Q2 2025 Toast Inc Earnings Call
Good afternoon. My name is Kate and I will be your conference operator today.
At this time, I would like to welcome everyone to toast a second quarter 2025 earnings conference. Call today's call will be 45 minutes.
I'll now turn the call over to Michael segno, Vice 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 Aman, 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.
Third quarter, 2025.
So we're looking statements reflect our views only as of today and except 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 Topline guidance.
These non-gaap measures are not intended to be a substitute for our Gap results. Please refer to our earnings release and the 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 the cost of revenue, gross profit, gross margin, sales and marketing expense, research and development expense, and general and administrative expense are on a non-GAAP basis.
Finally, the pressure release can be found on the Investor Relations website at investors.toast.com.
After the call, a replay will be available on our website.
And with that, let me turn the call over to Aman.
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 8500. Net new locations. We grew recurring gross profits 35%, and we've delivered 161 million of adjusted ibida.
Gap, 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 reinforced 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 their 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 Z Bars, the iconic New York Roaster 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 resi talk and toast tables in to 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 of 2, 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 U.S. restaurant business.
Number 2, demonstrate 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 investigate our most important priorities while gradually expanding margins.
All right, so let's jump into number 1 starting with our core restaurant business. We have strong momentum driven by our purpose-built restaurant platform and our local go to market teams.
As a result of positive, customer feedback and the brand Investments we've made. We've seen the largest year-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 tosot 3 and our new AI powered intelligence engine toast IQ, which reflect the steady drum beat of innovation. That's core to our strategy.
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 the third-party app that was cumbersome for them and their customers.
Since switching, its House, Supper Club has seen a nearly 40% jump in catering pills.
Toast catering is both easy to use and seamlessly integrates into the Toast platform, including our point of sale devices and handhelds.
Which is 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 these new market segments can be material drivers of growth.
We cross 10,000 live locations across Enterprise food, and beverage retail and international. And these new customer segments are on track to surpass a 100 million in ARR collectively, by the end of the year.
a milestone that took 6 years in our Core Business,
in Enterprise, our vision is to have the most iconic restaurant bands, and 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 rpos over time.
In food and beverage retail, we're off to another strong. 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, our proof of retail customer is already above 10K.
A clear indication. Our value proposition is resonating.
Food retailers like Zabar's, New York City are using toast. Retail to handle their large fast-paced operation.
Manage over 30,000 skus across the 30 20000 square foot store.
And process more than 25,500 transactions daily.
Zabar shows how Toast supports complex, high-volume retail environments.
across the UK Ireland and Canada rolling out more of our products as driving a steady increase in book to our food,
We're also seeing greater traction among full service restaurants.
Which now make up the majority of our new ones. In these regions showing that product improvements investments in our go to market, teams are paying and in our go to market teams are paying off.
We're launching in 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 instructor from our first 3 markets, and the localization Investments. We've made over the past few years
We took our first customer Grace case, craze live in Australia, this summer.
Um, Grace Grace is an existing post 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 other POS provided that matched toasted capabilities. So they were excited to transition to a toast. When we would when we would when we could support the 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. The experienced with the local system at launch.
And they plan to add more products, like, email, marketing and loyalty to help Drive demand.
And above store tools, including multi-location management and reporting, to power their continued expansion across Australia.
Shifting gears are third. Priority is increasing customer. Adoption of our platform and driving differentiation through data and AI.
We were a Pioneer in bringing purpose-built handhelds to Market 7 years ago, redefining in store operations and service for restaurants.
And since then billions of orders have run through Tesco handheld, giving us a deep understanding of what works on the restaurant floor.
Our new Tosca 3, Handel, 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 size IQ staff. Now get real-time contacts about their guests to help. Increase check sizes, personalized notes and guests details from toast tables. Show up directly into our Tesco 3, handheld and terminals.
And our Amex partnership aims to build in this technology to deliver these personalized experiences for AMEX card members as well.
Hey, wire restaurant in Texas calls to go 3, a game changer.
But now with tosot 3 cellular functionality, they can seamlessly transition between cellular and Wi-Fi to stay connected and take payments without getting interrupted.
The new handheld 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 toast code 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,
But lastly, our fourth priority.
Is to continue to invest with discipline, while expanding our margins.
Our updated, fully your 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 want to 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 Elena.
Thank you Amon. 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 group 31% and total fintech and subscription gross profit. Our recurring gross profit streams increased 35% year-over-year.
