Core Insights - Toast (TOST) reported $1.63 billion in revenue for the quarter ended September 2025, marking a year-over-year increase of 25.1% and an EPS of $0.25 compared to $0.07 a year ago, exceeding Zacks Consensus Estimates [1] - The reported revenue surpassed the Zacks Consensus Estimate of $1.59 billion by 2.6%, while the EPS exceeded the consensus estimate of $0.24 by 4.17% [1] Financial Performance Metrics - Gross Payment Volume (GPV) reached $51.50 billion, exceeding the average estimate of $50.62 billion from three analysts [4] - Subscription Annualized Recurring Run-Rate was $1 billion, slightly below the average estimate of $1.01 billion from three analysts [4] - Total Annualized Recurring Run-Rate (ARR) was $2.02 billion, surpassing the two-analyst average estimate of $2 billion [4] Revenue Breakdown - Revenue from Financial Technology Solutions was $1.35 billion, exceeding the average estimate of $1.31 billion from four analysts, representing a year-over-year increase of 26.1% [4] - Revenue from Subscription Services was $244 million, above the average estimate of $237.92 million from four analysts, reflecting a year-over-year increase of 29.1% [4] - Revenue from Hardware and Professional Services was $44 million, below the average estimate of $46.77 million from four analysts, indicating a year-over-year decline of 10.2% [4] Stock Performance - Shares of Toast have returned -3.3% over the past month, contrasting with the Zacks S&P 500 composite's +2.1% 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]

Core Insights - Toast (TOST) reported quarterly earnings of $0.25 per share, exceeding the Zacks Consensus Estimate of $0.24 per share, and showing significant growth from $0.07 per share a year ago, representing an earnings surprise of +4.17% [1] - The company achieved revenues of $1.63 billion for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 2.60% and increasing from $1.31 billion year-over-year [2] - Toast has outperformed consensus revenue estimates three times over the last four quarters, indicating a positive trend in revenue performance [2] Earnings Outlook - The future performance of Toast's stock will largely depend on management's commentary during the earnings call and the sustainability of the stock's immediate price movement based on the recently released numbers [3][4] - The current consensus EPS estimate for the upcoming quarter is $0.22 on revenues of $1.6 billion, while the estimate for the current fiscal year is $0.94 on revenues of $6.08 billion [7] Industry Context - The Internet - Software industry, to which Toast belongs, is currently ranked in the top 32% of over 250 Zacks industries, suggesting a favorable environment for stocks within this sector [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors or through tools like the Zacks Rank [5][6]

