All right, I think we're already live, forgive us for being a little bit late. Super grateful to have the Toast team with us, Chris Comparato, CEO, Elena Gomez, CFO, the IR team is here as well. My name is Tien-Tsin Huang. I cover the payment sector, I've told these folks for a long time, you know, so happy to cover more software content, learning about, you know, software, especially as it comes together with payments, and Toast is right at the center of that. We've learned a ton. You've heard me say that with some of the other software names and, you know, it's all about learning, that's why I'm happy we can spend some time going through some of the questions I've gathered from the investment community. Before we get started...
Well, welcome. Thank you for being here.
Thanks for having us.
Thanks for having us. Yeah.
I think we started last year with sort of icebreaker, talking about a Toast restaurant, a local one or a favorite one near your home just to kick it off. Love to hear it.
I think it would be too easy to spend an hour on Boston restaurants, so I'm not gonna go local, if that's okay. I spent last week in London and in Dublin. We started an international team last year, so I visited our first live restaurants in London and, you know, one of them was called Arcade Food Hall. What I loved about it was the customer experience, 9 concepts under 1 rooftop, super complex. Already seeing the value of the all-in-one Toast platform, and super happy right out of the gate. The food was fantastic. You can order from any different chef, and it's brought to your table, and it was just a fantastic experience. Almost like other food halls, but a little bit smaller, tighter, more quaint and technology forward.
That's the one that I left last week most excited about.
I'm there in two weeks. I will definitely check it out.
Arcade Food Hall.
Got it.
Yeah.
Elena?
Yes. If you're in San Francisco, check out a restaurant called Ozumo Sushi. I had lunch there actually last week with a colleague, and as we were leaving, the server came by with a Toast handheld, and we were both pressed to get back to our meeting. Of course, she said, "Oh, how do you like..." I usually do this obnoxiously. I ask the server how they like Toast.
Mm-hmm.
She did it for me, and the best part about that was the employee said, "I love it. I get more tips." He said, "I want my other restaurant." He works at 2 restaurants, apparently.
Mm-hmm.
I'm keep telling the GM of that restaurant to get Toast." That was music to my ears, just knowing that the employees are also someone we care about, and that can really be an evangelist for the product.
It really stands out when we do surveys, and we talk to restaurants, you know, when they respond that they use Toast, I mean, you can feel it, right? The passion is there. They definitely understand. They use it. They like it.
That's right.
It's different than just, being a tool-.
That's right.
-with some of these other restaurants. Good. No, thanks for sharing that. Since we last got together, we have seen share go up about 3 points. I know it depends on which numeric denominator you pick, but you're about 10% share now, up 3 points. What's happened in the last year to get you to that point? What's driving the success?
Yeah. I wanna zoom out a little bit, and I always start with our mission. Our mission is to empower the restaurant community to delight their guests, do what they love, and thrive. That's a big mission, and it's gonna take many years. It's a long game. You know, the restaurant industry is super complex, often not technology first, often manual business processes, point solutions, and restaurant operators are having to act like a CTO or a CIO to cobble together the experience. I think this is gonna be a long game. We're in our 11th year, 12th year as a company, still in the early innings of what we believe the penetration will become.
We're happy with the 10%, but we're somewhat dissatisfied with progress because there's a lot more TAM to go after. I'd say the recipe over the course of the past couple of years have been really. I love bread puns. The recipe has 3 key ingredients. First ingredient is to go vertically really deep into the vertical and have the most comprehensive restaurant platform with depth and breadth to serve restaurants of all different types. That's super important because the deeper we go, we have more dialogues with restaurant operators, whether it's QSR, FSR, whether it's upmarket, downmarket, whether it's SMB, whether it's international, those conversations are super rich, and we're passionate about going deeper. That's why you've seen our module growth and our ARPU growth over time. That's number 1.
