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Toast, Inc. (TOST)·Q4 2024 Earnings Summary

Executive Summary

  • Toast delivered strong Q4 2024 performance: Total revenue $1,338M, GAAP net income $33M, Adjusted EBITDA $111M (28% margin on recurring gross profit streams), and free cash flow $134M; locations reached ~134,000 (+26% YoY) and GPV rose 25% YoY to $42.2B .
  • Subscription growth benefited from improved ARR-to-revenue conversion and a one-time benefit; Q4 non-GAAP subscription + fintech gross profit was $392M (+39% YoY), and payments take rate increased modestly due to September pricing changes and cloud optimization .
  • FY 2025 guidance targets non-GAAP recurring gross profit of $1,745–$1,765M and Adjusted EBITDA $510–$530M (30% margin), signaling continued margin expansion even as Toast invests in enterprise, international, and retail adjacencies .
  • Catalysts: price optimization and improved cost structure sustained take-rate gains; enterprise wins (Hilton, Perkins/Huddle House) expand TAM; AI/data tools (benchmarking, marketing assistant) deepen attach rates; management flagged Q1 2025 GPV per location decline from storms/leap year comp, tempering near-term same-store momentum .

What Went Well and What Went Wrong

  • What Went Well

    • Record profitability and free cash flow: Q4 Adjusted EBITDA $111M and FCF $134M; FY 2024 Adjusted EBITDA $373M with first full year GAAP profitability .
    • Pricing and cloud optimization supported payments take rate, offsetting typical Q4 seasonal pressure; net take rate rose +1bp QoQ after September adjustments .
    • Strategic wins and TAM expansion: approved provider status with Hilton and 500-site Perkins/Huddle House rollout; management reiterated ambition to serve “many multiples” of current locations over time .
    • Management quote: “We added a record 28,000 net locations… delivered Adjusted EBITDA of $373 million, and achieved our first year of GAAP profitability” – CEO Aman Narang .

  • What Went Wrong

    • Q1 2025 caution on same-store sales: GPV per location expected to decline more than Q4 due to storms and leap year comp; Q4 GPV/location down ~1% YoY .
    • Subscription growth had a one-time revenue conversion benefit unlikely to recur in 2025, creating tougher H2 comps for ARR-to-revenue conversion .
    • Seasonal margin headwinds: Q4 margins typically compress versus Q3 due to GPV seasonality despite pricing tailwinds, requiring disciplined reinvestment .

Financial Results

Metric ($USD Millions unless noted)Q2 2024Q3 2024Q4 2024
Total Revenue$1,242 $1,305 $1,338
Gross Profit$286 $322 $333
GAAP Net Income$14 $56 $33
Diluted EPS ($)$0.02 $0.07 $0.05
Adjusted EBITDA$92 $113 $111
Net Cash from Ops$124 $109 $147
Free Cash Flow$108 $97 $134
Adjusted EBITDA Margin % (of recurring GP streams)27% 30% 28%

Segment revenue breakdown:

Segment Revenue ($USD Millions)Q2 2024Q3 2024Q4 2024
Subscription Services$166 $189 $200
Financial Technology Solutions$1,023 $1,067 $1,090
Hardware & Professional Services$53 $49 $48

Key KPIs and monetization:

KPIQ2 2024Q3 2024Q4 2024
Locations (approx.)~120,000 ~127,000 ~134,000
GPV ($USD Billions)$40.5 $41.7 $42.2
ARR ($USD Billions)$1.5 $1.6 $1.6
Total monetization (recurring GP streams as % of GPV)——0.93%
Payments net take rate (bps)54bps (net) 56bps (net) 56bps net; core 46bps

Vs. Estimates:

MetricQ4 2024 ActualQ4 2024 SPGI ConsensusSurprise
Revenue$1,338M N/A (SPGI consensus unavailable due to API limit)*N/A*
Diluted EPS$0.05 N/A (SPGI consensus unavailable due to API limit)*N/A*

