Toast, Inc. (TOST) Earnings Call Transcript & Summary

Excellent. My name is Josh Baer, software research analyst at Morgan Stanley. We have the Toast management team. Before introductions, a brief disclosure. For important disclosures, please see the Morgan Stanley research disclosure website at www.morganstanley.com/researchdisclosures. And if you have any questions, please reach out to your sales representative. Thank you so much for joining. We have Aman Narang, Co-Founder and CEO of Toast; and Elena Gomez, CFO. Thank you for being here. Really excited for the conversation.

Thanks for having us, Josh.

Aman, I wanted to start with a little bit of a look-back on 2024. You added a record number of net new live locations, you're GAAP-profitable, you're making progress on new growth markets. What were the biggest accomplishments, from your perspective, in '24? And how are you thinking about 2025?

Yes. Thanks, Josh, and thank you, everybody, for being here. 2024 was a big year for Toast. I stepped in as CEO in January. And first, we had a restructuring in February of 2024. So a bunch have changed, making sure we made some changes in our leadership team. I wanted to make sure that we, as a team, had our resources aligned against what's most important. So there was a lot of change to start the year. And it was great to see the team be really resilient. We had really a fantastic year. You look at the growth that we saw in our core business, you mentioned the record net adds. It's exciting to get our retail business off the ground. We launched our retail product and saw really good early signal in that business. Upmarket and enterprise, we -- our enterprise business is newer. We got some great success with brands like Perkins or Hilton and Caribou Coffee and many others. So great success there. And if you just look at on the metric side, we had, I think it was like $400 million or so in incremental ARR that we added. And we grew GPV to $160 billion, and we also increased margins by 20 points. And so I think really proud of the team's progress in terms of being able to grow at that level and also continue to -- and also expand margins. And looking into '25, to some extent, there's a little bit of like more of the same. There's a lot to do in terms of continuing to make progress against the things that started. And this year, while it's great to have 28,000 net adds, if you look at our U.S. restaurant business, we've got 28,000 locations that we added across the [ old pool ] business, but we still have 15% share in the U.S., and so continuing to scale that. And then within these new TAMs, whether it's retail or international or enterprise, we shared at earnings that we'll get to 10,000 locations across these. Now for context, if you look at our U.S. restaurant business, it took us a lot longer to get to 10,000 locations. And that's a big opportunity for us over the long term. So there's a lot of focus there to make sure that as we invest more that we see the right signals as we continue to scale there. And then -- and I think on the expansion side, if you talk to our customers, you continue to hear that many of them want more of an all-in-one integrated platform. And so there's a lot of investment and focus on continuing to make sure that as we expand the platform, we're seeing the right signals from customers. So like as an example, as customers use more of our platform, are they happier, right? Is NPS going up? Are they stickier? We talk a lot about our employee products, for example. Every restaurant today is going to run payroll, every restaurant is going to run scheduling. And so there's a lot of focus to say -- especially with AI, right? Like how do we make it even more differentiated and just a no-brainer for restaurants to use more of the platform? That's a big focus for the team this year. And then continuing to hold a really high bar on talent. We have to make sure that culturally, especially at the leadership level, as we're investing that there's no waste in the organization and investments are best aligned to what's most important. So a lot to do. I know I shared a lot, so a lot to do. I'm excited about -- you asked about what I'm excited about. We hold about 5% to 10% of our investments in R&D, and we hold it against these, what we call these Horizon 3 bets. so these are bets that are not driving revenue today. But some really interesting things we're doing there, whether it's in the consumer experience and the customer with this app called Toast Local (sic) [ Local by Toast ]. And then we're also looking to -- really think hard about like what are ways in which you can help restaurants, whether it's improving yield. How do we drive more [ bust and ] seats in the restaurants? How do we make the experience even more personalized? There's a lot of interesting bets the team has going that I think -- I'm personally involved with that I'm excited about.

