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DATE

Thursday, May 7, 2026 at 5 p.m. ET

CALL PARTICIPANTS

  • Chief Executive Officer — Aman Narang
  • Chief Financial Officer — Elena Gomez
  • Senior Vice President of Finance — Michael Senno

TAKEAWAYS

  • Recurring Gross Profit Streams -- Increased 27%; Toast (TOST +3.57%) cited as a key driver of financial outperformance.
  • GAAP Operating Income Margin -- Expanded to 21%, exceeding the 20% threshold for the first time.
  • Net Locations Added -- 7,000 net new locations, leading to 171,000 live locations, up 22%.
  • Annual Recurring Revenue (ARR) -- Rose 26%; SaaS ARR also grew 27%, fueled by both location expansion and ARPU growth.
  • Adjusted EBITDA -- $179 million for the quarter, for a 34% margin, representing 35% growth.
  • EPS -- GAAP EPS more than doubled to $0.20, aided by share repurchases and lower diluted share count.
  • SaaS Gross Margin -- Surpassed 80% for the first time, reaching 81%, expanding nearly 300 basis points.
  • Payments (Fintech) Metrics -- GPV $51 billion, up 22% year over year; payments take rate increased 2 basis points to 51 basis points; fintech gross profit up 24%.
  • Total Monetization Take Rate -- Climbed to 1.03%, crossing the 1% milestone for the first time with a 5 basis point yearly increase.
  • Toast IQ Adoption -- 40,000 weekly active locations using Toast IQ; pilot users of Toast IQ Grow reported an average 8% sales increase.
  • AI-Driven Productivity -- Engineering coding velocity up over 60%; approximately 40% of support interactions were resolved by AI.
  • Toast Capital Contribution -- Non-payment fintech gross profit of $51 million, contributing 10 basis points to the take rate.
  • International and Enterprise Expansion -- Toast Go 3 handheld launched internationally; Drive-Through solution opened new enterprise TAMs, and secured new accounts.
  • Hardware and Professional Services Gross Profit -- Negative 13% of recurring gross profit streams, attributed to customer acquisition and higher tariff costs.
  • Operating Expenses -- Increased 17% after adjusting for $28 million in bad debt and credit-related expenses; sales/marketing and R&D both up 20% to support segment expansion.
  • Free Cash Flow -- $115 million for the quarter; management noted seasonal Q1 patterns and inventory strategies impacting near-term cash flow.
  • Share Repurchases -- 14 million shares repurchased year-to-date for nearly $400 million; $200 million remains authorized.
  • 2026 Guidance Raised -- Full-year recurring gross profit expected to grow 21%-23%, with adjusted EBITDA forecasted at $790 million to $810 million.

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RISKS

  • CFO Gomez said, "the impact to the 2027 P&L will be larger than the impact to 2026," due to inventory and hardware cost pressures, though she stated management remains confident in long-term margin targets.
  • Hardware and professional services gross profit reported as negative 13% of recurring gross profit streams, with higher tariff costs cited as a factor.

SUMMARY

Management emphasized rapid progress on AI integration across the platform, with AI investments driving measurable improvements in both engineering productivity and operational efficiency. The company credited its vertical integration in software and hardware as foundational for accelerating innovation and deepening client relationships. Expansion into enterprise, international, and retail verticals continued to accelerate, with high-profile client wins and growing ARPU in key geographies outside the core U.S. market. The pipeline of enterprise deals increased significantly, with first-quarter bookings for new enterprise locations exceeding entire prior-year customer count. Management concluded that capital allocation remains disciplined, with a commitment to balancing growth investment, margin expansion, and share repurchases amid evolving hardware supply chain dynamics.

  • CEO Narang highlighted, "Toast IQ has 40 thousand weekly active locations and growing," indicating broad traction for AI-powered analytics and agent solutions.
  • The integration of Toast Local with Resy and Toast Tables created a reservation marketplace spanning over 20,000 restaurants, with app downloads more than doubling in the last quarter.
  • Elena Gomez noted, "GPV per location in Q1 was down 1%," but described consumer and same-store sales trends as "stable" through April.
  • Year-to-date repurchases totaled 14 million shares, with management emphasizing this as an "accretive use of capital" amid market volatility.

