Toast (TOST) Morgan Stanley Technology, Media & Telecom Conference 2026 summary

Business performance and growth

• Achieved 20% market share in US SMB and mid-market restaurants, doubling share since IPO three years ago.

• Recurring gross profit grew 32% last year, with ARR surpassing $2 billion and margins at mid-30s.

• Expansion into enterprise, international, and retail markets, now operating in four countries and retail ARR exceeding $100 million.

• Location additions remain the core growth driver, with continued strong net new adds expected in 2026.

• Retail ARPU already exceeds $10K, with strong early signals and plans to scale sales capacity.

AI strategy and product innovation

• AI is leveraged to automate manual tasks for customers and improve internal productivity, with top developers doubling efficiency.

• Toast IQ, an AI copilot, has seen rapid adoption, enabling custom data, workflow automation, and marketing optimization.

• AI pilots include voice and video applications for fraud detection, customer service, and operational efficiency.

• Monetization of AI is expected to be usage-based, with additional value from advanced agents for marketing, bookkeeping, and accounting.

• AI is seen as strengthening competitive position and deepening customer value across all software offerings.

Financial outlook and margin expansion

• Recurring gross profit is guided to grow 20%-22% in 2025, with upside potential from GPV and TAM expansion.

• EBITDA and GAAP margins have improved faster than expected, with a core business already at 40% margins.

• Long-term margin target remains 40%+, despite near-term headwinds from memory chip costs and tariffs.

• Payback periods for new TAMs are currently above 20 months but are targeted to reach sub-20 months as scale and productivity improve.

• Centralized R&D and G&A operations support margin expansion as new segments scale.