Great overview and we'll dig into most of that for the conversation. I do want to pull Elena into the conversation. And you have a unique insight into the health of consumer spending. We can see GPV per location. In '24, that was down a few points. Wanted to ask how much of that was due to same-store, sort of like-to-like sales pressure year-over-year versus just your evolving mix of your restaurants given your ramp in all these new growth markets.

Yes. It's a fair question. Thanks. Overall, our GPV per location was down 2% for the full year of -- for 2024. Most of that is really driven by same-store sales. To a lesser extent, mix does play a role. And as we begin to get into these and expand into these new TAMs, what we're seeing is not all locations are created equal. So on a GPV per location basis, for example, international, the GPV per location is slightly lower than what we see in the U.S. market. The flip side, on the retail side, what you see is when you compare the industry average -- and it's early for us on retail, I just want to remind everyone about that. But when you look at the industry average, that GPV per location tends to be a bit higher than what we see in restaurants. And then with enterprise, it really just depends on a deal by deal and the complexion of what they're looking for and the set of products they ask of us and so on, how many restaurants, et cetera. So it really depends. But overall, I think it's important that the core business continues to be the primary. A lot of these businesses are new. It's important for us to understand the dynamics of those and manage, obviously, paybacks and all that. But at the core of it, most of it is driven by same-store sales just because these businesses are just so new. Over time, you'll see a gradual impact to GPV per location, for sure.

Great. And how should we think about some of the puts and takes in Q1 from a seasonality perspective? And then also, what have you said about 2025?

Yes. Fair question. So just to give a little texture, overall, the consumer spend and sort of the health of the consumer, what we see is relatively stable. That's where I would start. I think in Q4, what you saw is a little bit of an improvement of GPV per location. It was down like 1%. And that was really driven a little bit by holiday timing, some weather that was favorable that sort of played a role in Q4. Q1, you will not see that same decline. It will decline a little bit more than Q4. And when you just step back and think about it, the weather in January, some of the fires in L.A., so a bunch of dynamics that play a role. Leap year played a role, believe it or not. And so when you think about all of that, you'll see that the complexion of Q1 will be a little bit different than Q4. But when you zoom out, in general, GPV per location has been somewhat in a relatively narrow range, and we continue to believe that as we get into 2025.

I wanted to talk about locations. I always say that's the most important metric to track because it's not only the base of growth for the whole business, but it also gets at all the debates around competition and TAM, go-to-market, execution. So wanted to start with competition. It's always been a competitive space. We have noticed some payment spenders maybe focusing more on restaurants, some delivery services, occasionally, some announcements about incremental functionality into restaurants. If you could unpack sort of the current state of the competitive landscape, are you seeing any changes?

I think you hit it, Josh. This market has always been competitive. I remember like 10 years ago, one of the things that really stood out to me was just how fragmented this market was. And I think if you look at our net adds, it's a testament to the progress we've been able to make despite that. We've been at this for 12 years. We've invested over $1 billion in R&D into this restaurant platform. And I think what customers really appreciate is that it's purpose-built for restaurants, and it comes through in all aspects of the platform and if you look at even not just the core point of sale, but even the expansion products that we've built out. And so we've got a lot of confidence, as long as we continue to be obsessed with customers and continue to improve both the product and the service, and there's lots of feedback, as you can imagine, we get all the time on ways we can continue to improve the platform across all these different subsegments of the TAM that we serve, I think we'll be okay. And I think in terms of like your question about the competitive landscape, our team on the go-to-market side does a great job of tracking a lot of that data. And we track the funnel end to end. And we continue to believe that there's nothing material there that's changed. And we continue to believe, at the end of the day, the most important thing that we can do is continue to focus on our execution.

Makes sense. Before we get into enterprise, retail, international, I want to ask you about the core, U.S., SMB, mid-market. In my perspective, last quarter, there was a lot of attention on these growth markets for good reason and maybe a little less focus on the core and the flywheel market. So wanted to ask the current state of the core business and how much more runway is left there.