INDUSTRY GLOSSARY

  • GPV: Gross Payment Volume; the total dollar amount processed through Toast's payments platform.
  • ARPU: Average Revenue Per User; reflects average customer revenue, relevant for evaluating monetization progress in SaaS and fintech models.
  • TAM: Total Addressable Market; represents the full revenue opportunity available in a specific vertical or customer segment.
  • Toast IQ: Toast’s AI-powered analytics and agent platform designed to deliver operational insights and automated services to restaurants.
  • Toast IQ Grow: The first AI agent within Toast IQ, focused on restaurant marketing automation and campaign management.

Full Conference Call Transcript

Operator: Afternoon. My name is Krista, and I will be your conference operator today. At this time, I would like to welcome everyone to Toast, Inc. First Quarter 2026 Earnings Conference Call. Today's call will be 45 minutes. I will now turn the call over to Michael Senno, Senior Vice President of Finance. You may begin your conference.

Michael Senno: Thank you. Welcome to Toast, Inc. First Quarter 2026 Earnings Call. Toast, Inc. CEO, Aman Narang, and CFO, Elena Gomez, will open with prepared remarks. Followed by Q&A. Before we start, I would like to remind everyone that today's call may include forward-looking statements which are subject to risks and uncertainties and reflect our views and assumptions only as of today. These forward-looking statements include expectations around financial and operational metrics, business and investment strategy, and guidance. Actual results may vary significantly and we expressly disclaim any obligation to update the forward-looking statements made today. For a detailed discussion of risks, please refer to the cautionary language in today's press release and our SEC filings.

During this call, we will discuss certain non-GAAP 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 a 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.

With that, let me turn the call over to Aman.

Aman Narang: Thanks, Michael. And thank you, everybody, for joining us today. 2026 is off to a strong start. In Q1, we grew recurring gross profit streams 27% and expanded GAAP operating income margins to 21%. We added 7 thousand net locations and are broadening who we serve, from local restaurants across the U.S. to enterprise chains, international markets, and retail, by bringing our same playbook of depth and operational expertise that built our core business to each new market. I am really proud of the Toast, Inc. team. We are both delivering world-class results and reinventing ourselves at the same time.

Now we build for, sell to, and support our customers with AI, as well as a series of AI investments across our platform to help our customers with the intelligence and the efficiency necessary to run a more successful and profitable business. Toast IQ is the foundation for our evolution from a software platform to an agent platform that can drive outcomes for our customers. And with the recent launch of Toast IQ Grow, which includes our first AI agent, we are already seeing this vision start to come to life. I am excited to share more as we break down our priorities, but what is incredibly exciting is we are just scratching the surface of what is possible here.

Our progress in each of these areas is shaping our revised set of priorities in 2026: number one, expand what Toast, Inc. has for customers—grow from a software to an agent platform that can do work and deliver outcomes for our customers; number two, expand the markets we serve; and number three, reinvent the organization with AI and dramatically accelerate productivity. We are incredibly well positioned as a vertically integrated platform across software, hardware, and fintech. We are a foundational technology partner for our customers, and they are looking to us to help them take advantage of the opportunities AI creates.

We will lean into this opportunity while continuing to execute our strategy of expanding to new markets to scale this business to $5 billion and $10 billion and beyond. Alright, so let us dig into our priority number one: grow from a software to an agent platform that can do work and deliver outcomes for our customers. For 14 years, we have evolved from a point-of-sale solution into a comprehensive system of record, helping customers manage operations, employees, guests, and suppliers. As we have delivered more value and built out our platform, we have seen broader parts attach at higher ARPUs.

But what I consistently hear from customers is that while they love our ambition and our innovation, they are stretched thin and do not have enough time to leverage everything we have built. As a result, small business owners outsource functions critical to running a profitable business—things like marketing, bookkeeping, payroll and tax, and more. We have always provided the software and now with AI, we will provide the service that can actually do the work for them. They can leverage our growing agent layer to outsource capabilities that are not their core competency and give them time back to do what they do best: great food, great service, great hospitality. Our advantage here is structural.

The data that powers these functions—what guests order, how often and when they visit, how much our customers spend on labor and inventory, how the business is performing—already lives in Toast, Inc. That data has been built up over 14 years. Every new location and transaction makes it more valuable. And every agent we deploy deepens the value we can deliver for our customers. This advantage is already showing up in the product. Toast IQ has 40 thousand weekly active locations and growing. Operators tell us Toast IQ is already helping them find revenue opportunities, save time, and identify trends they had not picked up on.

