Toast (TOST) Q3 2026 earnings call transcript

Thank you. Welcome to Toast's third quarter 2026 earnings call. We'll start with prepared remarks from Toast CEO, Amanerang, and CFO, Elena Gomez. Toast's incoming CFO, Michael Senno, will join Aman and Elena for Q&A. Before we start, I'd like to remind everyone that today's call may include forward-looking statements, which are subject to risks and uncertainties, and reflect our views and assumptions only as of today.

These forward-looking statements include expectations around financial and operational metrics, products, business, and investment strategy, and guidance. Actual results may vary significantly, and we expressly disclaim any obligation to update the forward-looking statements made today. For a detailed discussion of risks, please refer to the cautionary language in today's press release and our SEC filings. During this call, we will discuss certain non-GAP financial measures, including but not limited to, non-GAP subscription services, gross profit, and non-GAP financial technology solutions, gross profit, which we refer to collectively as our recurring gross profit stream.

These are the basis for our top-line guidance. These non-GAP measures are not intended to be a substitute for our GAP results. Please refer to our earnings release and SEC filings for detailed reconciliations of these non-GAP measures to the most comparable GAP 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-GAP basis.

With that, let me turn the call over to a month.

Thanks, Emily, and thank you all for joining us today. We delivered another strong quarter in Q3. Recurring gross profit streams grew 27% year over year, and we expanded GAP operating income margin into 26%. We added 8,500 net new locations in the quarter, which are gained across every customer segment. We continue to add world-class brands to the Toast platform, including Star Restaurant's newest concept, the Nora Hotel in Florida with six different food and beverage formats, John George's portfolio, including iconic restaurants like John George's, ABC Kitchen, Chojo, and Perry Street, as well as Ruby Tuesdays.

We're also bringing that same caliber of brands to Toast across our new market segments, including Renown Delhi and specialty retailer, Zingerman's Delhi, Outback Steakhouse Australian locations, and in Enterprise, we are thrilled to welcome Bagel Brands' 800 stores to Toast. We are evolving Toast to do more for our customers, moving beyond tools that help operators run their businesses towards agents that take on the work for them. This quarter, we added new agents to ToastIQ Grow and launch ToastIQ team, which helps operators manage scheduling and staffing.

Each step brings us closer to a platform that not only supports customers, but actively delivers results for them. Our top priorities for 2026 remain unchanged. Number one, expand what Toast can do for customers with AI, from software to an agentic platform that takes on critical work and delivers business outcomes for customers.

Number two, expand the markets we serve, and lastly, reinvent how we work with AI to accelerate our most important goals and drive durable growth.

Our results this year show our priorities at work. As a vertically integrated platform across software, hardware, payments, and lending, we have a foundation if you can match. And our momentum across these priorities reinforces our confidence in delivering durable long-term growth.

Okay, let's jump into our priorities. Number one, expand what Toast can do for customers. ToastIQ Grow was built to help restaurants attract new guests and keep them coming back, from reaching new diners to ads to bringing them back to personalized marketing.

Our latest launches build on that foundation, giving operators more ways to grow and measure what's working. An SEO agent that helps restaurants improve their visibility across traditional and AI-powered search. Our reviews agent helps turn guest experiences into reviews that influence where diners choose to eat, and an offers agent that recommends offers to help convert first-time guests or win back last month.

Morning mugs named Baltimore's best coffee shop for the last five years came to toast in 2024 to consolidate their operations onto a single platform and find a partner invested in its growth. The owner wears many hats, something we often see among our SMB operators, and did not have the time to invest in marketing beyond social media. Since adopting ToastIQ Grow, morning mugs has increased its reach and grown marketing-attributed sales by almost $100,000 year-over-year.

These outcomes are why Grow is seeing tremendous success. It remains our fastest growing product, on track to reach $10 million in ARR by the end of the year.

