Good afternoon. My name is Kate, and I will be your conference operator today. At this time, I would like to welcome everyone to the Toast earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star followed by the number two. Thank you. I'll now turn the call over to Michael Senno, Senior Vice President of Finance. You may begin your conference. Thanks, Kate. Welcome to Toast earnings conference call for the fourth quarter and full year, ended December 31st, 2023. On today's call, our CEO and Co-founder, 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. All statements other than statements of historical facts are forward-looking statements, including those regarding management's expectations of future financial and operational performance and operational expenditures, location growth, future profitability timeline and margin outlook, anticipated impact of our restructuring plan and share repurchase program, expected growth and business outlook, including our financial guidance for the first quarter and full year 2024. Forward-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 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. Finally, the press release and our earnings presentation can be found on the investor relations website at investors.toast.com. We will no longer publish an earnings presentation on a quarterly basis going forward. After the call, a replay will be available on our website. With that, let me turn the call over to Aman. Thank you, Michael. Good afternoon, everyone, and thank you for joining today's conference call. This is my 12th year since we launched Toast in my basement with Steve Fredette and Jonathan Grimm back in 2012, and I'm honored to be here today with all of you and lead this great business as CEO on my first earnings call. Before I recap 2023 and look ahead to 2024, I do want to address one topic upfront. We've made the difficult but right decision to reduce our headcount by 10%. As you know, Toast grew rapidly over the past few years to support our growing customer community. As we've taken a look across the organization, it has become clear that we grew our team too quickly in some areas, and we need to restructure the organization to best align with our most important priorities. The changes we announced today primarily focus on non-customer-facing roles, and we remain committed to sustaining healthy top-line growth and delivering a best-in-class customer experience. I want to thank every Toaster past and present, including those who are leaving us, for the important part each of you played in getting us to where we are today. In the very immediate term, my priority is to ensure we navigate today's decision with empathy and support for those affected. As we work through this transition, I'm confident we can tap into a renewed sense of optimism for the opportunity ahead. Our defining challenge for 2024 is to operate with a shared urgency against our mission, raise the bar on how we collaborate, and maintain a relentless focus on our customers. Over the past decade, we've built a leading integrated software platform for the restaurant industry, and since our IPO in September 2021, we've launched so much innovation to help restaurants thrive: products like reservations, websites, scheduling, retail capabilities for restaurants, a full redesign of our POS experience, and more recently, our Toast Now operator app, to name a few. This focus on platform innovation has allowed us to double the number of restaurants in our platform to 106,000 and more than double ARR to over $1.2 billion since the IPO. As we look ahead, our conviction in the future is as strong as ever. We are well on our way to becoming the technology platform of choice for the entire restaurant industry. Continuing to deliver on our mission and serving as the technology backbone for restaurants will lead to significant value creation for all our stakeholders: our customers, our shareholders, and of course, our Toasters that support our community each and every day. To accomplish this, we'll focus on four strategic priorities. First, scaling restaurant locations within our core business. Second, driving ARR and ARPU by building products and experiences our customers love. Third, expanding our addressable market by launching and scaling new growth vectors. And fourth, setting up the company to scale and deliver ongoing operating leverage. Now let me walk through each of these in more detail. First, we will continue to win market share and scale restaurant locations within our core business. We added over 6,500 net locations in Q4 and ended the year with approximately 106,000 locations, a 34% increase versus 2022. Our ability to sustain over 30% location growth at this scale is a testament to our competitive differentiation: our all-in-one platform, our localized go-to-market approach, and the consistent execution by our sales and customer success teams. The momentum in our SMB segment has allowed us to double the number of flywheel markets over the past year, with 30% of our markets now in flywheel, defined by over 20% SMB market share. Our reproducibility in flywheel markets is over 10% higher than other markets, leading to faster share gains. Even in our most penetrated markets, where we have over 30% market share, we are still gaining share at a healthy clip. These markets are a benchmark for how we expect other markets to evolve over time and gives us confidence in sustaining healthy location growth. The foundation of our success starts with high-value, full-service restaurants, which our go-to-market team is prioritizing. In addition, we're gaining traction across the broader TAM as we expand our product offerings to serve different restaurant types. As our addressable market grows and we see gradual adjustments in our mix across SMB, mid-market, enterprise, and international restaurants, we expect ARPU to continue to increase and GPV per location to remain above industry averages. Our team continues to ensure we maintain healthy unit economics as we scale locations across these categories. In addition to our SMB market segment, which is the largest share of the market and remains the biggest driver of net adds, we continue to see growth in our mid-market segment, including brands such as Wetzel's Pretzels, The 99, Dirty Dough, Romano's Macaroni Grill that have joined Toast over the past year. Let me highlight one FSR win from the quarter. Urban Prime