Toast, Inc. Class A

quarter 2025 earnings conference call. Today's call will be 45 minutes. I'll now turn the call over to Marco Seno, Senior Vice President of Finance. You may begin your conference.

Thank you. Welcome to TOAST earnings conference call for the second quarter and the June 30th, 2025. On today's call, our CEO, Amon 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, operational expenditures, location growth, future profitability and margin outlook, business and investment strategy, expected growth and business outlook, including our financial guidance for the third quarter 2025. Forward-looking statements reflect our views only as of today and accept 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 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 .toasttab.com. After the call, a replay will be available on our website. And with that, let me turn the call over to Amman.

Thanks, Michael, and thank you to everyone for joining us today. We've had a great first half of the year. Q2 results came in ahead of expectations. We've added a record 8,500 net new locations. We grew recurring gross profits 35% and we've delivered 161 million of adjusted EBITDA. GAAP operating income reached 80 million. At Toast, our mission is to help restaurants delight their guests, do what they love and thrive. Our strong results reflect our consistent execution across the company. And more importantly, they reinforce our belief in the significant long-term opportunity ahead of us. We're seeing that opportunity play out as we grow market share in our core and accelerate our momentum across our new customer segments. In Q2, we crossed 10,000 live locations across enterprise, international, and food and beverage retail. And now serve approximately 148,000 locations across our customer segments. We're excited to welcome Firehouse Subs, a 1,300 QSR enterprise brand, as well as Zabars, the iconic New York grocer to the Toast platform, further signaling our progress in enterprise and retail. Internationally, we launched in Australia. This is our fourth international market, extending our reach beyond the UK, Ireland, and Canada, and another step towards building the leading platform, global platform for restaurants. We're also thrilled to announce an exciting partnership with American Express. This collaboration will bring together reservation listings from Rezzy, Tock, and Toast Tables into Local by Toast, our mobile app, to make it easier to find and book tables. We also plan to use the reservation data and the power of our platform to enable personalized experiences for diners at the point of sale, including American Express card members. We're excited about the value our two companies can deliver together for both restaurants and diners through this exciting partnership. At the start of the year, we laid out four key priorities. Number one, scale locations and market share in our core US restaurant business. Number two, demonstrate that these new market segments can be material drivers of growth. Third, increase customer adoption of our broad platform and drive differentiation through data and AI. And lastly, continue to hold ourselves to a high bar and invest against our most important priorities while gradually expanding margins. All right, so let's jump into number one, starting with our core restaurant business. We have strong momentum driven by our purpose-built restaurant platform in our local -to-market teams. As a result of positive customer feedback and the brand investments we've made, we've seen the largest -over-year increase in brand consideration in our peer set. We grew share in nearly every SMB market we operate in. In our top 10 markets, we continue to see higher rep productivity and higher market share gains relative to our averages. The fact that we're still seeing strong gains in these markets where we have over 30% penetration across large and small metro areas is a clear sign our flywheel strategy is working. We're also expanding the breadth of our platform with new products and features like ToastCo3 and our new AI-powered intelligence engine, Toast IQ, which reflect the steady drum beat of innovation that's core to our strategy. Behind every update is our focus on the thousand little things that make the Toast platform such a great tool for restaurants. An example of this is Supper Club, a neighborhood restaurant and market in Richmond, Virginia. A deciding factor in their switch to Toast was our catering and events product, which replaced a third-party app that was cumbersome for them and their customers. Since switching to Toast, Supper Club has seen a nearly 40% jump in catering sales. Toast catering is both easy to use and seamlessly integrates into the Toast platform, including our point of sale devices and handhelds, which has allowed them to take on significantly more business and even open a second location in March this year. It's a great example of how, when our customers grow, we grow right alongside them. Now, second, moving gears, our second priority is demonstrating that these new market segments can be material drivers of growth. We crossed 10,000 live locations across enterprise, food and beverage retail and international, and these new customer segments are on track