ToastIQ team is our first step in doing the back office work that can quietly cost operators money through overtime and over-staffing. Great operators run their businesses week to week off a forecast, they anticipate demand, then staff and plan around it. Managing a team is also one of the most time-consuming parts of running a great restaurant, and labor is often the largest cost restaurants face.

Yet, operators often piece together forecasting, scheduling, time-tracking, peril, and tips across separate tools. Toast has these pieces in one platform, along with the sales data that drives forecasting. ToastIQ team brings it all together for operators to make staffing decisions based on expected demand and make labor costs more predictable.

The scheduling agent builds a complete schedule in second based on expected sales, employee availability, and overtime risk. And we're already seeing great results. Restaurants using our scheduling per solution averaged 41% fewer overtime hours per employee, which opens up valuable savings for restaurants running on thin margins. Let me give you an example. Maddy Group in San Diego is known for their well-beloved breakfast and lunch restaurants, and recently opened a new location in Pacific Beach.

They're using ToastIQ team to help manage labor costs, and the director of operations points to data driven scheduling capabilities, automatic overtime flags, and whether an event forecast to inform staffing decisions as a contributor introducing the labor costs as the percentage of sales from 28% to almost 24%. ToastIQ team is our starting point in tackling back office work.

Over time, we expect to take on more of these workloads, such as inventory management and bookkeeping. We're building towards the team of agents that drive results for our customers, crafting marketing campaigns, forecasting demand with staffing to match, flagging low inventory before and out of stock, and protecting margin from swings in costs. That's an exciting future for an industry known for slim margins and long hours.

It also opens the market well beyond software. Restaurants already pay for marketing, scheduling and payroll, and bookkeeping services, often several times what they spend on software. Toast has a structural advantage here. As our customers' system of record, ToastIQ sees how restaurants operate, sales, guests, staffing, orders, and many changes.

Our data and restaurant expertise show us which problems to solve and how the best operators work, and we build solutions designed specifically for them.

Okay, let's shift gears and talk about a second priority, which is to expand the markets we serve. In our core USSMB and mid-market customer segment, our momentum continues. Our win rates are strong. We're taking GPV share faster than any major competitor, and our largest share gains are coming from restaurants with over 2.5 million in sales. The award-winning star restaurant group already a toast partner at over 35 iconic high-volume finding locations, including pastis, La Diplomat, and the Michelin star, LeCoucou, is expanding its partnership with Toast for one of their most ambitious projects yet.

Six food and beverage concepts at the Nora Hotel in West Palm Beach. Star relies on toast innovative hardware, intuitive user interface, and first-class support to operate their complex locations, and it's enthusiastically embraced ToastIQ. They use automated custom reporting tools to run complex data queries, such as server sales performance or Chef Prepless, saving them valuable time as the team manages multiple restaurants and openings across the East Coast.

We're also excited to welcome the legendary Ruby Tuesday to toast. They're modernizing their technology across their restaurants to increase speed of service, as well as accuracy to improve the guest experience. Across our new TMs, enterprise, international, and retail, our vertical playbook is gaining steam every quarter. Collectively, these three new markets are scaling to 200 million in ARR in about four years, and will double for the second straight year, showing we have strong product market fit.

Internationally, we're welcoming outback to a colleges Australian restaurant. They chose toast to modernize their operations and use a single platform across their footprint. In retail, Zingerman's deli, a community of businesses in Ann Arbor, Michigan, operates concepts spanning from sandwich shops to a cafe to a specialty grocer. Zingerman's expanded their footprint with toast, this quarter into retail, and moved their 3,000 skew specialty grocer onto our platform.

And lastly, in enterprise, bagel brands will launch toast in 800 locations across their beloved brands, like Einstein Brothers Bagels, Bruggers Bagels, Manhattan Bagels, and Noah's New York Bagels. In total, we've already opened up a bigger market opportunity across the horizon to areas than the core market, and we're investing to expand the product market fit across that opportunity.

