Toast (TOST) 16 Feb 232022 Q4 Earnings call transcript

Good afternoon. My name is Emily, and I will be your conference operator today. At this time, I would like to welcome everyone to the Toast earnings conference call. [Operator Instructions].

I'll now turn the call over to Michael Senno, Vice President of Investor Relations and Strategic Finance.

conference. your begin may You

Elena Thank COO, you, the XXXX. conference for session. be and Toast today's remarks. or They will Narang, Welcome quarter and for to then CFO, Comparato, fourth Chris XX, by are earnings will year open call prepared our call joined CEO, Emily. Gomez, Aman ended On Q&A December our

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

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

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

and measures. be of release most comparable During to earnings the for substitute a Please these this call, are we to non-GAAP will GAAP our discuss certain our for non-GAAP to measures not filings financial measures. intended GAAP detailed measures refer These results. SEC non-GAAP reconciliations

gross are of and margin, expense cost on call research and expense non-GAAP and general all sales profit basis. a and otherwise references expense, stated, Unless this gross development to on and administrative marketing revenue,

replay Finally, our available both investor the will Relations presentation, release the be accompanying Investor website on a investors.toasttab.com. of this at including and call, press

Chris. over turn let call to that, With me the

top XXXX by another you, you, this quarter morning. Michael, finished us strong everyone, and line over continued margin XX%, thank joining further growth innovation. Toast with improvement Thank and of marked for product

year our consistent a growth, testament through product strategy, the the Our all of driving solid innovation. great pushing team industry the and throughout and serving deeply forward industry the quality of to bold results segments more are restaurant execution on location our battle-tested

The a particularly over restaurants seamless is experience. increasing. adapt This only challenges complexity inflation, of and the a demand evident labor as continuing running while supply year restaurant was constraints facing chain with guests last to more

the the leverage improve new X grow. than increased With by We our grow of of in that critical or added backdrop, strong to nearly approximately continues evidence attaching the Toast is all customer XX,XXX to in digital sales XXXX one platform demand. more more and SaaS restaurants ever. percentage to points net modules for value And efficiency, technology to locations quickly of adapt need and XX locations platform

a shortage. better There California is better Order customers in higher Alpine XX% check the are and Pay, guest Toast countless examples Mobile in a Inn, since helping adding sizes, unlocked revenue tavern & deliver including increase our line bottom top a of manage results, how driving Toast labor helping experience and

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delivering scalability in key growth investments while our throughout consistent both XXXX to QX momentum XX% total and up our to year-over-year results. efficiency is evidence to XX% $XX.X margin line commitment increased ARR cost our top and On of of $XXX basis, to expansion a our Sustaining GPV billion. was XX% Turning discipline. million. and model million business to balancing revenue grew the $XXX with areas

EBITDA adjusted QX, to improved million In $XX an loss.

sustained more healthy net adding in effects throughout location with We discussed strategy end and continue the we XXXX, live XX,XXX on year benefit QX total new scalable also We we've consistently locations markets. from go-to-market approximately to approximately locations. more in growth, executed flywheel the X,XXX to and our proven,

across Underpinning to we location restaurant locations is strong As grow our that can penetration, efficiently demand we increase ARR. and segments. we're confident continue growth

addition continue SMB we with momentum gain we as to customers traction upmarket with our in restaurants, In platform. to invest larger

with be their at Cameron few a past quarter. impressed were tech integrations potential partner saw all bookings brands the company restaurants tech easily After multi-concept to out and FSR focused the location, their and hall Toast grows. as Toast food is Mitchell for from They bud to Toast highlight dairy rolling trusted supported Toast partners working in with how their various I'll restaurant portfolio.

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eatery well-known in season approach. to a After POS, an payroll Michael's help revamp waterfront in in outdated Toast Here, their is they of busy north uptick pain months. with of Boston, to look and another enduring scheduling warmer a significant Harborside business

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growth attach location products. continue our of top more customers momentum, like to Teaspoon On

enable and the to attached XX% improving more has expansion, momentum end than That As X thanks to our or attach platform doubled our more X growing of SaaS at upsell the continued of of QX, percentage booking designed packaging just strategy. multichannel team efficiently of our our years more products modules. in customers to sales