to surpass 100 million in ARR collectively by the end of the year. A milestone that took six years in our core business. In enterprise, our vision is to have the most iconic restaurant bands in Toast and drive innovation for the entire industry. Our investments are paying off and we'll keep enhancing the platform to meet the needs of large-scale operators. We're also seeing strong interest from customers to use more of our platform, which will contribute to scaling enterprise ARPUs over time. In food and beverage retail, we're off to a strong start and the early signals are really promising. We're building deeper inventory management tools, expanding integrations, and scaling our dedicated sales team. Total ARPU for retail customers is already above 10K. A clear indication our value proposition is resonating. Food retailers like Zabars in New York City are using Toast retail to handle their large, fast-paced operation, manage over 30,000 skews across a -square-foot store, and process more than 2,500 transactions daily. Zabars shows how Toast supports complex, high-volume retail environments. Across the UK, Ireland, and Canada, rolling out more of our products is driving a steady increase in booked ARPU. We're also seeing greater traction among full-service restaurants, which now make up the majority of our new wins in these regions, showing that product improvements investments in our -to-market teams are paying off. We're launching Australia with the same products we have in our other international markets today. Our fast, comprehensive launch down under is thanks to the learnings and infrastructure from our first three markets and the localization investments we've made over the past few years. We took our first customer, Grace K. Grace, live in Australia this summer. Grace Grace is an existing Toast customer in the US, and we were top of mind when they decided to expand Australia. They initially opted for a local provider at launch, but couldn't find another POS provider that matched Toast's capabilities. So they were excited to transition to Toast when we could support their Australian operations. They're now using our guest-facing displays, kitchen display screens, and online ordering products to solve for the operational friction and reporting gaps they experienced with the local system at launch. And they plan to add more products like email marketing and loyalty to help drive demand. And have up-store tools, including multi-location management and reporting to power their continued expansion across Australia. Shifting gears, our third priority is increasing customer adaption of our platform and driving differentiation through data and AI. We were a pioneer in bringing purpose-built handhelds to market seven years ago, redefining in-store operations and service for restaurants. And since then, billions of orders have run through Toastco handhelds, giving us a deep understanding of what works on the restaurant floor. Our new Toastco 3 handheld builds on that foundation and continues to push the industry forward. It's the only device that combines Toast IQ, Toast Intelligence Engine, with built-in cellular connectivity so staff can take orders, process payments, and print receipts seamlessly across Wi-Fi and cellular networks. It does all this while being lighter, faster, and more durable than before. With a 24-hour battery life. With Toast IQ, staff now get real-time context about their guests to help increase check sizes. Personalized notes and guest details from Toast tables show up directly into our Toastco 3 handhelds and terminals. And our Amex partnership aims to build in this technology to deliver these personalized experiences for Amex card members as well. Haywire Restaurant in Texas calls the Toastco 3 a game changer. They used to lose Wi-Fi in certain areas of the three-story concrete building, but now with Toastco 3 cellular functionality, they can seamlessly transition between cellular and Wi-Fi to stay connected and take payments without getting interrupted. The new handhelds meet the demands of the restaurants, including drops on their concrete floors or servers working double shifts who can now carry a handheld all day long without needing to charge it. Haywire also sees the Toastco 3 as a tool for growth, giving them a reliable way to generate sales at community events and festivals and opening the door to sales that wouldn't access otherwise. Lastly, our fourth priority is to continue to invest with discipline while expanding our margins. Our updated full-year outlook reflects the strength of our execution and the scalability of our business. We've reached the medium-term margin guidance we laid out at our investor day ahead of plan, and we're confident in our ability to continue investing behind what's most important to fuel long-term growth while balancing margins over time. As I close out, I wanna thank every toaster, our customers and our investors. The progress we're making is a direct result of the team's incredible execution and the confidence our customers and investors have in what we're building. Our platform helps local businesses thrive and I've never been more excited about the opportunity that's in front of us. Thank you, and with that, I'll turn the call over to Lana.

