Toast, Inc. Q3 FY2025 earnings call

Aman Narang mentioned Toast delivered 34% top line growth, surpassed $2 billion in ARR, and has a clear path to doubling market share in the core U.S. SMB business. The company secured marquee wins such as Nordstrom, TGI Fridays, and Everbowl, and expanded the partnership with Uber. In new markets, international markets are growing with SaaS ARPU up 20%, food and beverage retail is gaining traction, and the enterprise segment has a strong deal pipeline. Toast is focusing on expanding platform adoption and driving differentiation through data and AI, with initiatives like Toast IQ and Toast Advertising. The core business operates at the target EBITDA margin, providing flexibility to invest in new growth engines.

The core U.S. SMB and mid-market restaurant business contributes about 95% of ARR. SaaS ARR grew 28% year-over-year, driven by location growth and a mid-single-digit increase in SaaS ARPU on an ARR basis. Payments ARR increased 31%, and fintech gross profit grew 35% in the third quarter versus a year ago. International SaaS ARPU was up 20% year-over-year. Enterprise, international, and food and beverage retail are collectively on pace to reach $100 million in ARR this year. The core business already operates at the target 40% EBITDA margin outlined at the Investor Day.

For the fourth quarter, total fintech and subscription gross profit is expected to grow in the range of 22% to 25% year-over-year, and adjusted EBITDA is projected to be $140 million to $150 million. The full year outlook has been raised, with an expected 32% growth in fintech and subscription gross profit and $615 million in adjusted EBITDA. In 2026, the company expects to continue growth over 20%, with margins flat to slightly up year-over-year.

Risks include increased competition that could impact market share gains, macroeconomic uncertainties affecting consumer spending on restaurant services, and potential technology outages or disruptions that might hinder business operations.

Q: Congrats on a strong quarter. I wanted to ask about GPV per location...

A: Aman Narang said the platform helps restaurants run better, and GPV per location was in line with expectations, with the platform playing a big role in aiding restaurants' success.

Q: Obviously, really nice results tonight. You talked about a clear path to doubling your market share in core SMB...

A: Aman Narang mentioned win rates are up against competitors, strong go-to-market execution, and the core platform's innovation as key to market share growth.

Q: I want to shift gears a little bit to talk a little bit more about the opportunity that Toast has with consumers...

A: Aman Narang discussed the potential in consumer experience, including digital offers, loyalty tracking, and enhancing the in-store experience due to the density of Toast restaurants.

Q: Obviously, great results here. I wanted to ask about just the consumer in general, like the macro...

A: Aman Narang said the summer and Q3 were strong, consumer in October normalized but customers were performing well, and restaurants tend to be resilient in various market conditions.

Q: Aman, just to start with, I mean, fantastic to hear that you guys are saying that Toast can double its market share in its core...

A: Aman Narang talked about Toast IQ use cases, early data points showing its value in helping restaurants understand customers and drive upsell.

Q: Congrats on nice quarter. Aman, I wanted to ask how you saw the business performed during the AWS outage...

A: Aman Narang said the business held up well as the platform was built to be resilient, allowing restaurants to operate offline and process orders later.

Q: Great results. It was good to see the total take rate up 7 basis points from a year ago...

A: Elena Gomez said the take rate increase was due to small targeted pricing moves, COGS optimization, and new products like surcharging.

Q: I wanted to ask about recurring gross profit. I mean you delivered, I think, about 1,000 basis points of upside on that metric in the quarter...

A: Elena Gomez said the guidance for Q4 is confident, with a balanced view on GPV considering macro dynamics and strong performance in summer and from Toast Capital.

Q: Great results. I wanted to follow up on a prior question on Toast IQ...

A: Aman Narang talked about Toast IQ's adoption, product-led growth opportunities, and potential monetization considerations for the future.

Q: It's great to see the strong results. I guess I'm pretty focused here on pricing...

A: Elena Gomez said the website issue was human error, pricing philosophy remains unchanged with targeted price changes balanced by market share goals.

Q: Just maybe help us understand what gives you the confidence in your ability to see increased net adds in '26...

A: Aman Narang said core net adds are stable, new TAMs are contributing more, and overlap in the core platform drives growth in 2026