These informs and our more further to rapidly heart of expand models. Helping incremental a to in of year-over-year the importance innovation our SaaS XX% opportunity revenue into restaurants and succeed unlocking to and at diversifying contributed and grow, the product over we needs business are evolve increasing ARPU is increasing over guests factors continue increasingly our developing significant customers by service as subscription revenue efficiency the of what the streams growth see XXXX, time. is

to launched from year with restaurants the over restaurant business. X core efficiently $XXX, industry manage found of on voice along we value business wholesale to system. customers that already survey their catering our product an invoicing, have restaurants invoicing service different transaction and used restaurant QX, also X,XXX billing Toast and Our employ their payment average for models. in orders, In streamline Over last grow X average, it's these integrated their enabling an with to opportunity and processes customers

employ Integrating to available platform Display their offer first a on Systems, To provider through drive-through more of will acquisition the our of and capabilities to enable omnichannel giving the menu us the model to we platform a critical models offer Delphi Delphi digital service our further business time, customers the into our option announced today, expand leading the for Toast products grow service and guests experience. drive-through this platform,

drive-through boards In over a and restaurants, from digital small seen offering year, follow-through quick-serve offering the of Adding for last in our and restaurants. both for QX quick-serve our large launched enhances even funnel model we quarters. over few and and to serve we've and Toast menu last strong QSRs service to Toast these Delphi the the more few years. excited family Drive-thru past partner has is restaurants. important deeply We're more team become welcome critical to our for an a QSRs

unlocks is of deeper to to restaurants our in products, expands their platform, their QSR to easy X integration, in We and our and it segment online Google place penetration seamlessly providing integrated business. Search Last and to this manage we making with capability flow. our Maps order going add the plan even online ordering another this expanding visibility week, reach order and Google digital customers continue with Order announced Google update capabilities by offering to to of channel forward. drive menus in for for in suite more fully restaurants hours grow Google with our ordering our XXXX

to to with ordering takeout offer guests restaurants their offer online off-premise ordering options online the experience. commission-free them a and enabling with Toast efficiently grow app, cost-efficient, to more continue while business we Together seamless

extensive continues expand. to our to broad addition our In platform, ecosystem partner

exceeded we network, partners technology QX, beverage XXX national and in local encompasses food our large which suppliers. integration During and partners, partners

customers. enhancing services access of their to of our products Our to complementing growing value further meet restaurant and Toast platform partner a the needs ecosystem wide expanding existing gives provides customers to and the range

through sharing ARPU half partner today partner on of are lower that higher churn our total for integration our of help evidence the average. And jointly X grow. not customers is we the using platform customers customers using these adds than grow, to how API XX% our have restaurant the you thrive. ecosystem API as module. partners to customers integrations our reinforcing a are integrations, Thank and over benefits our partners using and industry use another example This enhances it our for Over value and in we partner platform. integrations Customers from our our grow mission the a help rate customers

focused So move on strategy been we continuing that into XXXX, we are on the delivering to same as consistent results. strong has execute

foundation growth, always the continue opportunity do. we we customer as will and of to industry the First, is our be for everything is priority. always massive restaurant ensuring we trust the are scales trusted our drive top location ahead as platform business The

product is to Second, our innovation integral DNA.

of an and new guests, their exciting help stakeholders, the their to deepen optimize suites employees operations restaurant we owners important pipeline points to offer suppliers. products with most their have restaurants touch build We further to products of on and

This all deeply industry. segments mid-market Third, customer like serve tailored investing QSRs capabilities of offerings includes enhancing the for to the we will serve and and restaurant keep like segments types enterprise. better more restaurant to

will to fourth, forward we international building and continue very out in we're early, still significant, the while taking journey. And potential our the is the steps next look opportunity business, we multiyear

year investments Our and with durable us to focus momentum growth maintain strong well management balancing XXXX in another cost our throughout of on key up operating sets XXXX. disciplined deliver

investing by efficiently We guidance progress of our expect at EBITDA while year. growth revenue to of the improvement capitalize midpoint we XX% to full toward deliver profitability end scaling We the remain market opportunity range prudently margin the year to significant on adjusted as XXXX the committed while our for further driving business.

aware the there start in the continued dynamic restaurants while we As on operate the less to continue macroeconomic environment. restaurant industry well, visibility we're a consumer backdrop perform trends year, to uncertain, is remains has relatively and

top continue Our the platform face to restaurants emerge our overcome to is they and challenges help leverage stronger. to priority

our change to and calls ability the uncertainty The uncertainty also prepared us we're proven to for We've in well navigate flexible. in quickly adapt trends. remain to to past any

the even cost progress as last Our ahead. evolves against to ensure over flexibility growth the positions mindset we move and massive opportunity us environment to the a to execute maintain the faster disciplined year lean as structure a

our on want and our XXXX and community the continue turn their investors broader to for the partners, ahead confidence to I others support for dedication, our restaurant to in XXXX, focus customer network we thank their and employees and look Toast, page As community. and of extended who growing Toast