Yes. Look, the most important thing that we can do at Toast over the next decade is to make sure that we're a market leader in U.S. restaurants. Of course, there's lots of other opportunities, but that is still the most important thing we have to do. In fact, the investments we have in these businesses comes from the core. If you look at where we are, you've got 15% of U.S. restaurants, maybe a little bit higher in terms of SMB restaurants. But if you look at the patterns we're seeing, we've talked about this whole concept of getting to 20% share, and that drives flywheel that drives accelerated growth. We still see that. We've had more markets enter flywheel. When markets are in flywheel, you see actually everything improve, top-of-funnel conversion, win rate productivity. And if you just zoom out and think about why, it's actually pretty intuitive. Because if you're a restaurateur and you've got more proof points and data points of other restaurateurs using Toast, that social proof is really valuable, not just at like a city level but even at a neighborhood level sometimes or a city block. You'll see some time when you get more density, it really accelerates. And so in our most penetrated markets, we're still seeing stronger growth in the average market. And so there's a lot of investment, a lot of focus across the business. I know there's energy and enthusiasm when we talk about these new TAMs because they're exciting. But internally within the business, there's a huge focus to make sure we continue to scale and grow in our core business. And core business teaches a lot about these new TAMs as well, right? And so we've got to continue to make sure that we drive towards -- as I said, the most important thing that we can do over the next decade is continue to strive towards market leadership in restaurants here in the U.S.

Moving to enterprise. You mentioned Hilton and Perkins, you also won Potbelly. And so you're seeing some traction upmarket. First, I was hoping you could unpack what product, innovation and go-to-market changes have led you to this initial success. And what's on the road map around product and go-to-market to sort of continue unlocking that market?

Yes. I think -- I'll start and feel free to chime in, of course. At the highest level, when you look at our product differentiation in the core business, it's very relevant also in the regional and mid-market and enterprise business. So if you think about what happens in the 4 walls of a restaurant, it's very consistent. In terms of innovation -- and actually, I'll give you a little texture, too, when you think about our investment in enterprise. In 2019, we had invested in enterprise, and COVID hit and we stopped investing, if you will, in enterprise, really to get focused in the business and the core business. And then we've brought back that investment a couple of years after COVID, around 2022. Let's say, that's when we really in earnest began to invest. And over the course of the last couple of years, we've invested in above-store capabilities that you would expect, things like P2PE, just given the security requirements that a lot of our enterprise customers expect of us, multi-location management, menu publishing, all these things that you would imagine an enterprise operator needs when they're running hundreds of locations. So that's where the investment has focused. And as we've grown our investment, our pipeline has also grown. So it started with winning -- and we had enterprise customers all along, but we started winning the likes of Marriott and Potbelly and some of these others. And so we're starting to see an increased credibility in the market around our enterprise investment. And if I think about what do we need to invest to continue to grow, drive-thru is definitely an opportunity that we see. Especially if you want to get the larger QSR enterprise formats, that presents an opportunity. And there's a kind of innovation happening around voice AI. So there's, certainly, with the data we have, an opportunity to continue to be successful in enterprise. The team is executing really well. And a lot of times, we're getting pulled into deals, which is a really good sign in terms of having been in the market only a couple of years and seeing already such great traction.

You mentioned drive-thru. Just wondering, are there any other roadblocks in addressing the top chains in -- when you think about enterprise restaurant chains?

Maybe just to add to maybe extensibility of the platform. We continue to make sure that the infrastructure that we have -- we don't want any one customer to take over our road map. And so an important part of going upmarket is the extensibility that the platform offers. And what I see is, as tech is becoming more and more sophisticated, when you talk to the larger restaurant chains, they see the importance in the value of moving off of legacy on the cloud. And they don't want to be in the business of trying to build all of this themselves. And so I think the most important thing that we can do is to continue to invest in ways where the platform is extensible so you can benefit from all the innovation that's coming in from the SMB business, but it also can be customized for these upmarket larger chains.

