Toast at JPMorgan Conference: AI and Growth Strategies Unveiled

Published 13/05/2025, 18:22
Toast at JPMorgan Conference: AI and Growth Strategies Unveiled

On Tuesday, 13 May 2025, Toast Inc. (NYSE:TOST) presented its strategic vision at the 53rd Annual JPMorgan Global Technology, Media and Communications Conference. The discussion, led by CEO and Co-founder Aman, highlighted Toast’s commitment to expanding its artificial intelligence capabilities and enterprise solutions, while also acknowledging challenges from macroeconomic conditions. The company remains focused on increasing its market presence and innovating within the restaurant sector.

Key Takeaways

  • Toast increased its share in the US restaurant market from 10% to 15% over two years.
  • AI initiatives like Sous Chef and ToastIQ are in development to enhance restaurant operations.
  • The company is expanding into retail and international markets, with successful enterprise wins.
  • Toast is balancing growth with profitability, leveraging data-driven insights for risk management.
  • A disciplined approach to consumer engagement focuses on in-store experiences and data utilization.

Financial Results

  • Market Share: Toast’s US restaurant market share grew from 10% to 15% in the past two years. Markets with over 20% share show high productivity, indicating potential for future growth.
  • Productivity: Year-over-year productivity increased for Account Executives, with core US restaurant team productivity surpassing last year’s figures after separating the retail team.
  • Macroeconomic Indicators: Toast is monitoring same-store sales, new openings, conversion rates, churn, and capital defaults. Gross Payment Volume (GPV) saw a low single-digit decline year-over-year, attributed to post-COVID normalization.
  • Enterprise Sales: Mid-market and enterprise sales show high Annual Recurring Revenue (ARR), with small sales teams achieving good payback periods.

Operational Updates

  • Market Segmentation: The core US restaurant team improved productivity after the retail team split. New segments like retail, international, and enterprise are progressing ahead of plans.
  • Enterprise Expansion: Toast secured significant enterprise clients such as Applebee’s and Topgolf, driven by above-store capabilities and franchisee demand. The company is investing in drive-thru capabilities with potential voice AI integration.
  • Competitive Advantage: Toast maintains strong win rates by focusing on restaurants and investing in platform enhancements, including AI innovations.

Future Outlook

  • TAM Expansion: Toast is committed to expanding its Total Addressable Market through AI and long-term investments. The company uses a horizons framework for capital allocation, focusing on core restaurant SMB business, international/retail/enterprise, and consumer/AI efforts.
  • Strategic Priorities: Emphasis is placed on achieving customer outcomes, particularly in AI, with potential for a tiered monetization model. Continued investment in international markets aims to balance growth with sustainable success.

Q&A Highlights

  • Macro Environment: Toast is monitoring macroeconomic pressures and is confident in managing potential slowdowns using historical data and proactive measures.
  • Pricing Strategy: The company is refining its pricing strategy, optimizing variables like upfront sales, marketing tech, hardware, services, software, and payments.
  • Enterprise Strategy: Toast is enhancing above-store capabilities to support larger chains and is open-minded about payments in enterprise deals, focusing on customer outcomes.
  • Capital Business: Growth is balanced with risk management in the capital business, using Toast platform data to assess restaurant health and manage defaults.

For a more detailed understanding, readers are encouraged to refer to the full transcript.

Full transcript - 53rd Annual JPMorgan Global Technology, Media and Communications Conference:

Tien Tsin Huang, Analyst, JPMorgan: Alright. Thanks everybody for joining. Feel free to have a seat. My name is Tien Tsin Huang. I follow the the payments and IT services sector at at at JPMorgan.

And super excited to have have Toast and Amandarang here, CEO, cofounder. I’ve I’ve gathered a lot of great questions from from all of you. I’m hoping to get through all of them. And I was just telling Amand straight up, I’ll share it with you. I I high respect to the company, to him, and and the leadership that he’s put in to drive the mission of of Toast and and all the work we do following payments and thinking about point of sale software and systems and verticalizing.

I mean, Toast has has checked all the boxes and and done really well. So hats off to you, Iman, for for doing that. And thank you for the time.

Aman, CEO & Cofounder, Toast: Of course. Thank you. Thanks for having us. Yeah. Nice.

Had a nice easy commute here.

Tien Tsin Huang, Analyst, JPMorgan: I was just gonna say commute’s kinda easy. I I think maybe you could even walk here. Absolutely. Before we get into the questions, I thought we’d ask I think I’ve asked your peers and Chris in the past this question. Sort of your favorite local restaurant in Boston.

