Sign in
TI

Toast, Inc. (TOST)·Q2 2025 Earnings Summary

Executive Summary

  • Record execution and broad-based strength: Toast added 8,500 net new locations, grew ARR 31% to $1.93B, GPV 23% to $49.9B, and delivered Adjusted EBITDA of $161M with GAAP operating income of $80M; recurring gross profit (non-GAAP subscription + FinTech) rose 35% YoY to $464M .
  • Estimates beat and guidance raise: Q2 revenue of $1.55B and Primary EPS (normalized) topped S&P consensus; FY 2025 recurring gross profit guidance lifted to $1.815–$1.835B and Adjusted EBITDA to $565–$585M; Q3 guidance set at $465–$475M recurring gross profit and $140–$150M Adjusted EBITDA .
  • Strategic catalysts: Multi-year American Express partnership to integrate reservations and enable personalized experiences; launch of Toast Go 3 handheld with cellular connectivity and ToastIQ; international expansion to Australia .
  • Trajectory improving across segments: Enterprise/international/food & beverage retail surpassed 10,000 live locations; retail ARPU already >$10k, supporting mix shift and monetization; total take rate across SaaS and FinTech gross profit reached 93 bps .

What Went Well and What Went Wrong

What Went Well

  • Location and ARR momentum: “We added a record 8,500 net new locations… recurring gross profit grew 35%… Adjusted EBITDA scaled to $161 million,” with total locations up 24% YoY to ~148,000 and ARR up 31% YoY to $1.9B .
  • Upmarket and new segments: Enterprise, international, and food & beverage retail passed 10,000 live locations; Firehouse Subs (1,300+ units) joining Toast; first customer live in Australia, broadening global reach .
  • Product innovation: Launch of Toast Go 3 with cellular + ToastIQ to drive upsells and reliability; management highlighted its 24-hour battery life and real-time guest context: “Our new Toast Go 3 handheld… combines ToastIQ… with built-in cellular connectivity” .

What Went Wrong

  • Hardware/professional services drag: GAAP hardware/professional services gross profit was -$54M in Q2 (vs -$43M in Q2’24), indicating continued cost pressure in the hardware line .
  • GPV per location modestly lower: “GPV was $50B growing 23% YoY with GPV per location down 1% versus last year,” implying macro/format mix headwinds despite strong volume .
  • Second-half margin headwinds: Management flagged tariff expenses and incremental investment as reasons for lower margins in H2 despite raised FY guidance; “tariffs have a bigger impact in the second half of the year” .

Financial Results

Summary vs Prior Periods

MetricQ2 2024Q1 2025Q2 2025
Total Revenue ($USD Billions)$1.242 $1.337 $1.550
Net Income ($USD Millions)$14 $56 $80
Diluted EPS ($USD)$0.02 $0.09 $0.13
Adjusted EBITDA ($USD Millions)$92 $133 $161
Non-GAAP Recurring Gross Profit ($USD Millions)$344 $415 $464

Segment Revenue Breakdown

Segment Revenue ($USD Millions)Q2 2024Q1 2025Q2 2025
Subscription Services$166 $209 $227
Financial Technology Solutions$1,023 $1,082 $1,276
Hardware & Professional Services$53 $46 $47
Total Revenue$1,242 $1,337 $1,550

KPIs and Operational Metrics

KPIQ4 2024Q1 2025Q2 2025
Total Locations (000s)~134 ~140 ~148
ARR ($USD Billions)$1.626 $1.713 $1.928
GPV ($USD Billions)$42.2 $42.2 $49.9
Margins/Take Rates (Q2 2025)Value
Total Take Rate across SaaS + FinTech Gross Profit93 bps
FinTech Net Take Rate57 bps
Payments Net Take Rate49 bps
Free Cash Flow ($USD Millions)$208

Estimates vs Actuals (S&P Global)

MetricQ4 2024Q1 2025Q2 2025
Revenue Estimate ($USD)$1,315.3M*$1,343.8M*$1,518.6M*
Revenue Actual ($USD)$1,338.0M $1,337.0M $1,550.0M
Primary EPS Estimate ($USD)$0.1619*$0.1797*$0.2233*
Primary EPS Actual ($USD)$0.18*$0.1969*$0.2501*

