Goldman Sachs Communacopia + Technology Conference 2022

Sep 13, 2022

Okay, I think we'll get started now. Joining us here today from Toast, we are very excited to have Chris Comparato and Elena Gomez, CEO and CFO, here to discuss some of the trends they are seeing in the business. Toast is a cloud-based, all-in-one digital technology platform providing a full suite of restaurant software. Since the IPO roughly a year ago, the company has put up some very impressive stats, growing live locations roughly 40% and GPV at over 60%. Without further ado, please join me in welcoming Chris and Elena to the stage. Thanks, Will. Yeah, thanks for having us. I thought maybe I would start off with a higher level question and just go through a general overview of the business. You talk about empowering restaurant owners to delight their guests. What are some of the biggest challenges the restaurant industry faces? How does Toast help address some of those issues? Sure. I'll start at the macro. Our mission at Toast is to empower the restaurant community to delight their guests, do what they love, and thrive. If you think about the restaurant community, it's an amazingly diverse community, but they have one thing in common, which is to create hospitality. Hospitality comes in creating great consumer and guest experiences and creating great food. What you don't see behind the scenes is that it's an incredibly complex business. Danny Meyer, one of our customers, Union Square Hospitality Group, always talks about hospitality as this complex model where you're blending a retail and omni-channel storefront with a complex manufacturing distribution engine on the back end. There's incredible complexity across all the workflows from front of house to back of house in a restaurant. Restaurants are often tackling those workflows, either through custom work and manual work. Sometimes they're using legacy platforms to power some of those use cases. Often, they're using point solutions to string together their operation. They got into the business to offer hospitality, not to be a CTO. We look at that picture, and we feel that the picture's ripe for digital transformation. In the early days of Toast, it was an all-in-one platform, but more focused on POS, payments, the ability to submit an online order, loyalty, gift cards, pretty basic modules. Over time, we've tacked on many different workflows that we can help digitize and then enable not only driving revenue into the restaurant, but streamlining operations and productivity. Two of the biggest challenges right now that we look at are labor, every restaurant's looking at labor as a challenge, and food inflation and food costs. We try to attack those workflows with solutions within our platform that make their life easier so that they can spend more time on what they love and less time on technology decisions. A good example is on labor, how do you take a restaurant and enable them to do more with less? When it comes to staffing, how can you drive more volume through the same staff that you have today? We focus a lot on, what are the ways to unlock that productivity? A lot of restaurants on Toast unlock that productivity through layering of different digital ordering mechanisms. Place an online order, walk into the store, place an order on a kiosk. If you're sitting at a table, place an order on a Toast Go device so that they can turn tables faster and take a payment, and so on. Even consumers with mobile order ahead, enabling consumers to do it themselves. When it comes to labor management, we spend a lot of time talking to restaurant owner-operators about how to improve their productivity. A good example is in our last earnings, we announced that Jamba Juice is piloting kiosk. They're piloting kiosk to attack that labor shortage issue so that they could increase throughput, but do it with the same staff. On food inflation, we attack that piece of the workflow through xtraCHEF, and we'll talk about that a little bit later. Food cost optimization in the back office is a critical workflow that today restaurants are accomplishing, again, through point solutions and custom manual workarounds. Got it. But those are some of the big challenges. Today it's 15 modules within our platform, and it's still all in one, but we continue to attack these difficult use cases that have held them back. Maybe we can dig in a little bit more into the market opportunity. There's over 800,000 restaurants in the U.S. Can you help break that down into some of the various segments of the restaurant space? Toast historically is very strong in the SMB, full-service sit-down type of restaurant. What is different about the up and the down market from where you are today? How significantly are those areas contributing to your current growth? It's an amazingly large TAM, and just as a baseline, 860,000 locations across the U.S. Today, we only have 8% penetration as of the end of Q2 on the market penetration. I often divide the TAM into three segments. The first segment's SMB, and certainly we've done quite well in SMB. SMB is probably 60%-70% of the total TAM. Within SMB, you can divide it between vSMB and SMB, but we call it SMB, and that's where we put teams in markets to build relationships with restaurant operators in the local community, and restaurants are highly local, to build relationships and build their markets and build them into what we call flywheel markets. That's heavily an on-the-ground game that's highly