Thank you, Iman, and to everyone for joining. To start, I would also like to thank our incredible team for another strong quarter, which came in above our expectations. In the second quarter, ARR grew 31% and total FinTech and subscription gross profit, our recurring gross profit streams, increased 35% year over year. Total take rate across FAS and FinTech gross profit was 93 basis points in the quarter, an increase of eight basis points from a year ago, reflecting our growing share of wallet and the increasing value we are providing our customers. Adjusted EBITDA was 161 million for the quarter, with margins expanding eight percentage points year over year to 35% and gap operating income was 80 million. We also increased our full year guidance to reflect our strong quarter and the operating momentum we have heading into the second half of the year. We posted a record quarter with approximately 8,500 net location additions, and we ended Q2 with 148,000 locations, up 24% from a year ago. Our results reflect deeper penetration in our core customer segment, complemented by growing momentum across our new customer segments. As Amman mentioned, across international, enterprise, and food and beverage retail, we crossed 10,000 locations in Q2. We're excited about the new Bellwether brands like Firehouse subs and Zabars, showing the versatility of our platform to serve a wide range of customers across all segments. The traction we're seeing is a testament to our investments to serve these new customer segments across both product and -to-market, and our confidence in the trajectory of these new customer segments continues to grow. We expect these new TAMs to become increasingly meaningful parts of our business over time and contribute to sustained long-term growth. As a result, we are investing behind our success. We're building out the product to serve deeper parts of these new TAMs and scaling -to-market to accelerate our progress. That includes expanding into new geographies over time, and we're excited to have our first customer live in Australia. Looking out to the remainder of the year, we remain on track for more location net ads in 2025 versus 2024, driven by our consistent -to-market execution and comprehensive product offering in our core, complemented by the growing scale from new customer segments. SAS ARR grew 30% year over year, driven by location growth and a 5% increase in SAS ARQ on an ARR basis. Subscription revenue increased 37% and gross profit grew 43%, benefiting from the improved ARR to revenue conversion we discussed last year. As a reminder, beginning next quarter, we will lap the step up and the associated one-time benefits we saw in Q3 and Q4 of last year, and therefore expect subscription revenue to more closely mirror SAS ARR growth beginning in Q3. Payments ARR increased 32% and FinTech gross profit grew 30% in the second quarter. GPV was 50 billion, growing 23% year over year, with GPV per location down 1% versus last year. FinTech net take rate was 57 basis points and Payments net take rate was 49 basis points. Both increased three basis points from a year ago from a combination of ongoing optimization efforts, small targeted pricing moves, and new products including surcharging. Non-Payments FinTech solutions led by Toast Capital contributed 40 million in gross profit and eight basis points in take rate. Capital's take rate contribution was in line with Q2 last year, and as a reminder, is seasonally lower in Q2 due to higher GPV. Toast Capital remains healthy with solid demand from customers and defaults remain in line with our expectations. Looking ahead, we continue to expect Toast Capital's contribution and net take rate to remain in the 10 basis point range. Excluding 19 million of bad debt and credit related expenses, operating expenses increased 18% in Q2. That's primarily from a 28% increase in sales and marketing expenses as we grow our -to-market footprint across international and retail. In the core, we're making targeted repetitions and supporting our brand campaign to deliver ongoing share gain. R&D grew 9%, reflecting investments in our highest priority areas. In the core, ToastGo3 and newly launched Toast IQ features however, continue to focus on extending our product differentiation and driving tangible customer outcomes. Across our new customer segments, we are taking the same vertical approach that has driven our success in the core. We're serving the needs of our customers more deeply in each segment, such as enhancing our inventory solutions for retail, bringing ToastGo3 internationally and expanding our functionality and integrations in enterprise. Adjusted EBITDA was 161 million with a margin of 35%. Our strong Q2 results reflect healthy top line growth, including better than expected GPV, as well as our focused execution and discipline capital allocation. In addition, the seasonality of GPV contributed to the seasonally high margin in the quarter. Free cash flow was 208 million driven by strong adjusted EBITDA and a benefit from working capital due to the seasonality of our payments business. Gap operating income was 80 million up from 14 million a year ago. That's both the strength in adjusted EBITDA and our prudent approach to managing stock-based compensation. The stock-based comp as a percentage of recurring gross profit was 14% in Q2, down six percentage points versus a year ago. We continue to be on a path for stock-based comp to be in low double digits as a percentage of recurring gross profit. Turning to guidance, for the third quarter, we expect total subscription and FinTech gross profit to grow in the range of 23 to 26% year over year and adjusted EBITDA to be 140 to 150 million. We raised our full year outlook due to our strong results and continued momentum across the business. At the midpoints, we now expect 29% growth in FinTech and subscription gross profit and 575 million in adjusted EBITDA, a margin of 32% of five percentage points versus 2024. Let me provide some context on our margin profile in the second half of the year. As a reminder, Q4 margin is typically lower relative to the rest of the year due to the seasonality of payments. In addition, we will have higher tariff expenses in the second half of the year. Take a disciplined approach to scaling the business and based on positive signals in our growth initiatives, we are unlocking incremental investment across both core and our new customer segments to move faster in these areas and position ourselves for sustained long-term growth. Overall, we are on track for another year with both strong top line growth and expanding profitability and are confident we can continue to deliver durable growth while driving towards our long-term margin target. To wrap up, we had a great first half reflecting our consistent execution. Our momentum in the core is strong and we are really excited by our progress in new customer segments. Looking ahead, we're excited and confident about the opportunity in front of us and believe we're just getting started. Now I'll turn the call back over to the operator to begin Q&A.