Always looking for good good recs, sort of toast restaurant. I I don’t know if you’re allowed to say that, but I have to ask you before we get into

Aman, CEO & Cofounder, Toast: to be a toast restaurant. Yeah. No. I know I’ve been in Boston for twenty five years now, and the restaurants in Boston has really changed.

Tien Tsin Huang, Analyst, JPMorgan: Mhmm.

Aman, CEO & Cofounder, Toast: And I’m trying to think, like, there’s so many, it’s hard to pick. I like near Harvard Square. I like Pammys a lot. If you like small plates, they do a great job. In Summerville, there’s a place called Sarma.

If you like Mediterranean, it’s a great spot. And then in the Seaport, I like Bar Mitzana, which is Okay. One of our

Tien Tsin Huang, Analyst, JPMorgan: love that one.

Aman, CEO & Cofounder, Toast: Very early customers. In fact, the guy who runs Bar Mitzana, he’s got four or five restaurants now. He was the chief operating officer of Barbara Lynch Group. And he’s actually a big part of why we started Toast because we were trying to figure out whether we should build a business in restaurants. And we met with him and his team, and I got a lot of ideas and initial product from from him.

Tien Tsin Huang, Analyst, JPMorgan: Yeah.

Aman, CEO & Cofounder, Toast: Yeah. I I keep going. There’s like I can, you know, queue 20 more.

Tien Tsin Huang, Analyst, JPMorgan: No. That’s good. It is noted. Always looking to try different spots. I’m tired of the same old spots, I’m on.

So it’s good to have that. But let let’s start with sort of you’re you’re always talking to restaurants. You’re on the ground. You’re seeing a lot of the trends as as they emerge. I I had written down here that you’ve grown your share from 10 to 15% in the last two years.

Aman, CEO & Cofounder, Toast: Mhmm.

Tien Tsin Huang, Analyst, JPMorgan: So where is the next in the next three to five, where do you think that share is gonna come from? And I know you just updated us on on results last week, and you talked about record ads in in the second quarter. So maybe you can touch upon that and so the better bigger picture of the next three to five, where do you see the share coming from?

Aman, CEO & Cofounder, Toast: I think so this is in restaurants. Are you talking about

Tien Tsin Huang, Analyst, JPMorgan: 10

Aman, CEO & Cofounder, Toast: to 15% in The US in restaurants?

Tien Tsin Huang, Analyst, JPMorgan: Yep.

Aman, CEO & Cofounder, Toast: You know, one of the things that was really encouraging was if you look at the the start this year, we always talk about getting markets into flywheel. And the idea is the more share you have, the more visibility you have, the easier it is to get additional restaurant tours to consider Toast because so much of it is is based upon social proof. Where you can the best sales pitch is not me going in and pitching Toast, but actually taking someone to the restaurant nearby and saying, talk to the owner about what Toast can do for you.

Tien Tsin Huang, Analyst, JPMorgan: Mhmm.

Aman, CEO & Cofounder, Toast: And so we’ve talked about how important it is to get more and more restaurants into flywheel. And and we’re seeing that. We’re seeing more market center flywheel. We’re seeing our flywheel markets continue to have above average productivity. And these are markets with over 20% share, so we think they’re predictors of what’s gonna happen for the rest of markets.

Mhmm. There’s also a lot of energy on looking at markets that are not enviable to say why not, and what are the things that we can do on the sales strategy side to continue to drive more more penetration. And I think a lot of the effort and the focus, like one of the positive things we’ve seen this year is year over year, we saw AE productivity in terms of locations up, which we’re really proud of because at our scale to be able to get productivity up, that’s what gave us the conviction to talk about the rest of the year and q two. And I think that speaks to obviously our execution on the ground. It speaks to our product Because in our core business, if you look at like what has gotten us here.

Right? It’s like this this maniacal focus on restaurants. And there was like, in fact, a lot of questions about like, that the right strategy? Should you go horizontal and do more than restaurants? And and for for a decade, when we recently launched retail two years ago, there was this we said, no, we’re gonna just focus on restaurants and make sure we solve for restaurants better than everybody else.

And that that mindset continues in the r and d team, which is like, what are the ways in which AI can help restaurants? What are the ways in which we can innovate to continue to increase the value proposition? And improve the value proposition just like we have with, you know, things like our handheld or we were the first ones to launch a cloud all in one that was purpose built. So I think those things are fundamentally, that’s the most important driver is the product. Right?

