Thank you, operator. Welcome to Toast's earnings conference call for the fourth quarter and full year ended December 31st, 2025.

On today's call, our CEO, Aman Narang, and CFO, Elena Gomez, will open with prepared remarks, which will be followed by our Q&A session. Before we start, I'd like to draw your attention to the safe harbor statement included in today's press release.

During this call, we'll make statements related to our business that may be considered forward-looking within the meaning of the Securities Act and the Exchange Act. All statements other than statements of historical facts are forward-looking statements, including those regarding management's expectations of future financial and operational performance and operational expenditures, location growth, future profitability and margin outlook, business and investment strategy, expected growth and business outlook, including our financial guidance for the first quarter and full year 2026.

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

During this call, we will discuss certain non-GAAP financial measures, including, but not limited to, non-GAAP subscription services gross profit and non-GAAP financial technology solutions gross profit, which we refer to collectively as our recurring gross profit streams. These are the basis for our top-line guidance.

These non-GAAP measures are not intended to be a substitute for our GAAP results. Please refer to our earnings release and SEC filings for detailed reconciliations of these non-GAAP measures to the most comparable GAAP measures.

Unless otherwise stated, all references on this call to cost of revenue, gross profit and gross margin, sales and marketing expense, research and development expense, and general and administrative expense are on a non-GAAP basis. Finally, the press release can be found on the Investor Relations website at investors.toasttab.com.

After the call, a replay will be available on our website. With that, let me turn the call over to Aman.

Thanks, Michael, and thank you, everybody, for joining us today. I'm really proud of the Toast team for what we accomplished in 2025.

We grew recurring gross profit 33%, expanded adjusted EBITDA margins to 34%, and added over 30,000 net locations on the platform. Our core continues to grow at a rapid pace with strong incremental margins as we scale, while our emerging TAMs across retail, international, and enterprise doubled ARR in 2025.

We welcomed some amazing brands to the Toast platform in Q4, including iconic independent restaurants, such as Carmine's, chef Daniel Boulud's restaurants, multiple enterprise chains including Papa Murphy's, and noteworthy retailers including Meadow Lane. Our product team released over 500 new features, including Toast IQ, our conversational AI assistant.

Customer feedback and adoption has been tremendous. Toast IQ not only generates reports and insights about restaurant performance, it executes tasks directly in Toast, ranging from menu management to inventory updates.

For example, Toast IQ can analyze and update menus, tell an operator why their Thursday nights might be slow or why a certain daypart is successful, and analyze results across locations. It can also answer questions like, "What events and weather should I pay attention to this week?"

or "Who's working on a Friday night?" Now, AI is also reshaping how we work internally, from how we provide customer support to how we build software and how we sell and market our products.

This is making our teams more productive, which opens up capital to invest against our most important long-term priorities. We have strong momentum as we head into 2026.

Building on top of a strong Q4, we expect another year of record net location adds and consistent ARPU growth as we execute against the priorities we laid out last year. Number one, growing market share in our core.

Number two, demonstrating that new markets will be material growth drivers. Number three, increasing customer adoption of our platform.

Lastly, gradually expanding margins as we invest with discipline. Longer term, if we can do these well, we are positioned to drive durable growth from over $2 billion in ARR today to $5 [billion?]

, $10 billion, and beyond. Starting with our first priority, growing market share in our core US SMB and mid-market restaurants, we continue to grow market share year after year and now power 20% of SMB and mid-market restaurants in the US.

This has nearly doubled over the past 3 years. We have seen success across all market types, including urban, suburban, and rural markets, as well as ones that had high and lower density of Toast restaurants.

In fact, our sales productivity in our top 10 geos continues to outperform our average, which shows that we have plenty of headroom to continue to gain share. Our vertical platform across software, hardware, fintech, and networking is purpose-built for restaurants and continues to get better.

Over the past year, we launched over 500 platform enhancements, including Toast Go 3, the latest evolution of our handheld device designed to help restaurants drive throughput while elevating the customer experience and improving tips for staff. Other new releases include Toast IQ and Toast Advertising that are helping customers drive efficiency and guest demand.

Toast support has been reimagined with AI, with over half of all support interactions now starting digitally through an AI agent, and 70% of those never getting to a human. Our relentless focus to improve our platform for restaurants has helped us improve win rates with new customers and build a durable referral engine where 2/3 of our demand is inbound, and existing customers are the largest source of referrals.

It's why many of the busiest and highly successful operators continue to choose Toast. A great example is Alicart, the group behind New York's legendary restaurants, including Carmine's and Virgil's Real BBQ.

