Toast, Inc. Q1 FY2026 earnings call

Priority 1: Grow from software to agentic platform. Toast has evolved from point-of-sale to comprehensive system, now using AI to provide services to outsource non-core functions. Toast IQ has 40,000 weekly active locations, Toast IQ Grow launched with marketing agent showing 8% sales increase. Toast Local connects restaurants and guests, expanded to over 20,000 reservations and saw more than doubled weekly app downloads. Priority 2: Expand who we serve. Vertical playbook working in enterprise, international, retail. In enterprise, launched Toast for drive-through, won Hungry Howie's and Papa Murphy's. Internationally scaling location count, focusing on Tier 1 cities. In retail, scaling quickly with grocery as near-term focus. Priority 3: Drive productivity through AI. Engineering coding velocity up over 60%, 40% of support interactions resolved by AI, investing in account management and upsell, expecting to scale business by going deeper in core, expanding markets, and using AI to drive efficiencies.

In Q1, recurring gross profit streams grew 27%. ARR was up 26%. SaaS ARR grew 27% driven by location growth and SaaS ARPU growth. Subscription gross profit outpaced top line growth at 32%, fast growth margin exceeded 80% to 81%. Payments ARR and FinTech gross profit increased 24% in Q1, GPV was $51 billion up 22% year-over-year. Non-payment FinTech solutions led by Toast Capital contributed $51 million in gross profit. Total monetization take rate crossed 1% to 103 basis points. Hardware and professional services growth profit was negative 13% of recurring growth profit streams.

Expect total subscription and FinTech gross profit to grow 22 - 24% year over year and adjusted EBITDA to be $185 million to $195 million in Q2. Increased full year 2026 guidance, now expect recurring gross profit to grow 21 - 23% and adjusted EBITDA to be $790 - $810 million.

Q: How much of a differentiator do Toast's hardware solutions like Toast Go 3 could be?

A: Being vertically integrated across software and hardware gives an advantage to build capabilities faster. Examples include menu upsells, digital chips, just walk out and pay, voice and video AI, and AI listening to interactions to coach staff.

Q: Would Toast revisit pricing to align more with usage-based nature for Toast IQ?

A: Actively exploring pricing model, Toast IQ has 40,000 weekly active customers, customers find it useful, looking at usage-based pricing as an option.

Q: How does Toast balance growth and margin?

A: Positioning for long-term growth, holding high bar on capital allocation, decisions based on customer signal and productivity, with high conviction in long-term 40% EBITDA plus margin profile.

Q: Pipeline and backlog for enterprise?

A: Pipeline healthy, booked more locations in Q1 26 than total customers in 23, confident in hitting plans.

Q: How to make Toast Local a peer to DoorDash?

A: Focus on customer needs, continue with Toast IQ and agent layer based on customer feedback, early momentum with app downloads up 2x.

Q: Hardware impact on 2027?

A: Increased inventory to secure supply, impact to 2027 P&L larger than 2026, but will manage margins, no structural impact long-term.

Q: International progress?

A: International business grew healthily, launched Toast Go 3 handheld, most success in Tier 1 cities.

Q: Story sales into April?

A: Consumer trends stable, GPV per location in Q1 down 1%, Q2 similar, customers resilient