Number two is, we've got to put that platform in the hands of a really efficient distribution model. We've built a hyper-local distribution model, hyper-local teams across markets in the U.S. Those teams are in different phases depending on what market and whether it's an emerging market, a growth market, or what we call a flywheel market. Somewhere in that continuum, those teams are becoming much more efficient, much more productive. They're local to the community. They're building relationships. They're partner network. They're leveraging happy customers to drive increased productivity and efficiency within that market. I think less than 20%, less than 20% of our markets are in a flywheel state. That excites us because it's all about, you know, building up that market momentum. I think the third ingredient is having a founder's mentality.
Three founders that have been in the game and continue to lead our R&D and go-to-market efforts, that founder's mentality drives innovation. You know, that innovation pipeline is deep. If anything, our challenge is to make sure that we're prioritizing the right bets. You know, good example is we launched Toast Tables. We'll talk about that in a little bit. That innovation engine causes us to continue to think through, well, where is this gonna go next within the restaurant industry, and what are the technology innovations that will empower the community to run better businesses?
Those tend to be the three key ingredients that have driven most of the growth and adoption in the last couple of years. Where it's gonna go, you know, I think we now feel very confident that the entire TAM is addressable within the U.S. You know, in the earlier days, I would sort of carve off enterprise, I would carve off VSMB, but now we feel much more confident that the whole addressable market is available to Toast. We continue to build out capabilities within the core platform that restaurants can adapt. What we're seeing is we're seeing restaurants adapt those capabilities that are purpose-built for their type of concept. That's a...
It's such a diverse industry that we see plays that we can run both on the platform and go to market to continue to adapt it.
Good. Now, some of that momentum, I think, was being expressed in some of the comments from the earnings call, I thought. Something that really stood out to me, I think, Elena, you talked about location growth stepping up a little bit-
Yeah.
Beyond what we typically see in the second quarter and the second half. What's driving that confidence for you to put that out there, right there?
Yeah, no, I in fact, we are very confident, and the momentum in the business, which hopefully you can hear from Chris here, is really playing out in execution. Ultimately, everything we're saying about locations is grounded in a very well-oiled go-to-market motion, in particular, around our core SMB business. We noted over 6,500 locations in Q2, and Q2 typically is a seasonally high quarter for us, but that will be a record. We're really excited about that. I like I go back to consistent execution. That playbook is, you know, continuing to get honed and get better all the time. As we get into flywheel markets, you start seeing some of that productivity that Chris alluded to.
The other piece of it is, even though it's in the core SMB engine, you're starting to see some really good pipeline in regional mid-market. You're starting to see some other elements of that TAM come through, which is really encouraging to see. We're pretty excited. What I also gave on the call was when you look at the back half of the year, we also are stepping up our locations, you know, north of 6,000. We feel really good about that.
No, no, it's impressive. Going back to the TAM and all of it being available to you, Chris, you mentioned SMB going down market as well as enterprise. We get the question a lot, you know. What does it take to win both on that SMB and enterprise side? It feels like a very different muscle, very different go to market.
Yeah. I mean, you certainly wanna be measured as you enter into these new TAMs. That's one of our product priorities is to make sure that we're building out the right type of platform for that segment. I'd say there's a couple of dimensions happening. Number one, you know, we're seeing really good pull up market. We've always been in the mid-market space, and we've announced those wins, whether it's wins like Walk-On's or Golden Krust. We've been in the mid-market space, but we're now seeing customers want us to build much more above store reporting, above store menu management, recipe management, pricing, configuration management. We love those challenges because we've got a very capable product team.
We're continuing to layer in product functionality that sits above the store that is becoming more attractive to the enterprise space. I'd say the core in-store experience from a product perspective is very similar in an enterprise to an SMB. Whether it's a QSR or FSR, we feel really confident that that piece of the platform can be democratized up market and down market, and that puts us in a really strong position. Certainly, we've made acquisitions in the past like Delphi. We're also unlocking different service models that the restaurant or the enterprise can offer. Now if they offer drive through, we're feeling more confident that we can go after that type of market. Up market, we're being pretty measured, but we're seeing good pull.