Carmine's is one of the busiest independent restaurants in the country, with over $40 million in annual sales and up to 3,000 covers per day. After 25 years with an existing provider, they decided on Toast for the depth, speed, and reliability necessary to support their scale.

Their first few deployments have gone so well, they've accelerated their Toast rollout across all locations to leverage the benefits our platform offers. We hear stories like this from successful operators all the time, and we're committed to building the best innovation engine to help restaurants of all types and sizes stay ahead during a time when the technology landscape is evolving rapidly.

We have plenty of market share in front of us and continue to invest to serve deeper parts of the TAM. For example, in 2026, we'll launch better support for non-English-speaking operators, and features to support bars, pizzerias, and membership clubs even better.

These investments in our product and our best-in-class go-to-market engine supports our path to doubling market share and ARR over time. Our second priority is demonstrating that our new markets will be material growth drivers.

2025 was a great year for our new markets. We signed our two largest enterprise customers, Applebee's and Firehouse Subs, and successfully launched Australia, our fourth international market.

For the first time, we scaled a dedicated go-to-market team outside restaurants and have seen great results in retail. A few years in, each of these new markets is growing faster than our core was at a similar time period.

This growth, combined with the size of the TAM in these new markets, gives me confidence they can be material drivers of growth over the long term. We are seeing this success because we are building on top of a proven vertical playbook.

Vertical depth across product, go-to-market, and customer success drove our early success in US SMB restaurants, and we're applying the same approach when we build for retail, enterprise, and international markets. We are very comfortable leaning into the product and platform complexity necessary in these markets versus a horizontal, one-size-fits-all approach.

We're seeing customers switch from legacy on-prem solutions, similar to what we saw in restaurants 10 years ago. As we continue to scale and our platform gets better, we're confident we will see even higher win rates, rep productivity, and ARPUs over time.

In enterprise, our pipeline and active rollouts have never been bigger. In Q4, we expanded our relationship with MTY Group and signed Papa Murphy's, a 1,000-plus-unit pizza chain.

They chose Toast because of our flexible platform across multiple service models, including QSR and casual dining, as well as the feature depth necessary to support large pizza chains. In 2026, we will continue to invest in the platform to support the needs of our largest customers, including the launch of our drive-thru product, which is planned for later this year.

We're confident enterprise is well-positioned to continue to drive strong growth in 2026 and beyond. Internationally, we're seeing strong location growth, including great early signals from our launch in Australia last year.

Customer feedback and pull has been strong, and we hear from successful restaurants across Canada, UK, and Ireland that Toast is making their businesses better. As we continue to build out support for the full platform in these markets, including the launch of our Toast Go 3 handheld, as well as inventory management, I'm confident we will drive even stronger win rates and ARPUs as we scale.

Over the next few years, you should expect us to continue to scale in our current markets while opening up new countries thoughtfully where we have a right to compete and win. In retail, we built out our go-to-market team last year and have seen incredible results so far.

Our product can already support convenience stores, grocery chains, bottle shops, butcher shops, and more, because our platform offers the feature depth necessary to support businesses with high SKU counts and complex inventory in high-throughput environments. Many of these customers are coming from legacy on-prem solutions and have never experienced a cloud-based solution with the platform capabilities Toast offers across point of sale, guest-facing products, employee management, payments, capital, and inventory.

Customers especially love when we can support many different concepts within a single backend across their locations, from restaurants and retail shops in a hotel, to a grocery store that also has a cafe or a restaurant inside it. A great example is La Carniceria Meat Market, a 25-location butcher and grocer who replaced guesswork with data by deploying our platform, automating inventory and invoices, and understanding their costs better.

Automated SKU management cut down manual work, and their rollout was smooth thanks to our Spanish-speaking sales and support. It's a clear example of how Toast helps operators run more efficient, profitable businesses.

As we look to 2026, we're continuing to deepen the retail platform with more tailored onboarding support and integrations, including a new partnership with Instacart that allows retailers to sync in-store inventory with Instacart's marketplace. Our success in food and beverage retail reinforces something we've believed for a long time: our platform works well beyond restaurants.

We're layering in the vertical-specific capabilities to meet the needs of different customer types, and we're starting to see early success with retail customers outside of food and beverage retail as well. Just as restaurants with hybrid restaurant retail concepts pulled us into retail, we'll use the signal from our customers and our retail go-to-market team to test into new verticals and be disciplined about where we expand.

Now zooming out, our new growth markets have been incredibly successful so far, and we will continue to drive outsized growth in 2026 and beyond. As we gain market share and invest in our platform, we expect these new TAMs to drive strong growth and profitability just as we have in our core.

Over the long term, we will continue to invest to expand the opportunity from new verticals to new countries where we believe Toast has product-market fit and can help these businesses run more successfully. Moving on, our third priority is increasing customer adoption of our broad platform and driving differentiation through data and AI.