Two recent examples are launching Quebec with the fully translated French product and our new fuel offering in retail. We plan to methodically expand the addressable market from here across both new countries and verticals. We are incredibly proud of the progress we're making. With each new TAM in the early stages of a meaningful era opportunity, we're prioritizing market share gains and building towards the same flyable benefits we have in the core. As we scale, we are proactively managing payback periods and will continue to see meaningful efficiencies from leveraging the core platform.

Okay, let's shift to our last priority, which is to reinvent how we work with AI to accelerate our most important goals and drive durable growth. We are on track for another incredible year. We are delivering world-class growth and margins at scale, given by our decisions of the last several years to lean into high performing growth opportunities while driving efficiency.

In the core, we're gaining market share, increasing our food, and our new AI offerings open up more opportunities to scale ARR over time.

We're investing behind the success in our new TAM and seating long-term bets where our scale and platform advantage give us a unique opportunity to compete and win. These are earlier stage opportunities. We will remain disciplined in how we invest and will keep you updated as they progress.

With opportunities across multiple growth factors, we have a clear path to driving durable compounding growth for many years to come. We'll keep the capital allocation discipline that got us here. Core margins keep expanding, funding new TAMs, and emerging bets that we expect to add to long-term growth and cash flow.

I want to thank every toaster for the dedication and commitment to toast. We would not be here without all of your amazing work. And thank you as well to our customers and investors for your continued support.

Before I turn the call over to Elena, I want to thank her for an incredible, nearly six-year run at toast. Elena has been instrumental in guiding toast through a period of tremendous growth and transformation. She has been a steady hand to me and the entire management team and we are incredibly grateful for all of her contributions. I am also excited for Michael's set-out to become our next CFO at the start of the year.

Over Michael's nearly five years of toast, he has become a trusted member of our leadership team. He knows toast business inside and out of the strategy and investment approach. And with that, I'll turn the call over to Elena.

Thank you, I'm on and thanks to everyone for joining us today. Q3 was another great quarter and I'm proud of our consistent execution quarter after quarter. ARR increased 24% and recurring gross profit grew 27% year over year. Adjusted EBITDA was $240 million and GAP operating income nearly doubled year over year to $165 million, reaching a 26% margin.

With our recurring gross profit growth plus operating margin at 55%, we continue to operate above the rule of 50 on a GAP basis. We added 8,500 net new locations, a double digit growth in net ads from a year ago and ended Q3 with approximately 189,000 locations, up 21%. In addition to gaining share and winning new customers, we're also continuing to deliver more value for our customers in expanding monetization.

Total take rate measured by recurring gross profit as a percentage of GPD reached 104 basis points in Q3, up six basis points from a year ago. In recent years, the total take rate has steadily increased with growing contributions from our monetization engine, software, payments, and capital, as customers adopt more of our all-in-one platform.

We expect total monetization to continue to expand as we innovate and deliver outcomes for our customers. SAS ARR grew 28% year over year, driven by location growth, and consistent mid-single-digit ARPOO expansion. Subscription gross profit grew 36% and SAS gross margin increased 320 basis points from a year ago. AI tools are handling a growing portion of support tickets, providing a better customer experience, and are an important contributor to that margin expansion.

Payments ARR and FinTech gross profit both increased 21% in the third quarter versus a year ago, with GPD up 20% to $62 billion. FinTech net take rate was 61 basis points. Payments take rate was 50 basis points, up one basis point from a year ago, driven by the same levers we've seen over the last several quarters, growing product adoption, processing cost efficiencies, and small-targeted price moves. Non-payments, FinTech solutions led by Toast Capital contributed $69 million in gross profit and 11 basis points to take rate. Customer demand for capital remains strong, with defaults within our expectations.

Moving down the P&L, hardware and professional services gross profit was negative 12% of recurring gross profit streams. We are continuing to execute on our hardware cost mitigation strategies and expect to structurally improve hardware margins longer term as a result of our efforts. Operating expenses grew 16% year over year, excluding $35 million at bad debt and credit-related expenses.