Marketplace and Restaurant, founded by Chef Ercan Ekinci in Florida, opened in October. Urban Prime is an upscale FSR with large indoor and outdoor dining areas, as well as a gourmet market featuring a butcher shop, sushi, and wine. After extensive research, Urban Prime selected Toast to consolidate their business across their thriving restaurant and gourmet market and are leveraging our POS terminals, Toast Go handheld devices, kitchen display systems, online ordering, gift cards, and marketing. Using our restaurant retail product, they were able to consolidate POS systems across their restaurant and market to simplify their front and back-office operations and consolidate all the revenue streams into a single backend. In addition, they've also recently switched to Toast Payroll to further streamline and simplify their business. It's great to see Urban Prime expand with Toast and refer several restaurants to Toast. Our second priority is driving ARR and ARPU by building products and experiences our customers love. To complement our strong location growth, we are laser-focused on increasing ARR at scale. In 2023, we grew total ARR 35% year-over-year. We believe there's runway in our existing markets to continue to scale locations while also increasing both SaaS and FinTech ARR through product innovation, pricing, and our continued investment in upselling existing customers through our growth sales team. Hybrid product attach rates is an important driver of ARPU. Many of our existing products have plenty of runway to scale, and our product teams continue to act on customer feedback to enhance and expand their terminal attach potential across our customer base. For new customers, earlier this month, we rolled out simpler product packaging that will enable our new business reps to maximize initial product attach in ARPU while balancing strong location growth. For existing customers, price adjustments is a new lever that we are looking to build into our ongoing ARPU growth strategy. We will take a holistic approach across both SaaS and FinTech, and you should see progress from us in 2024 that we build on moving forward. One customer that has expanded and adopted more of the platform is Angelo's Ristorante in Massachusetts. Angelo's is a classic Italian eatery, half fine dining, half takeout pizzeria, which joined Toast in 2018. On a busy Friday night, Angelo's may send 40-50 tickets to the kitchen in a short 15-minute period. To support this volume, they went looking for a new POS. After looking at 10 different systems, they chose Toast because we best met their needs. Since joining Toast, Angelo's SaaS ARR has almost doubled. Angelo, the restaurant's owner, has worked closely with us to add more products to grow revenue, including online ordering, catering and events, and Toast Tables. With Toast Tables, Angelo's hosts can more efficiently manage table turnover and bring in more reservations. And as a new payroll customer this year, Angelo is excited about the time and cost savings he's seen so far. All right, so shifting to our next priority, our third priority is expanding our TAM by launching and scaling new growth vectors. To complement our success across SMB restaurants, our product team is hard at work to make Toast an even better fit across enterprise, hotel restaurants, and international markets. Last week, we announced an agreement with Choice Hotels. Toast will be the brand standard for Cambria and Radisson Hotels, as well as a qualified lender for other Choice brands. Cambria and Radisson will leverage the breadth of the Toast platform, including Toast Online Ordering, Mobile Order & Pay, kiosk, and Toast Payments to support the different dining options across their properties. We're also thrilled to welcome Caribou Coffee to Toast. They chose us to maximize speed of service across their coffee shops and partner with the scalable restaurant platform to support their expansion plans. And internationally, I'm excited to share that we've exceeded 1,000 locations as of the fourth quarter. The team has worked hard to establish the Toast brand in parts of Canada, the U.K., and Ireland using the same localized go-to-market approach that has worked domestically. The customer reception in these markets has been terrific, and it reminds me of what we saw here in the U.S. in the early days. As more of our platform is available in international markets, including online ordering, guest marketing, and reservations, we expect to drive higher ARPU and further improve our payback periods and margins. This is a priority in 2024. We're confident that as the enterprise and international markets represent a significant growth opportunity for Toast. Additionally, we're also looking to leverage our differentiated go-to-market engine, our all-in-one platform, and our growing scale to open up new opportunities for us. We're seeding investments in new parts of the TAM where we believe our market position provides a competitive advantage. Restaurant retail is a good example of this, and these nascent initiatives should further complement our growth potential over the long term. Next, our fourth priority is setting up the company to operate and scale to deliver ongoing operating leverage. In 2023, we grew ARR 35% and adjusted EBITDA to $61 million, which was a $175 million improvement year-over-year. Our progress shows the scalability of our business as we balance growth and profitability. As we continue to grow, we're committed to the ambitious priorities I laid out above, as well as delivering increased operating leverage, including GAAP operating income profitability by the first half of 2025. This effort includes managing our stock-based compensation expense with the same discipline that we approach all our expense lines. Additionally, as we start to scale free cash flow, our capital allocation approach will evolve. This includes prioritizing organic investments in areas we have signal and conviction that we can grow, looking at M&A if we see the right opportunities, and returning capital to our shareholders. To support this, our board has approved a $250 million share repurchase authorization, which we will leverage opportunistically based on market conditions. We plan to regularly evaluate and optimize our capital allocation priorities, and we will do so with a disciplined and transparent approach. All right, to wrap up, I want to leave you with a few themes that I covered