*Values retrieved from S&P Global were unavailable at time of request.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Non-GAAP Subscription & Fintech Gross ProfitFY 2024$1,340–$1,360M $1,395–$1,405M Raised
Adjusted EBITDAFY 2024$285–$305M $352–$362M Raised
Non-GAAP Subscription & Fintech Gross ProfitQ1 2025—$385–$395M (27–30% YoY vs Q1’24) New
Adjusted EBITDAQ1 2025—$100–$110M New
Non-GAAP Subscription & Fintech Gross ProfitFY 2025—$1,745–$1,765M (23–25% YoY) New
Adjusted EBITDAFY 2025—$510–$530M (30% margin) New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3 2024)Current Period (Q4 2024)Trend
Pricing & Take RateTargeted pricing to a small cohort (Sept) with minimal Q3 impact; expected small benefit in Q4 Payments take rate up +1bp QoQ in Q4 due to cloud optimization and Sept price change; balanced approach to ongoing small pricing moves Slight positive tailwind; ongoing gradual pricing strategy
International ARPU & AttachLaunch of guest products; strong attach; international go-lives; 2,000+ live locations International go-live SaaS ARPU up ~50% YoY; considering distribution strategies; focus on executing in current markets Improving unit economics, accelerating investment
Enterprise PipelineWins and rollouts with major brands (Potbelly, Marriott, MTY Group) Approved provider with Hilton; 500-site Perkins/Huddle House deal; stronger pipeline Strengthening presence upmarket
Retail (Food & Bev)Early progress; EBT/SNAP acceptance; 1,000+ customers booked Dedicated retail sales team and healthy economics (higher industry averages than restaurants) Scaling GTM; robust unit economics
AI & Data DifferentiationBenchmarking, AI marketing assistant; sous chef umbrella Focus on data-driven upsells, personalized experiences, menu/pricing optimization; customer adoption examples Increasing adoption and product breadth
Same-Store Sales (GPV/Location)Down ~3% YoY; tight band expected Q4 down ~1% YoY; Q1 expected bigger decline due to storms/leap year comp Near-term headwind
Margin Expansion & SBCRapid margin expansion with restructuring; SBC management targeted Q4 Adjusted EBITDA margin 28%; SBC at 16% of recurring GP exiting 2024, aiming for low double digits medium term Sustained leverage; ongoing SBC discipline

Management Commentary

  • CEO Aman Narang: “We added a record 28,000 net locations, grew our recurring gross profit streams 34%, delivered Adjusted EBITDA of $373 million, and achieved our first year of GAAP profitability” .
  • CFO Elena Gomez: “Q4… recurring gross profit streams increased 39%… monetization was 93bps; payments take rate increased 1bp vs Q3 due to… cloud optimization and targeted pricing… Q4 Adjusted EBITDA $111M; margins expanded 18 pts YoY to 28%” .
  • Strategy: Priorities in 2025 include scaling core U.S. restaurants, demonstrating new markets as material drivers (enterprise, international, retail), increasing platform adoption via data/AI, and expanding margins with disciplined investment .

Q&A Highlights

  • Retail economics: Healthy ARPU and GPV/location vs restaurant averages; early but promising, with dedicated sales expansion .
  • Pricing cadence: September fintech price change; expect gradual ongoing small adjustments across SaaS/fintech with no outsized impact in any single period .
  • ARR-to-revenue conversion: Elevated in H2’24 with a one-time benefit that won’t recur in 2025; expect tougher comps in H2’25 .
  • Same-store trends: Q4 GPV/location down ~1% YoY; Q1 anticipated larger decline due to storms and leap year comp; overall GPV/location expected to stay in a narrow band in 2025 .
  • AI adoption: Benchmarking and generative AI marketing tools driving measurable customer outcomes; focus near term on service improvements and data-driven upsells at POS .

Estimates Context

  • S&P Global Wall Street consensus (revenue, EPS, EBITDA, target price) was unavailable due to API limit at time of request; thus, beat/miss vs consensus cannot be assessed precisely for Q4 2024 at this time*.
  • Guidance vs prior internal guidance shows material raises in FY 2024 recurring gross profit and Adjusted EBITDA from Q2 to Q3 (see Guidance Changes table) .

*Values retrieved from S&P Global were unavailable.

Key Takeaways for Investors

  • Pricing and cloud optimization have begun to lift payments take rate despite Q4 seasonality; expect continued small, targeted adjustments as a complementary growth lever .
  • Margin trajectory remains favorable: FY 2025 Adjusted EBITDA $510–$530M (30% margin) while investing in enterprise/international/retail; SBC trending toward low double digits of recurring GP medium term .
  • TAM expansion is real: enterprise wins (Hilton, Perkins/Huddle House) and rising international ARPU (+50% YoY for Q4 go-lives) support the “many multiples of locations” long-term vision .
  • Near-term watchouts: Q1 2025 GPV/location decline from storms/leap year comp; H2’25 headwinds from lapping one-time ARR-to-revenue conversion benefits .
  • AI/data differentiation should drive attach and ARPU over time (benchmarking, marketing assistant, data-driven upsells); a notable competitive edge in vertical SaaS .
  • Strong cash generation (Q4 FCF $134M) and disciplined capital allocation (warrant/share repurchases) provide flexibility for investment and dilution control .
  • For trading: positive narrative on FY 2025 margin target and enterprise momentum is supportive; monitor Q1 same-store softness and any updates on pricing cadence and take-rate trends on the next call .