Down market, we've always had a goal to simplify the platform because it could be perceived as complex when you've got 20-plus modules. You know, how does a restaurant get started if you're a simple cafe bakery? We've always been trying to simplify the platform, make it more self-service, make it more e-com ready, don't bundle as much upfront, make it much more easy to get started with. Those initiatives are starting to pay off. When you see us in the smaller section of the TAM, it's the result of simplification, ease of use, make sure it's a more frictionless experience, where a customer can find Toast, subscribe to Toast, onboard themselves, and then really start to grow into the platform over time. Some of these smaller concepts, you know, drive into larger multi-unit opportunities.
Again, pretty measured, but we're feeling comfortable with the unit economics both up and down. And everything's driven by a model of making sure that the unit economics hold true to payback periods, rep productivity, et cetera.
Yeah. We will dig into that. Just to stay with this TAM penetration, the hyperlocal strategy has been quite effective. Again, we've learned a lot, you know, tracking that and getting into this flywheel status. You've mentioned the 20%. Can you tell us more, like, how do you go into these cities? I know Boston is obviously very successful. New York, we're seeing a lot. Miami. What's the thinking or thought process to go in?
Yeah. There's probably three elements of the recipe that stand out. I'd say the first element is more time in the market. Is Toast recognized in that market? Is there branding? Is there community whisper? Time in market is definitely one of the factors. Now we feel like we're in the majority of the markets that we wanna be in within the U.S. SMB TAM. That's good news. They're in different levels of this continuum. That's the first factor. Second factor is rep tenure, and is it a tenured rep? We had a lot of growth in our SMB sales team in 2021 and 2022. Those teams are becoming much more tenured and mature. That's the second factor because they're learning the platform, they understand how to objection handle, they understand the different complexities within the restaurants they're going after.
They're knocking on doors. They're building their local community network and partners. That's a critical element is rep tenure. Then I'd say the third thing is we've always had this muscle of experimenting with what's the TAM per rep. Now, if we're in a market, and you look at the total quantity of rooftops, how do you test and iterate on how many reps you can put into that market and still cover all the decisions that are being made, knocking on as many doors as possible, leveraging your partners, you know, iterating in terms of how many reps can you put in that market so that you have full coverage?
We've had this muscle, and it's very dynamic, where we can iterate in the market on what we think the TAM per rep is so that the reps feel productive, they feel like they have a healthy pipeline, but they can hold productivity levels really high. Those are the three ingredients. When those three ingredients come together over time, what we see is we see the unit economics get better. Often when you scale a sales force, the unit economics can get worse. We actually see the opposite because those teams start to become more productive. That's what we spend a ton of time looking at, which is all the unit economics around productivity and how do you tweak these models in each market to be more successful.
Yeah. Yeah.
We feel like now we're pretty comfortable putting any product, you know, into their bag and making sure that they're having valuable conversations with their community.
Yeah. No, I think the density, and it really shows through, I think, is what you've been saying. We'll see as some of these regions age, what we see. International, you know, you mentioned London. You know, when I was in Canada, I started to see some Toast restaurants there. I think you've talked about Ireland as well. As you're launching brand in those locations, how do you get to that density? How do you do it profitably? Can that playbook here in the U.S. apply to these other countries?
Yeah, it's a really good question. You hit it. We're in English-speaking countries.
Yes.
as sort of horizon one, of course. It's still early. The international opportunities is really early. What we're seeing in the early days, though, is the product market fit is what we expected it to be. We don't have the entirety of our product out there, but we're working to do that. We'd love to replicate flywheel markets over time.
Sure.
That's a way. In fact, some of what our GM is doing there is really learning the go-to-market motion and what's gonna work and what are the different models, all pointed back to what Chris just alluded to, which is unit economics and just making sure as we look at the portfolio of businesses we're investing in, we're doing that in a prudent way. We have hurdles that we wanna see, signal we wanna see in each of these initiatives that are newer before we continue to invest and just be super prudent about it. So far, very encouraging and the thesis we had going international was really when we look at the market and the competitive landscape, you see relatively fragmented, and some of the players that we have really great success with here in the U.S.