To Total take rate across SAS and fintech. Gross profit was 93 basis points in the quarter and increase of 8 basis points from a year ago, reflecting our growing share of wallet and the increasing value. We are providing our customers
Adjusted Eva was 161 million for the quarter with margins, expanding 8 percentage points year-over-year to 35% and gaap 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 segments, complemented by growing momentum, across our new customer segments.
As Amin mentioned, across International Enterprise and food and beverage retail, we crossed 10,000 locations in Q2.
We're excited about the new bellweather brands, like Firehouse Subs, and Z bars 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 go 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 towns and scaling go 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 more location. Net ads in 2025 versus 2024
Driven by our consistent, go 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 susaru on an ARR basis.
Description Revenue, increased 37% and gross profit. Group 43%, benefiting from the improved airr to revenue conversion. We discussed last year,
As a reminder. Beginning next quarter, we will last the step up and the associated 1-time benefits we saw in Q3 and Q4 of last year and there therefore expect subscription revenues to more closely mirror. SAS ARR, growth beginning in Q3
Payments are increased 32% and fintech gross profit grew. 30% in the second quarter.
GPD 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 3 basis points from a year ago, from a combination of ongoing optimization efforts. Small targeted pricing moves and new products, including search charging.
non-payments ventex Solutions led by toast, Capital contributed, 40 million in gross profit and 8 basis points intake rate,
Capitals 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. Capitals contribution and net take rate to remain in the 10 basis point range.
Including 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 go to market footprint across International and Retail.
In the core, we're making targeted repetitions and supporting our brand campaign to deliver ongoing share gains.
R&D grew 9%, reflecting investments in our highest priority areas in the core Toast 3 and newly launched Host IQ features. Higher can use 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 tosco 3 internationally and expanding our functionality and Integrations in Enterprise.
Adjusted. Even with the
161.
Margin of 35%, our strong, Q2 results, reflect healthy, Topline 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.
3. Cash flow was 28 million driven by strong, adjusted IBA and a benefit from working capital due to seasonality of our payments business.
Gap. Operating income was up 89 up from 14 million a year ago. That's both the strength and adjusted Ava, 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 6 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.
Returning to the guidance for the third quarter. We expect total subscription and fintech gross profit to grow in their range of 23 to 26% year-over-year and adjusted even though 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. Eva a margin of 32% of 5 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 Investments 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 of both strong. Topline growth and expanding profitability and are confident we can continue to deliver a durable growth while driving towards our long-term margin Target.
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 1 on your telephone keypad. Your first question comes from the line of real Nancy Goldman, Sachs your line is open.
Hey guys, uh, great results. Today, I wanted to ask a question, on the, the new disclosure on retail rpos being. I think north of north of 10K, obviously, great to see. And you talked about, uh, this being a, a very large average Merchant side as. As I was wondering, if you could talk through that number and and, you know, maybe give some context on the breakdown between payments and software. And then, you know, you mentioned further enhancements to the product. Where are you? Uh, in kind of Now versus where you want to be on the software suite for that vertical. And you know what, what types of things do you think? Uh, could be on the road map, appreciate it.
Yeah, well, thanks for the question, you know, if you go back and look at our Core Business, and you look at how we've been able, been able to expand both the SRP and fintech our poo over time. It's taken a while to get us to where we are today, where our Core group is. And so if you look at how quickly we've been able to get retail, our crew 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 going to
Can you invest in the balance of the year and, uh, and, and I think the data we're seeing from some of the early reps that we've scaled up these, this dedicated team for retail is really, really positive. Um, and 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 um that are very specific to retail that we continue to build out. And uh and by the way, the specific to subcategories within retail. So what's needed in grocery versus liquor stores? This is convenience stores, and, and such there are some differences as well. But net, net. I think if you look at where we are, like, I think we're ahead of expectations and the potential for um, you know, my confidence in the, in the potential as a business is the highest it's ever been.
Oh, that's great. I use the Loyalty module at a grocery store in my neighborhood. This weekend, save me a dollar, um, just on the sum of the Mack on some of the macro Dynamics and, uh, and gmv. Uh, I was wondering if you could maybe provide kind of latest and greatest breakdown of some of the gpv per location Trends across the base. Obviously, as you just talked about, uh, you know, you've got maybe an upward bias coming from retail, maybe a downward bias from uh, some of the location adds that 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 right. Some of those drivers and talk about you know, any any notable changes there, thanks.
