Toast, Inc. (TOST) Presents at UBS Global Technology and AI Conference 2025 Transcript

At the UBS Global Technology and AI Conference, Toast CFO Elena Gomez reported strong 2025 operational results, with recurring gross profit growing roughly 32%, net new locations added exceeding last year, and adjusted EBITDA margins expanding by more than 600 basis points. Management characterized 2025 as a year of strong execution and exiting the year with momentum heading into 2026, signaling improved profitability and continued unit growth that should be material to near-term investor positioning.

Analysis

Market structure: Toast's 32% recurring gross profit growth and >600 bps adjusted EBITDA expansion imply winners are cloud-native restaurant software and payment-routing partners (Toast, select ISVs, and processors capturing higher take-rates); losers are legacy on-prem POS vendors and low-margin hardware resellers. Competitive dynamics favor Toast's pricing power in mid-market restaurants if net-location additions continue to outpace peers; a sustained share shift of ~200–300 bps annually from incumbents is feasible over 2–3 years. Cross-asset: stronger recurring cashflows should compress Toast's credit spread vs. high-yield peers (positive for corporate credit) and reduce implied equity volatility, while FX/commodity impact is minimal beyond hardware supply chains.

Key Decisions for Investors

• Establish a 2–3% long position in TOST for a 6–12 month horizon, scaling in over 2–6 weeks; add a further 1–2% if shares dip >12% or if FY2026 guidance confirms >30% recurring gross profit growth.
• Implement a paired relative-value trade: long TOST (+2%) vs. short Block (SQ) (-1.5%) for 6–9 months to capture execution premium; rebalance if relative outperformance exceeds 15% or gross profit divergence >5 ppt.
• Use options to improve risk/reward: buy a 6–9 month TOST call debit spread 25–35% OTM sized to 0.5–1% notional to cap cost, and buy 3–6 month 10% OTM puts as downside protection representing ~25% of the equity notional if holding >2% position.
• Reduce/avoid exposure to legacy POS/hardware names (e.g., NCR) by 1–3% of portfolio over the next quarter; shift into fast-growing SaaS/fintech names where recurring gross profit growth >20% and margin expansion >300 bps.
• Monitor catalysts within 30–60 days: FY2026 guidance, net-new locations run-rate, and any permanent CFO appointment; if churn or take-rate compression appears (2–3 ppt QoQ), cut exposure immediately.