Mm-hmm.
We can have that same success internationally. So far, really encouraged by what we're seeing, but still early.
Sure.
Yeah, I mean, we're excited. Having spent a week there, you know, it reminds me of 2015, 2016 in some of the markets here in the U.S.
Mm-hmm.
you know, what we were doing to build the community base, but then also have the right product for the right type of restaurant concept. We're very excited.
Okay. Good. Let's get into the numbers a little bit. First quarter GPV up 50%. We think we track it versus Visa card spend. That's 5 times faster than that same category in that bucket. GPV per location up 11. We always get the question on sustainability, so I'll ask that. With the food inflation and these other impacts, I think there could be some positive selection bias as well with some of your restaurants doing very well. How do you think about benchmarking that?
Yeah, it's a fair question. At the highest level, I think what you're seeing, and we talked a little bit about this on the earnings call, is resilience in the consumer around restaurants, and really this focus on experiences, which is bodes well for restaurants. The GPV. A reminder, last year we had Omicron, so we had a little bit of that, so the growth rate takes that into consideration. Despite that, even entering into Q2, we're seeing continued resilience in the patterns that we typically see. You guys probably know, but our GPV's seasonally higher in the summer quarter, so Q2 and Q3, seasonally higher. We're continuing to see that pattern as we're entering into Q2. Just really great momentum all the way around.
ARPU. Let's talk about ARPU. The outlook for ARPU, I know SaaS ARPU I wrote up 60% up, right, since year-end 2020. The moderation that's expected, I think, in 2020-2023, can you comment on that? I know it's.
Yeah. No.
the high growth.
It's, it's a very fair question. A couple things I'll just set context for, just to remind. You know, our meta goal is always ARR growth, we really look at both growth levers, locations and ARPU. We're talking about ARPU, but what's important is as we get more of that market share, that's a massive opportunity for us to go and sell back into those restaurants. That's number one.
Mm-hmm.
When you look at the context of the last couple years, there's a couple things that played into this massive growth. One is we were enabling reps and actually helping them position the breadth of the platform. We moved into a multi-product platform around 2019, 2020. We started positioning the breadth of the platform. That was really important for us. Then two, we added an upsell team over the last 18 months. That's still a newer motion for us, but encouraging what we're seeing. We're seeing that get into our run rate now. Then we had a slew of products, Payroll, Sling, that all came during this time. When you put that all together, that's really what drove that, you know, 59% growth over 2 years.
Yeah.
When you think about that, you say, "Okay, that's not sustainable," of course. There's a lot of great learning that we got through the last couple years. One is how our customers wanna absorb the platform, may be different than us selling the entirety of the platform up front. Some customers do. I think we gave an example on the earnings call of a customer who adopted 13 modules all up front. That's a unique case, but we see that. We see customers who are ready to adopt the platform up front, and we see other customers who really want to change out their core POS first and then maybe later add, let's say, payroll as an example. All those learnings are really helpful to us. The one thing I said in the...
on the call, I'll remind everyone here, is as we think about our ARPU for the balance of the year, we will end somewhere in the ±10% in Q4. We feel that's an incredibly healthy growth rate. When we think about the longer term opportunity, whether it's the products we have today or continued innovation, which we've proven we can continue to have a ton of product velocity, we have a lot of excitement about what's yet to come about driving that ARPU over the long term as well.
Okay, good. No, I know that this depth versus breadth conversation's always is a fun one. I know you've been giving a lot more statistics around the different modules, which is great. I know you mentioned it up front, Toast Tables.
Sure.
Sort of that opportunity, and it's a pretty heavy ARPU as well, but it sounds compelling. Tell us how big that could be and maybe how that ranks with some of the other products that you guys have released?
We started this project roughly 2 years ago. It was a small team, again, in heavy conversation with our customer base. Customers don't love managing point solutions across waitlist, reservations, and then the interface with their current platforms and guest data.