optimized for how we execute as a business. That's the SMB space, and call it 1 to 20 units. That's what I typically put into the SMB. When you get above 20 units, we call it the mid-market. There's regional mid-market and mid-market, 20 to 200 is typically how I cut that. That's probably another 15%-20% of the total TAM. In the regional mid-market, we've continued to allow our hyper-local go-to-market engine to tackle those regional mid-market opportunities. Here in the Bay Area, that may look like a Beach Hut Deli, that may look like a SusieCakes, that may look like a Tacolicious. We allow our reps in markets to build those relationships and go after those regional breakout chains. When you get above that into the more broad mid-market, across the country, these are chains like Melting Pot, B.GOOD, other chains, then it's a more dedicated sales force that goes after those accounts, and it's really land and expand with our relationship management team to expand those accounts, probably a little bit more similar to enterprise sales. When you talk about the last leg of the TAM, the enterprise space, call it 200 units and above, these are the largest 40 to 50 brands across the U.S., often national, if not multinational. My argument is that they haven't really moved to cloud yet. We're starting to see the early signals, and we're starting to have those conversations with CIOs, CTOs, CEOs about the move to cloud. Often those enterprises are running multiple POSs. I was talking to an enterprise brand that was running seven POS Wow platforms. It's a long migration process, very much more like an enterprise sales cycle. There's RFPs, there's labs, there's pilots, and often corporate is making the decision, but then you're working with both corporate and franchisees to roll out the enterprise standard. Each of these segments of TAM have a different go-to-market execution muscle. Over the course of the past 10 years, we've been able to refine that. We feel comfortable in our position across each of those TAMs. We feel like the entirety of our TAM is addressable today. But we're being a little bit methodical up market because the up-market needs of an all-in-one platform are different than an SMB. An SMB may purchase 10 modules, 11 modules, 15 modules. Up market, it's a little bit more complicated because it's very integration centric. You have to have above-store reporting, multi-location management, managing menus and distributing menus across multiple channels is complex. We want to be careful to qualify as we go up market to make sure that the brand is ready for Toast and that we're ready to implement their solution. We want to avoid as much custom work as possible. But this is where I think SIs have an opportunity to come into play in the enterprise space. That's a little bit about how we divide the TAM and how we go after it. The one last piece is vSMB. When you're talking a restaurant that's doing, let's say, less than $500K in GMV, that's heavily self-service. Over the course of the past couple of years, we've built out an e-commerce channel that allows that customer base to have pricing, packaging, ease of use to go on to Toast, self-subscribe, self-onboard, and then add modules over time themselves without really having as much human interaction as our typical SMB customer. That's a little bit of color on the TAM. No, that makes a lot of sense. Maybe you can spend a little bit of time on what the competitive landscape looks like. There's a lot of players in the restaurant software space. Not all of them have the full suite of payments, hardware, and software like Toast. How does having the payment processing, the hardware, the software all under one roof help separate you from the competition? Then Elena, maybe from a financial point of view, maybe you can also hit on how this shows up in terms of ARPU and monetization opportunities. Yes, so maybe I'll hit the first piece. Yeah, go for it. You can hit ARPU. This is an incredibly important differentiator. 10 years ago, when we walked into our first restaurants, restaurant operators wanted an all-in-one platform, but we wanted the ability for a consumer to easily place an order, to easily pay for that order, and to easily exit the restaurant. Just a very, very simple use case that blended hardware solution with point of sale with payments. We chose to go after an Android architecture because we knew that over time, we were going to be able to play with different form factors on the hardware front. In the very early days, we slapped a card reader onto a commercial off-the-shelf tablet, and it was difficult. It was really difficult for restaurant operators to have this robust Android tablet with a card reader and conduct their business easily. At that point, we recognized that there's a unique opportunity that integrates a custom hardware solution, such as the Toast Go device, that allows the waitstaff to all be armed with a tablet that's robust for the restaurant environment. You can throw it, you can drop it, you could pour beer on it, but then you can enable it to take a payment quite easily. Then on the software front, we started to extend beyond POS, and we said, "Well, what if this user interface can also accomplish more workflows? What if you're checking out the guest on this hardware tablet that's purposely built for the restaurant industry, you're placing your payment, but then you can engage the guest on whether adding a tip or offering guest feedback or