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

Business performance and growth strategy

• 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, surpassing $2 billion ARR, with mid-30s margin levels.

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

• AI adoption is accelerating internal productivity and customer value, with one-third of support tickets handled without human intervention.

• Focused investments in platform differentiation and new TAMs to sustain durable location growth and market leadership.

AI and product innovation

• AI is seen as a core differentiator, enhancing customer productivity and internal efficiency.

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

• Voice and video AI pilots are underway to improve customer service and operational efficiency.

• AI-driven marketing agents optimize campaigns and customer engagement, leveraging a large user base for targeted offers.

• Strategy includes expanding AI agents across all software products to drive incremental value.

Financial performance and margin outlook

• Recurring gross profit is guided to grow 20%-22%, with location additions as a primary driver.

• Take rates in fintech have expanded through cost optimization, pricing, and new products.

• Long-term margin target remains at 40% or greater, with near-term headwinds from memory chip costs and tariffs considered transitory.

• Adjusted EBITDA margins reached medium-term targets ahead of schedule; core business operates at 40% margins.

• New TAMs are expected to reach sub-20 month payback periods as they scale, leveraging centralized operations.