And the value proposition for customers. And then enterprise, that’s another big part of our growth story longer term where two, three years ago we didn’t really have a lot of penetration and now starting to see some good success. Announced Applebee’s and Topgolf recently. And that’s one of the area where our penetration, it’s about 200,000 locations is low, and we think that over time there’s lots of opportunity there.

Tien Tsin Huang, Analyst, JPMorgan: In terms of the productivity being higher, Aman, thinking about the the second quarter record as, can you be a little bit more specific where where are you seeing some of that that growth come in a little bit above? Is it more in the core? Is it some of the new?

Aman, CEO & Cofounder, Toast: Yeah. So the specifically the productivity, I mean I mean the productivity in the core. Yep. And so, as we set the plan this year, we we wanted our core US restaurant team to really focus in on restaurants. That’s why we split out the retail team.

And and I think it’s been overall had really positive effects. In our core, we’ve seen productivity be over above above last year. And then in in some of these new segments, retail and international and enterprise were actually ahead of plans. That’s positive as well. And so I think splitting up the team was a was a good call.

Tien Tsin Huang, Analyst, JPMorgan: Yeah. So I did wanna talk about that later, but just thinking about the the macro side. I get that question so much. Man, I’m sure you’re you’re gonna get it all day today too. But what what signals do you see?

What are you what are you paying attention to? How healthy are restaurants?

Aman, CEO & Cofounder, Toast: Yeah. It’s it’s a good question. I mean, certainly, we the one thing that we we do a nice job of, like, you know, really tracking all of the data. Our sales team is very data driven and we as a leadership team get a weekly update that goes pretty deep on not just some of the output, but some of the input metrics that drive our business. And so we’re looking at all the things you can expect.

Like, we’re looking at same store sales. We’re looking at, you know, new openings. We’re looking at conversion win rate. We’re looking at churn. We’re looking at capital defaults.

Like, all the metrics that matter to our business to understand what’s going on. And and we’ve also studied, you know, historically what has happened to restaurants. If you go look in not that now is comparable necessarily, but you look at go look at 02/2008, you look at 02/2001, and you can start you can get some perspective on at least the data I’ve looked at says that retail sales were down maybe like, you know, 10% or so, with restaurants as low single digits even in those tough times. And so that’s the other thing that gives us confidence that if you expect history to repeat itself, even if there was a slowdown, I think we have we we that’s what gives us confidence that we can manage through it. And so far, if you look at where we are through the balance of the year, like we haven’t seen anything material Yeah.

You know, in the business in terms of our input metrics that we’re tracking, whether it’s all these metrics I talked about, like this productivity, GPV, all that is, you know, in line with our expectations. Now as we’ve shared, it was down year over year, like low single digits. So you look at, like, this COVID boom that happened. I think there’s some, like, post COVID, there’s a bit of a, you know, normalization that’s happening, but I think it’s normalized. It’s not like you’re seeing this or this.

You’re seeing, you know, went up and then there’s a couple points of it was lower and that’s we’ve seen that in narrowband like every every once we saw that dip, it’s just been in the same range.

Tien Tsin Huang, Analyst, JPMorgan: Yeah. You’ve seen that for quite some time, so that’s not necessarily new. Okay. No. That’s great to hear.

And, look, you guys have been winning a lot of shares, so I think that that’s always helped that stayed on. But before we get into to the selling side of it, just to the extent that the macro does pressure the top line, I’m just curious, your your commitment to protecting the bottom line and and profitability. You’ve over performed on some of your margin targets in general, but tell us how much discretion do you have to protect the bottom line, and what’s nonnegotiable for Toast?

Aman, CEO & Cofounder, Toast: Yeah. Tien Tsin, it’s a good question. I think one of the things that we are doing a good job of is making sure that we have clarity and alignment as a leadership team on where we wanna be three, five, ten years from now. And making sure that our capital allocation is aligned with that in terms of where we’re investing, what we’re tracking. And and so, you know, you’ve heard us talk about the TAM expansion

You’ve talked heard us talk about AI and some of the things we’re trying to do there. And so we wanna be be balanced about making sure that our long term investments are not compromised. We we use like you’re part of this book Zones to Win, we we try to use a horizons framework in terms of how we invest in the business. So, the horizon one businesses like this core restaurant SMB business. You think horizon two businesses like our international business, our retail business, enterprise.

And then horizon three is things like our consumer efforts, our AI AI efforts and and such. And so, you know, if there was a slowdown, I think we would certainly make sure we’d go back and look at and make sure everything we’re investing in is above the fold. If there’s any discretionary spend areas that we can cut, we’ll look at that. We also have in our guidance, I think we’ve factored in to make sure that we can absorb some of that as well. And so I think we Elena and team and I, I think we feel confident.