other use cases down the road that unlock these digital experiences, such as kiosk in the future." We saw this beautiful space between custom Android hardware, purpose-built for restaurants, point of sale and payments. You've got to do that extremely well. You've got to be able to take an order and pay for an order extremely well. But then extending this software life cycle over time. Like I said earlier, in the early days of Toast, it was a handful of modules, but now it's 15 modules. We continue to really focus on that intersection between the three, because that's incredibly differentiated versus iOS platforms or non-restaurant specific horizontal platforms that come into our space. We focus a lot of time and energy on R&D at that intersection, and Elena can expand on ARPU. Yeah, no, what Chris talked about is a really important point, which is the integration of SaaS and payments is incredibly powerful. From a business model perspective, obviously, we benefit from the recurring nature of SaaS. From a payment processing, we grow as our customers grow. So it's from a model perspective, really powerful. On the SaaS side, we benefit from a monthly recurring subscription and the host of products that Chris talked about, 15 modules plus and growing. When I've talked to customers, they actually want us to do more for them. What we're seeing is our reps are very good at positioning the platform upfront and seeing that monetization play out. On the payment side, of course, we benefit from the payment volume and have a take rate associated with that, and we're able to see that predictability over time as well. The other thing I would say is, over time, as we develop more fintech products, the fact that we own the payment rails gives us an opportunity to then even drive more payment volume through our platform. Again, the fact that it's integrated is incredibly powerful and really takes the decision off the table for the restaurant to say, "I want one platform to do it all for me. One other thing to add to it is, back to the mission to empower the restaurant community. As I mentioned, our customers are focused on hospitality, not tech. Previous to 2012, they would make multiple phone calls trying to figure out which vendor, am I calling about payments? Am I calling about software? Am I calling about hardware? We wanted to consolidate that experience so that they have one partner to call, and we can handle that customer experience, whether it's online, whether it's in person, whether it's remote. I think that's increasingly important in the restaurant space, which is the ability to call a trusted advisor and understand how the platform's running, how to troubleshoot. But then also, as Elena mentioned, we're not opportunity-constrained on some of the ideas that these restaurant operators have for the future. Makes a lot of sense. Maybe we can dig in a little bit more into the numbers on the software side of the business. I think software represents roughly 40% of the recurring revenue. Subscription revenue's been growing roughly 2.5 times faster than locations. Maybe you could talk through some of the tailwinds behind ARPU over the last year that's allowed for this. Yeah, sure. I think one of the important things that we're really proud of is that not only has the SaaS ARPU over time grown, but our reps have become incredibly comfortable positioning the platform upfront. That's really important to understand is our reps now, when they have that conversation with the restaurant owner, we're seeing higher value at the upfront sale, which is awesome, right? We're seeing our SaaS ARPU grow. In addition to that, we've built out an upsell motion, which allows us to also grow ARPU. We have, in fact, I think in Q2, more than 20% of our SaaS ARPU ARR came from our upsell motion. We share that because it's not only the SaaS ARPU at the outset, but then we have the opportunity on the back end with this upsell team to go back and position more of the platform for customers who didn't do that uptake upfront. The last thing, Chris Comparato already mentioned it, but we also have an e-commerce motion as well, a Toast Shop, and that allows our customers self-service to go onto the Toast Shop and buy more modules. That not only gives them the opportunity to add things like hardware without talking to someone, but as they're looking at Toast Shop, to the extent they have questions, it's a very warm lead back to that upsell team. They kind of work together. Those two things combined, both new locations, higher ARPU, plus that upsell team and that upsell motion has allowed us to see that tailwind that you guys see. Yeah. Makes sense. Maybe if you look at the current product set, could you talk about kind of what the opportunity is for SaaS ARPU over time? Then maybe, looking out, what are some of the opportunities you see to provide even more to restaurants and their employees? Yeah, it's a great question, and we talk a lot about this, obviously, as we think about the model of Toast over the next horizon, three to five years. But the one thing that we even talked about actually on the IPO roadshow is, the percentage of spend of technology that restaurants spend today is 3%. 