Tails in marketing increased 23%, fueling our location momentum, and a continued build-out of our go-to-market presence in our new customer markets. R&D grew 15% with investment focused on our agentic platform, product depth in each new TAM, and scaling internal AI tools. Adjusted EBITDA grew 36% to $240 million, and margins expanded 260 basis points to 37%. Reflecting strong top-line execution and continued discipline across the cost structure.

As a reminder, margins are typically higher in 3Q due to the seasonality of payments. Gap operating income was $165 million, nearly doubling from a year ago, and GAP diluted EPS was 29 cents up from 16 cents. The increase reflects our strong top-line growth, complemented by operating leverage down the P&L, including lower stock-based compensation expense as a percentage of recurring gross profit.

Free cash flow totaled $181 million, a 75% conversion from adjusted EBITDA. Conversion was lower than a year ago from our strategic decision to acquire and hold more hardware inventory in the near term. We expect conversion to improve in 4Q. Over time, we expect to see a corresponding benefit to free cash flow and higher conversion rates, when we choose to scale down inventory to more normalized levels.

Now onto our outlook. For Q4, we expect subscription and FinTech gross profit growth of 22 to 24% year-over-year, and adjusted EBITDA of $200 to $210 million. We're raising our full-year outlook to reflect the strong 3Q results and momentum in the business. We now expect recurring gross profit to grow 26% and adjusted EBITDA of $840 to $850 million.

We're positioned to deliver durable top-line growth over the next 5 to 10 years. We have a tremendous runway across the core and horizon two towns, and the opportunity to build new S-curves keeps growing as we scale and expand. We will remain disciplined capital allocators and manage our investments across these multiple horizons. Horizon One is our core. The growth algorithm continues to deliver, and we're operating with margins over 40% that we expect to keep expanding.

Horizon Two is our new town's international enterprise and retail. Mom touched on the attractive growth trajectory, and we're confident these businesses will have an equally attractive long-term financial profile. As these businesses scale, we expect their adjusted EBITDA margins to converge with the core margin.

The formula is straightforward. We plan to manage payback periods to 20 months or lower, ensuring strong unit economics and expect significant leverage on R&D and G&A from our core platform and central functions. We have a proven playbook to improve payback periods and a clear roadmap in each area.

First, the retail and international go-to-market motions will gain efficiency as we reach steady sales capacity, build the flywheel effect, and drive-up rep productivity. Second, each new town has a path to expand RPU as we launch more products.

Third, we will gain efficiencies in hardware and onboarding as we scale. We've already taken steps to improve unit economics. For instance, international RPU is growing at a healthy clip as we roll out more products and we're improving the enterprise onboarding experience to lower the cost of acquisition. Across R&D, our new tams are built on the same platform we've spent more than a decade developing and we continue to innovate.

They leverage the horizontal products and features we build for the core, like payments in FinTech, hardware, and toast IQ. The incremental investments for new tams focus on the vertical specific features to drive differentiation in each customer group. We're seeing that leverage come through. Horizon 2 will reach $200 million in ARR with 25% less direct R&D investment than what it took for the core to reach that same milestone.

And we expect that leverage to amplify as we scale. We have a multi-billion dollar growth opportunity with strong customer signal, a clear path to improving payback periods and increasing leverage from our core platform and functions. Together, this gives us confidence our new customer segments will deliver both meaningful growth and cash flow generation over time.

With momentum in our core, new tams on a rapid growth trajectory and emerging long-term growth opportunities were more excited than ever about the future and confident we will continue to deliver significant shareholder value. Thank you to all our employees who execute tirelessly every day and have a fun track for an excellent year. Before we move to Q&A, I'd like to take a moment to share some closing thoughts.