Yeah. Yeah, since since we asked about retail right now, well even though at the endless day, we talked about how retail gpv are higher than restaurants because we're newer, we're still growing into that, um, and so just wanted to clarify that. But overall, if you look at gpv Trends, you know, it's been largely flat for us. In gpv for location was down 1%. It's been on this narrow band and it's mixed with a very small component of it. Like, if you look at our customer base overall dpv has been largely been about flat, I think it's about like a very small amount. And then if you look at the rest of these segments, um, 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 Lena 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 great, great opportunities over time.
Thank you for taking the questions.
All right, thank you. All
Your next question comes from the line of DNC and Wong with JP Morgan. Your line is open.
Hey, thanks. Lots of
From here, I 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, Elena? Can you just elaborate on that maybe and how discretionary that is? I also heard tariff expenses, so 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 segments. 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 them on talk about 10,000 live locations.
Okay, great. Then my quick follow-up, just on TOS, go 3 her. A lot of good things about this. Are you, do you expect an upgrade cycle from existing customers using prior versions of of tosco? Or is this more about, you know, attaching to, to new sales, just trying to understand the how that layer is in.
Yeah, I think it's both attention. If you look at certain new customers will will, will will likely start start with the sales code 3 device. But for a lot of existing customers, uh, 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. So, if you got big spaces, they like the, the ability to be able to use both Wi-Fi, and cellular at the same time.
Perfect. Thank you guys.
Your next question comes from the line of DJ Hinds with canaccord. Your line is open.
Hey, thank you guys. Congrats on the next quarter. Uh, so Amon, we've had several quarters now with really nice Enterprise momentum. I'm curious. What, you're seeing incumbent vendors at the end of the at that end of the market doing to to sort the threat, that toast creates right? Are are they are 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 would be helpful.
Sure. DJ, you know, if you zoom out and look at what's happened,
um, in the core independent restaurant business, the adoption of cloud was actually faster up Market in Enterprise. And so, a lot of what we continue to see is a lot of, um, Legacy on premise solutions that tosses displacing. And so, I, I don't think it's really about price. I think it's about leveraging modern tech where you can use the cloud. Um, and and that's really, what's driving. Some of our growth? We're investing in a big way now, uh, with our Powerhouse of not just in um, you know, the, the non-drive through segments. But we're also starting to invest now in the drive-through segment and certainly, if you look at the competitive environment, you know, have we've said this before, it's always been a very competitive environment, um, 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, um, I think that's what's really driving, um, you know, our growth in our success. Yeah. And I would just build on DJ. We, we've begun investing in Enterprise really, a few years ago and that's what you're starting to see, show up, is our capability.
Abilities. Have matured in a way where you're starting to see the likes of Applebees and we we close Marriott a couple of years ago. Um and then if you take Firehouse as an example, 1 of the reasons they chose toast was 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 our let's just 1 example, but you're seeing our pipeline really improve. As a result of this investment which is taking a couple years to to mature
And then, Atlanta can you just remind me like a 1500 location win? A 13, 100 location win. Like, how long does it take to sand those up? When did they start hitting into that adds?
Yeah, it depends we, we would collaborate with the, um, with the, you know, the, the new customer, and decide what what their pipeline is, or when they're ready for implementation. But it could be like Firehouse, we already have some locations live, um, so it just depends on the velocity at, which they want to go. But generally speaking, it's it's not that far after we booked and then it can take the course of, you know, 1 to 2 years, depending on how fast they want to go some customers want to go faster. But generally a land like that will take, you know, it could take 4 6, quarters on the outside, maybe 2 years.
Yeah, perfect. Okay. Thanks guys. Congrats.
Thanks, DJ your next question.
Your next question comes from the line of Timothy, Cudo with UBS, your line is open.
Great, thank you. I want to talk a little bit about what you mentioned in terms of the investment behind go to market but I want to 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 sales people 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, Etc? And to the extent you could comment on the effectiveness of those channels in selling us such a vertical, specific product. Thanks a lot.
A lot to significantly increase our sales capacity. Um, and that's really what's driving? The core of our growth. Um, you know, the great thing is, you look at the supply will affect, 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, 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 want to add coverage and that's true, whether they're, you know, Metro areas or there are suburbs. And so, I think it's just really depends on kind of what our, what our penetration is, what our productivity is. And so we use that to refine, let's say on the edges, but it's not like a material step function change in terms of how much rep capacity we're adding. Um, and then 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 um, you know, food, distribution Partners, Tech providers and
So, um, that's certainly a key part of our funnel, um, but we do think that like it's important for us to your point about this vertical product, that's that's restaurant specific that we own the end-to-end experience. And so whether it's the go to market, the onboarding, the support, we all 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 certainly always exploring it since it's a topic actually, we talk about sometime all the time.