And we’ve studied, as I said, previous recessions in terms of what happens. So that gives us I think we’re confident that we can we can manage through it. And we we don’t wanna we don’t wanna compromise against what’s most important to drive long term growth and long term scale in the business.

Tien Tsin Huang, Analyst, JPMorgan: How about competitively? We’re hearing all these updates from from your peers. We cover Yeah. Several of them. I think they’re trying to narrow the product gap versus toast within within restaurant food and bev.

Are you seeing any change there, especially on the pricing side? Is there pricing discipline across the group? I’ll stop there and then have a follow-up.

Aman, CEO & Cofounder, Toast: Yeah. I I think there’s even before you look at competition, there’s a lot of work that our team can do to actually continue to get better and better in terms of how we use pricing as a tool. You know, our sales team has a lot of autonomy now, and more so I think than they’ve had in the past in terms of looking at all the variables. So you think about any deal, you know, there’s upfront sales and marketing tech, hardware services, and you and then there’s recurring fees around software and payments. I think we’re doing a better job of managing across those variables to optimize what is, you know, what what is best for for Toast.

And I think we’ve done a better job than we have in the past. That continues to be a focus area for our go to market team as opposed to looking at these variables in isolation. And so, think that’s been positive. So, I think our pricing muscle continues to get better whether it’s for new business or existing customers. And then, I think the market is always I remember when we started this business and it was like, you know, it’s hard to raise capital.

And the feedback was, hey, this market’s like really competitive. Mhmm. There’s lots of players. Like, how are you gonna stand out? And we just walked in.

I mean, I remember we were like walking in a bunch of restaurants around here. Right around here Harvard Square and Cambridge, you walk in, they were all using a lot of these legacy solutions. And and the reason cloud hadn’t taken off, this is in 2013, was because it like solving for the needs of this vertical had a lot of complexity to do it well. And I think that focus is what allowed us to be successful. And as the market evolves and I think people continue to invest to within the restaurant sector, our job, our R and D team’s job is to continue my job is to continue to invest to to make the platform better and better.

So we know we track as a North Star metric our win rate. That’s one of the most important metrics that we track in addition to things like ARPU to understand whether or not the product roadmap in our core business and all the investments we’re making is translating into outcomes for our go to market team, and of course, importantly, our customers. So things like NPS, things like attach rates for products. That’s the other variable that we track very closely. But but, you know, we’re doing a lot, for example, in in AI now.

We’re doing a lot to continue to invest in the platform to add more value. And so those things, you know, I think have allowed us to continue to have really strong win rates in productivity. So if you look at our long winded way to say, if you look at our where we are relative to where we were two, three years ago, if anything, our win rates have gotten better, right, in this market. Win a majority of the time when we’re in a competitive cycle.

Tien Tsin Huang, Analyst, JPMorgan: Alright. Good. So, let’s let’s do enterprise really quick. Was a popular question from investors. You did announce Applebee’s Topgolf as well.

Yep. And so so curious, tell us, you know, what what have you learned from from these wins? Why did they choose Toast? And remind us of the implementation timeline for these two.

Aman, CEO & Cofounder, Toast: Yeah. So we had talked about launching an enterprise business pre COVID in 2019. And then when COVID hit, said we need to focus. And so we got our focus back within the SMB.

Tien Tsin Huang, Analyst, JPMorgan: Mhmm.

Aman, CEO & Cofounder, Toast: And really just I think it was maybe two, three years ago, two and a half years ago, we said it’s time to launch back in upmarket and enterprise. And and, you know, and that required as we have shared with many of you. The the biggest gap was really building out the above store capabilities to support these larger chains. So we’ve had success in multi units for a long time, but not the larger chains. Mhmm.

And so we we invested in, like, really above store management of menus and config. And there’s a bunch of work on our API architecture on security and compliance and all the things that an enterprise groups need. And I think that’s really what is starting to pay off. If you look at some of the wins we’ve had over the past, year, year and a half, it’s Myriad, MTY, Choice Hotels, Hilton, Pop Belly, Perkins, Applebee’s, Topgolf, there’s a bunch of others as well. And I think this is testament to the product team’s execution and a commitment to say, we can solve for the needs of larger chains as well.

And what we hear typically from a lot of these groups is you’ll see pull from franchisees. Because if you’re a franchisee or, you know, you’ve seen Toast in the SMB environment, you typically like, a natural question if let’s say I’m a franchisee is, you’re go talk to the servers to say, hey, how do you like Toast? Like, does it help you run be more efficient? Like, does it help productivity? Does it help you with tips?

