Core Insights - Toast (TOST) reported a revenue of $1.63 billion for the quarter ended December 2025, marking a year-over-year increase of 22.1% and exceeding the Zacks Consensus Estimate of $1.62 billion by 0.75% [1] - The company's EPS for the same period was $0.23, compared to $0.05 a year ago, although it fell short of the consensus estimate of $0.24 by 5.47% [1] Financial Performance Metrics - Gross Payment Volume (GPV) reached $51.40 billion, surpassing the average estimate of $51.06 billion from three analysts [4] - Subscription Annualized Recurring Run-Rate was reported at $1.06 billion, slightly above the average estimate of $1.05 billion from three analysts [4] - The number of locations using Toast's services increased to 164,000, compared to the estimated 163,117 [4] - Payments Annualized Recurring Run-Rate was $986 million, closely aligning with the average estimate of $986.68 million from two analysts [4] - Total Annualized Recurring Run-Rate (ARR) was $2.05 billion, exceeding the average estimate of $2.04 billion from two analysts [4] Revenue Breakdown - Revenue from financial technology solutions was $1.33 billion, slightly above the average estimate of $1.32 billion, reflecting a year-over-year growth of 22.4% [4] - Revenue from subscription services reached $256 million, exceeding the average estimate of $253.8 million, with a year-over-year increase of 28% [4] - Revenue from hardware and professional services was $43 million, below the average estimate of $44.7 million, indicating a year-over-year decline of 10.4% [4] Stock Performance - Toast's shares have returned -21.4% over the past month, contrasting with the Zacks S&P 500 composite's -0.3% change [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

Financial Data and Key Metrics Changes - Recurring gross profits increased by 33% in 2025, with adjusted EBITDA margins expanding to 34% [5][26] - Annual recurring revenue (ARR) grew by 26%, reaching over $2 billion, with payment volume hitting $195 billion [26] - GAAP operating income rose to $292 million from $16 million a year ago, driven by strong adjusted EBITDA and effective management of stock-based compensation [27][30] Business Line Data and Key Metrics Changes - SaaS ARR and subscription revenue each grew by 28% year-over-year, with SaaS ARPU in the core growing even faster than total SaaS ARPU [29] - Subscription gross profit increased by 33%, with SaaS gross margin expanding by 300 basis points year-over-year to 80% in Q4 [30] - Payments ARR grew by 24%, while fintech gross profit increased by 25% in Q4 [30] Market Data and Key Metrics Changes - The company added a record 30,000 net locations in 2025, ending the year with 164,000 locations [26] - The net retention rate remained healthy at 109% in 2025, supported by upsell and location expansion from existing customers [30] - The company powers 20% of SMB and mid-market restaurants in the U.S., nearly doubling over the past three years [8] Company Strategy and Development Direction - The company aims to double market share in its core U.S. SMB and mid-market restaurants, while also expanding into new markets [8][12] - Investments will focus on product differentiation, particularly in AI and customer support, to enhance operational efficiency [10][21] - The company plans to launch new products, including a drive-thru solution, to capture additional market segments [14][73] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining high growth for the next 5-10 years, driven by strong customer signals and market opportunities [38] - The company anticipates a 20%-22% growth in recurring gross profit streams for 2026, with adjusted EBITDA expected to be between $775 million and $795 million [36] - Management highlighted the importance of disciplined capital allocation while investing in high-priority initiatives [24][35] Other Important Information - The company has repurchased approximately 8 million shares for $235 million since the inception of its buyback authorization in 2024 [35] - The company is experiencing cost pressures from higher memory chip costs, which are expected to impact margins in the second half of 2026 [36][37] Q&A Session Summary Question: SaaS ARR per location and enterprise metrics - Management confirmed confidence in mid-single-digit SaaS ARPU growth for 2026, with core SaaS ARPU growing faster than total company metrics [41][44] - Enterprise sales cycles are different, and management evaluates them on a deal-by-deal basis, focusing on total ARR [44] Question: Net adds and new verticals - Management indicated that net add growth in 2026 is expected to be higher than in 2025, with a similar pattern of growth from core and new towns [48][50] Question: AI disruption and competitive landscape - Management views AI as an opportunity to enhance the platform rather than a threat, emphasizing the unique value Toast provides through its integrated solutions [51][56] Question: R&D investment and margin framework - Management confirmed that the margin framework allows for increased R&D investment to capitalize on AI opportunities while targeting long-term margins of 40% [60][62] Question: Drive-through product rollout - The company plans to launch a drive-through product this year, which will significantly expand its market reach [73][74]