For 13 years, we've been at the center of the shift in restaurant technology from on-premise to cloud. We've spent that time listening to our customers and solving their toughest problems, which has allowed us to evolve from a point-of-sale solution into a comprehensive system of record that helps them manage operations, employees, guests, and suppliers.

As we've delivered more value and built out the partner ecosystem, we've seen broader attach of our platform, as well as higher ARPUs. When talking to customers, what I consistently hear is while they love the Toast platform, they don't have enough time in their week to leverage everything we have to offer.

Many of them are small business owners that are stretched thin to deliver a great customer experience while managing their staff and their suppliers. They don't have enough actionable alerts and insights to make good decisions about their business in real time.

They outsource a lot of the work: work from marketing, demand generation, bookkeeping, or accounting, all the work that is critical to ensuring they have a profitable business. We believe our AI roadmap, built on years of data and insights, can help our customers get more from the Toast platform.

Toast IQ is the foundation of this strategy. Less than 4 months post-launch, over half of all Toast locations have used Toast IQ, collectively sending over 8 million queries, and tens of thousands of locations are already using it each week.

We believe this early success comes down to three things. Toast IQ is built on more than a decade of deep restaurant expertise.

It's tightly integrated into the core Toast experience customers already rely on. It's designed to take action, not just surface insights, that can help operators run key workflows faster and get more done.

We're seeing this impact firsthand with customers like Alicart, an early Toast IQ adopter that now uses it daily. Toast IQ helps their teams quickly make decisions and turn hours of manual analysis into clear, actionable insights in just minutes.

Recently, the team used Toast IQ to identify menu combinations to boost check sizes, helping them spot opportunities to improve service and drive sales at some of the busiest restaurants in the country. We're still in the early stages of what AI will enable.

Today, customers are using it to get support, analyze data, and make backend configuration changes, such as updating menus or generating content to build an email campaign. We're investing for Toast IQ to evolve from an assistant to automating workflows, and eventually to running a team of agents that will handle more of the work restaurants have to do manually today.

For example, we expect Toast IQ to run workflows like operating within a budget to optimize marketing spend, or to understand inventory levels and get ahead of an out-of-stock scenario and then place an order from approved vendors. Over the long term, we expect these AI agents to start to own whole functions, from marketing, to managing payroll and tax, or accounting and bookkeeping.

We believe, because our data powers much of this work, we are uniquely positioned to both do it better and cheaper. Quick switching gears, our fourth priority is continuing to invest with discipline in our most important priorities while expanding margins over time.

We're operating from a position of strength. We've achieved our medium-term margin targets, including 40% margins in our core, ahead of schedule, and have confidence we can both innovate and grow while working towards our long-term margins of 40%-plus by holding a high bar on our execution and our capital allocation.

I think we have an opportunity to build a much more material business over the next decade that can both have a much bigger impact for existing customers and expand the opportunity across new markets where we're seeing great early success. I'm committed that we will be disciplined in how we invest and only lean into our biggest and highest-conviction opportunities where we can build differentiated and highly profitable businesses that deliver significant shareholder value.

My conviction ultimately comes from our incredible team of Toasters who care deeply about innovating on behalf of our customers. I want to thank each of them for their dedication and commitment to Toast.

I also want to thank our customers and investors for your continued support. We had a great 2025 and we're confident in our momentum and our plans heading into 2026.

Thank you, and with that, I'll turn the call over to Elena.

Thank you, Aman, and to everyone for joining us today. I also want to thank our team for another successful quarter and for the continued execution that led to our record performance throughout 2025.

Our results showcase the strength of our business model in what was another outstanding year for Toast. Net adds increased every quarter versus a year ago, and we added a record 30,000 net locations in 2025, ending the year with 164,000 locations.

ARR grew 26%, and our recurring gross profit streams increased 33% for the year, an incredible accomplishment at our scale, with over $2 billion in ARR and $195 billion in payment volume in 2025. On top of strong top-line momentum, we are efficiently scaling the business through disciplined capital allocation and ongoing cost management.

In 2025, we delivered adjusted EBITDA of $633 million and free cash flow of $608 million. GAAP operating income was $292 million, up from just $16 million a year ago, driven by our strong adjusted EBITDA and tight management of stock-based compensation.

We enter 2026 in a strong financial position, enabling us to offensively lean into our key growth initiatives. With a path to double market share in our core and accelerate expansion in our new TAMs, we are confident that continuing to invest behind these opportunities will lead to sustained top-tier growth for several years and create significant shareholder value.