For instance, Toast IQ helped a customer in California identify that they were not covering their food and labor costs when opening an hour early for sporting events last fall. The customer adjusted their hours based on this insight and saved thousands of dollars. The first Toast IQ agent we have launched is a marketing agent within Toast IQ Grow, which brings together everything a restaurant needs to build a brand online, develop direct customer relationships, and drive demand. Toast IQ Grow includes websites, online ordering, advertising, and marketing capabilities, plus this new marketing agent and a marketing success manager to develop the marketing strategy for restaurants right alongside them.

The marketing agent builds and optimizes the campaign from a customer's past performance data, their sales forecast, and soon, upcoming events and weather—a full month of campaigns across SMS, email, and social media, in minutes. Campaigns designed by the marketing agent are already outperforming what restaurants can do on their own, with pilot customers using Toast IQ Grow seeing an average 8% increase in sales compared to similar Toast, Inc. restaurants. Sahara Bistro Shawarma, a fast-casual Middle Eastern concept, came to us with a fragmented marketing stack. By adopting Toast IQ Grow’s marketing agent, they can now plan and schedule campaigns across email, SMS, Facebook, and Instagram weeks in advance.

Nearly a third of sales in March were directly attributable to Toast, Inc. marketing tools, and sales were up more than 30% compared to the prior four weeks. In addition to helping restaurants drive demand through Toast IQ Grow, we are investing in our consumer network, Toast Local. Toast Local connects restaurants and guests directly with zero commissions and no middlemen. Restaurants use Toast Local to attract new guests and reengage their regulars through loyalty programs and targeted offers. For guests, they love the convenience of an app that saves them money at tens of thousands of restaurants through no-fee ordering, personalized loyalty rewards, and exclusive offers, whether they are ordering pickup, delivery, or dining in.

That last part is important. Unlike aggregator marketplaces built around delivery, Toast Local extends into the on-premise experience where the majority of restaurant revenue is generated. We recently expanded that experience significantly. Toast Local now enables guests to discover and book a table at over 20 thousand restaurants through Resy and Toast Tables, making it one of the largest reservation marketplaces. The early traction is strong. We have more than doubled weekly app downloads in the last quarter, and Toast Local is now one of the top apps in the App Store's food and drink category. We have started to roll out a series of agent products to tackle other work as well.

Over time, we expect agents across restaurant operations, scheduling and payroll, inventory and food costs, and bookkeeping and accounting to complement Toast IQ Grow. By working in concert, we will be able to look at a restaurant’s projected demand, food cost and availability, labor schedules, and projected guest volume to drive suggestions to improve profitability. That is an incredibly exciting future because many of our customers do not have the time or the capability to do this effectively today. Moving on to priority two, which is to expand who we serve. The vertical playbook that built our restaurant business—product depth, operational expertise, and local go-to-market—is now working in enterprise, international, and retail.

In our core, we are well positioned to grow market share in 2026 and beyond, and we are differentiating on both product and brand. In product, customers are citing Toast IQ as the reason they are choosing Toast, Inc. Our brand campaign “Built for Busy” extends the differentiation into the market. Built for Busy reflects the fundamental truth about our customers: busy is the ultimate sign of success, whether they are running a family restaurant, enterprise chain, or a multilocation retailer.

And it captures our product philosophy to ship solutions and products to help customers get and stay busy—from handhelds increasing throughput to KDS keeping the kitchen in sync, and, starting with the marketing agent, Toast IQ agents taking work off their plates. These differentiators are why we continue to win the majority of the time. We are increasing share across all market types, from the largest cities to smaller metro areas, among high-GPV restaurants. In our most penetrated markets, we are still growing, giving us confidence in continued healthy share gains for many years to come.

We are proud to announce that The Alinea Group, the world-renowned Chicago-based restaurant group that includes iconic Alinea, Next, The Aviary, and The Office, went live on Toast, Inc. They chose Toast, Inc. as a key technology partner that shares the same DNA for relentless innovation, commitment to precision, and a passion for delivering a stellar guest experience. Across all of our teams, we are building more conviction in the long-term potential with every quarter. In each of our new TAMs, ARR is growing faster and has higher SaaS ARPU than our core did at a similar time period, demonstrating our proven vertical playbook is working.