Thank you, man.
Yeah, thanks Tim.
Your next question comes from the line of Matt Code, Richard. Your line is open.
Hi. Hey guys. Thanks for taking the question here. Uh, wanted to touch on cess aru again. Um, 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, uh if you could provide an update on kind of your strategy to price your value here,
Yeah, sure. Um, so a couple things 1 is, um, you know, our staff are who in Q2 was around 5%. And really how we think about our growth, levers is really focusing on ARR and locations and our who are both, uh, the vectors we think about. And in terms of pricing, that's really just 1 small part of our, uh, our food growth, but absolutely, we're focused on making sure we're driving value for our customers. So that pricing is is not an objection if you will. But if you zoom out and think about how can we drive our food growth over time? We have a lot of levers available to us. We are a, we know a lot of our products are not at Terminal attached. We're going to continue to innovate data. And AI will certainly play a role in that over time. And then we're still continuing to uh, hone the upsell motion and really balanced our land and expand motion. So feeling really confident that the combination of our breadth of our platform will drive.
Our pool over time.
I Thanks Elena, and then, yeah, just for my quick follow-up. Uh, the non-payment portion of gross profit, so mainly toast Capital it was down. I, I think you said to 40 million dollars, this quarter compared to 47 last quarter. Uh, could you unpack that a little bit for us? Is that kind of just timing related that the client are, are you guys pulling back on on certain loan growth right now?
Yeah, overall I would say the program is really healthy. There's seasonally some Dynamic there in Q2. Um and then there's a little softer demand at the start of the quarter. But overall, we feel really good about where TOS capitals growth is the defaults are in line with expectations. So feel really it's a good healthy program for us and continues to be.
Your next question comes from the line of Josh bear with Morgan Stanley. Your line is open.
Thanks for the question. Uh, quick 1 on Enterprise and 1 on, uh, International, uh, just wondering with regard to Firehouse talked about some of the reasons that they adopted toast. Just wondering, like how that translates into actual products. Um, are they using? If you can identify any of the sweets that they're going to adopt? Um and if payments is is in there too and then with regard to International and and Australia just wondering how we should think about it, is it
Part of a broader Wave 2 of international expansion and, you know, we're going to hear about other countries and GEOS or or is this kind of Wave 2?
And that's it for now.
form that they're using, um, and I'll let them on and talk about uh, International
Yeah, Josh on on Australia. I think your question was about is Australia. You know part of a broader strategy on waves too, right. Um, you know, I think 1 of the things that's been great about this Australia. Launched 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 and Canada and it's the work is a great work. The R&D team has done the localized, our platform where we can actually do that. As you know, it took us a long time in Uki and Canada to get all these products out and we all grew up. And so the fact that we can Now launch into new countries, uh with the full platform, I think is a huge Advantage for us. In terms of the uh in terms of whether or not we're going to add more countries but not a great announce anything at this time but certainly are like, you know, it's a balance, right? And the 1 hand, we've got to make sure that in the countries we're in, we're not sure changing ourselves so that we're set up to be successful. On the other hand. I think, if you look long term, like, do we aspire 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. Um you know for the record net adds 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 uh, Enterprise International and FNB 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 3 buckets?
Thanks guys.
Yeah. Hey Darren. So, um, if you look at our Core Business, that's still driving, right? The, the core, the bulk of our growth. We've been at this, we've said this before for more than a decade. And if you look at, um, like the number of go lives, for example, in our Core Business, that's never been higher. The rep productivity is is, is is, is at a really healthy level. The the most penetrated markets are, are are seeing healthy gains like higher than the average markets where we have the most penetration. So really the, 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 uh, net percentage of go lives. Um certainly that number is bigger than it's ever been. Just because we were now uh scaling in those markets as well. And that's really what's driving. The record net ads right in the business. Um, we're on track not only for this quarter but for the year as we said last quarter to have record that as for the year as well. Um in terms of the exact composition and breakdown of the 3, the only thing I'll say is across all of
Them, um, we're seeing good momentum, right? If you look at retail, we're adding more sales capacity because the margin, the the RPO are over 10K. The rep productivity is healthy. And so that gives us signal that we should lean in and invest in international. Um, we've increased our poo 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 the penetration that we have in the US. And so that's a good signal and Enterprise I think Enterprise is going to be gradual, right? Because if you look at these wins, while they're awesome um you know Enterprise wins the longer sales cycles and see like we expect them to be a gradual rip over time. Um and but all 3 of them are contributing in in all 3 areas, you know, we're investing, um, to continue to open up the longer longer term opportunity in front of us.