At this time, I would like to remind everyone in order to ask a question, press star then the number one on your telephone keypad. Your first question comes from the line of real names, Nate Goldman Sachs. Your line is open.

Hey guys, great results today. I wanted to ask a question on the new disclosure on retail ARPUs being, I think north of 10K. Obviously great to see and you talked about this being a very large average merchant side. I was wondering if you could talk through that number and maybe give some context on the breakdown between payments and software. And then you mentioned further enhancements to the product. Where are you in kind of now versus where you wanna be on the software suite for that vertical and what types of things do you think could be on the roadmap? I appreciate it.

Well, thanks for the question. If you go back and look at our core business and you look at how we've been able to expand both SaaS ARPU and FinTech ARPU over time, it's taken a while to get us to where we are today where our core ARPU is. And so if you look at how quickly we've been able to get retail ARPU up over 10K, I think just really shows that it's a really good opportunity for us. That's why we're investing in sales capacity. We're gonna continue to invest in the balance of the year and I think the data we're seeing from some of the early drafts that we've scaled up, this dedicated team for retail is really, really positive. I think a lot of the products that we have, you think about payments, capital, payroll, scheduling, a lot of that applies, but there are also some very specific products around inventory and that are very specific to retail that we continue to build out. And by the way, they're specific to subcategories within retail. So what's needed in grocery versus liquor stores and services, convenience stores and such, there's some differences as well. But net net, I think if you look at where we are, I think we're ahead of expectations and the potential for, you know, my confidence in the potential of the business is the highest it's ever been.

Oh, that's great. I used the loyalty module to grocery store in my neighborhood this weekend, save me a dollar. Just on some of the macro dynamics in GMV, I was wondering if you could maybe provide kind of latest and greatest breakdown of some of the GPV pro location trends across the base. Obviously, as you just talked about, you know, you've got maybe an upward bias coming from retail, maybe a downward bias from some of the location ads internationally. You know, we've been seeing negative same sort of sales for a while now in restaurants. So just kind of wondering if you could stack rank some of those drivers and talk about, you know, any notable changes there, thanks.