Turning to our fourth quarter results, our recurring gross profit streams increased 28%. Total monetization, measured by our recurring gross profit as a percentage of GPV, hit 98 basis points.

That's a 5 basis point increase from a year ago, reflecting our growing share of wallet and increasing value we provide our customers. We added approximately 8,000 net locations in the quarter.

We are consistently gaining market share in our core, with increasing contributions across our new TAMs as they scale. Underpinning the location momentum across the business is our best-in-class vertical SaaS platform and local go-to-market execution.

SaaS ARR and subscription revenue each grew 28% year over year. We are complementing our strong location growth with consistent mid-single-digit increases in SaaS ARPU on an ARR basis.

SaaS ARPU in our core is growing even faster than total SaaS ARPU, driven by customers continuing to adopt more products across the platform. Subscription gross profit increased faster than top line at 33%, with SaaS gross margin expanding 300 basis points year over year to 80% in Q4.

In addition to ongoing efficiency efforts across the business, the early benefits from leveraging AI to transform our customer support experience is contributing to margin expansion. Our SaaS net retention rate remained in a healthy range at 109% in 2025, led by solid contributions from upsell and location expansion from existing customers.

Payments ARR grew 24% and fintech gross profit grew 25% in Q4. GPV was $51 billion, up 22% year over year, with Q4 GPV per location down 1% versus last year.

Fintech net take rate was 58 basis points. Payments take rate increased 2 basis points from a year ago to 48 basis points.

We continue to drive year-over-year take rate expansion from cost optimization efforts, new products, and ongoing price optimization, even after lapping the benefits from the September 2024 pricing adjustments. Non-payments fintech solutions, led by Toast Capital, contributed $51 million in gross profit and 10 basis points in take rate.

Overall, the program continues to grow at a steady clip, and defaults remain consistent and well within our risk guardrails. Hardware and professional services gross profit was negative 12% of our recurring gross profit streams.

In addition to capitalizing on our customer acquisition momentum, we are absorbing higher tariff costs. Our strong overall unit economics and scale enable us to do this while maintaining healthy payback periods.

Moving to expenses, we continue to balance investing in our highest-priority initiatives across go-to-market and product while driving efficiencies across the business. Total full-year opex, excluding bad debt and credit-related expenses, grew 15%, providing 8 percentage points of operating leverage.

In Q4, sales and marketing expenses increased 21%. We're investing to support our market share gains in the core, expanding our account management team, and scaling the international and retail go-to-market teams to accelerate our progress.

R&D increased 7% as we invest in product differentiation and add capabilities to expand our product-market fit across our new growth markets. Adjusted EBITDA grew 47% to $163 million, a 32% margin.

Stock-based compensation as a percentage of recurring gross profit was 12%, down nearly 5 percentage points versus a year ago. That contributed to GAAP operating income more than doubling to $85 million.

We've dramatically expanded adjusted EBITDA over the last few years, reflecting the strong unit economics of our business and focused capital allocation. Dollar-based payback period for our portfolio remained in the mid-teens months in 2025, consistent with the last few years.

Our new TAMs represent significant ARR opportunities, and our early success and strong customer signal give us confidence in our right to win. Payback periods across our new TAMs are above the core today, given we are earlier in building our go-to-market and product offering.

As we scale and mature in these areas, we are confident each one is on a path to under 20 months. We have a proven track record and clear roadmap to improve payback periods.

In the core, payback dropped from 22 months in 2019 to 14 months in 2023. During that time, we expanded our product offering to increase ARPU and built the flywheel effect, growing referrals and scaling the go-to-market motion to increase rep productivity.

We also enabled our team with customer acquisition guardrails that balance efficiency and win rate. Since 2023, we've held core payback steady, and we believe operating in this range provides the right balance of growth and discipline, and supports our long-term margin profile of over 40%.

We're taking the same approach in our new TAMs, expanding product capabilities to increase win rates and ARPU, and scaling go-to-market to build the flywheel. Our near-term priority is investing to gain share.

Over time, we have a clear path to optimize and drive efficiencies in the unit economics, as we've done in the core. These new areas also leverage our core platform and centralized functions, giving us confidence that, at scale, these new TAMs will drive meaningful profitability.

Moving to capital allocation, we've repurchased approximately 8 million shares for $235 million since the inception of our buyback authorization in 2024, including 3 million shares for $107 million in 2025. Returning capital to shareholders is an important part of our approach to driving long-term shareholder value, and the board has approved a $500 million increase to our share repurchase authorization.

We do not have a specific timetable to complete the authorization and will maintain the same approach to buybacks, opportunistically repurchasing shares based on market conditions to support long-term shareholder value. Turning to guidance and our outlook for the year ahead, Aman and I have highlighted our strong momentum across the board, and our 2026 outlook builds on this trajectory.