In enterprise, we launched Toast for Drive-Through, opening up approximately 140 thousand locations, and we are going deeper in hotels, bringing Preferred Hotels onto the platform. We also continue to invest in specific product features to deeply serve important sub-verticals like pizza, demonstrated by winning Hungry Howie’s, a 500-unit national pizza chain, as well as Papa Murphy’s. We continue to see strong growth, and with the pipeline in front of us, I am confident enterprise will be a meaningful growth driver for years to come. Internationally, we are scaling location count and growing ARPU. We recently launched our Toast Go 3 handheld to further differentiate our platform.

We see the best opportunity in tier-one cities in the countries we are in, where higher-GPV restaurants align with our value proposition and drive stronger ARPU and unit economics. As we expand to new markets beyond Canada, the UK, Ireland, and Australia, we plan to launch more tier-one cities with a high density of busy restaurants. And in retail, we are scaling quickly and focused on deepening product-market fit with high-value operators. Grocery, for example, is a near-term focus and represents a meaningful opportunity. There are over 20 thousand independent grocers in the U.S., generating over $250 billion in sales.

We are seeing strong traction with these larger, more complex operators, and now serve over 100 grocery locations with more than $5 million in sales, demonstrating our platform is capable of handling the volume and complexity the most demanding retail environments require. The capabilities we built for restaurants—supplier connectivity, invoice workflows, SKU-level complexity—translate directly, letting us move fast to meet the needs of these customers. Our scale across restaurants and growing presence in retail give us a unique vantage point, and over time, we see it as the foundation to becoming the platform powering local commerce.

We are on a path to significantly scale the locations we serve across our existing TAM and further expand the opportunity into core adjacencies—membership and golf—more international markets, and new retail verticals. We will remain disciplined about where we expand, but our vertical playbook has proven, and with the TAM runway in front of us, I am confident we can replicate our success that we have had in our core business. Now moving on to priority three, which is to drive productivity through AI. AI is reshaping how we work. Engineering coding velocity is up over 60% year over year, and accelerating in recent months. This helped us launch our marketing agent three months earlier than planned.

In support, we have expanded AI coverage from chat to phone, and now have about 40% of our support interactions resolved by AI. We are seeing efficiencies as we do this, which is enabling us to invest more in account management and upsell for our highest-value customers. As we drive productivity and efficiency, it frees up capital to invest in our top growth initiatives and support our path to 40%+ long-term margin. We see a clear path to materially scaling this business by going deeper in our core market, expanding what we do for existing customers, scaling the new markets we are already seeing great success in, and, over time, opening up new ones.

We are operating from a position of financial strength and leaning in to drive sustained long-term growth. We will remain disciplined about where we lean in, guided by customer feedback and where we have conviction in building differentiated, profitable businesses that deliver significant shareholder value. I am excited about 2026. We are really well positioned for another record year. I want to thank each and every Toaster for their dedication and commitment to Toast, Inc. I want to thank our customers and investors for your continued support as well. Thank you. And with that, I will turn the call over to Elena.

Elena Gomez: Thank you, Aman, and everyone, for joining us today. I would also like to thank our team for an excellent start to the year. Q1 results exceeded our expectations, reflecting the consistent high level of execution across the company. In the first quarter, ARR was up 26%. Our recurring gross profit streams increased 27%, and total monetization across SaaS and fintech exceeded 1% of GPV for the first time. Adjusted EBITDA was $179 million. On a GAAP basis, operating income margin crossed 20% for the first time to 21%, or $110 million, and EPS more than doubled to $0.20.

Building on last year's momentum, we added 7 thousand net locations and ended the quarter with 171 thousand live locations, up 22% from a year ago. Our best-in-class vertical SaaS platform and local go-to-market execution continues to drive consistent share gains in our core, complemented by increasing contributions across each of our new TAMs. SaaS ARR grew 27% versus a year ago, driven by the combination of our strong location growth and consistent mid–single-digit SaaS ARPU growth on an ARR basis. Subscription gross profit continues to outpace top-line growth at 32%. SaaS gross margin exceeded 80% for the first time, expanding nearly 300 basis points from a year ago to 81%.

In addition to ongoing efficiencies as we scale, we are seeing early gains from leveraging AI to transform our customer support experience. Payments ARR and fintech gross profit increased 24% in the first quarter. GPV was $51 billion, up 22% year over year, with GPV per location down 1% versus last year. Fintech net take rate was 61 basis points and payments take rate was 51 basis points. Payments take rate increased 2 basis points year over year as we continue to execute on cost optimization efforts, new products, and targeted pricing adjustments. Non-payment fintech solutions led by Toast Capital contributed $51 million in gross profit and 10 basis points in take rate.