Yeah, since we asked about retail right now, Will, even though at the analyst day, we talked about how retail GPVs are higher than restaurants, because we're in New York, we're still growing into that. And so just wanted to clarify that. But overall, if you look at GPV trends, you know, it's been largely flat for us and GPV pro location was down 1%. It's been on this narrow band and mixed with a very small component of it. Like if you look at our customer base overall, GPV has been largely been about flat. I think it's up like a very small amount. And then if you look at the rest of these segments, you know, retail is a little bit higher, international is a little bit lower. But I think over time in each of these businesses, what Laina and team are doing a great job of is really looking at unit economics. They're looking at payback periods and margins. And, you know, we've confidence that all these businesses are going to have great opportunities over time.

Awesome, thanks for taking the question. All right, thank you,

Will. Your next question comes from the line of Tian Wang with JP Morgan, your line is open.

Hey, thanks, lots of fun momentum here. Just wanted to clarify on the third quarter, EBITDA expects to be sequentially down, it looks like. Is that the unlocking of certain investments that you called out there? Laina, can you just elaborate on that maybe and how discretionary that is? I also heard tariff expenses. I just want to get all that straight, thanks.

Yeah, thanks, it's a great question. Look, we've got a lot of momentum in our customer segment. So what you're seeing in the second half in terms of our margin is that we're increasing our investment in these areas to accelerate our progress. You heard Amman talk about 10,000 live locations, pacing to 100 million in ARR. So we want to continue to invest behind that. And that's really what you're seeing. Tariff is also playing a role for sure. It's a fluid environment, definitely tariffs have a bigger impact in the second half of the year than the first half of the year. But we've got a lot of conviction to invest, to grow, to drive sustained growth over the long term, which is what you're seeing us invest behind in the second half.

Okay, great. Then my quick follow up just on Tosco 3. Heard a lot of good things about this. Do you expect an upgrade cycle from existing customers using prior versions of Tosco, or is this more about attaching to new sales, just trying to understand how that layers in?

Yeah, I think it's both. If you look at 30 new customers, we'll likely start Tosco 3 device. But for a lot of existing customers, as their hardware refresh cycles come up, I think a lot of them are really excited about being able to use this device because it's got the cellular backup, especially if you've got big spaces. They like the ability to be able to use both WiFi and cellular at the same time. Perfect, thank you guys.

Your next question comes from the line of Dejai Hines with Canaccord. Your line is open.

Hey, thank you guys. Congrats on the next quarter. So, Amman, we've had several quarters now with really nice enterprise momentum. I'm curious what you're seeing incumbent vendors at that end of the market doing to sort the threat that Tosco creates, right? Are they trying to innovate? Are they getting more aggressive on price? How price sensitive are the enterprise buyers? Just any color on kind of competitive dynamics in the enterprise segment would be helpful.

Sure, Dejai. You know, if you zoom out and look at what's happened, in the core independent restaurant business, the adoption of cloud was actually faster up market and enterprise. And so a lot of what we continue to see is a lot of legacy on-premise solutions that Tosco is displacing. And so I don't think it's really about price. I think it's about leveraging modern tech where you can use the cloud. And that's really what's driving some of our growth. We're investing in a big way now with Firehouse stuff, not just in the -drive-through segment, but we're also starting to invest now in the drive-through segment. And certainly if you look at the competitive environment, we've said this before, it's always been a very competitive environment in the space. And I think our focus is just on customers. Like the more customer obsessed we can be about solving the problems these enterprise brands have, I think that's what's really driving our growth and our success.

Yeah, and I would just build on, Dejai, we've begun investing in enterprise really a few years ago, and that's what you're starting to see show up is our capabilities have matured in a way where you're starting to see the likes of Applebee's and we closed Marriott a couple of years ago. And if you take Firehouse as an example, one of the reasons they chose Tosco is really about the capabilities in store. They really wanted to focus on performance in store. They wanted to increase staff efficiency. They wanted to improve guest experience reliability. And so to me, that's a very much a capability. We were able to meet that demand. And that's why you're seeing our, that's just one example, but you're seeing our pipeline really improve as a result of this investment, which has taken a couple of years to mature.