While past opportunity we the we've in we're come. the getting started, year, over to accomplished a we lot are together believe just excited about the and years

turn the to Elena. call over I'll Now

work our our exceeding in performance operating range momentum sustained strong high thanks, and EBITDA both and joining. for year. morning, start revenue guidance. and hard and shout thank and execution quarter want We Good Chris, you, everyone, our throughout out on our great that drove Toast past you to a of end the consistent thank to entire with QX, the adjusted for the I another team,

continues to growth And in solid has top of payments Our industry-leading to margin quarters while software . scalable, drive X efficient started. resulted getting adjusted line improvement. we're and commitment just growth platform EBITDA consecutive our

in line still combined to early of we to expand We're platform same growth technology continue industry-leading runway disciplined with the smart bottom XXXX, delivered product have with opportunity industry's a consistent the be and ahead. the in execution we to stages trusted investments a innovation of targeted partner top restaurant our long we believe in generational

execution X,XXX QX, location strong our number approximately our us locations XX% In the approximately our XX,XXX, to throughout year-over-year new of adds sustain added approximately increasing team consistent we go-to-market sales to the platform approach enabling the led total and growth. year, location net on strong differentiated live net to locations, of

fourth examples in maintaining Chris grew many to building year-over-year success segments, demonstrated the we're million breadth $XXX the our in SMB As just upmarket. seeing restaurant full Total shared, while in of across strength XX% momentum our quarter. revenue

million, the XX% which For the at of from up year total $X.X core year up the year. previous revenue XXXX, year-over-year. our full $XXX billion closed ARR, is XX% was metric, operational

XX% revenue key $XXX fintech gross and the growth up healthy components totaled driven our ARPU million of across both by year-over-year, fintech. Subscription growth recurring SaaS profit, and revenue QX, location our continued and in

resulted That's NRR, down Our XXXX. rate, XXX%. retention XXX% in net a XXXX or of from total performance in

we reminder, stabilized since margin the XXXX from and higher non-present a COVID, which and in As debit during XXXX. recovery decline benefited credit GPV anticipated volume

from customers is nearly points X ARPU platform expansion ARPU XX% location driven by see grew years to we Our Subscription products. in our more increased join while and and XX% services the momentum higher customers continued and churn. low existing SaaS up adopt by more ago total NRR with QX, new XX% customers year-over-year revenue increased XXX%, to X upsell, from existing than continue as and SaaS

expand packaging the and refine SaaS overall to continue upsell ARPU potential SaaS ARPU than we of XX% ARPU. the to optimize the and attach QX, This end is platform, motion. our or compared higher last XX% our just modules great of a of restaurant more average significantly our longer-term year, the SaaS As example as locations this X cohort of is for our

below Revenue patterns. QX Moving the per million $X.X solutions. was million, to gross and XX% was $XX.X fourth below and GPV remained year-over-year slightly million, with solid processing levels, just in grew X% GPV to up profit Average and growth typical XX% line $XXX to fintech $XXX increased quarter. up year-over-year to in in billion QX. location seasonal annualized XX%

nonpayment continue QX. We Toast drove These and in million also $XX services gross by our profit approximately fintech products of led to Capital. benefit from products

eligible business, and provides with customers access Our their expand as business. capital we flexible grow And to grow growing Toast their them. Capital our with customers grow fast, offering to

from months. Georgia install its restaurant during in ROI. to funds to curtains contributed enclose growth used to XX For opened example, winter a colder in up Toast about sales XX% providing the the XXXX, powered in That incremental Capital a sales additional patio driving and steakhouse seats great

Loans repaid the portfolio health underwriting processing assess prudently and of and offering, monitor provides of uniquely to and to We're of repayment daily our profile portion manage and reducing insight risk. payment using positioned volume our the scale each restaurant pricing. POS restaurant a are our risk restaurant's process data a inform to the payment

offer also Our a includes protection. to partnership further banking loss cap

typically us basis to QX. expand continuing our to driven business. what to our by the enable Net increased grow balance while factors and fintech by points, see take rate These mix higher risk helping other in offset customers XX slightly growth to we the seasonal products, similar in credit

in remain in range rate net a take expect XXXX. similar We to

resulting margin gross In gross grew to QX, million, total XX.X%. year-over-year and quarter-over-quarter profit of XXX% X% total in $XXX

in fintech XX% of profit up recurring our power integrated million $XXX the fourth and totaled our subscription gross at business Looking model. quarter, showcasing the year-over-year, stream,

acquisition Hardware packaging the of to bundled lower margins Hardware costs. revenue pricing sales. costs. due decreased Turning product to customer to shipping improved due and year-over-year slightly

impact, hardware by increased and revenue upsell Excluding that driven growth. location