Perfect. Want to shift over to the international opportunity, where I believe you mentioned that sales reps internationally are, from a productivity standpoint, are tracking ahead of where...

Location productivity.

Location productivity versus the U.S. at a similar scale. Very impressive. What is key to that? Are you just replicating the U.S. playbook in these international markets? Are there nuances from country to country. How have you adapted your go-to-market strategy?

Team has done a phenomenal job. It's a team that is working on our international opportunity, is really passionate about going into these new markets. And we've got a lot of R&D out of Dublin. We've got people out of the U.S. that have moved into these markets to help launch these countries for us. And I think a lot of it is just -- we've been at this again for 12 years, and so there's a lot of experience, right? We've learned a lot along the way in terms of what does it take to scale a go-to-market and a customer success team. We've learned a lot about -- the platform, of course, is a lot better than it was 10 years ago. So I think some of it is -- internationally, we've talked about how not all of the platform is available yet. But if you look at the core platform of like taking orders, taking payments, getting reports and data, getting operational perspective on how employees are performing, all like the guts of running a restaurant and the operations of a restaurant, I think what you hear from customers internationally is that it's a step-function change versus what they were using previously. And that's because we've been at this, again, building the core of the platform for 10-plus years. In terms of the go-to-market, I think in the markets we're in today, we have a lot of conviction that there's a lot of overlap between our strategy in the U.S. and internationally, like these teams that are local in market that can get to know restaurateurs, a service experience that's again local. But we're also looking at -- as we think beyond the cities we're in internationally, because you can imagine like the number of like these bigger cities internationally, the ratio is a little bit different than in the U.S. And so we're thinking about like what are different models that we could consider. It's not well known, but in the -- with Toast in the U.S. early on, because we only had so much capital, we actually tested reseller models to get beyond the larger cities. And so we have some experience with that. And so we are exploring what are things we can do longer term, right, because we can't be everywhere. And so are there strategies, whether it's with e-commerce or through reseller models, to accelerate our growth? But again, the balance is always like we've got to also make sure in the markets we're in, our execution is top-notch. And so those are the things we're always balancing.

And when you talk about additional cities outside those largest ones, are you still sticking to U.K., Ireland and Canada? I'm just wondering like how you balance getting to a flywheel status in some of those markets versus expanding to some other countries.

Yes. I think we -- it's a balance because we also want to invest in some of the markets we're not in internationally within these 3 countries, by the way, to get them going because we need to get going. But we also -- there's efficiency to be had as you get to flywheel and the social proof that comes with that. So we're balancing those 2. But the focus is, first and foremost, on making sure in the cities we're in, right, the execution is top-notch, that we can get as quickly as possible to the level of scale where you start to see some of those flywheel elements. And In terms of other countries, we're always exploring. We've got a team, again, that's looking at -- further out. And so there's a team led really by R&D that's -- and it's a cross-functional team that's exploring what is the right strategy, which countries and how do we also just test and learn before we go full throttle in some of these countries. And so yes, there's learnings happening. But the core focus is, again, on these -- in the markets that we're in today.

Perfect. Want to shift over to retail adjacencies, grocery, convenience store, bottle shops. And you talked about what you saw in your initial investments making you more confident to invest more in 2025. So things starting out really strong in those markets. There are so many different subsegments when you think about some of those retail adjacencies. Where are you best positioned to win? Where is the Toast product a really good fit?