Yeah, yeah. And then, Elena, can you just remind me like a 1500 location win, a 1300 location win, like how long does it take to stand those up? When do they start hitting internet ads?

Yeah, it depends. We would collaborate with the new customer and decide what their pipeline is or when they're ready for implementation. But it could be like Firehouse, we already have some locations live. So it just depends on the velocity at which they wanna go. But generally speaking, it's not that far after we book. And then it can take the course of one to two years, depending on how fast they wanna go. Some customers wanna go faster, but generally a land like that will take, could take four or six quarters on the outside, maybe two years.

Yeah, perfect. Okay, thanks guys, congrats. Thanks, T.J.

Your next question comes from the line of Timothy Kudo with UBS, your line is open.

Great, thank you. I wanna talk a little bit about what you mentioned in terms of the investment behind -to-market, but I wanna keep it specific to core US restaurants and not looking really at the growth market sales teams. So I was hoping you could comment a little bit around your coverage in the major, major cities. I'm assuming you have salespeople in most of those, but is there more room to add in the major cities or is that you've kind of got the coverage? And then second, as you move into beyond those major markets, so 50 miles outside of ABC major city, is there any kind of a plan to add coverage there or would you consider more going with third party distribution partners, ISOs, banks, et cetera, and to the extent you could comment on the effectiveness of those channels in selling as such a vertical specific product? Thanks a lot.

Thanks Tim, it's a great question. It's actually one we debate internally all the time. If you look at the past five years, we've invested a lot to significantly increase our sales capacity and that's really what's driving the core of our growth. The great thing is you look at this Bible effect we've talked about that continues. So like in these markets where we've got SMB coverage, you actually see productivity up year over year this year as an example, so it just shows that that strategy continues to work. Now in terms of like what we're doing on coverage, it's saying most markets to your point, we've got coverage. That being said, there are some markets where we feel like we're under penetrated. So we're being surgical about saying in certain markets, we wanna add coverage and that's true whether they're in a metro areas or there are suburbs. And so I think it just really depends on kind of what our penetration is, what our productivity is. And so we use that to refine at say on the edges, but it's not like a material step function change in terms of how much rep capacity we're adding. I think in terms of like other channels, we've always had a really robust partner ecosystem like in a 20% of our new customers come from referrals that's food distribution partners, tech providers. And so that's certainly a key part of our funnel, but we do think that like it's important for us to your point about this vertical product that's restaurant specific that we own the -to-end experience and so whether it's the -to-market, the onboarding, the support, we own it all in-house and we think that's a differentiator in addition to our platform. And so there aren't any plans right now to open that up beyond our core direct strategy, but we're certainly always exploring it. It's a topic actually we talk about sometimes, well all the time.

Thank you, Amman.

Yeah, thanks Tim.

Your next question comes from the line of Matt Code which risks your line is open.

Hey guys, thanks for taking the question here. Wanted to touch on SES ARPU again. You guys are rolling out a lot of different products that you talked about, whether it be on the AI front or some of the new hardware. So just curious if you could provide an update on kind of your strategy to price for value here.

Yeah, sure. So a couple things. One is our SES ARPU in Q2 was around 5% and really how we think about our growth levers is really focusing on ARR and locations and ARPU are both the vectors we think about. And in terms of pricing, that's really just one small part of our ARPU growth, but absolutely we're focused on making sure we're driving value for our customers so that pricing is not an objection if you will. But if you zoom out and think about how can we drive ARPU growth over time, we have a lot of levers available to us. A, we know a lot of our products are not at terminal attach. We're gonna continue to innovate data and AI will certainly play a role in that over time. And then we're still continuing to hone the upsell motion and really balance our land and expand motion. So feeling really confident that the combination breadth of our platform will drive ARPU over time.