Overall, the program continues to grow at a steady clip and defaults remain consistent and well within our risk guardrails. Our total monetization take rate, measured by recurring gross profit as a percentage of GPV, crossed 1% for the first time to 103 basis points. The 5 basis point increase versus a year ago demonstrates our growing share of wallet and the value we provide our customers. We expect our total take rate to continue to grow as we evolve our platform with AI and deliver more outcomes for our customers. Moving down the P&L, hardware and professional services gross profit was negative 13% of our recurring gross profit streams.

We are leaning into our customer acquisition momentum across all of our TAMs and absorbing higher tariff costs. Our strong overall unit economics and scale enable us to absorb these costs while maintaining healthy payback periods. Excluding $28 million of bad debt and credit-related expenses, operating expenses increased 17% in the first quarter. We are investing in our highest-priority areas across product and go-to-market, and investing in AI tooling to evolve the ways we work and increase productivity. Over time, AI efficiency gains will give us the flexibility to invest more in key growth initiatives and support our long-term margin profile. Sales and marketing expenses increased 20%, reflecting our strong location growth.

We are investing to support our ongoing market share gains in our core and opening up sub-segments like non-native English–speaking customers. We are also expanding our go-to-market presence in our new TAMs, which is accelerating our progress. R&D expenses grew 20% year over year. We are investing in our product strategy to expand our TAM and drive location growth and differentiate our product with agent work, while providing our internal teams with AI capabilities to increase productivity. In enterprise, we just launched our Drive-Through offering, we are expanding Toast Go 3 internationally, and deepening our grocery product for retail customers.

We are further differentiating our core product, most recently with the release of Toast IQ Grow and relaunch of Toast Local. Adjusted EBITDA grew 35% to $179 million, a 34% margin. Our Q1 results reflect healthy top-line growth as well as our continued focus on driving efficiencies throughout the P&L. Free cash flow was $115 million. As a reminder, free cash flow is typically lower in Q1 due to the timing of cash bonus payments and payment seasonality. For the full year, we expect our conversion of adjusted EBITDA into free cash flow to be slightly lower than in 2025. We are strategically purchasing memory chips and plan to hold more inventory in the near term.

We expect the majority of this cash impact in Q2 and for the free cash impact to normalize over time as inventory moves to customers. GAAP operating income was up over 150% from last year to $110 million. In addition to our strong adjusted EBITDA growth, we are benefiting from ongoing leverage in stock-based compensation. SBC as a percent of recurring gross profit was 11%—that is nearly half what it was just two years ago—through our disciplined approach to managing stock compensation. Year to date, we have repurchased 14 million shares for nearly $400 million. We have been opportunistic given the market pullback and our confidence in the business, and we expect this to be an accretive use of capital.

We have approximately $200 million remaining on our share repurchase authorization and will maintain an opportunistic approach to repurchase based on market conditions to support long-term shareholder value. The combination of our strong financial results and decline in our diluted share count resulted in GAAP EPS more than doubling to $0.20. Turning to guidance. For the second quarter, we expect total subscription and fintech gross profit to grow 22% to 24% year over year and adjusted EBITDA to be $185 million to $195 million. We increased our full-year 2026 guidance, reflecting our strong start to the year. We now expect recurring gross profit to grow 21% to 23%, and adjusted EBITDA to be $790 million to $810 million.

We are positioning Toast, Inc. to sustain high growth for the next five to ten years. We are seeing positive results from the investments we have made to begin delivering agent solutions for our customers, extend our lead in the core, and accelerate progress in new TAMs across enterprise, international, and retail. Our new TAMs are scaling rapidly, and we are confident each is on the path to be materially larger with healthy unit economics. Our bias remains to reinvest top-line outperformance across our growth initiatives and into internal AI tools to transform how we operate.

Our bar for investing remains high, is grounded in customer feedback, improving unit economics, and where we have conviction we can generate meaningful long-term cash flow. To wrap up, we are executing our goals and are on track to deliver strong top- and bottom-line results in 2026 while positioning the company for sustained high growth over the next decade as we lead the AI transformation for restaurants and across local commerce. We are more excited than ever about the massive opportunity that lies ahead of us. Now I will turn the call back over to the operator to begin Q&A.