investments marketing continue net adds quarter. location evidenced as returns each by and sales Our our to new solid consistent deliver

to expect flywheel efficiently we over build a more effect penetration our drive and time. continue go-to-market We in as deeper engine scale to markets

acquisition costs scale a is as customer and inform help unit decisions. healthy Managing business we key economics and focus our the investment maintaining

the For economics months. benefit in optimize momentum and in at as line payback scale unit year was XXXX, productivity our sales remain our rep hardware team, with growth. we market the to from expectations penetration, continued our full ARPU in ability approximately period the confident of increasing XX costs to We in tenure our our driving opportunities

and in platform the location have with ongoing further the integration products of our new sustained and customers of for unlock pipeline XXXX for tap ARPU resulting our Google As we over drive an and enhance product from that and exciting latest on long is the more our capabilities value innovation Chris order term. our example investments will highlighted, R&D

and XX% year-over-year. administrative increased general QX, In expenses total

expenses credit-related to in X% Capital as and G&A $XX on and includes other grew step-up from million to benefit offerings. receivables which liabilities Bad public totaled in well leverage. credit-related bad outstanding Toast QX, expenses, as we year-over-year lap Excluding and fintech as debt operating costs the company related expenses started debt debt bad and

healthy debt believe expect Capital and bad the overall Capital we of for to health we reminder, the credit-related and a to the operating As business, accretive The grow related we expenses is of as margin Toast program. indicative Toast increase overall to program. the and

improvements over from on $XX focus a our line our QX disciplined growth. and improvement XXX to adjusted X.X% cost sustained points environment. and this is prior Total to adapt structure was margin The increase was having great in result and put margin a us progress cost year. in position durable XXXX million improvements of direct to investing structure commitment to efficiency combined basis drive negative EBITDA and lean ability our top This in dynamic with quickly a the

let turn Now me to guidance.

to For the million. quarter, expected is EBITDA range growth XX% Adjusted in be to million, first $XXX midpoint. revenue the million be of negative to range million to $XX $XX representing negative expect we of $XXX year-over-year at the the in

guidance a QX typical historically of is lowest year. the the Our GPV per in decline processing as quarter reflects location seasonal

the a full to represents For in XX% $X.XX At billion, at improvement the to negative year profit margin XXXX. growth XXXX, to $XX we point of million. expect basis million which midpoint, and range this revenue midpoint, nearly compared $XXX implies billion XXX the improvement be year-over-year $X.XX

to the XXXX. profit end target We by EBITDA a on of quarterly deliver adjusted also remain

balanced in efficient context disciplined lean investments opportunity scale. with approach additional be restaurant for to some and provide on maintain the industry, to as XXXX the platform the our guidance, targeted we capitalize intend on a staying to while To trusted we

and market strong plan long longer-term sustained both capabilities Toast which investments We to opportunity for and further growth term. expand such make in position the our enterprise over building expanding initiatives, internationally, also as

our software subscription Now operating total looking will over and meaningful gross in continue confident plus beyond that compounds we're fintech expect we scale XXXX, leverage. profit core payments model to business to integrated time, show as efficiently, our

as XX% total reach of we percentage to larger adjusted achieve XX% gross scale, we profit expect range. a EBITDA subscription fintech to plus As

segment from execute which impact profile or strong factor expansion efficiency margin forward to several capitalize business our of believe current long-term the going our in We same the disciplined does financial with to playbook will sustained and and balancing opportunity drive opportunities not nascent targeted core intend This like reflects international. growth. in into mix improvement investments the on we business, massive years enterprise

profitability delivering target year, the each goal on As exceed financial our margin we mean Certain our of rule XX the path to balance growth that is years consistently and profile. margin context -- more We'll to target increase to we years, deepen in may those more potential. invest of some optimizing in flow assess to our decisions or potential. our cash penetration expansion long-term the ARPU decide and may

of and our into are which margin profile. the we Rule the ahead as And given our and anchor the and the opportunity basis gross business above and operating and expenses. even assess payments software integrated model, operate and fintech to we this power how recurring the Subscription as size the core our we streams profit on serves margin operate of of expect XX business our the our for grows

