Toast Earnings: ARR Crosses $2B as AI and Partnerships Drive Platform Growth
- Hardik Shah
- Nov 4
- 4 min read
TLDR
• Revenue Strength: 34% YoY growth to $1.63B; ARR hit $2.0B as new platform wins drove expansion.
• Margin Trends: Adjusted EBITDA rose 56% to $176M with 35% margin—up five points YoY.
• Forward Outlook: FY25 EBITDA guidance raised to $610–$620M amid ongoing AI and market expansion momentum.
Business Overview
Toast, Inc. (NYSE: TOST) is a cloud-based restaurant technology company providing an all-in-one platform that integrates point of sale (POS), payments, digital ordering, loyalty, team management, and financial technology solutions. The company serves over 156,000 restaurant locations, spanning quick service, full service, and food retail segments. Toast’s software-as-a-service (SaaS) model generates subscription and transaction-based revenue, positioning it as both a SaaS and fintech hybrid serving the broader hospitality ecosystem.
Toast Earnings
Toast delivered another strong quarter, achieving record ARR of $2.0 billion, up 30% year-over-year, fueled by both SaaS and fintech expansion.
Total Revenue: $1.63B (+25% YoY)
Gross Payment Volume (GPV): $51.5B (+24% YoY)
Gross Profit: $432M (+34% YoY)
GAAP Net Income: $105M, nearly double YoY
Adjusted EBITDA: $176M (+56% YoY), translating to a 35% margin, up 500 bps
Free Cash Flow: $153M (+58% YoY)
By business line:
Subscription Services Revenue: $244M (+29%)
Fintech Solutions Revenue: $1.35B (+26%)
Hardware and Professional Services: $44M
CFO Elena Gomez noted that “we crossed $2B in ARR just two years after reaching $1B—both SaaS and payments ARR now exceed $1B each, underscoring the power of our diversified model”.
Forward Guidance
Q4 2025:
Non-GAAP fintech and subscription gross profit: $480–$490M (22–25% YoY growth)
Adjusted EBITDA: $140–$150M
Full Year 2025:
Non-GAAP fintech and subscription gross profit: $1.865–$1.875B (+32% YoY, up from 28–29% prior guidance)
Adjusted EBITDA: $610–$620M, raised from prior $565–$585M outlook
Toast reiterated 2026 goals of >20% topline growth and maintaining 40% long-term core EBITDA margins, while investing in international and retail verticals.
Operational Performance
CEO Aman Narang emphasized Toast’s balanced growth, saying:
“It took us over a decade to reach $1B in ARR and just two years to double it. Our momentum gives us confidence to scale from 156,000 to 500,000 locations over time.”
Key operational drivers:
7,500 net new locations added in Q3 (23% YoY growth).
Core U.S. SMB and mid-market segment still accounts for 95% of ARR, maintaining strong win rates.
Enterprise expansion: Nordstrom, TGI Fridays, and Everbowl onboarded multi-location rollouts.
International growth: Major hospitality groups in Ireland, the U.K., and Canada selected Toast.
Retail entry: New customers like Tri-County Meat Markets (TX) and Nature’s Best (IL) expanding TAM into food retail.
Market Insights
Toast continues to benefit from restaurant sector resilience despite macro uncertainty.Narang observed that “restaurants have proven resilient across past downturns, and our data shows customers holding up well even as consumer spending normalizes”.
Competitive position: Toast reported rising win rates against all major POS and restaurant tech competitors, citing its purpose-built design and high reliability, particularly during recent AWS outages that competitors struggled with.
Consumer Behavior & Sentiment
Toast’s insights show stable same-store sales and slightly higher GPV per location driven by menu optimization and strong summer trends. Consumers remain active in dining, with a growing shift toward digital ordering and loyalty engagement.The network now spans over 100K U.S. restaurants, enabling dense consumer reach through the Toast Takeout app, Toast Tables, and partnerships with Uber and Resy—positioning Toast to capture both B2B and B2C monetization.
Strategic Initiatives
Toast’s AI strategy took center stage:
Toast IQ: A conversational AI assistant used 235,000+ times by 25,000 restaurants since launch. It provides proactive insights, like identifying menu inefficiencies or suggesting pricing actions.
“Toast IQ feels like having a personal assistant,” one customer shared—echoing Narang’s goal of building “the best GPT interface for the restaurant industry.”
Toast Advertising: AI-powered marketing campaigns across Google and Meta, delivering 20× ROI for select customers.
Partnerships: Multi-year collaboration with Uber Technologies for integrated ordering and delivery, and an AI beverage optimization initiative with Coca-Cola.
Product roadmap: Expanding international localization and deepening fintech solutions such as Toast Capital, which contributed $58M in gross profit this quarter.
Capital Allocation
Free Cash Flow: $153M in Q3; trailing-12-month FCF of $564M (~100% conversion).
Share Repurchases: 1.5M shares YTD (~$54M).
Balance Sheet: $1.36B cash and $500M in marketable securities.Gomez reaffirmed Toast’s commitment to “disciplined reinvestment in new TAMs with clear paths to profitability and healthy unit economics.”
The Bottom Line
Toast’s Q3 2025 results reinforced its evolution from a U.S. restaurant POS provider to a global, AI-powered fintech-SaaS platform. With durable growth across ARR, expanding margins, and strong adoption of next-gen products, the company is solidifying its leadership in hospitality tech.
Key investor watchpoints:
AI monetization path for Toast IQ and related tools.
Scaling in international and food retail verticals.
Margin balance as reinvestments accelerate toward 2026.
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