3% of their sales they spend on technology. So if you just take an average Toast customer today that's running, call it $1.2 million in GPV, that's kind of our first half number, so in the first half of the year, $1.2 billion in GPV. So if you just assume that they're spending 3% of that immediately starts seeing 40K as an ARPU SaaS alone number. We're not there yet. But that speaks to the opportunity. To actually make it really tangible, we've got customers today, there's a brewery in Ohio that I talk about. I used to talk about a donut shop, but I'll talk about a brewery today. This brewery in Ohio, 10 modules, and they're an average size restaurant. They're not big, they're not small, but they're right down the fairway. adopted the entirety of the platform, or most of it, call it 10 modules, and we're seeing SaaS alone on that restaurant north of 10K, approaching the teens. You can see how that's just one example of, if you take our average ARPU, SaaS ARPU, in the four, five range, we have restaurants already north of 10K. So it just speaks to the opportunity of a restaurant really adopting the entirety of the platform, and our reps getting really good at positioning it up front. Yeah. Makes sense. So maybe we could switch gears over to the hardware side. We touched on it a little bit earlier. There's a lot of what I call the tablet-on-a-stick competitors in the space, and I think you guys obviously screen very well. Could you talk a little bit about the hardware strategy going forward? Elena, could you hit on maybe some of the margins in hardware? I know those have been a drag on performance. What sort of line of sight do you have to improve the drag on the gross margins there? Yeah. Sure. So building on what Chris said earlier, hardware's always been part of all-in-one integrated into the platform. We think of hardware beyond just the POS. If you think about things like Toast Go and kiosks, those are really true differentiators for the restaurant. More importantly, they really help them run a more efficient operation. We're really proud of that in terms of how we think about hardware and how important it is to help a restaurant run both the front of house with Toast Go devices, but also the back of house, where the cook can really see on a kitchen display screen what he needs, and so we can serve up diners much faster and more efficiently. So hardware, definitely critical to our strategy. The team has done a really nice job of navigating what we are seeing in supply chain over the last several quarters. We made a decision, probably a year ago now, to bring more inventory into our warehouses. The principle was, we never want to be in a position where supply chain gets in the way of delivering that hardware to our customers. Hardware cannot be a reason that we cannot grow. We set out the team on that task, and they came back and said, "We are going to add more inventory." That will not only insulate us from short-term supply chain costs, but really give us the confidence that we have line of sight into that hardware for the near term. We feel really good about that. In the short term, what you guys have seen is shipping costs have been elevated, and you saw that in the first half of the year. Product costs have gone up. If you were to look at our hardware costs today relative to pre-COVID, we have all seen product costs go up, and that is built into our calculus of payback periods and all of that. That is what you have seen. What you will start to begin to see, because we made this decision on inventory, as we ship this hardware, we no longer have this high shipping cost. Over the second half of the year, you should start seeing us gain some benefit because we are not paying that high shipping cost. You will start seeing that over the second half of the year. Okay. Makes a lot of sense. Maybe we can pivot over to go-to-market. You guys have made a lot of investments in the sales force over the past year or so. Maybe you could talk about some of the early results, touch on what you are expecting in terms of productivity as you look out. Sure. For context, especially within the SMB space, we have built a hyper-local go-to-market engine. We will put sales reps within communities. The restaurant industry is community-oriented. What is a good example? I used to live in San Carlos down on the peninsula, so we will put reps into that community, and the reps will foster what we call a flywheel effect within the community. They will start to knock down some of the key restaurants within that community. The community tends to be reference heavy. Restaurants talk to each other, and we tend to capitalize on that opportunity on reference-ability, on brand awareness, and on the ability for the solution to be successful. Our reps will cultivate that local market. As they cultivate that local market, over time, we have seen that more tenured reps become even more productive. They are driving a lot of their organic leads inbound, either through existing customers or through partners that are local to the market. They receive about two-thirds of their funnel from inbound organic activity, and that helps them be even more successful. Now they are becoming more and more productive, and we notice that there is a tipping point where an early market will tip over into what we call a flywheel market, that will allow us to continue to go fast, but then also make sure that we are effectively covering the zip codes within that market with enough TAM and enough TAM per rep to be successful. It is incredibly complex. It is incredibly data-driven, but it is super important because we are building relationships with these restaurants on the ground, and we are handling all of their needs on the ground. That