We overhead economics of the to leverage to margins. expect XX% improving a path XX% on and drive combination to cost unit

few I'll we scale. leverage highlight our see total key continues a to ARR as areas will

out expect We've tenure drive we've continue as is become and discussed, both markets with and to rep market to penetration. addition, flywheel marketing and as sales in this we dynamic continue that play costs rep efficient. sales our and higher will seen increases, correlated tenure penetration productivity In and rep as more

we hardware from services margin see lower as and Longer the cost chain full onboarding plus term, expect efficiency we new in supply to increased to further customers. improve shipping shift optimization and benefit

discipline and evident also efficiency on G&A. be focus in will Our cost

scale time. increased underlying to We from automation and over expect in expenses starting operating leverage XXXX our benefit G&A and

long-term in also Capital. the growth Toast with proportionate liability credit in factors expenses Our profile G&A

sustained and and We of have focus drove an to we a efficiency company continuing improvement. stages where disciplined our opportunity. year thank The in remain execution lead our the forward want and to execute confident an to partners, on location management I create and across growth exciting we value. In customers are XXXX early significant strong lot continue about XXXX. that relentlessly to will cost a employees was our and conviction growth look meaningfully of to incredible shareholder closing, consistent very strategy for and led and margin long-term our long-term market ARPU Toast, of opportunity to all durable

the Now the to back Q&A. start over call operator to I'll turn our

[Operator Instructions].

Our first Dan comes question today from Mizuho. Dolev with

results. it. Much Great appreciate

I question So -- thing. questions, a about question the have quick a X a do about SaaS and follow-up

SaaS was then down if very So growth, look customer? were -- And think And like at year-over-year. with basically I I revenue massive per a quick lot your expecting customer revenue have that what of flattish a Like in bullish slightly and growth I like there? happened per SaaS follow-up. or people

Yes.

SaaS over up So growth Dan, our positioning the is that And we're remind seeing SaaS overall a all, and our of there. want upsell to XX%. team complement and and want platform you lot for XX%, our just so of I momentum years, X -- ARPU first also team up really, I to

and to in want start context. And up QX XX%. provide just that I So revenue there was SaaS also

to higher also continue really, has going going more really as land is And on at the good really more of see way platform, innovate progress team progress see but upfront ARPU, we're team more so far. to we're bringing on actually a upsell we So having executed. to customers our our proud as to customers we continue

on ads the pace about follow-up and into location we my XXXX. is How ARPU Got XXXX in trends for of helpful. the And cadence really the like then should year? it. think It's

Yes.

ads, heading of strong and in again, location like, complement well. executing The of the XXXX, by sales the funnel to the to terms into XXXX. is is all, In a team continue team and sales see first we momentum execution

you would QX QX. is So typically and lower seasonally to the I QX thing X than point

that momentum mind. point. business the just So in in we've continue keep at But believe to this we got

Great. Great results. Congratulations.

with comes Blair. from question Stephen next Our Sheldon William

to a to down it's a guess I that more but know SaaS next And still start it's you early you're if a caps of still And that certain that, seem mature wanted at guess, across markets, dynamics more guess market your most share frequently too market But share some share have in market some of just incumbent. location initial to think looked Or you or I And I threshold? harder you're you with it out maybe with, I I do early like seeing. get gaining slows is in markets. does more market? the know question. in to the harder get to way, even XX% unseat XX% flywheel clearly certain asked location it another if high-level another

the see our competitors. reps that's but I continue of see. we Yes, ease we continue our to That's think market gain and against get continues rep the to we to where of And Stephen, in density our not the improve. I question. as rates we great only terms up Look, dynamic and markets, market same think productivity these trend win see and the productivity, share also tenure in the

it's terms first XX% tell our nothing the seeing the to the your think we there we're what's of that continue the that that in so grow hardest. XX%, I And of into says you is plywood markets. in data last whether I'll And XX% first is can question,

That's for topline there there your those solutions? whether implications unit any would follow-up, and integration, economics love just to it. order existing ordering notable get helpful. to a on to great orders really Got And with impact an see could payments how what of Google flow your might online the that kind opportunity be, big on that thoughts relative and of growth through

good a question. it's Yes,

and any meet to they for important are. guest where super it's the think restaurant I consumer

it's taken restaurants that is as we're Maps So bullish capability and well and both also with the opportunity the them on is Google opportunity or connecting then eliminates of our the to advantage on teams. revenue pretty critical searching market. with as online productivity and so factor ordering a on consumer Google. streamlines it It Seamlessly unique think integrating attach the a the Google restaurant be third-party we success should of in the as first-party

Great. Nice results.

Suisse. comes with question Chiodo next Timothy from Credit The

the little for I want about bit a to net talk fintech. take rate

those comment range. given the of the been just Fiserv that pricing marketplace. changes And of There's was quarter, quarter. reports of also in I there and you've hoping the same in expectation the rate. take And that some that saw factors by in particular. factors year, for price increases take upside in comment be considering also took uptick the in could maybe points And X Those Toast is Capital. a suggest that was overall roughly they on some to pricing be some last big that the tests you could ramping some of been the and basis to Clover and But pricing. that there's XX So rate next the comments yield

No. Yes.