Yes. So first off, retail '23 was largely about hybrid concepts, 2023. There were restaurants that had some retail component. '24 was the first year we said we're going to actually go after the retail opportunity across convenience stores and bottle shops and grocery stores. And we've seen thematically, at the highest level, really good traction. And that's why we're investing in a dedicated sales team this year going after the retail opportunity. So thematically, just across the TAM, like we've seen really good early signal. And one example of that is just the productivity of the reps that are going after the retail opportunity. I think Elena mentioned earlier that the GPV per location in retailers were higher than restaurants across these TAMs. And it made me go back to Toast 7, 8 years ago, where it took us a while to get into the larger GPV locations in restaurants. Because you can imagine, if you're in these larger restaurants, you need more social proof before you're going to switch over. And so we've seen some of the same trends in retail, where we're seeing really good success across the subcategories we're in. But as an example, if you're a small market or a bodega or a smaller grocery operation versus you're a $50 million grocery operation, the complexity is a little bit different, right? Like for example, you need more self-checkout capability. You need -- the inventory needs are more sophisticated. There's -- e-commerce needs more sophisticated. And so the R&D team that focuses on grocery is, again, looking at the TAM and saying, "What is the right strategy to serve this whole TAM?" And often, I think GPV is a proxy for complexity. Similarly, if you look at fuel and look at convenience stores, one of the areas we need to invest in is the fuel integrations. And so we do a good job supporting massive -- a big set of SKUs in convenience stores, but we have to build out the fuel capability to support convenience stores. In fact, people like our product so much, they, in fact, sometimes use Toast within a convenience store, even if the fuel integration is not there and they manually double key in what the fuel total was. And then on the bottle shop side, there's some regulation and rules and laws that are state-specific in terms of what's required in terms of reporting back to the states. And so we're working through those. And I think at the highest level, the thing that has been really positive to see is the early data. Because we track our pipeline, we look at like legacy and how much of the pipeline is coming from legacy operators, and you see like a lot of legacy. And I think it's -- or you see some of these horizontal solutions that are not purpose-built that, actually, in fact, we compete against in restaurants. And so what we're seeing is that the early customers, the biggest thing they found to be valuable is this like vertical focus, where we're going in and not just saying, "Here's your restaurant product." We're going in and saying, "How do we make this product work for you?" And that signal -- and as a result, the customer signal and the receptivity has been really positive.

Excellent. So sort of rolling up U.S. core, international, enterprise, retail. You've talked about a goal to serve multiples of your current customer base, which is a really big number. So can you get there through those markets that we've just talked about? Or are there other verticals or other ways to think about that TAM expansion to get there?

Yes. Yes. If you look at the opportunity in U.S. -- in the U.S., first of all, yes, absolutely. I'll start by saying, absolutely, we can get there in just the markets we're in. And my leadership team and the Toast team knows I love numbers, so I can share a little bit about how we think about it. You look at U.S. SMB in the mid-market and the enterprise space, and you kind of have a sense of what that TAM is. And then you go look at the retail TAM across convenience stores and bottle shops and grocery. And then you say, "Okay, we're in these 2 or 3 international markets." You just add that up and you get a perspective on like what kind of market share you'd need to go to have meaningful growth for many, many years, right? This is the many multiples. Then you stack up -- then you say, "Well, wait a minute, like in addition to SMB and mid-market restaurants in international markets, you've got retail." In fact, we've got -- if you go to London, you'll see some retail locations, grocery stores using Toast already, right? Then you say, "Well, the enterprise changed internationally." And so if you look at the cross-section of all of these, there's actually a lot of opportunity. Just by looking at the intersection of some of these subsegments that we were in the U.S., taking them international, looking at more international markets over time. And then over -- in the long term, I do think we will explore other verticals as well. Like you think thematically, like one long-term vision that we think a lot about internally, we had an internal kickoff event a couple of days ago and we talked about this, is like could Toast be the platform that powers in-person commerce. And of course, there's a lot there. And so you got to figure out how do you surgically think about the sub-TAMs gradually over time. But that is part of the long-term vision.

Great. So put differently, it would be shortsighted to look at the 1.4 million TAM that you've laid out as the endpoint that -- just like we've seen that grow so much since IPO, you could expect to see that continue to grow significantly over time.

Yes, over the long term. And the balance always is we've got to make sure we win -- as I said, the most important thing is we've got to win in U.S. restaurants. And so how we think about TAM expansion is like it's more of a longer-term vision.

Perfect. Want to shift and talk a little bit about payments and pricing, starting with fintech take rates. There's the potential for, I think, fintech take rates to move higher, pricing increases, cost optimization. Ultimately, where can take rate go?