And one of the things that’s been really positive for Toast, right, and this is actually a big headwind early on, was the restaurant communities and the the servers and the kitchen staff that work in restaurants know Toast really well, unlike Toast. And and and in fact help drive our flywheel. And so, that often is is something in our favor where a lot of the staff that work even in the enterprise chains know and are familiar with toast and like toast. And so, the franchisees will bring it up in that context. And then it’s about, can we support them, right, for the things beyond the four walls of a restaurant.

And we still have work to do. Like, you know, it’s good to see that we made progress, but we still don’t have we haven’t fully built out our drive thru capability. We think there is an opportunity in the next couple years with voice AI, where at least what I’m seeing is is the technology is is starting to get there. And so there’s this unique window, I think, the next two or three years where you can leapfrog what’s out there in terms of building out not just like what it takes to power a drive thru, but leveraging more, you know, some of the AI technology. And I’ve seen examples, by the way, where picking up a phone, like maybe not in like drive through quite yet, but picking up a phone, it works remarkably well.

So if you’re a restaurant and you wanna pick up your phone, you can you can leverage start to leverage AI now, and it will do a nice job of like ordering online, booking a table, like, all these hours. Like, all the things that that you call a restaurant for, like, we’re not that far off because there’s not a lot of ambient noise when you call, and it’s it’s we’re getting there for that. And so the question is, what else could you do with it? And one of the use cases, obviously, big one is drive through. Another one is in the restaurant, like, you know, are there ways where you can have voice AI augment the server?

So so there’s a there’s a lot of opportunity to innovate and and do more than just just replicate what’s out there, you know, today.

Tien Tsin Huang, Analyst, JPMorgan: At the drive thru, I think all the AI would hear is arguing from my family about what we’re going to order. Because I don’t know they’re gonna come out from that. I I do wanna let me think. Before we before we go into AI, I I do wanna hit that. I I do think it’s important to ask, I’m just thinking on the enterprise just to stay with it and close it out.

Just payments attach. Yes. How important is payments attach? I think Applebee’s is not attaching payments.

Aman, CEO & Cofounder, Toast: That’s right.

Tien Tsin Huang, Analyst, JPMorgan: So, I’m I’m curious how that impacts growth and margins. And does this make you more competitive if that’s not something that has to be included?

Aman, CEO & Cofounder, Toast: Yeah. I think the team does a nice job of looking at the unit economics on a deal by deal basis because these are large deals. And so like for example, Applebee’s really happy with payback periods and margins and ARPU on that deal. And if you go look at like a lot of these enterprise chains, the reason they have adopted our payments quite a bit is because it actually works really well as part of the platform natively. And and often when they don’t, it’s because they’ve gotten to the partner they’re working with and they wanna focus right now on the point of sale.

And so we’re open minded either way. Like, whatever is best for our customers is how we look at it. You know, one thing I think we need to do a better job sharing with all of you is as we get into, you know, beyond these SMB restaurants

Tien Tsin Huang, Analyst, JPMorgan: Mhmm.

Aman, CEO & Cofounder, Toast: And you look at more material growth out of retail, out of national, out of out of enterprise, You know, some of the unit economics are different. Sure. Right? And like retail, I think, is the closest to The US SMB business in restaurants. Like GPV per store is, if anything, slightly higher in the TAM.

We’re seeing really good, you know, it’s like the focus there on that team has been remarkable. And like we we’ve we’ve seen it feels a lot like the early days of the restaurant business when you see like us in, you know, some of these markets in The US. In enterprise, like the the deal value, as you can imagine, or mid market even, the deal value in terms of ARR you’re booking, you got hundreds of locations. The payback periods are never an issue because you’ve got, you know, small sales team selling lots and lots of units. And we’re exploring what are the ways in which we can drive ARPU long term and margins long term upmarket enterprise.

And so we’re looking at everything from innovation like voice AI, like I talked about, looking at guest products. Because one of the areas where I think we can drive both win rate and ARPU up market is our guest suite. When you think about like most chains, they want a compelling online ordering, kiosk, CRM solution. And then also, I think enterprise support is another area. We haven’t done much much there, but I think there’s an opportunity there long term to create a differentiated support offering for enterprise chains, because a lot of that often is in house.

Mhmm. And it doesn’t necessarily need to be often folks feel like, you know, they see the value of having Toast be a good partner there. And so so I think ultimately, like, in all these areas, we’re managing and looking carefully at, you know, payback periods and margins and and and we feel like a lot of these areas are very accretive to the business. And ultimately, like across all of these, the reason we’re investing and the reason we think these are good businesses to be in is because if you look at the core of what we’re selling, it’s not that different than what we sell into an SMB restaurant. Like, g and a, the opex cost will it’s it’s in our best interest, I believe, to to continue to invest to scale because that’s where the leverage will come from longer term.