So the good Thanks question. question, Tim. for

First Capital to for the demand quarter. Toast meeting the the that we're Toast we're that really that the higher. QX our from all, Capital, take And just customers into the and team remember and plays of definitely that the fact is on seasonally credit complement seeing rate momentum for

QX, mind, rate had a take a in increased. year-over-year, course. our in take in we rate, just our rate So core of lower take But has bit of keep

drive to would cost volume muscle of your we're And the optimization I and drive that And everyone, payment just that longer-term on and overall, but rate both finally, digital pricing have think optimize specific take to And then just important Aman then, the opportunity opportunity over to -- a remind what And we more let a built long term. focused is pricing. on. to company course, opportunity the say products I zoom in that's talk just I'll we there's about, there's pricing. on and cost question around often I'll transaction. optimization, then out offer we're And focused always more comment that and

we're focused look, we're terms always And there's rate. changes report to we're and on like share, packaging and optimizing, right? pricing Tim, always gaining in something pricing in testing is Elena. pricing, Thanks, our take but our material nothing Sure. market of

take $XX really million, and very brief and QX I Toast Okay. you was that. mentioned for for is I appreciate believe, card, very, last million The $XX the Capital follow-up quarter. it

for or So number half? just I year it. missed those give full Did you the a have second might

No, given we the full haven't year.

UBS. from with comes question The Kumar next Rayna

macro the on gave You backdrop. helpful detail some really

Just guidance. that your 'XX it curious worse actual as macro assume Does remains or is? on gets

our and restaurants question. guidance guidance prudent fair the given we've the customers that contemplated uncertainty We our a past. felt there. in we there's out that in But just the our it's seen like with backdrop, in resilience was and macro Yes, was

calculus our in as also well. that's So

using That's are given evolved you Can elective then we're to the or more of for it percentage months? products demand talk And difficult it. helpful. environment how continue sell easier customers in you recent has finding in? to you Got these improve And a little about macro elective bit the products products.

environment, macro the restaurants to about strong less and have on it's more it's also of partner and an all-in-one top wanting really think about really that solution platform. adopt then ecosystem I strong --

restaurants if how the inflation top line facing about you of the think So drive to and end the growth. at day, challenges, challenges, labor they're

platform So connects much that after. having a we're efficient allows those them what be and to dots is more

we we're their make give to and upmarket. So improvements in proposition value sure well drive that with as partner fingertips great the them ecosystem as that SMB want at that market, And for well. we do our to resonate seeing technology both as

adoption of based proposition. value that modules seeing that broader on So we're

question comes next from The Huang JPMorgan. Tien-Tsin with

growth Great here.

Elena, to fiscal 'XX. exciting for mentioned wanted think, products new Just I -- Chris, or you

Google more the Just a of bit the Just variety the of enterprise? more or map for flavor curious, here hoping that products give year. to little power on on is a

a Yes. No, question. good it's

pilots to lines see across of going all business. opportunities You're and

So both guest facing.

this restaurants, QSR think our team can so serve that acquisition with the we drive-through bringing You the about Ken capabilities. Delphi morning, specifically broadly and fold more into

So payroll And to visibility opportunity the office, a tracking restaurants to unique that you're employee our and fight chef extra solution. the opportunities, management spend. can in opportunities and back inflation continue price within around employee-facing restaurant food is show cost then their as across so going in and to see guest-facing they optimize obviously, cloud sector

attack So mission across broad-based a again, I'd their restaurants different with all it's improve different But of stakeholders. empowering the of to the types say opportunities on operations.

I appreciate that response.

composition should lot a we around of growth change? just the a quick sense versus in expect of in about questions I between here high Just relative maybe here. growth expecting But follow-up 'XX outlook 'XX? ARPU then, in my to thinking trying a know and level to are any Just growth change you get location --

said our location with we market. be resonates composition should think the is the Yes. sensing thing No, X the of Like relatively the consistent. parts platform of I various

restaurants, whether or QSR, So format restaurants. larger it's whether smaller-format it's FSR,

different the offering to think TAM. resonate I allowed So in our the of has breadth of us parts

consistent. that so be expect And to we

as to On the in year-over-year, is XX% call, we continue product to side, the we're then well. and SaaS, just -- and that see constantly investing -- to 'XX increase our continue TAM Elena expect on as up mentioned,

for Great. thoughts. Thanks the

Josh question Morgan The comes next Stanley. with from Baer

and innovation, unlock what coming long features, question. not of Great. Delphi the QSR the that further are big Thanks other With and ago, upmarket? of board for areas innovations so some around are to functionality needed hospitality, on product

