Toast (TOST) J.P. Morgan 54th Annual Global Technology, Media and Communications Conference summary

AI strategy and product evolution

• Focus on evolving from a software platform to an agentic platform, leveraging AI to automate and optimize restaurant operations and marketing, with Toast IQ Grow as the first agent showing an 8% sales lift in pilot programs.

• AI is being used both internally and externally, with 40% of support tickets now handled by AI and increased engineering velocity.

• The roadmap includes launching more agentic capabilities, with a focus on personalized marketing, operational efficiency, and leveraging data for smarter offers and yield optimization.

• AI-driven products are expected to accelerate ARPU growth and open new revenue streams, with pricing models still evolving based on customer value and usage.

• Early customer engagement with AI products is positive, with Toast IQ cited as a key reason for new customer acquisition and upsell motions.

Financial outlook and margin expansion

• Commitment to durable growth and expanding margins, with a long-term target of 40%+ margin, expected to increase further due to AI-driven efficiencies.

• Near-term hardware memory constraints will pressure the P&L in 2026 and 2027, but supply has been secured and customer growth will not be disrupted.

• Multiple levers are in place to manage near-term cost pressures, and the hardware operations team is experienced in navigating supply chain complexities.

• AI is already improving internal efficiency, reducing the need for headcount growth to drive revenue, and supporting higher gross profit per employee.

• Capital allocation remains disciplined, with a high bar for M&A and opportunistic share repurchases to deliver long-term shareholder value.

Market expansion and customer engagement

• New TAMs in retail, international, and enterprise are growing ARR and ARPU faster than the core business did at a similar stage, with meaningful scale achieved.

• Product-market fit in retail has exceeded expectations, especially as many customers are upgrading from legacy on-prem systems.

• The consumer-facing Toast Local app has seen downloads more than double quarter-over-quarter, with a focus on loyalty, offers, and seamless dining experiences.

• Partnership with Resy and Toast Tables increases restaurant booking density, and the app is being tested for product-market fit in select cities.

• Restaurant consumer spending remains stable and resilient, with GPV per location within a narrow band in Q1 and Q2.