It's been a privilege to serve as CFO of toast and work alongside a mom and this incredible leadership team and I'm proud of what we've accomplished together. While I'm stepping away, I couldn't be more confident in the company's future and incentive to work alongside this leadership team to continue building this generational company. Senna has worked alongside me in close partnership for several years and I'm confident this will be a seamless transition.

With that, I'll turn it over to Senna.

Thank you, Elena. I'm humbled and honored to step into the CFO seat. I want to thank a mom and the board for your trust and support.

Elena's made an indelible mark across toast business and culture and is a key part of our success. It's been an absolute privilege to partner with her on this journey for nearly five years and to learn from one of the best. As both a mom and Elena outlined, we have great momentum and I'm excited for the incredible opportunity ahead.

Now we'll start Q&A. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimal sound quality. If you are muted locally, please remember to unmute your device. I will now turn the call over to Emily Woodward for the Q&A.

Thanks, Jonathan. We'll take our first call from Steven Sheldon with William Blair.

Yeah, hi, Steven. So first off, you know, we are seeing with this really good adoption of toast IQ within our customer base, the monthly active users continue to grow month after month. And they really value this interface to be able to get reports, engage with the back end, make changes to the back end of the platform. So that's been really positive. And then I think in terms of our agentic capabilities, whether it's IQ grow or IQ teams, one of the reasons that such a natural fit is we are typically displacing work that these restaurant tours were outsourcing.

So outsourcing, for example, to a marketing success manager or to a back office accountant or a payroll expert. And the early data that we've seen has been really, really powerful. We in fact measure for customers like you grow.

We have a data science team that's looking at this. What the sales list is by deploying IQ grow relative to a control sample that is not using IQ grow. And we've seen really good revenue growth. And this is because our tools have the data and we're setting up a great first party presence around things like your website, online ordering, your SEO, more recently with reviews agents, to make sure that restaurants are getting as much profitable first party demand as possible.

On IQ teams, again, very early. But again, we're seeing some data that shows that customers that deploy IQ teams. And this is really, if you think about our back office products, there's scheduling, there's payroll, there's tip automation. It's a lot of work to manage these schedules. And so what ToastIQ teams is doing is automating the work to manage those schedules.

And we've seen a 41% reduction over time hours, which is obviously very valuable for our restaurant industry, which runs on thin margins. So again, really good early progress. These products are new, even though it's great to see, for example, ToastIQ grow, you know, on path to the past 10 million in the year or this year, in the scale of our business, obviously, still early. And we see tremendous opportunity for growth ahead.

Good year. Thank you.

The ToastIQ Grow product, you asked about a tax rate and IQ growing local? Yeah. Okay. So Toast Local is available to all of our customers. It's really in an app that we offer on top of all of our customers, where customers can place orders of pick up for delivery. They can get, you know, check, track loyalty. They can track loyalty. And so really that's available to all of our customers. And IQ Grow primarily that's being sold to our upsell team. So our upsell motion has matured over the years. As you know, that we've invested in a big way in our expand motion. And that's really the team that's focused on IQ Grow.

Part of the reason we've seen, by the way, an inflection in our poor business. So you look at our poor growth this year, year over year, we're up. And we're actually set up really well for next year. And a lot of that is, of course, driven by our whole platform. But specifically the impact that IQ Grow is having. And that's because the opt-to-win and the growth that we're seeing in IQ Grow has been incredibly meaningful. But it's largely in the upsell team versus attaching on new business attach.

Thanks, Raina.

Yeah. So, Samad, the net ads in our core business can be incredibly strong, or win rates are strong. We're taking care of fasten any of the competitors in this space, and just really proud of the team's progress there. And then these new teams, the reason they're on track to double is because we've seen accelerating that ad in our new business. So, overall, really proud of the progress in terms of the progress we've made on that ad, this quarter, and really throughout this year. And as I look to the future, I think we're incredibly confident in where we are on the market and our ability to continue to grow.