today. We have a large opportunity ahead and have built the foundation to capitalize on it. As we execute our playbook to deliver continued market share gains in our core business, we will invest in parallel and leverage our strengths to open up additional TAM and build new growth curves. We will sustain ARPU and ARR growth through a combination of product attach and pricing. We're confident we have a scalable business model and will continue to balance growth and profitability. I want to thank all our Toasters, including those who will be leaving us, for your dedication and contribution to Toast. As I said earlier, this week is a tough week, but I'm confident that we will move past this and over time build a stronger Toast. I also want to thank our customers for entrusting us to support this incredible community. I want to thank our shareholders for believing in us and the potential in this business. Thank you, and now I'll turn it over to Elena. Thank you, Aman, and to everyone for joining. I'd like to thank all of our Toasters for their hard work and commitment, including those we are saying goodbye to today. Organizational changes like these are hard, though this is a necessary step to streamline how we operate and position us to move faster to capitalize on the opportunity ahead. In 2023, we showed our ability to balance durable growth and profitability. For the year, Toast processed over $125 billion in payment volume, up 38%. ARR grew 35%, and total FinTech and subscription gross profit, our recurring gross profit streams, increased 49% for the year. We are efficiently scaling the business and driving cost discipline, delivering adjusted EBITDA of $61 million, a 6% margin on our recurring gross profit streams, 22 percentage points better than 2022. Over the past two years, we've embedded durable, efficient growth as a principle for how we operate the business. The midpoints of our 2024 guidance at 24% growth in our recurring gross profit streams and $210 million in adjusted EBITDA reinforces this and puts us on track for GAAP operating income profitability by the first half of 2025. As you heard from Aman, we are still in the early stages of our growth potential and committed to maintaining the same approach as we lean into the growth opportunity and continue to scale. The three main areas I want to cover today are our fourth quarter results, our guidance and the impact of our restructuring plan, and our capital allocation approach, including the $250 million share repurchase program we announced today. Starting with our fourth quarter results, we added over 6,500 net locations, increasing our total locations to approximately 106,000, up 34% year-over-year. SaaS ARR grew 43% year-over-year, driven by the strong location growth and a 7% increase in SaaS ARPU as we lean into our customer acquisition momentum and balance ARPU growth. Our SaaS net retention rate, or NRR, remained in a healthy range at 117%, led by solid contribution from upsell and location expansion from existing customers. Fourth quarter payments ARR grew 28%, and FinTech gross profit increased 29%. Fourth quarter GPV increased 32% to $33.7 billion, and GPV per location declined modestly year-over-year, in line with our expectations and consistent with the trends exiting the third quarter. As a reminder, fourth quarter GPV per location is seasonally lower than the third quarter, and payments ARR reflects the same seasonality. Net take rate was 52 basis points in the quarter. Our non-payments FinTech solutions, led by Toast Capital, contributed $34 million in gross profit in Q4, reflecting steady, healthy demand. We continue to take a balanced approach to growing Toast Capital, and our unique position with real-time access to POS data allows us to monitor the health of restaurants and prudently balance risk while helping our customers grow with fast, flexible access to capital. ARR remains our no rth star. As Aman laid out, across our two growth vectors, locations and ARPU, we have multiple levers to sustain healthy ARR growth over time. We will prioritize the highest value locations to extend our success in this segment of the market. At the same time, the breadth of our integrated platform and ongoing product innovation opens up the entire restaurant TAM to us, and we plan to capitalize on that opportunity to drive further share gains. As we expand, we will remain grounded in unit economics and will tightly manage payback periods across the portfolio to ensure we drive incremental profit as we scale our locations. In 2023, our dollar-based payback period was 14 months, in line with our target for the portfolio and an improvement from 2022, even as we expanded into more parts of the TAM and increased our international investment. In FinTech, our long-term growth drivers for increasing core net take rate remain, driving towards lowest cost per transaction and leveraging our unique customer relationships to provide additional FinTech solutions. We anticipate SaaS ARPU growth to be in mid-single digits over the near term, driven by increasing attach and pricing. Across both SaaS and FinTech, pricing is a lever that we will use methodically to monetize the value we provide customers. As Aman discussed, this is a capability we are building to be an ongoing part of our growth algorithm over time. Turning to our expenses, we manage hardware and services as customer acquisition costs and provide these on a discounted basis to offer an easy, low-friction on-ramp for customers. Q4 hardware and services growth margin improved 19 percentage points compared to last year, primarily reflecting lower shipping costs and ongoing operational efficiencies. Sales and marketing expenses increased 18% year-over-year in Q4 as we continue to invest in our upsell and international sales teams and make targeted investments in our U.S. new business team to drive deeper penetration. Sales and marketing, as a percentage of our recurring gross profit streams, improved by 400 basis points in Q4 relative to last year. Our go-to-market motion is a competitive differentiator and an important part of our ability to efficiently scale the business, enabling us to sustain healthy ARR growth while moderating investments in sales and marketing. R&D expenses grew 17% year-over-year in fourth quarter. Our product investments are aligned with our priorities to serve more of the TAM, to expand ARPU by increasing the addressability