is the pro side of the picture, which is, it is truly a competitive differentiator for us, and it has allowed us to put hundreds of reps into the markets across the U.S. The cons is that it is really difficult to build, and you have got to think about all of the people aspects, from the type of person you hire and recruit, to the sales enablement, to the pacing, to the tenure, to the incentives, and to the career ladder for sales reps and sales managers. We have had to put a lot of time and effort, and be purposeful about the people aspect of the job, because it is not easy to build. It has taken us a decade to really refine this model, but we do feel like it is a competitive differentiator, and it is allowing our, like I said, our more tenured reps to be even more successful in their patches. Now you can walk down an avenue, and they are very much like the mayor of their town. Whether it is a small mid-market chain, like a SusieCakes or a Nothing Bundt Cakes, or it is a high-end restaurant, like Town on Laurel Ave, these are restaurants that the reps get to know within their local community. Got it. Maybe switching gears over to the payment side of the business. The net take rate has expanded from roughly the high 30s in 2019 to roughly 50 basis points over the course of three years. What has driven that expansion over time, kind of point to point? Then maybe as you look out, should investors expect further moves higher in take rate as a significant driver of results, or are we looking at more incremental improvements from here? Yeah, it's a fair question. If you look back at our take rate pre-COVID, and you mentioned it, to where it is today, we saw pre-COVID, it was sort of in the mid-30 basis points, if you will, and then it approached a peak, I think, in the 60s, and now we're settling down at the 50s. The way we think about it is, we've made some intentional structural investments on the back end, and announced some digital products that have helped us with adoption of these digital products, which helps customers grow, but also helps our revenue as well. On the cost side, we're investing to optimize. As we scale and we get more volume, we're getting some of that natural benefit. We also have multiple processors, which also help with that. Then we're constantly working with partners to optimize our cost per transaction. We're down to that transaction-level inspection, and we have a whole team that's really focused on how do we optimize this over time. So that's on the cost side. Of course, there's a revenue component to it. As we launch more digital products and we get our customers to adopt these digital products, such as online ordering, order to pay at the table, those all drive more revenue for us, but also really drive revenue to the restaurant. So it's really looking at both dimensions, both the revenue side, but also the cost optimization side. Then finally, I mentioned it earlier, but the fact that we have the payment rails gives us opportunity down the road to even be more innovative and drive more digital products to our restaurants to help them. That's a calculus we're thinking about over the longer term. But definitely, take rate is something we believe over time will have steady growth. Got it. Makes sense. I guess continuing with payments, today you largely play a role as an acquirer for the restaurants. More recently, you've had a couple new products, such as the Toast Pay Card for employees that provide you some opportunities to get more into card issuing as well. I guess, what's been the early reception to the Toast Pay Card? Then, higher level, what are some other aspects of restaurant spend where you see additional payment opportunities beyond just the consumer-to-business aspects? I will hit the first piece. Pay Card, we announced that last year at Spark. It is still very early, and I think it is part of a broader employee value proposition. At the end of the day, we believe there is an important flywheel between the employee and the restaurant, and Pay Card is a part of that. We fundamentally believe that an employee at a Toast restaurant will want to work at a Toast restaurant versus a non-Toast restaurant. I have two teenage 17-year-olds. One works at a Toast restaurant, one works at a non-Toast restaurant. The one working at a Toast restaurant is a lot happier. She is getting more tips, it is more productive, and it is a better-run operation. If you zoom out, that employee value proposition starts with technology. From how they manage their schedule, to how they clock in, clock out, to how they take orders and turn tables faster, to how they receive and manage their tips. Tips management is critically important, and certainly for this cohort of employees, they want to receive tips quickly, and they want those to be right with business rules that the restaurant can set. Pay Card is a continuation of that employee value proposition so that we can also pay them out quickly should they choose to get paid out quickly. You will see us continue to exercise opportunity at the platform level to maximize the opportunity for every employee within a restaurant. Pay Card sort of finishes the play on that employee value prop. Scheduling, as we mentioned in last quarter with Sling, was a critical element also of that employee value proposition. Over time, as Elena mentioned, we believe there are ways in which we can monetize other aspects of how the restaurant handles money. What is a good example? We