And, Samad, I'll take your question on 27. So, there's no change in philosophy. And we've shared some colors. The year goes on. But, you know, on the top, we've had a really strong year in 26. You're seeing consistent, strong results quarter after quarter. We're exiting the year with really good momentum. And on both top and bottom line, we'll give formal guidance for 27 on the February earnings call. But on the RGP growth side, we're set up to execute the same growth algorithm in 27 that you saw us deliver this year. Core delivering share games, complementing that with continued ARPOO expansion, which has been really healthy, as Amman just pointed out. And on top of that, we're seeing rapid growth across our new towns that we are set up to continue.

So, we're confident in the 20% plus framework that we've provided. And we think we're set up for a really good 27.

And then on the margin side, we're going to finish this year at about 36% even on margin. That's already above the medium term target from our investor day. And the pace of margin expansion over the past couple of years has actually been faster than we had anticipated. We're sitting on what we believe is a generational opportunity. We have the financial profile that positions us to lean into investment to go after that opportunity.

Our margins in a really healthy spot. And as a result, we expect very modest margin progression next year. I'll give you a little bit more context underneath how we're thinking about it. We've proven the operating leverage in our business model. Core margins are already over 40% in expanding each year. And the company margin is going to depend on how much we choose to invest in these new growth vectors and nascent long-term bets. And as we go into next year, we want to retain flexibility so we can offensively mean it and where we see opportunities.

All in service of really driving durable long-term growth and building these franchises with strong cash flow generation. But underneath that, we're going to use the same discipline cap allocation approach that you've seen from us. Our investments are only going to be focused where we see strong long-term growth opportunities and really good ROI potential.

Thank you.

Last quarter we gave an update and nothing's really changed. Like the team has done a tremendous job, kudos to that team for managing. I think it's an incredibly dynamic environment. But like I said on the last call, we've improved the impact not only in 26, but in 27 versus our original expectations that we had shared earlier. And that's as a result of us taking some very deliberate mitigation steps, whether that's, you know, leveraging earlier generations of hardware, transitioning through to hardware to lower cost memory, being active on the spot market. So there's a lot of, I would say initiatives within that organization that they're executing against.

And, you know, we're maintaining through that. We're really proud to say we're maintaining really excellent best-in-class hardware. So overall, I feel really good about our ability to absorb this and manage it and no change from what we updated to last quarter.

Thank you, Elena.

And we're under your question, Kathy, on the FTC. We are incredibly disappointed with the FTC's decision to file the suit. You know, we've been engaged with them and cooperating with them really for the past year. And fundamentally believe their application of RASCA is unprecedented for custom contracts in B2B, which is what we negotiate for every single customer. You know, if RASCA would apply to B2B custom negotiated contracts in a B2B context, it would have huge implications for really the whole industry and business contracts in general.

We have a lot of confidence in our business practices and are ready to defend ourselves. And if you just zoom out and think about why we are where we are in the industry, you know, we built a purposeful platform for the restaurant to share with the past 15 years, we're industry leaders, and it's fundamentally grounded in customer impact. One of our values is we're all in customer success. If you talk to our customers, one of the things they'll tell you is that we really live that value. And that is why we continue to grow and take share of the rate we are. And then lastly, you know, I think, you know, we are here to build a generational company.

And what happens here and how we settle the suit is not going to change that over the long term.

Yeah, sure. I'll start with your first question. Look, we had a focus effort to optimize our resource allocation and align our investments with our top priorities. And periodically we'll do that. And look, the opportunity for us to make sure we're investing in our highest priority is something we're always going to pay attention to. And we're going to reinvest back into the business just like I'm on talked about in terms of our opportunity ahead. We want to continue to invest in those high priority efforts.

And then in terms of toast capital and loans on our balance sheet, you know, the program overall because capital is doing really well. And we continue to grow originations and continue to add funding sources and diversify our funding sources and adding balance sheet was really a natural next step for us. And you're right. The balance sheet has better profitability metrics for us because we retain all the economics. We're not working with a third party.