Thanks, Elena. And then, yeah, just for my quick follow-up, the non-payment portion of gross profits, so mainly toast capital, it was down, I think you said to $40 million this quarter compared to 47 last quarter. Could you unpack that a little bit for us? Is that kind of just timing related that decline or are you guys pulling back on certain loan growth right now?

Yeah, overall, I would say the program is really healthy. There's seasonally some dynamic there in Q2. And then there was a little softer demand at the start of the quarter, but overall, we feel really good about where toast capital's growth is. The defaults are in line with expectations. So it feels really, it's a good healthy program for us and continues to be.

Your next question comes from the line of Josh Rear with Morgan Stanley. Your line is open.

Thanks for the question. Quick one on enterprise and one on international. Just wondering with regard to Firehouse, talked about some of the reasons that they adopted toast. Just wondering how that translates into actual products. Are they using, if you can identify any of the suites that they're gonna adopt and if payments is in there too. And then with regard to international and Australia, just wondering how we should think about it. Is it part of a broader wave two of international expansion and we're gonna hear about other countries and geos or is this kind of wave two and that's it for now?

Yeah, on Firehouse, they're definitely taking payments. And in terms of the suite of products, obviously they're using our handhelds, they're using our KDS and restaurant management suite. So it's the breadth of our platform that they're using. And I'll let Amon talk about international.

Yeah, Josh, on Australia, I think your question was about, is Australia part of a broader strategy on wave two? I think one of the things that's been great about this Australia launch is that we've been able to launch with the same products in Australia that we have actually in our H1 markets. This is UKI in Canada. And it's the work, it's a great work the R&D team has done to localize our platform where we can actually do that. As you know, it took us a long time in UKI in Canada to get all these products out and the ARPU up. And so the fact that we can now launch into new countries with the full platform, I think is a huge advantage for us. In terms of whether or not we're gonna add more countries, we're not ready to announce anything at this time, but certainly it's a balance. On the one hand, we've got to make sure that in the countries we're in, we're not shortchanging ourselves so that we're set up to be successful. On the other hand, I think if you look long-term to be inspired to do more internationally and more globally, absolutely the answer is yes.

Okay, thank you, appreciate it. Thanks, Josh.

Your next question comes from the line of Darren Peller with Wolf Research, your line is open.

Guys, thanks. For the record net ads of 8,500, just how much of that was driven by the core business versus the TAM expansion? And then just kind of doubling down on that, when you look at the 10,000 location goal, it's great to see you pass that for Enterprise International and FMB retail. Is there any way to give us a bit more granularity around the composition of these 10,000 and just where they fit within those three buckets? Thanks, guys.

Hey, Darren. So if you look at our core business, that's still driving, right? The bulk of our growth, we've been at this, obviously, we've said this before for more than a decade. And if you look at the number of goal lives, for example, in our core business, that's never been higher. The rep productivity is at a really healthy level. The most penetrated markets are seeing healthy gains like higher than the average markets where we have the most penetration. So really, the core business is incredibly healthy. Now, are these new businesses contributing more as they're scaling? Yes, right? If you look at retail and national enterprise, in terms of the percentage of goal lives, certainly that number is bigger than it's ever been, just because we're now scaling in those markets as well. And that's really what's driving the record net ads in the business. We're on track not only for this quarter, but for the year, as we said last quarter, to have record net ads for the year as well. In terms of the exact composition and breakdown across the three, the only thing I'll say is across all of them, we're seeing good momentum. If you look at retail, we're adding more sales capacity because the ARPUs are over 10K, the rep productivity is healthy. And so that gives a signal that we should lean in and invest. In international, we've increased ARPU and we're seeing rep productivity be comparable to what we've seen in our US SMB business, even though we don't have the level of, we don't have the brand or the penetration that we have in the US. And so that's a good signal. And enterprise, I think enterprise is gonna be gradual, because if you look at these wins while they're awesome, enterprise wins the longer sales cycles and we expect them to be a gradual rip over time. But all three of them are contributing in all three areas we're investing to continue to open up the longer term opportunity in front of us.