Tien Tsin Huang, Analyst, JPMorgan: Good. Good. Now, I feel like we should since it’s a tech conference, we should talk about AI a little bit more. So let’s skip on that. Skip ahead to that.

Just, you know, we wrote a

Aman, CEO & Cofounder, Toast: lot Am I going to slow on the answer?

Tien Tsin Huang, Analyst, JPMorgan: No. No. You’re not. I’m just I’m just trying to, you know, make sure we use your time wisely.

Aman, CEO & Cofounder, Toast: Sure.

Tien Tsin Huang, Analyst, JPMorgan: So I I think with with AI, I I thought sous chef was interesting when you talked about it at Investor Day and the AI assistant for restaurant operators. You just also announced Toast IQ. Yeah. How do these things work together for those maybe less familiar? And and help us understand the monetization around AI both, you know, with from a customer standpoint, but also from a retention standpoint.

Aman, CEO & Cofounder, Toast: Yeah. You know, what’s interesting is like the AI in this world is changing so quickly that what was relevant a year ago and you know, sure many of you know this, six months ago is like changed Yeah. In terms of just how fast these LLMs and these models are evolving. And so what you could do with AI even a year ago versus what you can do today is is changing. And and so, you know, as an example with Sous Chef, when we first launched it, we felt like you think of the average restaurateur, you know, they’re not technologists, they’re not they’re not CIOs on staff.

And often when they call us, it’s like very our support team, have very basic questions like, hey, how do I turn off online ordering? Like, you know, something very basic like that or I can’t find this report. Like, know I could do in the past, I just don’t remember how to get to this view where I can see like, you know, short employees in terms of who are have the highest check size or something. It’s these really basic questions that we got. There’s a lot of support volume and things that you would expect to be self-service.

Mhmm. And part of the reason is because their turnover in restaurants and employees is pretty high. And so often they gotta get up to speed on this new platform, we got a new GM or new staff member. And so the the vision behind Sous Chef was, can we give people a language interface to be able to interact with the back end of Toast? So you can do things like the same questions you’d call support for, ask Sous Chef using a language interface.

Just like you would chattypi tea. Right? So you can you can go in and say, you know, what happened with sales yesterday? Or why was fraud up? Or you know, who are the employees that had the best productivity and upsell on these check on these items that I know are we were we wanted to promote as specials.

And so there’s there’s a whole host of questions we’re offering that language interface, I think is is makes Toast more accessible and powerful. The other thing that this buzzword going around in AI, I think, MCP, the highest level as I understand it is like, it’s an API that LLMs can use to talk to these back ends. And so within Toast, of the things we’re looking at is how do we enable all of our platform via MCP? So that you can’t you don’t just access reports, you can actually start to do run actions. And over time, this is like the agentic piece where you can actually do more and more complex actions.

And the idea would be, you know, basic action would be, you know, 86 item. Right? Just talk to as opposed to go find this queue in the menu. Or or turn off online ordering because I’m really busy. Or, you know, help me Myriad of use cases around just managing the back end of Toast, so many of those.

And then over time, you can even do some more complex things like you can say, hey, if I’m slower than if traffic is slow, generate a campaign and send out offers like in real time. Mhmm. Right? On whether social or Google or text or email. And and those are types of things where you you know, think having that language interface is really powerful.

I actually think one of the biggest opportunities long term is restaurants don’t have the technology or the tools to try to optimize their yield. And so what ends up happening is you’ve got you try to you live and die by your sales forecast. So like, because you’ve you’ve got your how you you you know, your staff and your food you purchased. And really, once you’ve gotten there, try to maximize your dining room capacity, your kitchen capacity, and you wanna every incremental sales dollar is really valuable unless you’re full. And so but then they don’t don’t have the technology to enable all that.

Right? You can run happy hour and some of these like, you know, basic ways to try to optimize your sales. But there’s not a lot of technology. You look at other categories, like you look at airlines or hotels and it’s like very data driven to help make sure these the the yield on a, you know, flight or hotel is optimized. And I think there is opportunity like where AI can help with those types of use cases.