Mm-hmm.
They were saying, "Hey, can you jump into this space and simplify it and make it much cleaner?" You know, consumers tend to, you know, do search and discovery on things like Google. They call the restaurant to make a reservation. They go to the restaurant's website, or they go to another platform. You know, restaurants wanted us to simplify that, so we said, "Okay, we could... You know, we can envision this as part of the all-in-one platform, and then have tentacles to platforms like Google. Certainly a native online interface to reservations if you go to their website." We felt like two of those four, we could more cleanly sort of clean up and make sure that the restaurant could turn on a reservations and wait list capability as part of our all-in-one value proposition.
That allows them to just simplify their operation, because we're already managing all the tables.
Right.
We're already managing all the guest data of their favorite consumers. It made a lot of logical sense. We put a small team on it, and within 2 months, that small team had a prototype up and running with a handful of customers. Over 2 years, scaled it to a few hundred customers, and then more recently, several thousand customers. We said, "We ought to announce this to the public." We're excited about it. It's early days, just like some of our other modules, but we think it's gonna be an important play for us downstream because it's part of our mission, you know, to allow the merchant to delight their guests and have a much better experience in-house, but then also a much better consumer experience. We're excited about it.
Again, still early days. It'll move the needle on ARPU. I think we put out the stat. It's roughly about $2,000 if you use the more mature module annualized. We're excited about it. The sales team's super excited about it. Our customer base is starting to adopt it. We'll, you know, we'll have the same motion that we have for payroll and xtraCHEF and Commerce, which is to just continuously improve it over time. Yeah.
Yeah.
Toast Tables.
Just to put that in context, you know, if you just think about the long-term ARPU opportunity, Toast Tables is one example. There's other products, of course, whether it's Payroll or xtraCHEF, but just putting that $2K in context, if 10% of our customers are paying us more than $10K in SaaS ARPU, you could imagine that there's a few products that could really move the needle.
Yeah.
What we're seeing is there's multiple ways to drive that 10K or 20K ARPU. It could be a restaurant who's got multiple handhelds. It could be a restaurant that uses Toast Tables and uses Payroll and uses Sling. There's a host of different ways where we have conviction on that long-term opportunity because not only what's in the bag today for the reps to sell, but the different combinations that really meet the needs of the restaurant versus landing the entirety of the platform upfront, for example.
Good. Now I know there's a lot of products, Payroll, xtraCHEF. We went through a lot of that. From an R&D perspective, the pace of product releases from here, how should we see that be maybe step up, or could we see more focus on existing products and the sell-through and enhancements on that? What's the balance?
I think you should expect it to be pretty consistent.
Okay.
You know, even looking back at 2019, you know, we started the order and pay at the table project in early 2019, then COVID hit, and we launched it within restaurants. That maturity of looking at the product pipeline and then figure out what are the hurdles that these products are going through to get more investment from us is a pretty consistent pattern. I'd say there's probably three areas of product that we prioritize the most. The first is unlocking more TAM. Location growth is the top driver when we look at growth levers. If we can unlock more TAM, then we're gonna do that through products. What's a good example? You know, Toast for Hotels.
You know, we started that project a while ago because hotel and hospitality owners were telling us, "We can't run the restaurants within our hotels. Can you help us?
Mm-hmm.
Doing things like PMS integrations was a natural fit. That's a clear example where you can unlock tens of thousands of restaurants by pushing that product forward. One pillar is product-focused on unlocking TAM, and that includes hotels, that includes enterprise. International would fit into that. I'd say the second pillar is product roadmap that supports the key stakeholder across the restaurant value chain. Is it the operator GM? Is it the employee within the restaurant? Is it the guest or consumer? Toast Tables, for example.
Yep.
Is it, or is it the supplier and accounting, so you think of xtraCHEF? We have GMs that run those portions of the platform, and each of them have their own roadmap.
Mm-hmm.