Yes. No, great question. We are very confident that over the long term, we can move take rate up. And the reason we have this confidence is if you think about the levers that we can deploy to really drive that, and this is really over the long term, number one is cost optimization, as you said. And if you just think about the scale that we're at now processing over $160 billion in GPV, that's just going to continue to grow, especially as we go after this multiple hundreds of locations. But as our scale grows, that's just going to create natural opportunity for us to work with our partners and our ecosystem and really drive some of that cost per transaction down. And then, of course, pricing, we've talked about being very targeted, very gradual, sort of steady execution against that over time as a natural part of our playbook. And then just thinking about our innovation and how we can take our innovation, drive more digital products. Surcharging is a more recent example of that. And then just think about embedded finance, and Toast capital is our first step into that direction that we've had a great program already. But you can imagine with the data we have, the visibility we have with payments that, that presents other opportunities for us over the long term. And so when I look at all those levers over time, we feel very confident we can drive the take rate up.

A follow-up on Toast Capital, how should we think about that opportunity? How do you size that opportunity? And for those investors who have some concerns around the capital business, considering and assessing the risk side of things, what's the takeaway?

Yes. Great question. First of all, managing risk is front and center for that program. We have a great team that's very focused on managing that risk. We have great visibility into the payment data, which gives us a lot of insight into the creditworthiness of our customers. So overall, very pleased with how the team is managing the program. But also just from a customer lens, we're presenting an opportunity an integrated part of our platform where customers can get access to capital very easy, quick, low friction. And what we're finding is not only is it driving value, but a lot of our customers are coming back and renewing those loans. And so it's one of our highest NPS products. So certainly very proud of the team. And as we thought about growing the program over time, natural course of business was let's add -- let's diversify our funding sources. And so as many of you know, we have a CRT program where we retain some of the risk. And then we also have added in 2024, I think it was '24, forward flow, losing track of time here. It's '25 now, yes. Forward flow was an opportunity for us to, again, diversify our funding resources. It has different economics, very positive in both scenarios. And then within our CRT program, really pleased with the team's ability to manage the risk but also optimize how our underwriting process overall. So that's what you saw drive down the bad debt in 2024. But over the long term, as I think about the program, it will be roughly contributing the same amount of basis points, 10 basis points to our take rate. And I think it will just grow as our business grows. So really pleased overall with the program, and the risk is managed quite well.

Great. Want to ask about software and software ARPU. Software ARPU has been growing mid-single digits, and it sounds like that's the right way to think about the range in the near term. And so the question is, you're taking some actions around packaging and pricing. You have continual innovation, rolling out new products, selling more products, attaching more products, investing in this upsell team. Like if all of that goes well and you execute to those initiatives, is that what's needed to get to mid-single-digit growth? Or is there potential to see that reaccelerate?

Yes. It's a great question. So first, I would start by saying our North Star is ARR, even though I know everyone focuses on locations. I view locations and ARPU both equally important as we think about the trajectory of the business over the next 3, 4, 5 years. And in 2024, we added $200 million of SaaS ARR alone across those 2 vectors. So that's number one. As it relates to ARPU and growing it over time, in the near term, certainly, the mid-single digits is the right zone. But over the long term, we have an opportunity to continue to grow that ARPU. And so just breaking that down, some of it is this idea that we -- the fact that we're not in -- we don't have -- our attach is not a terminal attach today. So for most of our products, there's still plenty of runway with our upsell team, with our team to grow that attach. Second, you can imagine we're going to continue to innovate, right? So that will continue to drive more opportunity, more surface area for our teams to sell. And then some of the products, whether it's team management or some of the newer products and catering, et cetera, those are opportunities really new where we still have an opportunity for our upsell team to grow and drive more penetration into our customer base. And our upsell team is still relatively new. We're doing quite well, but there's still more room to optimize their efficacy over time as well as we get more data. So on product attach, there's absolutely a way to grow. Pricing is another lever. Of course, that -- we'll take slow, steady, surgical movements on pricing, very targeted over time. So when you put that all together, we feel really confident over the long term, we can drive our ARPU growth.

