Stephen Sheldon: Great. Thank you.
Operator: Thank you, The next question is from the line of Dave Koning with Baird. Your line is now open.
Dave Koning: Yes. 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 go through. And I guess I’m wondering, is that kind of level sustainable? And is there some sort of metric like EBITDA percent regarding GP, we could see you give at some point, is there some sort of target on that?
Elena Gomez: Yes, 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, that’s — we have ambition to get to 30% to 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, that 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.
Dave Koning: Great. Great. Thanks. And then I guess on the fintech yield, I think Harshita asked a little bit about this, too. It was a little down this year. Is the seasonal impact Q1 being the highest 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?
Elena Gomez: Yes, Q1 definitely is typically because of — you’ll see a higher impact. And then as the year progresses, it’s not just we have a marginal in for some surgical putting 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.
Dave Koning: Got you. Thanks. Great job.
Aman Narang: Thank you.
Operator: Thank you. The next question is from the line of Tim Chiodo with UBS. Your line is now open.
Tim Chiodo: 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 assay ARPU 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?
Aman Narang: Sure. Thanks for the question. Look, I think we mentioned this in our last earnings call as well. Our — 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 rate. And so the ARPU is slightly lower. And then that’s complemented with our upsell team. The upsell team then takes Toast 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 I think — and we believe both of those will complement each other. And so 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, there should be continued levers of growth for us into the future.
Tim Chiodo: Okay. Thank you, Aman. So, essentially, the new customer cohort will 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 than the existing customers upsell and, of course, the pricing, is that the fair characterization at least for this year?
Aman Narang: Yes, I think that’s fair. I think that’s fair. I think you think of pricing as a gradual lever, right, that complements both locations and price.
Tim Chiodo: Perfect. Thank you so much.
Aman Narang: Thank you.
Operator: Thank you. The next question is from the line of Samad Samana with Jefferies. Your line is now open.
Samad Samana: 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 installed 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?
Elena Gomez: Yes. 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 — with our core platform, so we expect to add more elements to the platform. So, as a result of starting with the 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 — in the US. So, that’s an opportunity for us. And even with platform we have, we’ve had a lot of great success. So we expect to add more of the platform in 2024. We’ll see that play out over the next, obviously, several years in terms of the impact on ARPU. And in terms of the profile of customers, they don’t look that different in the US.
Samad Samana: Yes. Great. And then on the cost side — sorry, go ahead. Go ahead.
Aman Narang: Go ahead Samad.
Samad Samana: I don’t know, please. I’ll let you finish that. I was going to go in a different direction.
Aman Narang: 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, right? We’ve got — we reach 1,000 locations over a couple of years. And as we build out the full platform internationally and see the improvements in our activities and unit economics, that’s where we look at the pedal down even further. And 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.
Samad Samana: Understood. And maybe just on the cost side. I know that doing a reduction in force is 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 that we should be aware of that flows as the year progresses as well?
Elena Gomez: We terminated a lease. But just in general, when you zoom out, Samad, I want to make this very clear, like the restructuring is one of many efforts that we’ve — have been working toward efficiency for several quarters, right? We delivered over $175 million of leverage this year. And we’re going to continue on across the company to operate in a very disciplined fashion. So you shouldn’t see this as a onetime effort on efficiency, but just how we run our business.
Samad Samana: Great. Thank you for taking my questions.
Operator: Thank you. The next question will be from the line of Josh Baer with Morgan Stanley. Your line is now open.
Josh Baer: 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?
Aman Narang: Yes. Hey Josh, thanks for the question. As I mentioned earlier, like 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. 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 is stronger. But in terms of, 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, retail, that’s on retail.
Josh Baer: Got it. And 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.
Aman Narang: Yes. I think so over time. Like 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 fail 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 to serve, right? That’s really, you’re seeing these lines between restaurants and retail blur. And a lot of these concepts want a single system because they want a single back end that they can use, in fact all of this data, and that’s where we’re starting.
Josh Baer: Great. Thank you.
Operator: Thank you. Next question is from the line of Darrin Peller with Wolfe Research. Your line is now open.
Darrin Peller: 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 in Caribou. Maybe just a little more color on your anticipation there and expectations for that 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?