of our products and serving more of our customers' needs, and to seed longer-term growth initiatives. Complementing these priorities is an emphasis on delivering best-in-class customer experiences and building scalable, resilient infrastructure to support hundreds of thousands of locations. G&A expenses grew 5% year-over-year in the quarter. Excluding $20 million of bad debt and credit-related expenses, primarily related to reserves for Toast Capital, G&A was up 3%. That's a result of our ongoing efficiency efforts and prudently managing overhead expenses. Adjusted EBITDA was $29 million in the quarter. The 10% margin on our recurring gross profit streams marked a 19-percentage point improvement from Q4 last year, driven by the combination of continued strong top-line growth and operating leverage as we efficiently scale the business. Free cash flow totaled $81 million in the quarter and $93 million for the full year. We converted over 100% of adjusted EBITDA to free cash flow, with working capital benefiting from stronger GPV trends in December. Over time, we anticipate the trajectory of free cash flow to broadly mirror adjusted EBITDA. Free cash flow is typically lower in the first quarter each year due to seasonality of our payments business and the timing of cash bonus payments, and this year in Q1 will also include severance payments. Given these factors, we expect free cash flow to be negative in Q1, then accelerate as the year progresses. In terms of the restructure we announced today, we anticipate recognizing $45 million-$55 million in restructuring and related charges for the year, with most of it falling in Q1. In total, we expect over $100 million in annualized savings, including stock-based compensation from the restructuring and lower hiring. We will reinvest a portion of savings into our highest conviction growth initiatives. Our 2024 top-line guidance is for the combination of subscription and FinTech non-GAAP gross profit, our recurring gross profit streams, which is the P&L metric that most closely aligns with ARR. In Q1, we expect 22% top-line growth and $20 million in adjusted EBITDA at the midpoint. This reflects slower GPV trends in January due to weather headwinds across many parts of the country. GPV has stabilized over the past few weeks, and we continue to closely monitor. Net location adds in 2024 will follow the typical seasonal pattern. We expect a lower Q1, similar to Q1 last year, in the 5,500 range. Then location adds will peak in Q2 as restaurants prepare for busy season. More broadly, with a healthy pipeline, consistent go-to-market execution, and increasing contribution from new segments as the year progresses, we are well positioned to add more locations to our platform in 2024 than last year. On a full-year basis, the $210 million midpoint of our adjusted EBITDA guidance reflects a nearly $150 million improvement and margin expansion of 10 percentage points relative to 2023. As we drive efficiency and increase profitability, we'll prudently invest in our highest priority growth areas, including product innovation and our go-to-market engine. In addition, we will continue to invest in longer-term initiatives where we have conviction, like international expansion and enterprise, as well as plant seeds in newer initiatives where we see a clear right to win to expand our market opportunity and extend our growth potential. Stock-based compensation is an area we're managing with the same rigor and discipline as other expenses, through a combination of disciplined headcount management, including the restructuring plan announced today, changes to equity-granting practices, and the roll-off of large grants made in 2021 and 2022 over the next couple of years. Our goal is for stock-based comp to decline from 27% in 2023 to low double digits as a percentage of recurring gross profit streams over the medium term. Managing our equity program will also improve dilution. We are committed to maintaining net share dilution on our total, fully diluted share count, which includes all stock awards, to below 2% annually. With the combination of continued adjusted EBITDA margin expansion and leverage in our stock-based compensation, we are on track for GAAP operating income profit by the first half of 2025. Lastly, let me turn to capital allocation. As our free cash flow profile grows, our capital allocation strategy will evolve. Our top priority continues to be investing organically in our business to drive sustainable long-term growth. Even as we strategically invest, we are committed to driving increasing free cash flow. With excess free cash flow, we will evaluate M&A, but we will hold a high bar given the strong organic growth outlook, and we're adding the option to return capital to shareholders to our capital allocation toolkit with a $250 million share repurchase authorization. We do not have a timetable on repurchases and will act judiciously and opportunistically. We plan to regularly optimize across these priorities to do what's best for the business at any given time and will always optimize for long-term shareholder value. To wrap up, we are executing across the board, growing our location count, driving value for our customers, seeding new longer-term growth initiatives, and positioning the company to operate fast and nimble going forward. We're planning to host an analyst day during the second quarter where we will go deeper into our business and share more about our market opportunity and strategy. I'm incredibly excited about what lies ahead for Toast. Thank you, and now I'll turn the call back to the operator to begin Q&A. 