Operator: Thank you. 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.

Michael Senno: Thanks, Krista. We will now open the call for questions. First question, we will take from Stephen Sheldon at William Blair.

Stephen Sheldon: Hey, thanks for taking my questions. Maybe first here, as we think about the hardware, how much of a differentiator do you think your hardware solutions like Toast Go 3 could be? And does owning those touch points—with employees and servers having them in their hands—give you a big leg up in terms of helping restaurants take AI-supported insights from Toast IQ and making them actionable in employee–guest interactions? Are there other things like that in your platform that could serve as a big leg up on the AI front?

Aman Narang: Yes, Stephen, I think that is a great question. There are obviously lots of ways in which AI is helping us build across the platform. Specifically on hardware, we have learned over the years that being vertically integrated across software and hardware as a platform gives us an advantage where we can build capabilities for our customers faster. To your point about leveraging AI at the table when a server is interacting with guests, there are a few examples we have shared over the past few quarters. One example is menu upsells where servers have visibility into items that are most likely to increase check size.

More recently, we announced digital chits, which is basically if you book a table using Toast Tables in tune with Resy, you will be able to get that data right on the handheld when a server is interacting with guests. Over time, the vision is not only to get the data that is stored in the CRM, but to actually look at a guest’s order history to learn what is most relevant for that guest, like an allergy, for example. We are also testing things like “just walk out and pay,” so if you have a card on file when you book a table, you do not even have to go through the checkout experience.

That is an example where the server validating that the bill was paid is really important on the handheld. There is a lot of discussion on voice AI and video AI as well. With voice, of course, there are examples like picking up the phone to automate that experience, drive-through, but also things like kiosks and handhelds. Imagine walking into a restaurant and the server, with the handheld, listening to the order and it getting to the kitchen even faster. Another one is AI listening to the interaction to help coach staff better. We certainly see the fact that we have got the hardware and the software together being a big advantage in terms of building products faster.

Stephen Sheldon: Got it. That is helpful.

Aman Narang: Yep.

Michael Senno: Alright. We will move to our next question. Samad Samana from Jefferies.

Samad Samana: Hi. Good evening. Thanks for taking my question. I wanted to ask on Toast IQ and the monetization of agents and your pricing model. Would you ever, at some point, revisit pricing to make it more usage-based? We have seen a lot of rapid change in other parts of software. I do not know if that would be aligned for the restaurant out there. Do you see that as a potential upside driver over time if they are driving a lot of utilization and value out of it? Thank you so much.

Aman Narang: Hey, Samad. Good question. We are actively exploring not just capabilities from an agent standpoint in Toast IQ, but also the pricing model. It is topical for us and timely. First and foremost, what is exciting to see with Toast IQ is we have now 40 thousand weekly active customers using the platform. That was the first step—it was critical to get usage. What we have heard from customers is it is actually useful. One of the common use cases is being able to generate custom views on data versus just getting pre-canned reports. Another area that was a bit of a surprise was analyzing fraud and theft and getting visibility into what is going on there.

Then, of course, making changes to the back end of Toast, Inc., getting support more broadly with the chatbots. There have been lots of ways in which Toast IQ is adding value for our customers. I shared the example on the call about a customer that adjusted their hours by chatting with Toast IQ and recognizing there were hours they were open when they were not generating enough profit. There are also examples across software and hardware as part of the platform. But the biggest opportunity I see right now is, if you talk to our customers, one of the things you consistently hear is: “We are trying to keep our doors open.

We are trying to make sure we deliver great food and great hospitality, and that takes a lot.” Especially for these busy operators, often they will outsource things like marketing and running their back office—payroll and tax, or accounting and bookkeeping. For a lot of these functions, the data necessary to do marketing is actually coming from Toast, Inc. That is a key reason why Toast IQ Grow has seen such really good early signal. We are optimizing their digital presence and generating marketing campaigns for them because all that data is already in Toast, Inc. We have seen an 8% lift in GPV, which is a really good early signal.

From a pricing and monetization standpoint, that is what is most important, because as we take on some of this work—and by the way, Toast IQ Grow is an agent, but it is also backed by a human that can help support these marketing campaigns—as we take on the work, that is really the opportunity for monetization long term. But we are looking at usage-based, to your question, as a pricing model as well. Thanks, Samad.