Values retrieved from S&P Global.
Note: “Primary EPS” reflects normalized EPS per S&P Global methodology and may differ from GAAP diluted EPS reported by Toast .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Recurring Gross Profit (Non-GAAP)FY 2025$1,775–$1,795M $1,815–$1,835M Raised
Adjusted EBITDAFY 2025$540–$560M $565–$585M Raised
Recurring Gross Profit (Non-GAAP)Q3 2025N/A$465–$475M New
Adjusted EBITDAQ3 2025N/A$140–$150M New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024 and Q1 2025)Current Period (Q2 2025)Trend
AI/Technology initiativesIntroduced ToastIQ in Q1 to drive upsells/efficiency ; platform differentiation emphasized in Q4 Toast Go 3 with ToastIQ and cellular; real-time guest context and upsell prompts Expanding capabilities; stronger attach/monetization
Enterprise momentumApplebee’s (largest deal), Topgolf wins (Q1) Firehouse Subs 1,300+ units; pipeline strengthening Building scale; gradual rollout over 4–6 quarters
International expansionBroadening presence; strong signals across UK/Canada (Q4/Q1) First customer live in Australia; launch with full product suite Accelerating footprint; localization leverage
Retail ARPU / segmentNew retail TAM developing (Q4/Q1) Retail ARPU >$10k; deeper inventory tools and dedicated sales team High-ARPU vertical; investment increasing
Tariffs/MacroNot highlighted previouslyH2 tariff expenses to weigh on margins; prudent guidance Emerging headwind
GPV & per-location dynamicsGPV strength in Q4/Q1 GPV +23% YoY; per-location GPV down 1% amid mix Volume up; per-unit intensity modestly lower

Management Commentary

  • Aman Narang, CEO: “We added a record 8,500 net new locations… recurring gross profit grew 35% year over year, and Adjusted EBITDA scaled to $161 million… We’re building a platform to help local businesses thrive and I’ve never been more confident…” .
  • On strategy: “We crossed 10,000 live locations across enterprise, international and food and beverage retail… we launched in Australia… and announced a partnership with American Express” .
  • Elena Gomez, CFO: “Total take rate across SaaS and FinTech gross profit was 93 basis points… Adjusted EBITDA was $161 million with margins expanding eight percentage points YoY to 35%” .
  • On H2 outlook: “We raised our full year outlook… Q4 margin is typically lower… we will have higher tariff expenses… unlocking incremental investment across core and new segments” .

Q&A Highlights

  • Retail ARPU and product roadmap: Retail ARPU already >$10k with focus on inventory tools across sub-verticals (grocery/liquor/convenience); scaling dedicated sales; strong early rep productivity .
  • GPV trends and per-location intensity: GPV up; GPV per location down 1% YoY; mix (retail higher, international lower) and macro contribute; unit economics/paybacks remain healthy .
  • Margin bridge and tariffs: Sequential EBITDA down in Q3 due to incremental investments and tariff costs; management views spend as discretionary to accelerate TAM initiatives .
  • Enterprise competition: Toast displacing legacy on-premise in upmarket; customers selecting for in-store performance, staff efficiency, reliability; Firehouse adopting handhelds/KDS/payments .
  • Channel and coverage: Surgical additions in underpenetrated metros/suburbs; robust partner referral ecosystem (~20% of new customers) while maintaining end-to-end owned experience .

Estimates Context

  • Q2 beat: Revenue $1.55B vs $1.519B estimate; Primary EPS normalized $0.2501 vs $0.2233 estimate, reflecting strength across FinTech/subscription and cost control *.
  • Trend: Toast exceeded consensus in Q4 2024 and Q1 2025 as well, signaling consistent execution; revisions likely to move higher for FY recurring gross profit and EBITDA following raised guidance * * .

Values retrieved from S&P Global.
Note: “Primary EPS” is normalized and not directly comparable to GAAP diluted EPS reported by Toast .

Key Takeaways for Investors

  • Durable growth with improving quality: Strong location adds, ARR and GPV growth, and rising total take rate support sustainable topline—while adjusted EBITDA margin at 35% demonstrates scalability .
  • Guidance upshift: FY 2025 recurring gross profit and Adjusted EBITDA were raised; near-term Q3 guide embeds investment and tariff headwinds—watch cadence into Q4 seasonality .
  • Strategic catalysts: Amex partnership and Toast Go 3 should enhance monetization (upsells, reliability) and expand demand funnel; monitor attach rates and upsell conversion .
  • Enterprise/retail/international mix: Enterprise wins (Firehouse, Applebee’s), retail ARPU >$10k, and Australia launch broaden TAM and should lift ARPU over time; expect gradual enterprise go-live pace .
  • Hardware drag but necessary: Hardware/pro services remain a gross profit headwind; non-payment FinTech (Toast Capital) contributed $40M gross profit with seasonal dynamics—net take rate ~10 bps contribution expected .
  • Watch H2 levers: Tariffs and incremental investment may compress margins; focus on execution in new segments and SaaS ARR-to-revenue conversion normalization after lapping Q3/Q4 2024 step-up .
  • Near-term positioning: Potential for estimate raises and positive sentiment from raised FY guide; balance with H2 margin comments and macro GPV per-location softness for trading setups .