Financial Data and Key Metrics Changes - Recurring gross profits increased by 33% in 2025, with adjusted EBITDA margins expanding to 34% [5][26] - Annual recurring revenue (ARR) grew by 26%, reaching over $2 billion, while payment volume hit $195 billion [26] - GAAP operating income rose to $292 million from $16 million a year ago, driven by strong adjusted EBITDA and tight management of stock-based compensation [27][30] Business Line Data and Key Metrics Changes - SaaS ARR and subscription revenue each grew by 28% year-over-year, with SaaS ARPU in the core growing even faster than total SaaS ARPU [29] - Subscription gross profit increased by 33%, with SaaS gross margin expanding by 300 basis points year-over-year to 80% in Q4 [30] - Payments ARR grew by 24%, and fintech gross profit increased by 25% in Q4 [30] Market Data and Key Metrics Changes - The company added a record 30,000 net locations in 2025, ending the year with 164,000 locations [26] - The SaaS net retention rate remained healthy at 109% in 2025, supported by upsell and location expansion from existing customers [30] - The company continues to gain market share in its core U.S. SMB and mid-market restaurants, now powering 20% of these restaurants [8][9] Company Strategy and Development Direction - The company aims to double its market share and ARR over time, with a focus on growing market share in its core and demonstrating that new markets will be material growth drivers [8][12] - Investments in product differentiation and AI are prioritized to enhance customer adoption and drive differentiation [18][21] - The company plans to launch new products, including a drive-thru solution, to capture additional market segments [72] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining high growth for the next 5-10 years, with a focus on reinvesting in growth initiatives [38] - The company anticipates 20%-22% growth in recurring gross profit streams and adjusted EBITDA of $775 million-$795 million for 2026 [36] - Management highlighted the importance of disciplined capital allocation while expanding margins over time [24][35] Other Important Information - The company has repurchased approximately 8 million shares for $235 million since the inception of its buyback authorization in 2024 [35] - The company is experiencing cost pressures from higher memory chip costs, which are expected to impact margins in the second half of 2026 [36][37] Q&A Session Summary Question: SaaS ARR per location and enterprise metrics - Management confirmed confidence in mid-single-digit SaaS ARPU growth for 2026, with core SaaS ARPU growing faster than total company metrics [41][43] Question: Net adds and new verticals contribution - Management indicated that net add growth in 2026 is expected to be higher than in 2025, with new TAMs contributing significantly to this growth [47][49] Question: AI disruption and competitive landscape - Management views AI as an opportunity to enhance the platform and drive innovation rather than a threat, emphasizing the unique value Toast provides [50][54] Question: R&D investment and margin framework - Management confirmed that the margin framework allows for increased R&D investment to capitalize on AI opportunities while targeting long-term margin goals [58][62] Question: Drive-through product rollout - Management stated that the upcoming drive-through product will open up new market opportunities, particularly in enterprise [72][73]