Financial Performance - As of September 30, 2025, approximately 156,000 Locations partnered with Toast, representing a 23% year-over-year increase, processing approximately $186 billion in gross payment volume (GPV) over the trailing 12 months [86]. - For the three months ended September 30, 2025, gross payment volume (GPV) reached $51.5 billion, a 24% increase from $41.7 billion in the same period of 2024 [90]. - Annualized Recurring Run-Rate (ARR) increased by 30% to $2,016 million for the nine months ended September 30, 2025, compared to $1,554 million in 2024 [90]. - Total revenue for the three months ended September 30, 2025, was $1,633 million, a 25% increase from $1,305 million in the same period of 2024 [96]. - Subscription services revenue for the three months ended September 30, 2025, was $244 million, up 29% from $189 million in 2024 [96]. - Financial technology solutions revenue increased by 26% to $1,345 million for the three months ended September 30, 2025, compared to $1,067 million in 2024 [96]. - For the three months ended September 30, 2025, net income was $105 million, compared to $56 million for the same period in 2024, representing an increase of 87.5% [111]. - Adjusted EBITDA for the three months ended September 30, 2025, was $176 million, up from $113 million in the same period of 2024, reflecting a growth of 55.8% [111]. - Free cash flow for the nine months ended September 30, 2025, was $430 million, significantly higher than $172 million in the same period of 2024, indicating a growth of 150.0% [116]. - The net cash provided by operating activities for the nine months ended September 30, 2025, was $467 million, compared to $213 million in 2024, reflecting a growth of 119.7% [116]. Expenses and Costs - Total costs of revenue for the three months ended September 30, 2025, were $1,201 million, a 22% increase from $983 million in 2024 [98]. - Operating expenses for the three months ended September 30, 2025, totaled $348 million, reflecting a 21% increase from $288 million in 2024 [100]. - Sales and marketing expenses rose by 21% to $144 million for the three months ended September 30, 2025, compared to $119 million in 2024 [100]. Shareholder and Capital Information - The company repurchased approximately 2 million shares of Class A common stock for an aggregate amount of $54 million during the nine months ended September 30, 2025 [124]. - As of September 30, 2025, the total fully diluted share count was 629 million, including 587 million Class A and B common stock issued and outstanding [125]. - The company has 21 million options to purchase Class A and B common stock, 17 million unvested restricted stock units, 1 million warrants, and 3 million shares reserved for charitable donations [125]. - The available credit facility increased from $325 million to $346 million as of September 30, 2025, following an amendment to the credit facility [123]. Liquidity and Financial Position - Cash and cash equivalents as of September 30, 2025, totaled $1,357 million, an increase from $903 million as of December 31, 2024 [118]. - The company believes that existing cash and cash equivalents, along with available borrowing capacity, will be sufficient to meet working capital needs for at least the next 12 months [126]. - The company does not anticipate any material changes in liquidity or cash flows in the near term [122]. - There have been no material changes to expected working and other capital requirements since the last annual report [126]. Market and Credit Risk - The company is exposed to financial market risks, including changes in interest rates and foreign currency exchange rates, as well as credit risk on accounts receivable [127]. - The exposure to market and credit risk has not changed materially since the last annual report filed on February 26, 2025 [127]. Other Financial Metrics - The change in fair value of warrant liability for the three months ended September 30, 2025, was $7 million, compared to a loss of $1 million in the same period of 2024, indicating a significant change [103].

Financial Data and Key Metrics Changes - The company achieved 34% top-line growth and 35% margins in Q3 2025, surpassing $2 billion in ARR for the first time, doubling from $1 billion in just two years [6][21] - Total fintech and subscription gross profit increased by 34% year-over-year, with adjusted EBITDA of $176 million and margins expanding by 5 percentage points to 35% [23][27] - GAAP operating income was $84 million, up from $34 million a year ago, with free cash flow growing to $153 million in Q3 [27][29] Business Line Data and Key Metrics Changes - SaaS ARR grew 28% year-over-year, driven by location growth and a mid-single-digit increase in SaaS ARPU [24] - Payments ARR increased by 31%, with GPV reaching $52 billion, growing 24% year-over-year [24][25] - Non-payments fintech solutions contributed $58 million in gross profit, with a net take rate of 61 basis points [25] Market Data and Key Metrics Changes - The company added approximately 7,500 net locations in Q3, ending the quarter with 156,000 total locations, a 23% increase from the previous year [24] - International SaaS ARPU increased by 20% year-over-year, indicating strong traction in international markets [12] Company Strategy and Development Direction - The company aims to double its market share in the U.S. SMB business and expand into new verticals and geographies [7][9] - Key priorities include scaling locations, demonstrating new market growth, increasing platform adoption, and investing with discipline while expanding margins [9][18] - The company is focused on building a durable growth business with a long-term goal of reaching $10 billion in ARR [21][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to sustain growth and expand margins, with expectations for continued net adds in 2025 and 2026 [18][30] - The company noted resilience in the restaurant sector despite macroeconomic concerns, with customers performing well [56] Other Important Information - The company has expanded its partnership with Uber to enhance restaurant demand and off-premise sales management [8] - Adjusted EBITDA margins are expected to remain flat to slightly up year-over-year, supported by a strong core margin of 40% [31] Q&A Session Summary Question: About GPV per location and its drivers - Management indicated that GPV per location exceeded expectations in Q3, attributing part of the performance to the company's platform helping restaurants run more profitable businesses [34][35] Question: Concerns about competition and market share sustainability - Management highlighted improved win rates against competitors and emphasized the strength of their core platform as a differentiator [38][39] Question: Opportunities with consumer engagement and network density - Management discussed the potential of their growing restaurant network to enhance consumer experiences and drive new product opportunities [47][49] Question: Performance during AWS outage - Management confirmed that the business held up well during the AWS outage, allowing customers to operate offline without significant impact [67][68] Question: Sustainability of the improved take rate - Management expressed confidence in the ability to drive take rate up over time through targeted pricing moves and cost optimization [74][76] Question: Financial impact of Toast IQ and its adoption - Management noted strong early adoption of Toast IQ and its potential to drive product-led growth, with monetization strategies still being explored [83][84] Question: Pricing strategy and adjustments - Management clarified that recent pricing adjustments were intentional and targeted, with a focus on balancing market share and pricing optimization [90][91] Question: Confidence in increased net adds in 2026 - Management indicated that new TAMs are expected to contribute significantly to net adds, alongside continued performance in the core business [96][98]

