Toast Earnings: Record Location Adds and Strategic Growth Power Q2 Beat
- Hardik Shah
- Aug 5
- 3 min read
TLDR
🔼 Revenue Strength:Annualized recurring run-rate (ARR) grew 31% YoY to $1.9B; gross payment volume hit $49.9B.
📈 Margin Trends:Adjusted EBITDA rose 75% YoY to $161M with margin expansion of 8 percentage points.
🚀 Forward Outlook:Raised full-year outlook; new segments expected to exceed $100M in ARR by year-end.
Business Overview
Toast, Inc. (NYSE: TOST) is a cloud-based, all-in-one digital platform serving the restaurant industry with software-as-a-service (SaaS) and financial technology (fintech) solutions. Its platform spans point-of-sale, payments, digital ordering, loyalty, payroll, and team management across dine-in, takeout, delivery, and catering models. With ~148,000 locations globally, Toast is rapidly expanding its footprint beyond the U.S. into markets like the UK, Ireland, Canada, and now Australia.
Toast Earnings Q2'25
Revenue Performance
Total revenue: $1.55B (+25% YoY)
ARR: $1.928B (+31% YoY)
Gross Payment Volume (GPV): $49.9B (+23% YoY)
SaaS Revenue: $227M (+37% YoY)
Fintech Revenue: $1.276B (+25% YoY)
Profitability
GAAP Net Income: $80M (vs. $14M in Q2 2024)
Adjusted EBITDA: $161M (vs. $92M YoY)
Free Cash Flow: $208M (vs. $108M YoY)
Margins
Recurring gross profit: $464M (+35% YoY)
Adjusted EBITDA margin: 35% (+8 pts YoY)
Stock-based compensation as % of recurring gross profit: Down to 14% (from 20%)
Forward Guidance
Q3 2025
Recurring Gross Profit: $465M–$475M (+23–26% YoY)
Adjusted EBITDA: $140M–$150M
Full Year 2025 (raised)
Recurring Gross Profit: $1.815B–$1.835B (previous: $1.775B–$1.795B)
Adjusted EBITDA: $565M–$585M (previous: $540M–$560M)
Risks & Watchpoints:
Higher tariffs in H2
GPV per location slightly down (–1% YoY)
Seasonality to weigh on Q4 margins
Operational Performance
Core U.S. Restaurants
8,500 net new locations in Q2 (record)
Penetration over 30% in top 10 SMB markets
Toast Go® 3 handheld and ToastIQ™ (AI engine) driving productivity
“Our strong results reflect our consistent execution… and reinforce our belief in the significant long-term opportunity ahead.” — Aman Narang, CEO
New Customer Segments
Enterprise: Added Firehouse Subs (1,300+ units)
Food & Beverage Retail: Onboarded Zabar’s, Toast Retail ARPU >$10K
International: Launched first customer in Australia (Graze Craze), leveraging playbooks from UK, Canada, Ireland
Market Insights
Retail ARPU already exceeds $10K, showing strength in inventory, scheduling, and back-end tools
Toast Capital, non-payment fintech arm, contributed $40M in gross profit despite seasonal softness
Cloud migration in enterprise still underway, Toast displacing legacy POS vendors
“Enterprise wins like Firehouse Subs show how we’re displacing legacy on-premise tech with modern cloud-based solutions.” — Elena Gomez, CFO
Consumer Behavior & Sentiment
Slight decline in GPV per location (–1%) attributed to macro softness and international expansion
Value-driven engagement: personalized guest experiences enabled by ToastIQ and Amex partnership
Supper Club (Richmond, VA) cited a 40% jump in catering sales post-Toast adoption
Strategic Initiatives
American Express Partnership: Integration of Resy, Tock, and Toast Tables into Local by Toast for personalized in-dining experiences
Toast Go® 3: Handheld with ToastIQ, Wi-Fi + Cellular, and 24-hour battery life
International Expansion: First launch in Australia; same product suite now deployable globally
AI-Powered Differentiation: ToastIQ enables dynamic guest profiles, upselling, and staff recommendations
Capital Allocation
Cash & Equivalents: $1.19B
Share Buybacks: $31M YTD
No debt on balance sheet
Adjusted FCF: $208M, boosted by seasonality and margin leverage
The Bottom Line
Toast continues to execute on all four strategic priorities: expanding in core markets, scaling new segments, innovating through AI, and disciplined investment. With the enterprise, retail, and international segments tracking toward $100M in ARR this year, Toast is evolving into a diversified platform poised for sustained, profitable growth.
Watchpoints for investors:
Execution in international markets beyond Australia
Competitive response from legacy POS vendors in enterprise
Progress on upselling platform modules to lift ARPU
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