Financial Data and Key Metrics Changes - Recurring gross profits increased by 33% in 2025, with adjusted EBITDA margins expanding to 34% [5][26] - The company added over 30,000 net locations, ending the year with 164,000 locations [26] - Annual recurring revenue (ARR) grew by 26%, reaching over $2 billion, with payment volume at $195 billion [26] - Adjusted EBITDA for 2025 was $633 million, with free cash flow of $608 million [27] - GAAP operating income rose to $292 million from $16 million a year ago [27] - Total monetization, measured by recurring gross profit as a percentage of gross payment volume (GPV), hit 98 basis points, a 5 basis point increase year-over-year [28] Business Line Data and Key Metrics Changes - SaaS ARR and subscription revenue each grew by 28% year-over-year [28] - Subscription gross profit increased by 33%, with SaaS gross margin expanding by 300 basis points to 80% in Q4 [29] - Payments ARR grew by 24%, while fintech gross profit increased by 25% in Q4 [29] - Hardware and professional services gross profit was -12% of recurring gross profit streams, impacted by higher tariff costs [31] Market Data and Key Metrics Changes - The company powers 20% of SMB and mid-market restaurants in the U.S., nearly doubling over the past three years [8] - The sales productivity in the top 10 geographies continues to outperform the average, indicating room for further market share gains [9] - New markets, including international expansions, are growing faster than the core market at similar time periods [12] Company Strategy and Development Direction - The company aims to double market share in its core U.S. SMB and mid-market restaurants while expanding into new markets [7][12] - Investments in AI and product enhancements are expected to drive efficiency and customer adoption [20][24] - The company plans to launch a drive-thru product and improve support for non-native English-speaking operators in 2026 [11][17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining high growth for the next 5-10 years, driven by new TAMs and product innovations [38] - The company anticipates a 20%-22% growth in recurring gross profit streams for 2026, with adjusted EBITDA guidance of $775 million-$795 million [36] - Management highlighted the importance of disciplined capital allocation while investing in high-conviction opportunities [24][35] Other Important Information - The company has repurchased approximately 8 million shares for $235 million since the inception of its buyback authorization in 2024 [35] - The dollar-based payback period for the portfolio remained in the mid-teen months, with expectations to improve as new towns mature [33] Q&A Session Summary Question: SaaS ARR per location and enterprise metrics - Management expressed confidence in mid-single-digit SaaS ARR growth for 2026, with core SaaS ARPU growing faster than total company metrics [41][43] Question: Net adds and new verticals contribution - The company expects a similar pattern in net adds for 2026, with incremental growth from new towns and verticals [48][50] Question: AI disruption and competitive landscape - Management views AI as an opportunity to enhance the platform rather than a threat, emphasizing the unique value Toast provides [51][56] Question: R&D investment and margin framework - The company is committed to investing in R&D to sustain long-term growth while targeting 40% margins over time [60][64] Question: Drive-through product rollout - The company plans to launch a drive-thru product this year, which will open up new market opportunities [75] Question: Overall investment strategy and guidance - Management indicated that 2026 reflects a long-term vision for growth, with a balanced approach to guiding expectations [82][84]

Core Insights - Toast's stock is currently testing lower boundaries, hitting a new low due to market reactions following its earnings report [1] Financial Performance - Toast reported a Q4 revenue of $1.63 billion, slightly above estimates of $1.62 billion [5] - The company achieved a Q4 EPS of 16 cents, exceeding estimates of 13 cents [5] - The annualized recurring run-rate (ARR) grew by 26% to over $2 billion as of December 31, 2025 [2] - Gross Payment Volume (GPV) increased by 22% year-over-year to $51.4 billion [2] Business Growth - Total locations increased by 22% year-over-year to approximately 164,000, with an addition of 30,000 locations in 2025 [2] - The CEO of Toast, Aman Narang, highlighted momentum across the business, including scaling the core restaurant business and accelerating growth in new markets [3] Future Expectations - For the first quarter, Toast expects gross profit from subscription services and financial technology solutions to be in the range of $505 million to $515 million, representing growth of 22% to 24% [4] - Adjusted EBITDA for the first quarter is anticipated to be between $160 million and $170 million [4] Share Repurchase Program - Toast's board has authorized an increase of $500 million to the company's previously authorized share repurchase program [3] Market Reaction - Following the earnings report, Toast shares fell by 8.11% in after-hours trading, reaching $24.02 [5]

