• Net Location Additions: Approximately 7,000 net locations added in Q3.

• Total Locations: Nearly 127,000 locations, up 28% year over year.

• Recurring Gross Profit Streams Growth: Increased by 35% year over year.

• Adjusted EBITDA: $113 million, representing a 30% margin on recurring gross profit streams.

• GAAP Operating Income: $34 million.

• Subscription Revenue Growth: Increased 44% year over year.

• Gross Payment Volume (GPV): $41.7 billion, growing 24% year over year.

• Net Take Rate: 56 basis points, with a core net take rate of 45 basis points.

• Free Cash Flow: $97 million in the third quarter.

• Share Repurchase: Over 2 million shares repurchased for $56 million, average price of $23 per share.

• Fourth Quarter Guidance: Subscription and fintech gross profit expected to grow 32-35% year over year; adjusted EBITDA expected to be $90 million to $100 million.

• Warning! GuruFocus has detected 5 Warning Signs with CCSI.

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Toast Inc (NYSE:TOST) added approximately 7,000 net locations in the third quarter, demonstrating strong growth in market presence.

• Recurring gross profit streams grew by 35% year over year, indicating robust financial performance.

• The company increased its full-year outlook based on strong third-quarter performance, showing confidence in future growth.

• Toast Inc (NYSE:TOST) launched new products like a branded app and SMS marketing, enhancing its offerings and customer engagement.

• The enterprise segment saw significant wins, including a partnership with Potbelly Sandwich Works, expanding Toast Inc (NYSE:TOST)'s reach in larger markets.

Negative Points

• GPV per location was down approximately 3% year over year, indicating potential challenges in transaction volume growth.

• The company faces ongoing challenges in converting ARR to revenue, with some improvements being one-time benefits.

• Toast Inc (NYSE:TOST) is making targeted pricing adjustments, which may impact customer satisfaction and retention.

• The international and retail segments, while showing promise, are still in early stages and require careful monitoring of economics and contribution margins.

• Churn remains a concern, particularly among smaller restaurant clients, which could affect overall customer retention metrics.

Q & A Highlights

Q: Can you discuss the trajectory of location growth for 2025 compared to 2024? A: Aman Narang, Co-President and CEO, stated that Toast had a strong quarter with 7,000 net location additions. The company is confident in its ability to continue driving location growth into next year, supported by strong productivity in flywheel markets and early momentum in new verticals like CBG retail and international markets.