That represents the second pillar, because then we prioritize those bets against each other. Is Toast Tables a better bet than maybe doing something within payroll? We're constantly looking at that portfolio, placing those bets, and then holding the GMs accountable to execute that roadmap. That's the second pillar. The third pillar is really all of the infrastructure that sits beneath all of those elements. Those include APIs, just much cleaner, simple APIs for our partners. That includes APIs for our internal teams. When you look at Fintech, you know, if we're monetizing any money movement in and out of the restaurant, making sure that that's really clean, and teams at Toast or our partners can benefit from those Fintech rails.
The infrastructure is probably the third pillar, to just make the platform ready to support not just tens of thousands of restaurants, but hundreds of thousands of restaurants. Those tend to be the three pillars that we play off of each other. I think they consistently execute in a certain pattern.
Need to get ChatGPT, she could either make a picture of it.
Well, I mean, yeah.
That'd be perfect.
We could talk about that for another hour. Certainly AI, both traditional AI as well as Generative AI come into play. Now the GMs are all starting to insert those plays into their roadmap on, you know, where can this fit over the course of the long term.
Yeah.
I think this is why we're still in the early innings of where this industry's gonna go, because there's a lot of tech to be built.
No, I was kidding. I was thinking.
I know you were kidding.
-come up with a clean way to actually put that into pictures, everything you said, that would make my life easy. That was good. I appreciate you going through that. Let's, let's rapid fire a few. I wanna hit Toast Capital, right? I know we've been talking about this thesis of, you know, merchant and consumer platforms wanting to bank their users, and Toast Capital is a great fit for that. Looks like you lend out about 70 basis points of your GPV today. The same question I've asked you guys many times, right? Your risk appetite here, how would you like to scale that up? And maybe for those in the audience, just a reminder of the risk model and-
Sure. Yeah. No, it's. Risk is important to us. Let me give some context on just on the program itself.
Please.
kind of why we're in the business. If you think about, restaurants, they're typically under-banked, and they're looking for capital to, you know, redo their patio or get new kitchen equipment. We found this unique opportunity because we see their data, their payment volume on a daily basis, that positions us to really understand the creditworthiness of the customer and their patterns, et cetera. So that's sort of the thesis of, like, why are we in this business? First of all, it's to solve a customer pain point, and they've been coming to us asking for this product. When you think about the risk profile, that data advantage, which I talk about, is really important because we get that understanding of the customer, the creditworthiness, et cetera.
We also collect the payment through their payment volume. That also gives us predictability, allows us to keep default rates low. You, you layer on the fact that we're not the ones actually issuing the capital. We work with a partner to do that. Then you say, "Well, then what is your risk?" At the, at the highest level, you know, we've got a 15%, you know, maximum risk, if you will, on the, on the principal balance of the loan. We're not anywhere close to that, by the way, but that's just sort of something we had as a stopgap, if you will. When you think about the...
We also have a team very much focused on fraud, on counterparty risk, all the things that you would expect a, you know, high quality risk team focused on. When you put that together, I feel pretty good about our ability to manage that risk, and we're being relatively prudent about how we roll out the program. The default rates have been pretty much in line with what we've expected. We feel pretty good about where we are. We have a lot of customers that come back for a second loan, which has been great to see. If you think about your question on the outlook, how do we think about this program over time?
As we grow our customers, as we grow our GPV, of course we're gonna add more capital, but we'll do it in a very prudent way and managing that risk the entire time. The last thing I would say is, at any point in time, we could obviously just shut down the program. We did that during COVID. Actually, during COVID, we relaxed the program and sort of stopped loaning for a while to see what was gonna play out. We could do that at any time.
I mean, the data advantage does seem real. I mean, you're already seeing all the sales, and if you start to get into payroll-
Exactly.
You see their supplier activity, I mean, that is data that's very.
Yeah, the context around the customer are really important.
