Toast, Inc. Q4 FY2025 earnings call

Key Achievements in 2025 - Recurring gross profits grew 33%, adjusted EBITDA margins expanded to 34%, and over 30,000 net locations were added. - Launched over 500 new features, including ToastIQ, a conversational AI assistant. - Grew market share in core U.S. SMB and mid-market restaurants, powering 20% of such restaurants in the US, nearly doubling over 3 years. - Made progress in new markets: signed large enterprise customers (Applebee's, Papa Murphy's), launched Australia, and saw success in retail with a built-out go-to-market team. - ToastIQ adoption was strong, with over half of all Toast locations using it within 4 months of launch, sending over 8 million queries. - Achieved medium-term margin targets, including 40% margins in core ahead of schedule.

In 2025, recurring gross profits increased 33%. SaaS ARR and subscription revenue each grew 28% year-over-year. Payments ARR grew 24% and fintech gross profit grew 25% in Q4. GPV was $51 billion, up 22% YOY. Hardware and professional services gross profit was negative 12% of recurring gross profit streams. Recurring gross profit streams contributed to the top line, with SaaS gross margins expanding 300 basis points YOY to 80% in Q4.

2026 Guidance - Expect 20%-22% growth in recurring gross profit streams and adjusted EBITDA of $775M to $795M. - Q1 guidance: total fintech and subscription gross profit growth 22%-24% YOY and adjusted EBITDA $160M-$170M. - Headwind from higher memory chip costs for hardware, weighted towards the second half of 2026, but not structurally changing long-term financial profile.

Q: Timothy Chiodo asked about SaaS ARR per location, specifically core vs new verticals and if enterprise should be broken out separately.

A: Elena Gomez responded that SaaS ARPU growth is expected to remain in mid-single digits, core SaaS ARPU grows faster, and enterprise has different sales cycles but strong unit economics.

Q: Will Nance inquired about the mix of core vs new verticals for net adds in 2026.

A: Aman Narang stated core should be similar to 2025, new TAMs should grow further, with investments in go-to-market capacity driving growth.

Q: Tien-Tsin Huang asked about margin framework and R&D balance for AI.

A: Elena Gomez and Aman Narang explained that they invest in R&D for long-term growth, targeting 40% margins long-term, and view AI investment as an opportunity to accelerate customer value.

Q: Matt Coad asked about ToastIQ and its role in winning RFPs.

A: Aman Narang said ToastIQ is valuable in SMB business, helps with faster data analysis and workflow changes, and is driving win rates.

Q: Josh Baer inquired about the drive-thru product rollout.

A: Aman Narang mentioned the drive-thru product is planned for 2026, opening up that market segment.

Q: Adam Frisch asked about peak investment year and initial guidance deceleration.

A: Elena Gomez said 2026 reflects conviction in new TAMs, and guidance is balanced with ambition to do better over time.

Q: Dominic Ball asked about Toast evolving into a platform business via ecosystem partnerships.

A: Aman Narang discussed Toast's platform strength, AI integration, and partner ecosystem as ways to deepen the moat.

Q: Dan Dolev asked about AI cross-sell modules and focus metrics beyond locations.

A: Aman Narang mentioned ToastIQ and AI integration across various platform modules, with focus on durable growth via ARR and margins.