talk about xtraCHEF and food cost optimization. Restaurants have to pay their suppliers, and pay all of their vendors, so there could be an opportunity there. We talk about payment rails beyond Pay Card. There could be opportunities. I think it is still very much early days for where we could monetize the rails that we have built. We are excited about what we are seeing, but not yet ready to talk about volume. Yeah. Makes sense. That employee, just to build on, I was at a restaurant about a month ago, a sushi restaurant here in town, Ozumo, if you go. It's a great restaurant. I asked the waiter, he didn't know who I was. I didn't say I was at Toast. I said, "How do you like it?" He goes, "I love it. I have more tips, but more importantly, I work at two restaurants, and I'm trying to get my other GM to get Toast." I didn't tell him who I was. That was music to my ears. My kids were like, "Mom, please stop asking Toast questions." It was really powerful. That employee is in the restaurant day in and day out, so the voice of that employee is something we're really paying attention to. Yes. We talked about the TAM of 800,000 restaurants in the U.S., but if you look at the employee TAM, it's 11 million- Yeah employees within the restaurant sector in the U.S. alone. That's a captive audience to help out. Yeah. Makes a lot of sense. We made it to the last 10 minutes here without a macro-oriented question, so I'll go ahead and ask that now. It's a two-part question. On the consumer side, what are you seeing, if anything, on consumer spending habits in your customer base? How do you think about risk to GPV if we do see a weakening in the economy? Then second, you serve a largely SMB customer base, how do you think about customer retention in a downturn, or what's been your experience in past slowdowns? Yeah, despite this morning's news, we've really not seen any material signal that consumer sentiment is souring on restaurants. We feel that food inflation at home is higher than food inflation within the restaurant. Restaurants are driving GPV. In fact, we believe that total transaction volumes across the entire restaurant sector are lower than pre-COVID. We feel like there's still room to go when it comes to transaction volumes within the restaurant space. We look at GPV, we look at churn, we look at ticket sizes, and we just look at this across as many markets that we operate as possible. We're not seeing any material negative signal at the moment. That bodes well. We've looked at past recessions, 2008, and we felt like consumer sentiment was strong. Certainly, you may see pockets of mix shift where maybe they're spending the dollars in different types of restaurants, but at the moment, no negative signal on the consumer front, and our team continues to execute extremely well. We're sort of hyper-focused on it. We have a dashboard that we look at very regularly to make sure that we're seeing as much signal as possible. On the restaurant location front, very similar answer. We haven't seen any uptick in churn. Churn is enormously low for Toast. We're talking about low single-digit churn on a monthly basis. If you go back to the early days of COVID, 2020, even in early COVID, we thought the restaurant industry was going to take a big hit, perhaps for several quarters. Maybe for one to two quarters, we saw a small uptick in churn, and then it came roaring back. The restaurant industry was battle-tested in the early days of COVID, and we saw no material impact on churn. Went back and looked at 2008, and we said, "Okay, what did it look like back in the recession?" Total net locations remained healthy. Now, we saw some churn. Not we, Toast, but the restaurant industry saw some churn. We saw net new location adds slow, but then we saw existing brands expand, but total locations remained somewhat constant. I think it's TBD. No one has a crystal ball, but we feel like we've been battle-tested. The team's executing extremely well. We're signal-detecting as much as we can, and rest assured, we have scenarios, should we see any signal, to make changes. But right now, we're after durable, efficient growth, so there's no reason to execute a different game plan except keep our customer base happy. The other thing I'll mention is at the location level, we can help restaurants adapt. So between tools like xtraCHEF, tools like Employee Cloud and Payroll, and the broader platform, we feel like we can really help our customer base navigate uncertainty that they're seeing. Yeah. Yeah, I would just build on that and say that in this environment, with a rising cost environment and a labor shortage, Toast really bodes well. This is a time for us to really shine, because we will help you run a more efficient operation. We had an example of a restaurant in San Francisco that ran 8 servers, 90 diners, and adopted the platform, then ran 9 servers, 200 diners. That's just a real live example. This was a restaurant owner who came to our executive staff meeting to talk about the good and the bad at Toast, and that was one of the efficiency gains he had. You can just imagine, our reps are positioning the platform right now in this rising cost environment. We will give you line item detail to empower you to make better decisions about your menu choices. We'll help you run a more efficient operation with Toast Go devices. So, there's a really easy pitch right now for our sales rep in this backdrop. Yeah. I think that's a fascinating stat on the GPV