Keane asked about EBITDA margin expansion and pricing changes.

A: Elena Gomez said margin expansion in 2025 reflects investment in growth and visibility, and pricing changes are gradual across SaaS and fintech.