We remain well-positioned to grow net location adds in 2026 compared to 2025 and sustain mid-single-digit SaaS ARPU growth on an ARR basis. For the full year, we expect 20% to 22% growth in our recurring gross profit streams and adjusted EBITDA of $775 to $795 million, implying margins are slightly up year over year, consistent with the expectation we shared last quarter.

In addition to the investments we're making in future growth and higher tariff costs, our guidance also includes approximately 150 basis points of negative impact from higher memory chip costs for our hardware. This headwind emerged since we shared our initial expectations last quarter, with memory costs increasing from the surge in global demand for chips.

We expect the cost pressure to be weighted towards the second half of the year as inventory with our higher-cost parts roll out. We anticipate the market to stabilize over time, and while near-term hardware costs will be elevated, this does not structurally change our long-term financial profile.

Over the past few years, we've demonstrated the power and leverage in our business model, rapidly expanding margins to hit our medium-term target faster than expected while sustaining over 30% growth, investing in product innovation, and building the next set of growth levers for the company. We are positioning Toast to sustain high growth for the next 5 to 10 years, and have high conviction and strong signal across our key growth opportunities.

As we move through 2026, our bias is toward reinvesting potential top-line upside to go even faster on our growth initiatives, including new TAMs, product and AI investments, and seeding future growth bets. Our rigorous capital allocation approach is unchanged.

We'll only invest where the customer signal and data warrant going faster. We are confident delivering durable, compounding growth with the incredible leverage and cash flow generation in our business model will maximize long-term shareholder value.

Turning to our first quarter guidance, we expect the same seasonal patterns in 2026, with Q1 being lighter quarters for both net adds and GPV compared to the rest of the year. That's reflected in our Q1 guidance for total fintech and subscription gross profit growth of 22% to 24% year over year and adjusted EBITDA of $160 to $170 million.

To wrap up, we are executing across the board, growing our core, expanding our TAM, and maintaining healthy margins as we scale. Heading into 2026, we're laser-focused on sustaining our momentum and continuing to execute at a high level across the business.

We're incredibly excited about what lies ahead for Toast and well-positioned to capture the massive opportunity ahead. Now, I will turn the call back over to the operator to begin Q&A.

Great, thank you for taking the question. I want to first start with SaaS ARR per location.

You mentioned for the full year of 2026 that you're confident in staying in that mid-single-digit range, which I think is great to hear. You mentioned that core SMB and mid-market are doing even better than that mid-single-digit.

There's a little bit of a drag on the front book from international, food and beverage retail, and enterprise. I was hoping you could just break down a little bit of those components, because international and food and beverage retail, yes, they're lower, but they're good signs of them improving and getting closer and closer.

Enterprise is sort of a different animal, right? Enterprise is sold differently, it's got a different LTV to CAC profile, it's very different.

Really two questions related to this: One, if you could talk about the mid-single-digit SaaS ARR per location maybe over the medium term. Then two, is if you could talk about if you've ever considered or would you consider just breaking out enterprise separately, because some of these per-location metrics would just look a little bit better if enterprise, again, sort of a different type of business, was broken out separately?

Thanks.

Hey, Tim, thanks for the question. Lots of confidence actually in SaaS ARPU growth to remain in mid-single digits in '26, similar to what we saw in 2025.

To your point, core SaaS ARPU is actually growing faster than the total company based on exactly what you said, right? Some of these new TAMs today have lower SaaS ARPUs, but it's early, and we expect them to grow as they scale.

Just one thing that we've looked at in our data, when you look across all three of our new TAMs, SaaS ARPU is ahead actually of where the core was at comparable times. As we roll out more products, and we're planning on doing that across all of them, we will see ARPU grow over the long term.

In terms of enterprise, it's a really great point that it's a very different sales cycle, the way we look at it is different. We look at total ARR really when we look at enterprise, and we evaluate, to be honest, deal by deal, and the LTV to CAC per deal is really strong, right?

There's higher ARR, low CAC, low churn, all of these elements really contributing to strong unit economics. Really encouraged by what we see in international, and as we add more products like drive-thru, which we talked about, it's only an opportunity to continue to grow.

Great, thank you, Elena. Yeah.

Hey, good evening, thank you for taking the question. I wanted to ask on the net adds, really strong finish to close out the year in the fourth quarter and reiterating the expectation for net adds up this year.

I think you mentioned in the prepared remarks that one of the goals this year is to prove out that the newer verticals can be a material driver of growth, and you've kind of given us some data points on that along the way so far. Maybe you could just talk a little bit about the mix of core versus new verticals this year.