Because you imagine you can go in and say, hey, anytime I’m slow, which the platform can tell you, find ways to get more people in with special offers in real time, as an example. So that’s like Sous Chef, the vision is like make it more authentic, make it more the interface where you can not only get data and insights, but actually manage the back end with the voice and with the language interface. And then ToastIQ is is just more of the intelligence layer across the platform. And so, you know, it’s as an example, one of the things that we were recently testing into is on our on our terminals that are handheld. I mean, Amazon e commerce has had this for a long time.

The ability to recommend what items to to suggest to help maximize check size. A lot of servers today from the point of sale, online ordering might have it, but the the terminals typically don’t. And so there’s tech you can you can, you know, can you can bring to life that just says, what are the items most likely to pair with those items with the data? What’s most popular? Over time, you can when people book on things like Toast tables or through one of our partners, if you know who the guest is at the table, one of the things I talk internally about in terms of long term vision is you all remember the show Cheers?

Everybody knows your name. And so this concept of a Cheers experience, where not only can you recommend, you know, what’s popular in the menu, you can recommend what’s you, Tien Tsin, would like Tien Tsin will like on the menu. So there’s lot of opportunity again for AI to play a role there long term. And Toast IQ is really the intelligence layer across all of our products to help with the employee experience, the guest experience, you know, all the constituents.

Tien Tsin Huang, Analyst, JPMorgan: And is there a monetization path for some of these things in your mind?

Aman, CEO & Cofounder, Toast: Absolutely. I I think the the monetization, like anything else, is driven by value. Sure. And so, we are really focused on what I’m what I’m what I’m I’m I’m what we we we as a leadership team keep reinforcing is AI is like going through this rapid it’s very clear AI is here to stay and it’s gonna make a huge impact in the next decade. That being said, like, you know, it’s like not clear where we’re in the hype cycle, like, and what is real and what is not.

And so the team is very, very focused on outcomes for customers. We always talk about this internally, which is like the whole point of doing all of this is to show that it’s creating outcomes for customers that customers care about. And the way to measure that is, you know, a simple measure I love is you took it away. How many people will freak out? It tells you freak out’s the wrong word, but how many people will be unhappy that you took this product away?

And so we’re very focused right now on usage, adoption, activation, and customer feedback from the beta customers that are using it. And I think over time, like, if we can solve for that, the the monetization, I think my guess is what we’ll end up having is a basic tier where everyone has access to a lot of these tools and the premium tier that does more that we’ll monetize.

Tien Tsin Huang, Analyst, JPMorgan: Good. Good. I do wanna we’re almost out of time. Time goes by so quickly. So, on the consumer opportunity, something has always been of interest to me, Aman.

I think you guys mentioned it at at Investor Day. You just mentioned the example of cheers and knowing what to, you know, curate for me as an individual. Why can’t it’s very clear that the SMB platform on the restaurant side is moving to enterprise, and we can talk about that more.

Aman, CEO & Cofounder, Toast: But Yeah.

Tien Tsin Huang, Analyst, JPMorgan: I feel like the consumer side could be really interesting to the extent that you have that data, you can curate content, and even agentic commerce can help you do checkout in any channel. So, big of a priority is that for you, Aman?

Aman, CEO & Cofounder, Toast: Our like, if you look at like back to the horizon framework, our core horizon one and two investments and focus is we think and I’m not, you know, providing short term guidance here, but long term, we think we can power many multiples of our current locations if we are global, if we do multi vertical well in the verticals where we think we can be relevant with our strategy that they go vertical deep approach. So, we’re very simple business, it’s not necessarily the right approach. But you go to a lot of these gross up verticals, I think that’s a big opportunity. You look at core, we think we can gain a lot of share. As we continue to gain scale, all of our opportunities where the scale and the data can play a role become more and more powerful.

And so whether it’s consumer or supplier or employee, those opportunities are more powerful the more scale we have. In fact, I’d argue the biggest challenge we have when it comes to consumer is just supply. Right? It’s great that we have, whatever, a 40,000 locations globally, but that’s still not like still a fraction, right, of like all of the locations. And and so our strategy on on consumer is to is to go back and say, what are the things that and it is a focus for us.

It’s a Ryzen three focus. It is a focus for us. And we’re looking at what are the things that Toast can uniquely do well in the market. Like, what would we wanna be known for, right, in the market if we had the Toast app in your pocket? Let’s call it local.

And the things that that jump out to us are bringing people in store. That’s where I think we can play a role. Because we’ve got this really powerful data advantage, back to what I talked about the yield optimization, to help restaurants drive demand. And so, the the pieces we look at very carefully are we’re looking at things like a reservation book, a wait list, that’s why we launched Toast tables. We think that can be an anchor to things like yield optimization and offers.