Aman, want to ask you about AI, a topic that I think you have started talking more about on recent calls. You have a benchmarking tool, Sous Chef, lot of potential around optimization. I guess, the question is, one, what is your AI strategy? Two, how does the data and your positioning puts you in a good position to deliver AI capabilities to customers? And three, are restaurants ready to adopt AI?

Yes. Before I get there, just one comment on the ARPU. And I think if you look at the Toast platform fundamentally, the reason people switch to Toast is they see -- as an example, the handheld is turning tables faster or they see integrated e-commerce drive digital demand. And so these new products, one of the most important things we're getting the team focused on is what are the customer outcomes, right? Because we want to see the same flywheel with these incremental products as well. And I think the more we focus on that, the more -- then the ARPU and expansion will follow. And that's a mindset that the team is really focused on. And to your question, AI, it's -- maybe I'll share a story that one of our customers that's recently signed up is a place called China Live, almost like -- it's based in San Francisco. It's kind of similar concept to Italy in many ways. They've got like a restaurant, but they've got a food court-like concept, some retail. And just chatting with the GM and the owner, and they were saying, "We get so much data every day. And like our team is like they gloss over it." They say, "We don't know what to do with it," because there's just so much data that hits them. And so the task that we have is to recognize like our restaurateurs are really busy. They're not technologists and CIOs and like BI experts. And so how do we leverage AI to make their jobs easier by making -- like as an example, insights more actionable? And you look at benchmarking, for example, the reason it's done well is because you log into the back end of Toast, and it tells you some things you should consider, like hey, you even kept up with inflation. Here's a menu item for your cuisine type that you could add that's really popular, how to think about pricing of your menu. And so -- even fraud, by the way. And so making it actionable and making it accessible is what's going to unlock the usage of the platform and our customers leveraging AI. Even generative AI for marketing. The reason more than half of our customers now use it because it's so much faster to generate these marketing campaigns in Toast using GenAI as opposed to doing it themselves. And so the more we can stay focused on recognizing that our customers are not technologists, they're not data experts and the more we can make the platform accessible, I think that's what's really going to unlock like the power of AI. And I think that the potential is so enormous because so much of how restaurants operate is so manual even today. Like you think of like how they've scheduled staff or how they go purchase inventory or food, like there's so many workflows that are so manual. And so our challenge is to leverage AI but do it in a way that is accessible and easy for our customers.

Want to sneak last question in on margins and investments. The EBITDA margin expansion for 2025, roughly 300 basis points, is greater than sort of how you were framing it a little bit earlier before the end of the planning process. So I guess, the question is really on investments. And how do you manage all these different growth initiatives, priorities from an investment standpoint, deliver this type of margin expansion?

Yes. No, absolutely. So Aman and I spend a lot of time talking about that. At the highest level, I would say our -- as Aman said it earlier, we still have to invest significantly in the core business. course. And so when I think about it, if you think Aman's priorities, deepen our penetration in the core, expand in our new verticals, of course, product differentiation and doing that in a balanced -- very balanced way, right, thinking about durable growth over the long term while still expanding margins along the way, that's the principles of just how we manage. And then just to give a little more texture on the core business, it's everything from reps and targeted territories, it's product differentiation; for the new TAMs, it's rep capacity, it's adding product, expanding the product in the platform to serve those customers. And again, zooming out, when I think about the investment, a lot of it is going to drive revenue in '25, but a lot of it is also going to drive this growth over the long term. And so we're constantly looking at that balance, knowing that there will always be expansion every year. And so we're sort of balancing the growth over the long term. But really encouraged by what we're seeing in the market today, and we're leaning into that investment.

Excellent. We are over time. Aman, Elena, thank you very much for all your insights.

Thanks, Josh. Thank you, everybody.