But overall, most of our originations will go through our CRT program. But if you just zoom out and say, how will the toast capital program grow? I would say we'll continue to grow as our business grows. And so far, you know, the customer receptivity has been really positive. A lot of customers come back for renewed loans. And regardless of whether we use balance sheet or CRT, we're managing across the same risk profile, regardless of the program. So we feel really good about our ability to manage it as well.

Thanks, Jensen.

I'll take the first one. You could say our GPV prolongation trends have been very stable. Three queue into four queue and really for the better part of the year. It's been in the same zone. Even in the core, GPV prolongation has been slightly off year over year for the majority of the year. There's been, you know, some mixes we add more in Horizon two. And that impact's been modest and I expect it to be gradual over time. But some more storage, if you do your prolongation, a really tight band and consistent throughout the year.

And Jensen on local, you know, monthly active users continue to tick up every month at a really healthy clip. I don't think we're publicly shared exactly what that data is, but the rate of growth has been really, really strong. And really a couple of use cases. One is across all those restaurants, similar to which you give the Starbucks app, you can get pick up on the app. People love that in that you get in store prices and the experience of pick up is really seamless.

Two is tracking loyalties. A lot of our customers offer loyalty. And people love the fact that you can track loyalty across all the restaurants in one place, which is harder to do without local. And then lastly for reservations between toast tables, resi and talk. We've got great inventory in the app to book a table and we've seen dramatic growth there as well. So really proud of the progress over on local and what the team is doing, they're working hard.

And I think one other thing that Alad here is, you know, if you look at the toast ecosystem, just an online ordering, we have almost 50 million active users that have signed up on account on toast online ordering when they order on a restaurant's website.

Yeah, yeah. It's a good question, DJ. First off, I'll say, look, it's one of the reinforced, our execution is tremendous. You saw the results and you look at our net ad growth, you look at, you know, in our core business, which is both now growing share, but also expanding our pool. It just shows that we're executing at high level.

And if you look at what we've been about from day one, it's been about how do we help restaurants thrive? We've been vertically focused on restaurants, and so we live and read these problems. I think that anybody else in the world. And at its core, I think that is going to be one of our most important durable advantages long term. As an example of this, you think about toast IQ grows, not just about launching some AI products.

The most important thing we're doing there is measuring whether or not these products are actually driving top line sales for our customers. Similarly, we think about back office and you think about IQ teams, you know, over time, the launch inventory, the launch bookkeeping. It's all about improving bottom line profitability. And to do this well, part of it's like understanding the workflows, understanding the use cases, but part of it's also the data that we have and the learnings we have across approaching 200,000 restaurant locations. So I'll just give you one example of this. You think about restaurant cogs. It's really valuable to know across all of the different suppliers, what is it that they're paying to make it easier for them to have visibility into what their cogs are and where they benchmark.

The only way to do that is to actually know where they stand relative to all the customers near them. And that data only exists in toast. And there are numerous examples like this on demand and marketing, on back office, where I think our focus on the restaurant industry and our focus on driving profitability for our customers is what's going to ultimately make a successful. I think one of the points we don't share enough is we're really proud of the fact that if you look at those restaurants, they're left like to go out of business. They have more GPV on average than the average restaurant industry.

And our focus is to make that even better.

Andrew, thanks for the question. And I'd say we've made really good progress on fast growth margins over the past couple of years and you could see that consistent margin expansion. That is probably the one area inside the company where we've had the most traction refer this along on leveraging AI just in both chat and starting to do voice AI and delivering a better customer experience along with that.

You know, we'll get into the full 27 as we as we get into the February earnings call. But, you know, there's going to be a balance because we're also spending on AI. But longer term, I do think those continued opportunity in the gross margin. But I'd say that's probably the area that we've seen the biggest impact so far internally from an AI efficiency.

Thank you.