What would be a good outcome, and what should we be looking to kind of gauge your success in those new parts of the business being a material contributor? Thanks.

Yeah. Hey, Will.

I think first off, as you mentioned, really proud of our performance here in 2025. Every quarter in 2025, our net adds were up year over year.

In fact, in Q4 of 2025, that rate of growth accelerated to over 8k. I think that's really a testament to the team's performance.

Now, in terms of the composition, what we saw last year was the core was in the same range, and a lot of incremental growth on net adds came from these new TAMs. Now, if you think about the core, locations and market share has doubled over the past 3 years.

When we look at this year now, what we expect is actually a very similar pattern to play out, where the core should be in a similar range to 2025, and the new TAMs should grow further, which is why we have a lot of confidence that net add growth in '26 should be even higher than '25. Some of that is, of course, we're investing in go-to-market capacity, we talked about that in retail, some of it's the sales capacity we have added ramping, and then we're also doing some early testing, we're learning beyond food and beverage retail, and as we expand the TAM further, that'll give us some upside over the long term as well.

Great. Appreciate that.

Then if I could squeeze in a follow-up, I was wondering if you could maybe just address kind of the elephant in the room around AI disruption in software. We used to talk about Toast trading like a software company as being the bull case, but now that it's gotten caught up in this AI narrative, I was hoping I could just give you the floor and you could talk about how you think about the moats around this business and why or why not new entrants leveraging new technology are or aren't a threat to the business.

Thanks.

Yeah. Sure, Will.

Look, I think if you think about what Toast is, we're the most important piece of technology restaurateurs use to run their business. Where all the work gets done, you think about running the operations, front of house, back of house, kitchen, all the reporting and analytics and data, the guest experience, like a restaurant's website, online ordering, gift, loyalty, employee management, finance, and it's really broad.

We don't talk enough about how if you think about everything Toast offers, it's software. It's also hardware.

It's fintech, things like lending and payments, payroll, that have heavy regulatory and compliance needs. We power the network in these restaurants.

Then we've got hundreds of partners that sit on top of Toast to extend what our platform offers. If you talk to our customers, the other thing you'll hear is, in addition to all the technology that we power, they also look to us to leverage all this technology, almost like an outsourced CIO, like all the sales and services team that enable our customers to leverage all of our technology.

I think there's a lot to the Toast platform. I actually think AI is an opportunity for us to lean in even further.

On the customer side, and I talked a little bit about this in my prepared remarks, we start off early on by automating certain key workflows, like generating an email campaign or maybe it's about getting inventory on the shelf faster. Now with Toast IQ, it's this copilot that actually can help restaurateurs leverage more of our platform, whether it's analysis of data, it's automating certain workflows, making changes to the Toast back end.

Voice I think is another opportunity. You think about walking up to a kiosk or in a drive-thru or walking up to a terminal and leveraging voice to automate some of the work of placing an order.

Then longer term, we are investing in a big way in Toast IQ to do even more. I talked about how restaurateurs they outsource work around generating demand with marketing, or bookkeeping, payroll and tax, and we think there's an opportunity there, because a lot of that is our data that's powering those experiences.

There's an opportunity there to actually make some of those workflows more agentic than they have been in the past, and to do them better and to do them cheaper. I look at AI as an opportunity for Toast to lean in to and drive innovation and impact for our customers and versus being a risk to the business.

Got it. Appreciate the perspective.

Thanks for taking the questions.

Yeah. Thanks, Will.

Hey, thanks so much. Nice results.

Just to add on to your answer to Will's question there, is your margin framework, Aman, give you the leeway to lean harder into R&D to the extent that AI creates more opportunity, more tools, products, services that you just talked about that customers demand? I'm just curious how you're balancing that, and if you have again, the leeway to lean in if you need to.

I'll start, and, Aman, maybe you

jump in,

but, Tien-Tsin, you're exactly right. Part of the reason, in fact, when you just think about our margin profile, we're not expanding margins faster because we're investing in R&D to really sustain this long-term growth that we've talked about, innovating for our customers, solving problems for them.

That said, our margin framework, just to hit that head-on, remains unchanged, right? We're targeting 40% margins over the long term, and that pace, this is really important, the pace at which we drive that margin is in our control.

Then a lot of things that Aman just said around AI investments, we view that as an incredible opportunity to accelerate and do more for our customers over time.

Yeah. That's well said, Elena.

I just want to reinforce one point. We are here to build a generational company over the next decade.

The reason we're investing across the business, including in R&D, in a big way is because we think we can serve many multiples of the current TAM that we serve, and we can increase the impact through investments we're making across the platform. That's why we're investing in R&D, and if we wanted to focus on shorter-term margin expansion, we absolutely could do that.