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. We'll pause for just a moment to compile the Q&A roster. Your first question will be from the line of Will Nance with Goldman Sachs. Your line is now open. Hey guys, appreciate all the color today and congrats on the strong results. You mentioned pricing a couple of times in the prepared remarks. So maybe you could just kind of expand a bit in terms of how you're thinking about pricing. I know this is something you guys have been talking about for the past couple of quarters. And then, Elena, maybe just a numerical clarification on the guidance, the mid-single digits ARPU, is that on an ending basis, kind of like we discussed last year, or is that more on an ongoing basis over the course of the year? Thanks. Sure. Thanks. Will, I'll start by saying, if you look at pricing, it's an important lever for us, but we plan to use it gradually as part of a broader strategy. We've been at this for over a decade, and we're continuing to invest in our restaurant-specific platform to help restaurants thrive a nd I think our customers understand that if we continue to invest in this platform, that we will increase prices over time. If you look at our new customers that are joining our platform, they're paying us more across both SaaS and FinTech. O ver time, we expect that existing customers, we will make those adjustments gradually, and it's going to be a lever that we'll use over time. Yeah, and I can, Will, you had the question about SaaS, and is that an ending point or over the course of the year? And we expect it to be in that range over the course of the year. Got it. Appreciate both of those. And then maybe just a follow-up question on Toast Capital. It's been, I think, a little over a year since you rolled out the longer duration products there. You kind of mentioned prudently managing that. Just wondering if you could kind of talk about your expectations for that product. Is there something you guys are kind of looking to get more data on or kind of more history, and how should we think about kind of the potential for that product as you continue to scale it? Thanks. Yeah, thanks Will for the question. So, at the highest level, we're really pleased with the performance of Toast Capital, and customer demand has been really steady, and default rates are in line with our expectations, so really confident in the program overall. We did launch the 360-day program last year. I think now we've lapped that, so we're more in a steady state, I would say, in the business, but still seeing healthy demand. I would expect over this course of this year, it'll grow more in line with the rest of the business, but we'll scale it prudently, as you mentioned. Over the longer term, I think we have an opportunity to continue to evolve and offer more FinTech solutions to our customers, but for now, we're going to focus on optimizing this program. It's working well. Got it. Appreciate taking the questions. Congrats again. Yep. Operator we'll take the next question. Thank you. The next question will be from the line of Harshita Rawat with Bernstein. Your line is now open. Good afternoon. Thank you for taking my question. Elena, can you talk about the dynamics on the gross profit on the FinTech side? Looks like the net take rates came down a little bit. I know there's some seasonality here, but can you talk about the drivers here, especially looking forward? I know some of your peers have commented on a favorable pricing environment. And then just as a follow-up, Aman, can you talk about the overall data for Toast for new business formation, which has been kind of running above trend over the last few years? Thank you. I'll cover the first question. I didn't hear clearly the second question, so we may ask you to repeat it if that's okay. On the take rate question, take rate in Q4 was 52 basis points. 10 basis points of that is related to Toast Capital. Our core take rate was 42 basis points. That was, there were some customer credits in that take rate, nothing structural to consider over the long term. As we think about take rate over the next year, we'll have that same seasonal pattern we do in Q1 were, because of debit, it's higher. But as the year progresses, we should see it improve, mostly because we're going to continue our cost optimization efforts. We'll have some surgical pricing that's planned in the latter half of the year. And then longer term, of course- Ok. Yes. as I always talk about, we always continue to optimize our take rate and drive it up steadily over time. And then your second question, do you mind repeating it? Yeah, of course. So it was about your data to overall new business formation on the location adds. I know overall, if I look at new business formation restaurants, it's been running higher versus trend, on the long-term trend, so just any comments there. Thank you. Yeah, thanks, Harshita. Look, we've seen continued to see fairly balanced between new openings and existing restaurants. Post-COVID, we saw a bit of tailwind from new restaurants, but that hasn't tailed off in any material way. I'll also just say, if you zoom out, we've been at this for over a decade, and we were the first to build this vertically integrated restaurant-specific platform, and we're continuing to invest. And what we see is across both existing restaurants and new restaurants, we see our sales team able to continue to gain market share across both a nd this is across FSRs and QSRs. And so, even in a world where there's some movement in terms of the number of new openings, we're confident in our ability to continue to gain share. Thank you. Thank you. The next question is from the line of Tien-tsin Wong with JP Morgan. Your line is now open. Thank you, and I appreciate all the profitability focus here. So, my question is, Elena, for you, you were spot on with your location outlook here in the second half of 2023. You mentioned you're going to add more in 2024 than 2023. A question I get quite often is, how do the new location additions differ than what you've seen in the past year or two years ago? I think there's always this question of, are they smaller GPV potential locations? Can you maybe just comment on that, bigger picture-wise? Thank you. Yeah. I'm happy to take that, Tien-tsin. Thanks for the question. I'll repeat, actually, what I just said. If you think about- Yeah, I heard. ... our mission, we've been at this for 12 years now, and we were the first ones to build a platform that was purpose-built for the restaurant industry. The team is continuing to invest to make it accessible across all restaurants, starting in the U.S. and over time globally. If you look in the near term, SMBs continue to drive the majority of our growth, and we see a lot of runway as we gain share. We've talked about how, as we get into these markets, I talked about this in my prepared remarks, we see more and more markets getting into viable state, which is markets that have over 20% share. We're also expanding our products to go after the broader TAM, starting with the U.S. TAM, an enterprise market, as well as mid-market and the SMB, and then international markets as well. The impact to GPV as we expand this TAM should be minimal and gradual. Our average