what Yes. to just similar I Josh. mentioned, Very

to out help restaurants in going you're our that solutions think platform push thrive. each us in stakeholder the see I

to guest-facing the So want meet we are. omnichannel experiences, where restaurants they guest

create the through through online at kiosk that be also experiences want whether then sure their drive-thru allow but to it's of that or guest through productive. in-store Google or to models and we table, an So allow in line, restaurant a the to we search or staff service drive make top amazing set

go improves go higher employees, restaurant itself. restaurant, happier platform up the their then guests, productivity on you productivity consumers, for the flywheel treat wages, seeing changes restaurants staff have they can see Diner, and labor and that tips sizes staff a our with we're and higher through that restaurant the within productivity happier example progress ticket better If good gaining Silver amidst so inside a

the chain we And restaurant believe connect then opportunities to there's cost. food optimization office, I back so the that mentioned into back is optimizing their as in cost supply the better

the that our across about that's all-in-one so all platform that to we're groups. to platform see this us because going opportunities gets you're thrive. different these these So is make advancing mission can what excited And sure stakeholders stakeholder of

expansion there Is M&A? accelerate any through to appetite international

a isn't our it business. mean than Right just M&A think overall philosophy I different overall I it's international is for for fair now, our question.

there something product road is So faster? that market us Or our there is to gets we're looking at something that's complementary map. to

anyway focus I started building anticipate or of the in have that XXXX. Right in foundation internationally, material now, impact a our is meaningful don't we XXXX will a impact and off

The from Nance question Sachs. Will with comes next Goldman

platforms. The a little the uptake for lower quarter? in quarter recent that trends in of macro has throughout the time sort of software-oriented We've of into market heard particularly spending on spend some first data, particularly retail the other adds in fourth the been third that XXXX some you software little new names slowdown software you suggests little dining, kind I'd the ARPU guys temporary on Can expansion the a and and net a lower, from quarter. SMB sales saw into talking than was note robust or though. January a about

things you're some maybe quarter sort seeing how and XXXX? could same about fourth progressed trends of over guys seeing whether end the just the the and So of in the of far talk you so macro are traction kind market in you

Sure. Good question, Will.

we're meaningful across changes in spending So seeing consumer or demand not our business.

demand, seeing are with I call and what for seasonality restaurants line historic So expectations it's would in trends. our

food the in for or at material dining services across strong more not seeing moving food home. some demand but restaurants. we're to sales January services, Certainly, out We retail were spend consumers strength signals continue like meaningful really or continued versus January, with any consumer impact to of see on from

As quarter, on dining proven past consumer we've during mentioned mentioned pretty before, economic slowdowns. I spend has resilient last this think we

said, we're So things signals I closely. monitoring of the and think That continue. that keeps us mindful hopefully we're optimistic that will being seeing mixed we're macro pretty what

really I successful platform make stronger times. and look during to adjust years, business, restaurants think and restaurants And if adapt you been the we've adapt our past their is be I at X.X would resilient allowing point tough incredibly survivability. the helps have last

that's things SaaS valuable platform. more modules our seeing using customers and what we're on our So in the tough really I like growth with becomes platform ARPU think and market conditions,

So in the that are continue mindful the of to general, out it's and there. signals course stay be

And is X line in would we our location in Yes. comparable I QX. tell to adds also, QX and you expected what Josh, with things. One were

expectations. is So our below X not also ARPU our up XX%. over XX% down year-over-year, and up not And years, reinforce and I'd

as mind in QX. that you consider keep just . So

on the numbers. the you it. And I rev most origination. through credit-related upon Yes. a relationship, The follow-up that on that largely kind You and called all of expenses timing then think those booked of Can a revenues, Capital. upfront? Is in the out also the Got and I of of just you P&L. is upfront how we drivers mentioned kind bad maybe question talk that of debt Like some the between Toast quarterly basis? on see do relationship and the rec about on sum that expense of think of revenue? total

Yes.

way that way what proxy, the think to of -- a you really gave about but drives So sort is we the and think is to about loan. the tenure the so that of without

different a does. would so XXX the reserve, it's creditworthiness That's analysis the future that's for if potential typical reserve going customers, then you XXX-day losses. team So plays that day, how the or expect into to if we XX-day, And that a will. the the underwriting you have of all

it. Got life the of And over of at most that to is loan? upfront opposed as origination booked

Correct.

take my you appreciate I questions.