That's great to hear, thanks. Just a quick follow up would be on SAS ARPU, it's still growing very well. And so when we think about how much is driven by customers coming on with higher SAS ARPU versus just the upsell team continuing to do well, how do we distinguish that if you can help us out? Thanks guys.

Yeah, so it's both, right? We're seeing ARPU both from customers and existing customers. And one thing we're talking about is honing our land and expand motion. But the upsell team is absolutely contributing to that in terms, and their execution is solid. I think over time, obviously, we wanna continue to optimize our product market across a whole set of products and continue to drive that. But overall seeing really good progress across both new and existing customers.

That's great, thanks. Thanks guys.

Your next question comes from the line of David Koning with Baird, the line is open.

Yeah, hey guys, great job. I guess, first of all, between Q3 guidance and full year guidance, we have a little insight into Q4. It looks like 21, 22% at the midpoint in terms of recurring GP growth. Is that a good, if that's the exit point, is that a good insight into kind of how next year starts and maybe what might be the moving parts that could kind of move it either way over time?

Yeah, thanks for the question. So a couple of things, one is, we always aim to do better, and that's really important in how we balance our guidance. Just keep in mind the first half of the year benefited from that ARR conversion, so that's a dynamic at play in the second half of the year. And then GPV was better than our expectations in Q2. And so just in terms of how we guide, we really focus on being prudent and balanced as we enter into any guidance cycle. The other thing I'll tell you is our investment that we have, we've talked about on this call, is really in service of sustaining our growth over the long term. So we're always gonna aim to do better, and these investments really will position us for growth not only in 26, but beyond.

Great, thanks. And just quick follow up, July trends. Obviously Q2 got better with volume, which is great. July trends, like per location, did that start out pretty well?

Yeah, it's in line with expectations. Yeah, I think we're in good shape in July.

Yeah. Yeah. Your next question comes from the line of Dan Dolles with Mizuru Securities. Your line is open.

Hey guys, great results here as always. Can you please help us understand how the MX partnership enhances the flywheel here? Because it seems very cool, that deal that you're doing. Appreciate that, thank you.

Sure, Dan. So what we're doing in this MX partnership is one, we're combining inventory from ResiTalk and ToastTables into our app, this is Toast Local. And the idea is, you've got one place now where you can go find a place to book restaurants, there's a broad set of restaurants that are available. Now, when you book on any of these platforms, when you check in at the restaurant, what the Toast platform can do is create a personalized experience for you. So it's everything from, you think about allergies, notes, birthdays, but also be able to recommend menu items, whether it's your favorite drink, or it is items that you love. If you think about most people, they've got these preferences in their taste profiles. So they've used to empower the staff, the host, and the server and the kitchen with that data is really valuable in creating personalized experiences. So I think those are two areas of focus. One, broaden the inventory within local, and two, provide a great experience for the guests, including for MXCard members.

Thank you so much, great stuff again, appreciate it.

We will now take our last question from the line of Harshita Rabi with Burnsdian. Your line is open.

Hi, good afternoon. So I went to ask about Sushif, which you announced last year. I know you're currently doing file loads. What are you hearing from your customers in terms of the problem they're solving with the AI powered assistant and the value of driving and how differentiated is that product in the market? Thank you.

Yeah, thanks for the question, Harshita. We are making really good progress with Sushif. The customer feedback has been really positive. I think what people like about the product and beta is if you think about most restaurateurs, they're not CTOs, they're not CIOs, and so the ability to have a human interface, to be able to get insights, to get recommendations, to be able to actually make changes. So this is like the ability to make take action within the Sushif capability is something that we're getting really good feedback and input on. And I think ultimately our goal here is to build the world's best GPT-like interface for restaurants because we've got all this great data. And so we're taking feedback from customers and we plan to GA the platform at some point later this year.

Thank you. This concludes today's conference call. Thank you for joining.