And then in store, it can power the choose experience because you have to identify the guest. And it’s awkward to have to like check-in on NFC or people don’t like, we may get there someday, but the best way to do that is ahead of the transact of the meal, if you know who the guest is. Mhmm. And then and then I think, to your point, I think post purchase, it’s this powerful experience where you can just walk out and leave because you’ve got a card on file as part of the transaction. And you can even ask peep this the guest, if do this today, how’d it go?

And and from that data you can you can, you know, interject if it was not a good experience or encourage people to share in Google, which people care about, and social. And and there’s a bunch of use cases off of that that we’re looking at as well, but that’s the primary driver which is how do we bring people in store. And that starts with discovery, booking, ordering and paying.

Tien Tsin Huang, Analyst, JPMorgan: I gonna keep asking you about it. Yes. I do think it’s interesting, but I’m glad you’re taking a disciplined and methodical approach to it. But this feels like there’s some interesting opportunity out there. So, have two and a half minutes left.

Aman, CEO & Cofounder, Toast: Okay.

Tien Tsin Huang, Analyst, JPMorgan: I wanted two things real quick, international and then capital. Maybe quickly on capital. You have the trust on SMB restaurants. There’s a lot of need for for capital. Your willingness to extend that capital in this macro environment.

Aman, CEO & Cofounder, Toast: Yeah. We have always done, I think, a really nice job of building out the capital business in ways where it’s it’s always been from day one. It’s not about how much money we lend, it’s about making sure we balance that with while managing risk. And and so if you look at like the penetration of capital as a result, like, you know, some impact, you know, our board will push us to say, could we go faster? Yeah.

And we’re trying to be really balanced to make sure that we are doing a great job of of of managing risk. That’s like core to how we operate. And of course, we work with partners as well. And so, you know, they demand that off of us as well. And so, I think if there was a slowdown, I think we we are tracking all leading indicators, and we know which levers to pull.

And and and you’ve heard this before, but the good thing is because the Toast platform, the way it’s built, and the way the capital system platform works is you can literally log in to Toast, it’ll tell you based upon your sales volume and all the data we know, what loans are available to you. And then the loans are paid back as part of the payment stream. And so the biggest thing we’re trying to always assess is what are the odds this restaurant’s going about at business? Because that’s what really matters for our capital defaults. And the team does a nice job of that.

Tien Tsin Huang, Analyst, JPMorgan: Yeah. No, we have a lot of data. You could also be there to help when things are tougher, but I’m sure you’ll be selective.

Aman, CEO & Cofounder, Toast: And I think that’s a really good point where Some of the stories you hear is a lot of these small business owners don’t have the ability to get this capital this easily from another provider. And so, that’s actually a really good point to continue to make sure that if there was a tougher environment that we that we are really balanced about leaning in as well.

Tien Tsin Huang, Analyst, JPMorgan: Let’s close out international. Yeah. That was another popular question we got from investors. Just, you know, I’ve seen it in London. I know I’ve heard you talk about product parity and getting those countries into product parity with The US.

That’s an ambition. But, it does feel like it’s more English speaking terms of focus. Yeah. Can you get into another gear on growth in international?

Aman, CEO & Cofounder, Toast: We certainly aspire to, I think longer term. If you go and look at the ecosystem of what people are using globally, whether it’s in Western Europe, parts of North America, Australia, New Zealand, you know, other markets that are like, you know, Singapore, Dubai, etcetera, you you see lots of opportunity. And I think our balance is how much can we it goes back to how much can you do well. And that’s always like the hardest thing to solve for. And I don’t think our international growth is constrained on capital.

It’s leadership and execution. Like how many great people can we bring in that can execute at a high level and and open up the opportunity faster. Emily knows, the team knows, we we push as hard as we can to to open up the opportunity globally because I do think that fundamentally, if you go visit restaurants in countries we’re not in, especially restaurants that have above average GPV, like in The US, that’s where we shine, these these more successful restaurants that have more complex operations. Mhmm. They can absolutely benefit from a platform like Toast.

And and so, you know, we’re gonna be strategic in terms of making sure that we we open up markets in a way that we’re set up for success. Because the counter argument of this is you don’t wanna end up in 20 markets and number four in all the markets either. And so, we’re trying to balance the two things. And but our aspiration absolutely over time will be to open up more markets.

Tien Tsin Huang, Analyst, JPMorgan: Alright. Good. No. I think we covered a lot. I have a lot more other questions.

But, hey, line’s been great. You guys are already at the midterm margin target. So I didn’t want to dig in too much on that. But I’m glad we got to cover some of these subjects. You.

You so much. Thank you. Thank you.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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