that your volume per location is so much higher than it was pre-COVID, but you're saying transaction counts are still below the trend line. Yeah. It just kind of shows that the inflation is showing up so much in the data and kind of leads into the next question. There's been a lot written about that disconnect between food away from home versus groceries cost, and just the raw input cost. Maybe you could talk about that challenge that the industry is facing. How is inflation affecting margin structure in the business? Maybe talk about some of the ways, you're talking about line item detail, about ways to help manage costs. Yeah, so I can start, and feel free to add. This is where xtraCHEF is a critically important piece of the platform for restaurant operators today. We only started to enable our sales force to position and sell xtraCHEF as part of the bundle at the start of this year, so it's still pretty much early days, but shining a light bulb on food cost optimization is really a new habit for the average restaurant operator. Typically, it starts with invoices, and what are all the invoices that I'm receiving into my restaurant so that I can actually codify those and understand where I'm spending money? I don't know if any of you have watched "The Bear" on Hulu. It's a fictitious show, but if you see scenes of Carmen in the back office managing all of his invoices manually, it's chaotic. First is xtraCHEF Lite, which allows us to automate that whole invoice ingestion process and codify invoices so that you have visibility into where your spend is going. Secondly, as you graduate from xtraCHEF Lite into what we call Pro, now you can shine a light bulb on, okay, where am I spending? Food is one of the top most expensive categories in the restaurant. So where am I spending on food? It allows you to break down your menu into recipes, break down your recipes into food supplies, and then analyze, well, geez, what am I paying? Which supplier am I paying? What are the trends on that? So we're giving restaurant operators the tools to help them analyze down to the produce level, are they optimized on food costs and could they drive improvements? Restaurants are telling us that those tools are allowing them to navigate. Certainly, they're going to raise their price, but on the back end, they're doing more with less in terms of food cost optimization. Still very much the early days, but we think there's a huge opportunity in the back office to help restaurant operators run a better shop. Yeah. To carry on with "The Bear," you're literally finding the money in the tomato cans. Yeah. We wish they were finding money in the tomato cans. That was the last episode of "The Bear. Yeah, don't want to spoil it. Okay. You've planted some of the initial seeds for international expansion. Could you maybe provide an update on that initiative? Any sense for rough timelines for international to be a meaningful contributor to the business? Yeah. We made a seed investment, I would call it, in international this year, which is really in the $10 million-$20 million range, so materiality's not high. That said, it's a really important medium-term investment for us. It's a multi-year journey on international. I would view 2022 and really part of 2023 as the foundation, building the foundation, understanding the go-to-market motion. We're focused on English-speaking countries, London, Canada, Ireland, and we've got a few restaurants already up and running, so we're learning from them. So far the response has been good. As we look at the competitive landscape abroad and we compare that to the U.S. and we think about, well why did we make this international investment? We have a ton of conviction that because the market's fragmented internationally and it's relatively similar players and we have really strong win rates here in the U.S., we should be able to be successful internationally. We're learning that. We've got a really strong leader that's gone out there to really take it to the next level. But I view that as a medium to three to five years before it really has meaningful impact on our P&L. Got it. Makes sense. I left 60 seconds to talk about profitability. I am surprised so late in the game. I know. Toast showed really impressive cost control in 2Q. You made some commentary around seeing greater operating leverage into 2023. Maybe just talk about how you are balancing growth and profitability and anything you could say about the near term and long-term profitability profile. Yeah, you should know getting to profitability is a priority for us. As important is growth, and so we are really focused on being deliberate about those investment choices we are making. And really being okay with deferring certain investments if they are not driving near-term revenue. We are really thinking about that. We are inspecting every single hire very carefully, and so that mindset and that discipline around what Chris called durable growth, but smart, efficient growth is really permeating the culture. And that is really what we want our employees to think about as well, day in and day out. And so we are positioning the company for a lean cost structure. It gives us the ability to navigate, especially in this market backdrop. But we still have ambitions to be a high-growth company. Makes sense. I think with that we are out of time. Please join me in thanking Chris and Elena for their time. This has been great. Appreciate you guys being here. Thanks, Will.