It's really about investing for the long term.

Understood. Thank you so much.

Yeah. Thank you.

Hi. Hey, guys.

Thanks for taking the question here. Aman, really appreciate all the AI commentary so far.

I just wanted to ask one more. Just curious, with all the broadening out of Toast IQ and of everything it's doing for merchants, are you seeing Toast IQ kind of be a big reason why you're starting to win RFPs?

Then if so, what type of merchants find the most value in these tools?

Yeah. Today, the focus, I think, is really in our SMB business, and we're certainly seeing our go-to-market team and our customers, I shared some of the data, in terms of usage and adoption, play a big role in terms of why people are picking Toast.

I think what customers like about it, you think about the average SMB restaurant owner, what they like about Toast IQ is that you've got this copilot that you can query. Whether it's simple things like asking questions, analyze data, it's much faster than finding the specific sub-report that they need.

You can generate custom views and data that maybe in the past you'd have to export to Excel and create a custom view on. You can make changes to the back end of Toast, as I mentioned, if you want to 86 an item, for example, or change what shows up online for online ordering.

All these workflows that are so crucial, the ability to do them faster is really been valuable to our customers. We're certainly seeing that in our sales cycles.

We're seeing our sales team is super excited about it and sees the impact it has, because our tool is really purpose-built, right, for the restaurants, because a lot of the data and the use cases are focused on the workflows that our customers care about. Early, and again, I'd say early, as I mentioned earlier.

I think over time, we think there's an opportunity to start to automate more and more complex workflows. Think about imagine almost if I'm a restaurant, I want to think about demand when I'm slower, generating marketing spend through Toast Advertising, let's say, help me drive more demand in a budget, for example.

Then over time, start to make more of the work more agentic. Again, good to see the early progress, and we're going to continue to invest to make it better and better based on customer feedback.

Really helpful. Thank you.

Yeah.

Thank you.

Great, thanks for the question. Changing gears a little bit, could you expand on the drive-thru product rollout?

I think that you acquired a company called Delphi several years ago that had drive-thru tech, and I'm just wondering if that's a segment of the market that you have been addressing already or does this rollout open up that market?

Yeah. Far, our focus upmarket in enterprise has been a non-drive-thru.

If you look at all of our wins so far and the progress we've made, it's been in casual dining, it's been in sit-down. It's not been where drive-thrus are primary mode of their operation.

The investments we're making now, we're planning to launch our drive-thru product this year, which is going to open up that market in a much bigger way than has been available historically. It doesn't mean that some customers that have got small amount of drive-thrus as part of their business don't use Toast, but there's a lot to supporting multilane drive-thrus and some of the complexity that exists there that we're launching this year.

That's really helpful. Along those lines, are there any other segments of the US market that you're not able to address today because of product, but maybe it's a potential on the product roadmap and opening that up down the road?

Yeah. It's a good question.

We're seeing across whether it's SMB or enterprise, there are parts of the TAM where we think we can create more value. As I mentioned, for example, in SMB, for non-English-speaking operators, there's some work we've done and we are doing that I think will help.

Even in parts of the TAM where we're established, like bars, pizzerias, or membership clubs, we're making some improvements to our product that I think can drive further win rate. Then upmarket in enterprise, there's opportunity in some segments of the market.

Like sports and entertainment is an example where we've got some traction, but we think improving the product can open up that opportunity further. Then even other sub-TAMs, you think about golf, for example, where we think we've got some adoption, but not at scale.

The product team is always looking at all of our data in a de-average way, where they're looking at what are our win rates, what's our market share across all these sub-TAMs and then using the size of the opportunity to prioritize their roadmap.

Thank you.

Yeah.

Thanks, and nice results. Taking a step back to put '26 in perspective, you're still growing really well while investing heavily.

Do you see it as a peak investment year, as at least as it relates to the current cycle? Then related to that, your initial guide for RGP in '26 implies a back-half deceleration.

Is there anything you'd like to call out there that's driving that initial guide, or reasons it could prove conservative? Thanks.

I'll take the last question first. Just in terms of how we guide, right, as we start the year, we take a pretty balanced view as looking at past years.

Obviously with GPV, we want to be balanced, but we always aim to do better, just keep that in mind as we progress, we'll update you on that over time. Then in terms of your first question, on peak investment year, as Aman said earlier, we're really thinking about this over the long term.

We're trying to build a generational business, right, and have ambition to find opportunities where we have a right to win, where the customer signal is really strong, and so 2026 reflects our conviction behind these new TAMs that we've talked about. We haven't changed our long-term margin profile as I talked about earlier.

