• Net Locations Added: 28,000 net locations added in 2024.
• Recurring Gross Profit Streams Growth: 34% year-over-year increase.
• Adjusted EBITDA: $373 million for 2024.
• GAAP Profitability: Achieved for the first time in 2024.
• Payment Volume Processed: Approximately $160 billion in 2024.
• ARR Growth: Over $400 million added in 2024.
• Q4 Recurring Gross Profit Streams Growth: 39% increase.
• Q4 GPV: $42 billion, up 25% year-over-year.
• Q4 Net Take Rate: 56 basis points.
• Toast Capital Originations: Exceeded $1 billion in 2024.
• Q4 Adjusted EBITDA: $111 million, with a 28% margin.
• Free Cash Flow: $306 million for the full year 2024.
• 2025 Guidance: 23% to 25% growth in recurring gross profit streams; $510 million to $530 million in adjusted EBITDA.

• Warning! GuruFocus has detected 4 Warning Signs with HLF.

Release Date: February 19, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Toast Inc (NYSE:TOST) added a record 28,000 net locations in 2024, showcasing strong growth in its customer base.
• The company achieved GAAP profitability for the first time in its history, marking a significant financial milestone.
• Recurring gross profit streams grew by 34% year over year, indicating robust revenue growth.
• Toast Inc (NYSE:TOST) expanded its market share in the US restaurant segment, reaching 15% with significant headroom for further growth.
• The company secured major enterprise wins, including partnerships with Hilton Hotels and Ascend Brands, enhancing its presence in the enterprise market.

Negative Points

• Despite strong growth, Toast Inc (NYSE:TOST) faces challenges in maintaining its growth momentum in the face of potential economic headwinds.
• The company anticipates a decline in GPV per location in Q1 2025 due to seasonal factors and external events like wildfires and weather disruptions.
• Toast Inc (NYSE:TOST) is investing heavily in new markets, which may impact short-term profitability as these initiatives take time to mature.
• The international expansion strategy is still in its early stages, with uncertainties around distribution strategies and market penetration.
• There are concerns about the sustainability of recent pricing changes and their long-term impact on revenue growth.

Q & A Highlights

Q: Can you discuss the progress and strategic priorities for Toast's international and retail segments? A: Aman Narang, CEO, highlighted that while the primary focus remains on scaling the core US restaurant segment, there are promising signals in new segments like retail and international. The retail segment has shown strong unit economics and ARPU, prompting investment in a dedicated team. The enterprise segment has a stronger pipeline, and international efforts have increased SaaS ARPU by 50% year-over-year, justifying further investment.

Q: What are the expectations for SaaS ARR per location growth, and how do international markets impact this? A: Elena Gomez, CFO, noted that SaaS ARR per location saw a slight increase, driven by international ARPU improvements. Despite challenges like wildfires and weather, the company expects GPV per location to remain stable. In the near term, mid-single-digit growth in SaaS ARPU is anticipated, with potential for higher growth as international markets mature and new modules are adopted.

Q: How does Toast manage payback periods across different growth areas like enterprise, international, and retail? A: Aman Narang explained that the retail segment shows healthy CAC payback due to higher GPV per unit. Internationally, increasing SaaS ARPU was crucial, and enterprise deals vary but generally have strong unit economics. The company manages payback on a portfolio basis, ensuring efficient investment across segments.

Q: Can you elaborate on Toast's AI initiatives and their impact on restaurant operations? A: Aman Narang discussed leveraging Toast's extensive data set to enhance restaurant operations. AI tools like benchmarking and Sous Chef help restaurants optimize menu items, pricing, and staffing. Generative AI is used to simplify marketing for restaurateurs, and future AI efforts will focus on improving service and personalization at the point of sale.

Q: What are the financial implications of Toast's pricing changes in the fintech segment? A: Elena Gomez stated that the fintech pricing changes implemented in September contributed to an increased take rate. The strategy involves gradual, small pricing adjustments across SaaS and fintech, complementing primary growth drivers like location additions and product attach. This approach is reflected in the company's guidance.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.