location, we expect, will continue to remain above industry averages. As we mentioned, look, this year, we expect ARPU to continue to grow in 2024 to complement our location growth and be a vector of growth. The team is very focused on making sure that, as we get into new parts of the TAM, they're looking at payback periods to make sure that we have healthy economics across the broader TAM. Great. No, thanks for going through that. I didn't mean to be redundant but just wanted to cover that. Then just maybe as a follow-on to that, with that ARPU comment, just the attached products, is that evolving as well? I know the 43% using 6+ has stayed there, but is the composition of products being taken changing at all? I know that a lot of your peers are pushing some of the higher -end stuff like payroll as well. Any update there? Thank you, and I'll jump off. Sure. Thanks, Tien-tsin. Yeah, look, we're seeing one of the things we just rolled out was Pricing and Packaging 3.0, the new version, and it's really helping our new business reps optimize both location growth as well as maximizing ARPU upfront. We're balancing that with our upsell team that we're continuing to scale. In terms of the product attach rates, there's nothing that's fundamentally changed. We're seeing healthy growth across our Employee Cloud products, our FinTech products, our guest products a nd the R&D team continues to focus on getting customer feedback as we continue to scale locations to see what are ways in which we can increase terminal attach in terms of expanding the product market fit of these products. But we continue to see healthy growth across the portfolio of products that we offer. Thank you. Thanks. Thanks, Tien-tsin. Next question. Operator, we'll take the next one. Thank you. The next question is from the line of Stephen Sheldon with William Blair. Your line is now open. Hey, thank you. So great to hear that you're now over 30% SMB market share in some markets, and I think you noted that in those markets, you're still seeing healthy share gains. But curious if market share gains seem to be slowing down some once you hit a threshold like that. Do you reach some level of saturation where it gets a lot harder to grow locations in some of those markets? Yeah. Thanks for the question, Sheldon. I mean, I mentioned this in my prepared remarks, but even in our markets where we have the highest SMB penetration, this is over 30%, we're still seeing some of the strongest rep productivity and some of the strongest conversion and productivity. And I think a lot of that is driven by just the social proof. As we make more customers successful in these markets, we continue to see strong growth. So, we haven't seen any change in terms of the rate at which customers are joining our platform as we get market share in these local markets. Got it. That's helpful. And then to follow up with international monetization seeming like it's picking up, I think you noted 1,000 locations in those three markets. How are you thinking about expansion into other markets beyond those three that you've been focusing investments on so far? Yeah, it's a good question. For the moment, we're really focused on the markets that we're in. We're still early in the early days there, and we've been focusing on the go-to-market motion and honing that and building out the platform. So, we want to continue to focus there, but we'll update you should that change. But for the near term, we're focused on the countries that we've talked about, which is the U.K., Canada, and Dublin, still. The only thing I'll add is, in those markets, we see tremendous potential for growth. It's still in the early days of what I think was possible. The reception we receive from these customers in these markets is very similar to what we saw in the U.S. in early days, and we want to make sure that we're able to get these markets to a great spot before we think about expanding beyond that. Great. Thank you. Thank you. The next question is from the line of Dave Koning with Baird. Your line is now open. Yeah. Hey, guys. Great job. I guess my first question, the flow-through on recurring GP growth was like 70% to EBITDA the last two quarters. So you're getting incredible margin kind of flow-through. And I guess I'm wondering, is that kind of level sustainable, and is there some sort of metric, like EBITDA percent of recurring GP we could see you give at some point? Is there some sort of target on that? Yeah. I mean, I'd point you to our guidance. We're really confident in the guidance that we have, Dave, and it's reflecting if you think about the long-term guidance, we've given out a few quarters ago, we have ambition to get to 30%-35% long-term recurring gross profit growth. That was something we talked about over the long term, sorry, EBITDA margin. And so just keep that in mind, t hat continues to be our focus. And you see us tracking towards that based on the leverage you've seen in the business over the last several quarters and the guidance that we said today. So, our ambitions on EBITDA guidance haven't changed over the long term. Great. Great. Thanks. And then I guess on the FinTech yield, and I think Harshit asked a little bit about this too. It was a little down this year. Is the seasonal impacts Q1 being the highest and then going down through the year, or because of some pricing actions, could we see a little divergence in kind of the normal yield progression through the year? Yeah. Q1 definitely is typically because of debit, you'll see a higher impact. And then as the year progresses, it's not just we have a marginal amount in for some surgical pricing in the second half of the year, but you'll continue to see us optimize cost. And that's just part of our normal mode of operating is really trying to optimize our cost structure over time. So, both will play a role in the second half of the year. Got you. Thanks. Great job. Thank you. Thank you. The next question is from the line of Tim Chiodo with UBS. Your line is now open. Great. Thank you. I want to dig in a little bit to the mid-single-digit SaaS ARR per location outlook. Two components there I want to dig into. First is the newer customer cohort and also the potential from the upsell of the back book. On the newer customers or the new cohort, are you able to put a finer point on what sort of SaaS ARR per location level that they are coming in at, maybe relative to the total company or