Good. No, we'll be tracking. I'm glad you shared the gross profit on that explicitly. It's good for us. Just to round out on the Fintech side, you rank as a top 10 merchant acquirer, given the scale of sales that run through your system. I have to ask about the pricing angle of that, right?
Sure.
That gives you some advantage to get better economics. I know the take rate has some complexity to it depending on payment type, but maybe share a little bit more on.
Yeah. No, you're right on point. I mean, there's many, many factors that impact the take rate, of course. A couple things that we think about. First of all, over the long term, we're focused on driving that net take rate up over the long term.
Mm-hmm.
How will we do that? There's a couple levers we have. One is just our payment infrastructure and optimizing that on a per transaction basis, and we're constantly looking at that. Scale, just as we grow, we should be able to leverage some of our scale. Then pricing, to your point, is another one that we can think about. And we're always looking at and testing different pricing and packaging, all really centered around value. If we can drive value to the customer, that earns us the right to consider a price change. One example of that that we've been testing most recently is on digital online ordering. Could we consider a guest fee related to online ordering to our digital products? Some of the premise on that is, A, it's standard practice.
We're not the only ones that would do that. More importantly, we drive value with that change if we were to do that. We've been testing some models like that.
Okay.
I would say over the long term, we have room to move that take rate up. In the near term, we've said it's in the low 50s for the balance of the year.
Okay, good. Thanks for going through that. Time flies. We're at less than nine seconds to go.
Oh, okay.
I'll try and bundle some of the questions together. You have focused on profitability. We've seen that move forward.
Absolutely.
You've been talking about high ROI investments. There's worry around recession and discretionary spend, the usual kind of questions I'm sure you're fielding all day here. How does that all come together for you, right? The need to wanna invest, to deliver on the profitability as well, but be ready to, you know, protect the bottom line to the extent that things might get weaker. How does that all come together?
Hopefully you're hearing from us a lot of momentum in the business, right?
For sure.
We wanna invest into that, but we wanna do that in a very balanced way. That DNA actually around unit economics has been with the company for a very long time, and we're continuing to do that as we expand into different parts of the TAM, we're gonna continue that DNA. We gave out some long-term margins, you know, on gross profit. Over the long term, we haven't changed our conviction about driving that pro-profitability. Around 30% margins on that gross profit, which is SaaS and Fintech.
Mm-hmm.
That's really the timing is in our control. Like on one hand, we have this massive opportunity to invest, but the focus on efficiency and the focus on unit economics is really what's gonna drive that long-term efficiency. That's across the entirety of the business, whether it's in our G&A functions and finding automation opportunities and low-cost locations, versus, you know, how we serve our customers, how do we serve our customers more efficiently through self-service, et cetera. We have various levers that we're looking at, and then we're just being incredibly prudent about any new investment, whether that's international, whether that's enterprise, really looking at signal before we double down.
Great.
It's just how we operate.
No, that's great. I'm glad you powered through that really quickly. I know we're out of time. I can't get you out of here without asking at least one question: what you're excited about, Chris, here as we leave you, other than eating good food, what's fun coming up?
Yeah, I'd say for me, I love seeing sort of the edges of the TAM and where it can go. Spending more time with the teams and more importantly, the customers that are in these new markets on, you know, where we could be doing more to help them out, that's what we love doing, and that's sort of the new frontier in those markets. I think that's super exciting, whether it was the trip to international, whether it's enterprise, whether it's hotels. We're seeing some interest in opportunities, and those dialogues are really rich, and those dialogues inform the rest of what we're doing. I think that excites me over the course of the next year.
Yeah, for me, it's just the scale that we're operating in. you know, we've talked about record locations in Q2 and getting closer to that 6K in the back half of the year versus 5,500 a year ago. Like operating at that scale consistently like that, you know, that's just to me that excites me 'cause that tells me Not only are we resonating getting different parts of the TAM, but we have this our ARPU opportunity with those customers as well. you put those two together, and you can see this company growing for a very long time.
No, that's exciting. Thank you for going through it all.
Yeah. Thank you.
Thank you.
Thank you guys.