Michael Senno: We will take our next question from Josh Baer at Morgan Stanley.

Josh Baer: Great. Nice quarter. Thanks for the question. You highlighted 40% of the support interactions resolved by AI, and on the engineering side, velocity up by more than 60%. So, seeing a lot of efficiency there. The messaging is you are reinvesting into growth areas while still trending upward toward those long-term margin targets. How do you make the growth versus margin decision? Should we interpret that as higher growth for longer, or if growth dips, would you flip higher on the margin side? A little help thinking about the growth versus margin philosophy. Thanks.

Elena Gomez: Thanks, Josh, for the question. I will take that. First, we believe AI is absolutely going to change the way we work. We are already seeing efficiencies in our support organization and really across the company, though we are still continuing to roll out, so we want to be balanced with how we think about those benefits. Zooming out on how we balance growth and profitability, a couple of principles: We are positioning the growth of the company over the next five to ten years. We are investing behind growth initiatives we believe will deliver durable growth for a very long time. Alongside that, we are holding the bar high—you have seen us employ strong discipline around capital allocation.

That is not going to change. The decisions we make to invest are typically driven by customer signal and rep productivity—we talk to our customers all the time. We are looking at signals across all of the businesses to make sure that we are excellent stewards of capital, always. Opportunistically, we will continue to look at options—e.g., we have repurchased shares, etc. So, we have a capital allocation framework that we look at. You should take away that we have high conviction about our long-term 40%+ EBITDA margin profile. That has not changed, and you have seen us make a lot of progress in GAAP profitability as well.

Aman Narang: Great. Thank you.

Michael Senno: Thanks, Josh. We will turn to our next question from David Hynes at Canaccord.

David Hynes: Hey. Thanks, Michael. Elena, I was hoping you could touch on enterprise across two axes. First, the pipeline you see in that cohort and how that compares to this time a year ago—does it feel like there is any inflection happening there? Second, the backlog of deals you have won that have yet to go live, and what visibility that gives you into location growth over the next several quarters? Thank you.

Elena Gomez: Look, I will start, and Aman, you can jump in as well. First of all, we have been on this journey—it is a multiyear journey. As you have seen through our wins announced over the last several years, we are definitely getting pulled into enterprise deals. The pipeline continues to be really healthy. With Drive-Through, that opens up the TAM even further, and we are really excited about that offering. The team is executing quite well across the enterprise TAM.

Aman Narang: Yes, Elena, you hit it. One stat I will share: in Q1 2026 alone, we booked more locations than we had total customers in 2023. That momentum has not slowed down across both hotels, full-serve restaurants, and Drive-Through. Drive-Through we just launched, but there is good customer signal there as well. We are confident in our ability to hit the plans we set out to start the year.

David Hynes: Thank you.

Aman Narang: Thanks, DJ.

Michael Senno: We will take our next question from Dominic Ball at Rothschild.

Dominic Ball: Hi, Aman, Elena. Thanks for taking my question. Aman, interesting comments on Toast Local following the commentary yesterday from DoorDash. Alongside seeing DoorDash POS active in San Francisco, Phoenix, New York, it seems like a formal launch is somewhat imminent. They have a bundled offering and strong distribution channel. As the delivery platform transitions from a partner to a peer, how do you really get Toast Local to be a real peer to DoorDash, and is there any other competitive response available to Toast, Inc.? Thank you.

Aman Narang: Hey, Dominic. First off, whether it is DoorDash, Uber, or hundreds of other partners we have, they are critical partners for us because to deliver a great experience, our platform and their platforms have to work really well. That does not change. We were the first in the space to build a deep vertical platform for restaurants. That is what allowed us to grow and succeed and get to 20%+ share in the market. We continue to see the same signals in terms of the growth and the potential that we have.

The way we are going to do that is by doing the same thing we did to start the business, which is to focus exclusively on the needs of our customers. A lot of the focus we have now on Toast IQ and the agent layer is about creating value for customers based upon customer feedback. As long as we continue to do that and stay customer-obsessed, I think we will be just fine. In terms of Toast Local, the biggest reason we are leaning in is, again, based on customer feedback. We hear consistently from customers that they would love to have a low-commission or no-commission channel where they can generate demand.