relative to last year's new cohort? And then on the existing customers, given you've hired new or added to the sales team for the growth team or the upsell team, maybe you could talk about the contribution to that mid-single-digit growth for the existing book. Sure. Thanks for the question. Look, I think we mentioned this in our last earnings call as well. As we optimize our land-and-expand motion, the new customers that are joining Toast, our sales team is optimizing the number of locations as well as the product attach rates. And so, the ARPU is slightly lower. And then that's complemented with our upsell team. So, the upsell team then takes over. Those are teams that are regionalized that take over and are looking to drive attach rates across the product portfolio. I think if you look at, if you just zoom out for a second and think about the growth potential in the business, we're confident in our ability to continue to drive sustained ARR growth across both locations and ARPU. And we believe both of those will complement each other. I think over time, as we continue to improve the capabilities across our product portfolio and improve our pricing and packaging and our upsell motion, those should be continued levers of growth for us into the future. Okay. Thank you, Aman. So essentially, the new customer cohort would be a little bit of a drag on that mid-single-digit ARPU growth. More of the growth will be driven by the other two levers then, the existing customers upsell and, of course, the pricing. Is that a fair characterization, at least for this year? Yeah, I think that's fair. I think that's fair. I think you should think of pricing as a gradual lever that complements both locations and product attach rates. Perfect. Thank you so much. Thank you. Thank you. The next question is from the line of Samad Samana with Jefferies. Your line is now open. Great. Good evening. Thanks for taking my question. Maybe just on the international side, I know it's only 1,000 locations, but just as we think about that contributing more going forward, how does the average SaaS ARPU for those locations look versus maybe your broader install base? And similar question, how does maybe GPV per location compare, and how should we think about that maybe evolving over time as you make more progress in the international markets? Yeah. Thanks, Samad, for the question. So first of all, as Aman said, we're really pleased with what we're seeing internationally, and we've really focused on the go-to-market motion. We've started with our core platform, so we expect to add more elements to the platform. So as a result of starting with just the core elements of the platform, the ARPU is obviously lower, but as we add more to the platform, we should see it get closer to what we see in the U.S. So that's an opportunity for us. And even with the platform we have, we've had a lot of great success. So, we expect to add more to the platform in 2024. We'll see that play out over the next, obviously, several years in terms of the impact on ARPU. In terms of the profile of the customers, they don't look that different than the U.S. Great. And then maybe just on the cost side, sorry, go ahead. Go ahead, Samad. I don't know. Please, I'll let you finish that. I was going to go in a different direction. Okay. I was just going to say, if you look at our business, the bulk of our net adds continue to come from our core SMB business. We reached 1,000 locations over a couple of years. As we build out the full platform internationally and see the improvements in our payback periods and our unit economics, that's where we look to put the pedal down even further. So in terms of any changes to our mix across GPV and ARPU, you shouldn't expect that to be material in the short term. Understood. And then maybe just on the cost side, I know that doing a reduction enforces a difficult decision. I guess stepping away from headcount, are there any other cost-savings measures that you're putting in place in addition to just the headcount reduction? Anything that we should be aware of that flows as the year progresses as well? We terminated a lease. But just in general, when you zoom out, Samad, I want to make this very clear. The restructuring is one of many efforts that we've had been working towards on efficiency for several quarters. We delivered over $175 million of leverage this year, and we're going to continue across the company to operate in a very disciplined fashion. So, you shouldn't see this as a one-time effort on efficiency, but just how we run our business. Great. Thank you for taking my questions. Thank you. The next question will be from the line of Josh Baer with Morgan Stanley. Your line is now open. Great. Thanks for the question. Two on restaurant retail. I guess first, any context for the mix of locations that might have retail or the addressable GPV opportunity not currently on the platform? Yeah. Hey, Josh. Thanks for the question. As I mentioned earlier, we have SMBs continue to drive the majority of our growth, and we see tremendous runway there. I think as we look at, in fact, a lot of the growth and expansion into restaurant retail was driven by our existing restaurants because many of them also offer markets and grocery and wine and wanted a single platform across all these businesses. I think we do think that the GPV and ARPU potential in these businesses, if anything, is stronger. But in terms of if you just zoom out and think about what's driving the bulk of our net adds, it's going to continue to be SMBs and over time mid-market enterprise and international and then beyond that, restaurant retail. Got it. The follow-up in regard to retail, perhaps if you have a robust restaurant retail offering you're part of the way there to more fully serving the retail vertical, is that a TAM expanding opportunity that you're considering down the road? Thanks. Yeah. I think so over time. If you just zoom out and think about our capabilities that we offer, we started in the restaurant vertical by building this purpose-built platform that's exclusively built, and that's really what's allowed us to scale and gain market share to being one of the market leaders. As we think beyond this and expand the platform and the portfolio of products that we offer and the go-to-market engine that we have and the customer success engine that we have, we certainly think there's opportunity for us to expand beyond. But