Peller with comes Wolfe. Our Darrin question from next

we investments it gave around that be you timing on just on just could know helpful, on the cadence we considering think inflection I the slide profitability profitability Could long-term showing the margins. thoughts pronounced on when again. process your the and about touch hear on you've more Nice trade-off results. really to was just really and thought and talked levels But thoughts. love views updated some on you would us

Yes. Thanks for question. the

I we've hopefully, So improvement. from consistently in how last the delivered think, see you margin executed we've that can year

team pretty management that's change. that focus won't this so by intentional And

we're people opportunity thing a want hear really because much balance conviction so moment. opportunity going about we're balance have this to this going And so we continue important is to to I at that's to and our

healthy of at have of way. going think about years, same margin That's couple to be -- to but to the plan we're time, the with to is ambition this to expansion exceeding continue we're still And balancing that so growth, our we how Rule next idea and XX. deliver the you in as that going continue

would tell So I that's what you.

margin that path that to to linear. it's profile not will think for realize not always may we I our important -- be And you

opportunities that to flexibility present of into lean we want investment. So themselves, that as kind

still appreciate that. it ARPU all? around X,XXX That's touch just past? has could is if have follow-up, you helpful. quick front spoken level it I book in a Or the And you at just on change Is I just trended? about guys and -- how the

we're in No, zone. . definitely that

Great. some Great. All going there's It forward. looks traction some guys. it, like right. Appreciate

next with question from KeyBanc. Beck comes The Josh

a you to good a mid-teens. And this ask really like in like it little feel efficiency-wise, result want sounds I about opportunity. there's year the payback Certainly, assumption. bit the more

reference beyond, to as think terms is in is about and look growth? good a So important 'XX And efficiency? of headcount just how we that point forward into

I important get is as that see see that we flywheel Josh. deeper we're of Yes. things. rep going into and really because more so manage couple we sort I -- of tend One a to and productivity think is tenure -- going to play And market, markets always out. make a we're to on see commentary to mean, the -- that mid-teens, we we increase,

to rep we anticipate will healthy. will drive to will these be to we've of We the allow we we've that within few increase last less, continue in be we leverage that should that as some replicate stay the an us added added productivity, example add are to the and so payback And able that which right? flywheel periods to markets, continue that capacity as like need years feel

to And been opportunistic. add to we've just that, Josh,

they So we've as attach lots seen more shaft products our good ARPU our growth, penetrated extra products good example, the for on aren't of locations. adding in -- holding the There's base. upside rates progress upsell payroll given we guest and team, our of in are

is emerging up. of feel the in mature driving the driving biggest driver density investing tenure really Elena's point, but and the -- markets we were to some our upsell we're in reps market and So markets

items? so that, Thank maybe how follow-up impact required. helpful. because And framework. frame then spend? profile scale in just up those It's included? a like and the the target be bit go-to-market the more could type the think factors yes, how the Would horizon that of of international should for I Darren's those then curious Just type enterprise very should we a that's to you be it I to And sales But question marketing, around P&L. believe what about around Okay. little the excludes mean, X and

Yes. for call the No, thanks out.

like feel You're hear our you options sustain time. more those have investments what But should we confident is I to exactly ahead, to continue and growth to can we think emerging we right. Look, opportunity consider a over I big to that's and profit -- going ARR investment, drive continue years years -- compound our to for continue more continued ARPU. obviously, And deepen our next and the to to penetration fintech be gross come. the for next to R&D both

-- to X we at about what is like that way can larger be we'll the think scale, it And think we'd that is to margin a drive profit profile.

flexibility time. be but it. to I kind back want that have can opportunities So because, the of come -- timing that probably we'll said, always about on into over of I the to we invest I we don't to want Rule notion XX as the the evolves, best precise way this want as to market exceed to think that's

Makes sense.

line from comes today of Bauch question final Nikko. with SMBC Our Andrew the

revenue full First this have How then perspective. EBITDA from year guide much a are Delphi. follow-up in the question you or the And of contributing on quick after that.

strategically offering. not Delphi to XXXX QSR Yes. is But material P&L. to is our our important it

long just that over So consider the term.

pieces. pick fintech apart terminal of Got potentially you're there it. profile, And subscription on financial your kind us helpful give what and gross then you line? very for long-term looking margins Could sense at a on using each these the to of

But overall, time, to to R&D the continue ARPU expect time. I investing that entire we're balance over should business with in not see detail. to and to leverage going innovation, we're think but to obviously, that in you give over drive to Yes, continue going that

assume? can should fairly gross . line the be But margin stable, we

I'm not going to comment on that.

right. All

time Those today. the are we questions have all for

back So over the I like presenters. would call the to to turn

you Thank day. all. a Have Okay. great

your you concludes now lines. everyone, today. disconnect for This you, joining our Thank call, us and may