That's great to hear. Thank
A quick follow up would be on SAS or who it still is growing very well. And so when we think about how much is driven by customers coming on with higher SAS or approvers is just the upsell team continuing to do well. Um how do we you know distinguish that if you can help us out?
Yeah, yeah. It's a it's um, so it's it's both right? We're seeing our poop both from the customers and existing customers and that's 1 thing. We're talking about is honing our land and expand motion. Um, but the upsell team is absolutely contributing to that uh, in terms and their execution is, is solid. I think, over time, obviously we want to continue to optimize our product market across our whole set of products and
Continue to drive that. Overall, we're seeing really good progress across both new and existing customers.
Your next question comes from the line of David coning with Barry. The line is open.
Yeah. Hey guys, great, great job. Um, I guess, first of all, you know, between Q3 guidance and full year guidance, we have a little insight into Q4. It looks like 2122 percent at the midpoint in terms of recurring GP growth is, 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 over time.
Thanks for the question. Um, so a couple things 1 is as, as you know, we always aim to do better and that's really important in how we balance. Um, our guidance, um, just keep in mind, the first half of the Year benefited from that are are conversion. So that's a dynamic at play in the second half of the year. Um, and then gpv, you know, was better than our expectations in Q2. And so just in terms of how we guide we really focus on, um, being prudent and balanced as we enter into any guidance cycle. The other thing I'll tell you is our investment that we have. You know, we've talked about on this call is really in service of sustaining our growth over the long term. So we're always going to aim to do better and these Investments really will position us for growth, not only in 26 but beyond
Great, thanks. And just a quick follow-up. July Trends. Um, you know, obviously Q2 got better with volume which is great. July trends like per-location. Um, it did that start out pretty well.
yeah, I think a lot of expectations
Yeah, great. Well I think we're in good shape in July. Yeah. Yeah.
Your next question comes from the line of Dan Do with Mizou Securities. Your line is open.
Hey guys. Uh, great results here as always. Um, can you please help us understand how the MX partnership? Enhances the uh, flywheel here? Because it seems very cool.
Uh, you know that deal that you're doing, appreciate that. Thank you.
Sure, Dan. Um,
If you so what we're doing in this MX partnership is 1. We're combining inventory from resi talk and toast tables, um, into our app, this is toast local, and the idea is. It's you've got 1 place now, where you can go find, right? Uh, um, uh, a place to book, restaurants is a, a broad set of restaurants that are that are available. Now, when you book, um, on any of these platforms, when you check in, at the restaurant,
What the toast platform can can do is create a personalized experience for you. So, it's everything from you, think about?
Allergies notes birthdays, but also, um, be able to recommend menu items, whether it's to your favorite drink or it is items that you love. So if you think about it, most people, they've got these preferences and their taste profiles. So the the 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 the 2 2 ways to focus 1, broad the the inventory within local and 2 provide a great experience uh for the guests.
Including for MX Card members.
Thank you so much. Great stuff again, appreciate it.
We will now take our last question from the line of Harsha, Robbie with Bernstein. Your line is open.
Okay, uh, good afternoon. Um, so I want to ask about sucia um, which you announced last year, I know you're currently doing Pilots.
Uh, what are you hearing from your customers in terms of the problem they're solving with the CI-powered assistant and the value of driving? And how to differentiate that product in the market? Thank you.
Yeah, thanks for the question. We are uh making really good progress uh with s. Chef the customer feedback has been uh really positive. You know. I think what people like about the the product the the product in beta is
If you think about most restaurant tours, you know, they're not CTO, they're not cios. And so the ability to have a human interface to be able to get insights to get recommendations, uh, to be able to actually make changes. So this is like the, this is the, you know, the ability to make to change make take action within the within the S shift. Uh, capability is something that we're getting really good feedback and input on and um I think ultimately our goal here uh 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 then uh, and we plan to G GA the platform at some point later this year.
Thank you.
This concludes today's conference call. Thank you for joining.