our focus right now is really in markets where food is served. You're seeing these lines between restaurants and retail blur. A lot of these concepts want a single system because they want a single backend that they can use to track all of this data, and that's where we're starting. Great. Thank you. Thank you. Thanks, Josh. The next question is from the line of Darrin Peller with Wolfe Research. Your line is now open. Thanks, guys. I'd love to hear a little bit more about what's going so well on the enterprise side for a moment. Obviously, you brought up hotels and Caribou, and maybe just a little more color on your anticipation there and expectations for more progress to come. Maybe a bit more on product gaps or product opportunities that you see in that category that you can do some more work on and maybe even add ARPU on that front as well. Yeah. Thanks for the question, Darrin. Look, we're proud of the team's progress over the past year with new brands. If you just look at Choice and Caribou, which I talked about in my prepared remarks, Marriott expansion with existing customers like Nothing Bundt Cakes and MTY. If you just zoom out, we started investing in enterprise business just a couple of years ago, and it's really great to see the progress we've made in a short period of time. And we're also seeing a really good, healthy pipeline and inbound requests from customers. But you got to keep in mind, these are enterprise customers. These are long sales cycles. And we want to be balanced also in terms of which customers we partner with so as to not distract our R&D teams where a single customer has custom work that can take over our product roadmaps. In terms of some of the capabilities in ARPU, I think it starts by building out some of just the core capabilities: enterprise config management, publishing, security, compliance, data, APIs. And over time, if you look at the reasons SMBs choose Toast, all of the platform capabilities in terms of in-store and things like handheld, for example, Mobile Order & Pay and kiosk, we believe over time, a lot of those will be applicable in the enterprise market as well. But you should expect this to be a gradual, continued momentum up market as we expand TAM as opposed to a step function change in terms of how we're gaining share. Yeah. That makes sense. Maybe just very quick follow-up is on the competitive landscape, meaning more for the SMB side. We obviously continue to hear about other companies talking about a certain type of POS that could be applicable to their restaurant space. But obviously, given the customer adds, you still continue to show very strong traction. You don't notice it in the competitive landscape as much. What are you guys seeing on that front, though? Any changes? Yeah. Look, I think this has always been a competitive market right from day one when we started this business. And we continue to believe in what we see in our data is as we execute and get into more of these markets, restaurants are so local. And the more share we get, the more social proof we have, the more of a flywheel effect it creates. That's the most important trend that we see in our business. Our team, obviously, is tracking our win rates and competitive dynamics in the market. But that's really if you think of, we've been at this for so long, and we've built this vertically integrated platform and expanded it over time, and that's what's really driving our growth more than anything else. Yep. Okay. Thanks, guys. Thank you. Thank you. We will now take our last question from the line of Dominic Ball with Redburn Atlantic. Your line is now open. Hey, guys. Thanks for the question. Great job on execution when it comes to location growth, winning market share, being clearly very, very strong. My question is, since the summer, you have been, shall we say, strongly signaling price increases. I just want to make sure we get this right in terms of how do you approach doing this? Is it raising software prices on old or new merchants? Is it on payment rates? Is it monetizing existing free products? Any more color on this would be great. Thank you. Yeah. Yeah. Thanks, Dominic, for the question. Look, as I said earlier, as I've stepped in and looked at the business, I think it's important to remember pricing is an important lever, but it's one lever. We want to make sure we're using it gradually as part of a broader strategy. One of the focus areas to continue to gain market share and scale is to look at opportunities to continue to expand the incremental attach rates of the products that we have to drive ARPU, and that's a really important driver of ARPU. In terms of the opportunities specifically in pricing, you look at new customers that are joining our platform. What we see is across both SaaS and payments, they're paying us more than our base. And so we do see an opportunity over time to go back and build this as an ongoing lever as part of our growth algorithm to complement location growth as well as product attach. And I think you should expect that to be gradual over time, starting with FinTech this year and then SaaS in the out years. Yeah. That's great. And just one more, if that's okay. I mean, your answer to another analyst's question around a potential expansion to the retail vertical, is sort of that Toast for retail restaurants, is that a potential gateway in the future into serving retail merchants, or is this too far off for now? Yeah. Dominic, as I said earlier, a lot of this was driven by our customer base. If you've got our customers really pull us into these hybrid restaurant retail concepts because more and more of them offer not just a restaurant environment, but also they may offer packaged goods in a market. They may offer grocery, wine. And so these lines are blurring. And the way our team thinks about it is anywhere food is served, we think that our platform that we've built over the past decade offers us an opportunity to go create tremendous value for those customers. And so we're starting there. And then I think over time, we'll look at where else Toast can be applicable. Yeah. Thanks, guys. And again, well done. Cheers. Thank you. Thanks. Thank you. That will conclude the Q&A session today. At this time, I will turn the call back over to the team for any final closing remarks. Yeah. Thank you, everybody, for your time today. Thanks, everyone. This concludes today's conference call. You may now disconnect.