In fact, we have a lot of conviction and even more conviction because of these TAMs and the fact that we have a path to sub-20 months. Zooming out, what you're seeing in 2026 is our confidence that we've identified new TAMs that will drive durable growth over the very long term.

Like I said earlier, driving margin and the timing of that is really in our control.

Hi, Aman and Elena, thanks for the question. Another question on AI, it's very much dominating the debate with investors.

The key concern, of course, is software becoming more commoditized. Aman, can you speak a bit more about Toast potentially evolving beyond a software provider into more of a platform business, particularly through the strength of your ecosystem partnerships?

Any more additional color on that and how that ecosystem kind of deepens your moat over time would be really helpful. Thank you.

Yeah. Sure, Dominic.

If you look at Toast today, right, it is already, I'd say, more than, right, a software provider for our customers. I think to your point about how do you deepen the moat, it's continuing to invest to make the platform better and better to support the use cases that our customers want, including with AI.

If you look at today, the Toast platform, it's got software, it's got a broad software platform across powering operations, employees, guests, fintech, I think it's less well known, we power the network in these restaurants as well. Then we've got this, as you mentioned, this large partner ecosystem that sits on top.

Part of the reason the average SMB restaurateur picks Toast is because we simplify all aspects, right, of the technology needs they have to help them run their business. They love the all-in-one nature of our platform.

I think the more we can continue to lean in to make our platform better and better I mentioned some examples early on with Toast IQ, voice AI, and then lastly, if you look at the average restaurateur, they're spending a lot on fractional work. That's actually not even full-time hires that the restaurants have.

A good example is to drive marketing and demand, you might have someone fractionally on the team, or to manage your books, or accounting and bookkeeping, or to help you with payroll and tax. Those are areas where the data, as I mentioned, comes from Toast.

We think with Toast IQ, the vision is to start to support more and more complex workflows over time, which eventually I think could be actually doing some of the work. That's really the vision there in terms of where we're headed with AI.

Then I think in terms of your question on what Toast does as a software provider, I'd argue even already today, right, Toast is a lot more than just a software provider for our customers.

Makes sense. Thanks,

Aman. Yeah.

Thanks, Dominic.

Hey, guys. Thank you.

Last, but not least, I guess. Quick question and a follow-up back to the AI environment.

Can you maybe talk about sort of the top 4 to 5 cross-sell modules and how much of the SaaS ARR they represent, and then I have a quick follow-up. Thank you.

Hey, Dan. Is the question specific to cross-sell modules tied to AI or just to clarify the question?

Just given that there's so much focus on AI and software, what are the most kind of important modules that you're selling in terms of SaaS right now?

Yeah. It's a good question.

If you look at the history of how our platform has evolved, initially with AI, it was about automating some of the simpler work that a restaurateur had to do. I'll give you a simple example.

If I'm using our marketing module to drive demand, it's really valuable to be able to actually generate those email campaigns with AI, because we've got lots of data and with generative AI, you can generate campaigns that's much faster. Similarly, if you want to bring inventory to your shelf or online on e-commerce, the ability to leverage our master catalog and generate images with AI, generate descriptions with AI just makes that workflow faster.

That's an example of how AI is actually embedded across our platform. If you look at features in guests or employee, as for example, with scheduling, right, being able to forecast demand and build automated schedule is an area that we're working on to automate the speed with which restaurateurs can drive an efficient labor schedule.

It's really across the board in the platform that we've asked our R&D teams to focus on ways to leverage AI to make the platform stronger and better. Specifically on your question on where are we driving cross-sell, I'd say Toast IQ and the adoption of Toast IQ is really the foundation.

We seen really good adoption so far, as I mentioned. It's helping us drive win rates, and over time, within that Toast IQ framework, we will launch more, whether it's more complex workflows, agentic workflows, the examples I think I shared were things like marketing and payroll and bookkeeping where it's really owning the whole function over time, and then of course with voice as well.

That's where we're headed, and the focus really is right now is getting the Toast IQ platform to be adopted more widely.

Great, thanks. Maybe just a quick follow-up on, the location metric has been obviously front and center.

As we move forward, in the outer years, is this still sort of the main metric, or is there something else you would like investors and analysts to be focused on? Thank you, and great results.

Yeah. Thanks, Dan.

I could start. I think, look, at the end of the day, it's about driving durable growth.

It's about driving ARR, recurring gross profit, we guide on recurring gross profit, and balancing that with healthy margins as we continue to scale. The location growth, as I mentioned earlier, I think the thing that gives me a lot of confidence there is it shows that what we did in SMB restaurants for the past 10 years is applying beyond SMB restaurants as well, and that's really the crux of why we think there is an opportunity to continue to drive durable net adds over the long term.

Got it. Thank you so much.

Great stuff.

Thank you.