Financial Performance - Annualized recurring run-rate (ARR) increased 26% year over year to over $2.0 billion as of December 31, 2025[6] - Fourth quarter net income was $101 million, compared to $33 million in Q4 2024, and Adjusted EBITDA was $163 million, up from $111 million in Q4 2024[6] - For the full year 2025, GAAP net income was $342 million, compared to $19 million in 2024[6] - Net income for the year ended December 31, 2025, was $342 million, significantly higher than $19 million in 2024, marking a year-over-year increase of 1694.7%[23] - Cash flows from operating activities for the year ended December 31, 2025, were $661 million, compared to $360 million in 2024, reflecting an increase of 83.6%[23] - Adjusted EBITDA for Q4 2025 was $163 million, compared to $111 million in Q4 2024, with total Adjusted EBITDA for the year at $633 million, up from $373 million in 2024[34] - Total Annualized Recurring Run-Rate (ARR) reached $2,047 million in 2025, a 26% increase from $1,626 million in 2024[34] Revenue and Profitability - GAAP subscription services and financial technology solutions gross profit was up 29% year over year to $487 million[6] - Subscription services gross profit for Q4 2025 was $189 million, up from $140 million in Q4 2024, with total gross profit for the year at $672 million, compared to $487 million in 2024[37] - Financial technology solutions gross profit for Q4 2025 was $298 million, an increase from $238 million in Q4 2024, with total gross profit for the year at $1,146 million, up from $878 million[38] Growth Metrics - Total locations increased 22% year over year to approximately 164,000[6] - Gross Payment Volume (GPV) increased 22% year over year to $51.4 billion in Q4 2025[6] - Payments Annualized Recurring Run-Rate (ARR) increased to $986 million in 2025, representing a 24% growth from $794 million in 2024, while Subscription ARR grew by 28% to $1,061 million from $832 million[34] - Gross Payment Volume (GPV) for Q4 2025 reached $51.4 billion, a 22% increase from $42.2 billion in Q4 2024, with total GPV for the year at $195.1 billion, up 23% from $159.1 billion in 2024[34] Assets and Equity - Total assets increased to $3,145 million in 2025, up from $2,408 million in 2024, representing a growth of 30.6%[21] - Total stockholders' equity rose to $2,124 million in 2025, up from $1,545 million in 2024, indicating a growth of 37.4%[21] - Cash and cash equivalents at the end of the period were $1,353 million in 2025, compared to $903 million in 2024, an increase of 49.8%[23] - The total cash, cash equivalents, cash held on behalf of customers, and restricted cash at the end of the period was $1,583 million in 2025, compared to $1,085 million in 2024, an increase of 46%[23] - The company’s accumulated deficit decreased to $(1,262) million in 2025 from $(1,604) million in 2024, showing an improvement of 21.4%[21] Expenses and Liabilities - The company reported a total current liabilities of $969 million in 2025, up from $811 million in 2024, which is an increase of 19.5%[21] - The company’s capital expenditures for the year ended December 31, 2025, were $53 million, slightly down from $54 million in 2024[23] - Research and development expenses for Q4 2025 were $97 million, slightly up from $93 million in Q4 2024, with total expenses for the year at $374 million, compared to $351 million in 2024[41] - General and administrative expenses for Q4 2025 were $84 million, compared to $78 million in Q4 2024, with total expenses for the year at $344 million, up from $307 million[42] Strategic Initiatives - Toast's Board of Directors authorized a $500 million increase to the share repurchase program[1] - Toast signed an agreement with MTY Food Group to roll out Toast across more than 1,000 Papa Murphy's US locations, expanding its existing relationship with MTY[12] Cash Flow - Free cash flow for Q4 2025 was $178 million, compared to $134 million in Q4 2024, with total free cash flow for the year at $608 million, up from $306 million[42] - Non-GAAP costs of revenue for Q4 2025 were $1,188 million, compared to $984 million in Q4 2024, with total costs for the year at $4,463 million, up from $3,689 million[36] - Non-GAAP subscription services and financial technology solutions gross profit is expected to be in the range of $505 million to $515 million for Q1 2026, representing 22-24% growth compared to Q1 2025[11]

Core Insights - Warren Buffett emphasizes the difficulty in identifying potential winners in emerging industries, suggesting that it is easier to recognize the losers [1] Group 1 - The statement reflects a broader investment philosophy that highlights the unpredictability of new markets and the challenges investors face in making informed decisions [1]

Last year was a tough one for restaurant stock investors. Rising costs, intense competition, and changing consumer behavior crushed many high-profile restaurant chains. The fast-casual industry was hit particularly hard as low-income consumers reined in spending. This paradigm has created opportunities for eagle-eyed investors with a long-term outlook. One such opportunity is Toast (NYSE: TOST), the digital platform and operating system for restaurants. Will AI create the world's first trillionaire? Our ...

Toast, Inc. (NYSE:TOST) is one of the stocks Jim Cramer looked at recently. When a club member expressed that they are in pain due to their position in the stock, Cramer commented: Yeah, you know what, boy, that stock has just really come down. They’ve got a great device, but you know what, that’s not enough. And I’ve always been suspicious of it because I still think you can trade back and forth. It’s got a good device, but a device does not make a great stock. Jim Cramer on Toast (TOST): “They’ve Got ...

This story was originally published on Restaurant Dive. To receive daily news and insights, subscribe to our free daily Restaurant Dive newsletter. Instacart and Toast are launching a new strategic partnership that will let restaurants sync their inventory to Instacart’s service and offer a “just-in-time” supply solution for stockouts of critical ingredients, the companies said Tuesday. The companies will test the partnership in early 2026 and then expand it nationally later in the year, the press release ...