We brought in Resy inventory to combine with Toast Tables—now we have one of the best inventories of restaurants to book tables on. We think we can do some really unique things with that experience where, when you book a table and have a card on file, we can make the experience of checkout much better. You can personalize the experience at the table based on guest order history in Toast, Inc. We are also looking at data about both the guest and the restaurant—when the restaurant is busy and when they are not—to create the right set of offers that are personalized to the guest and drive incremental demand.

Our focus on Local has really been about helping restaurants get more people in the door at a great value. One stat I think is exciting: our weekly app downloads are up 2x in the last quarter, and you can see the rankings go up in the app stores’ food and drink category. Really good early momentum, very much focused on bringing restaurants demand in-store.

Michael Senno: Thanks. We will take our next question from Timothy Chiodo at UBS.

Timothy Chiodo: Great, thank you. A topic that a lot of investors would like to get a little bit more comfort with, particularly into 2027, is the hardware topic. You previously said for 2026, about a 150 basis points impact to EBITDA margins. Earlier today, you mentioned some impact on free cash flow conversion as you build inventory. I know this is a challenging topic to forecast, but to the extent there is anything you could provide around how you are thinking about it for 2027—the supply that you think you will have entering 2027, and how the process or conversations go with your suppliers? Thanks.

Elena Gomez: Tim, it is a very relevant question. It is a very fluid environment. A couple of things: it is really important to us to not have any customer disruption, and that is a principle we are operating under. To that end, we have increased inventory levels to secure the supply into 2027, and of course we will remain opportunistic to add supply if it makes sense. At the highest level, I have no concern about our ability to meet our growth. Second, the impact to the 2027 P&L will be larger than the impact to 2026.

As I say that, you should understand that we are going to manage the margins in 2026 and 2027 as you have seen us manage them today. We will have healthy margins in both 2026 and 2027; we are actively planning for that. Lastly, yes, there will be near-term cost pressure, but we do not anticipate this will have any structural impact to our P&L over the long term. As I said earlier, we remain committed to the long-term margin profile we have talked about. All in all, the team is managing it well.

We are actively managing it and feel very good in our ability to manage margins and, more importantly, the ability to get supply into our customers’ hands.

Aman Narang: Excellent. Thank you, Elena.

Timothy Chiodo: Thanks.

Michael Senno: We will take our next question from Andrew Bauch at BMO.

Andrew Bauch: Hey, guys. Thanks for getting me on. I wanted to touch upon international progress. Over the last several months, we saw a lot of new headlines and new press releases from you. Anything you have seen so far that is working, or anything that is materially different than the U.S. market given that we are now a couple years into this push?

Aman Narang: Hey, Andrew. Overall, really proud of the team’s progress. We continue to grow the international business at a healthy clip last year, both in terms of locations as well as ARPU. We recently launched our Toast Go 3 handheld internationally, which was a big missing piece because it is such an important part of our platform. One of the learnings internationally has been that where we have seen the most success is in tier-one cities—think in Canada, Vancouver; in the UK, London; and in Australia, we are seeing really good early signal in Sydney and Melbourne.

The reason is these cities have the most high-GPV, busy restaurants where the Toast, Inc. value proposition is most pronounced in terms of things like the handhelds or the operational capabilities we offer in our platform. One of the things we have done is lean further into more of a tier-one city strategy. We will continue to grow outside of these cities in the countries we are in, but as we open up more countries, it may look more like a tier-one city strategy versus going fully deep in every country. That is something we are contemplating and looking at as we head into the back half of this year.

Andrew Bauch: It would be great to see London as a flywheel market. Thank you.

Aman Narang: Could not agree more. Absolutely. That is what we are working on.

Michael Senno: Thanks, Andrew. Okay, we are going to take our last question from Rayna Kumar at Oppenheimer.

Rayna Kumar: Hi. Thanks for taking my question. I am just wondering what you are seeing for same-store sales into April and if you saw any changes in the quarter as well. Thank you.

Elena Gomez: I will take that. Overall, our consumer trends have been stable. GPV per location in Q1 was down 1%, but very much within a reasonable zone. Q2 is similar. Overall, customers are quite resilient—it has proven that over many cycles—so that is what we are seeing. We looked at our own data as well, and it is stable.

Rayna Kumar: Appreciate the color.

Aman Narang: Thank you. Thanks, Rayna. That concludes our conference call today.

Michael Senno: Thank you to everyone for joining, and have a good rest of the night.