Financial Data and Key Metrics Changes - The company achieved 34% top-line growth and 35% margins in Q3 2025, surpassing $2 billion in ARR for the first time, doubling from $1 billion in just two years [6][21] - Total fintech and subscription gross profit increased by 34% year-over-year, with adjusted EBITDA of $176 million and margins expanding by 5 percentage points to 35% [23][27] - GAAP operating income was $84 million, up from $34 million a year ago, with free cash flow growing to $153 million in Q3 [27][29] Business Line Data and Key Metrics Changes - SaaS ARR grew 28% year-over-year, driven by location growth and a mid-single-digit increase in SaaS ARPU [24] - Payments ARR increased by 31%, with fintech gross profit growing by 35% in Q3 compared to the previous year [24][25] - The company added approximately 7,500 net locations in Q3, ending the quarter with a total of 156,000 locations, a 23% increase from a year ago [24] Market Data and Key Metrics Changes - International SaaS ARPU increased by 20% year-over-year, indicating strong traction in international markets [12] - GPV (Gross Payment Volume) was $52 billion, growing 24% year-over-year, with GPV per location slightly up due to stronger same-store sales trends [24][25] Company Strategy and Development Direction - The company aims to double its market share in the core U.S. SMB business and expand into new verticals and geographies [7][9] - Key priorities include scaling locations, demonstrating growth in new markets, increasing customer adoption of the platform, and investing with discipline while expanding margins [9][18] - The company is focused on building a durable growth business that can scale to $5 billion and $10 billion in ARR over time [8][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to sustain strong growth and expand adjusted EBITDA margins, with expectations for continued net adds in 2025 and 2026 [20][29] - The management noted that restaurants tend to be resilient even in challenging economic conditions, with customers performing well [55][56] Other Important Information - The company has secured partnerships with major brands like Uber and Nordstrom, enhancing its market presence [8][12] - The company is investing in AI-driven capabilities, such as Toast IQ, to improve customer experience and operational efficiency [15][16] Q&A Session Summary Question: About GPV per location performance - Management noted that GPV per location exceeded expectations in Q3, attributing part of the success to the platform's ability to help restaurants run more profitable businesses [34][35] Question: Concerns about competition and market share sustainability - Management highlighted that win rates against major competitors are up year-over-year, and they are on track to double market share in the core market [38][39] Question: Opportunities with consumer engagement - Management discussed the potential of their dense network of restaurants to enhance consumer experiences and drive new product offerings [47][50] Question: Performance during AWS outage - Management confirmed that the business held up well during the AWS outage, allowing customers to operate offline and process orders once the system was restored [65][68] Question: Sustainability of the take rate increase - Management expressed confidence in the ability to drive take rate up over time through targeted pricing moves and cost optimization [72][74] Question: Financial impact of Toast IQ adoption - Management emphasized that the focus is currently on driving adoption and customer value, with monetization strategies being explored for the future [80][83] Question: Confidence in increased net adds for 2026 - Management indicated that new TAMs (Total Addressable Markets) are expected to contribute significantly to net adds, alongside continued performance in the core business [92][94]

Financial Data and Key Metrics Changes - The company achieved a 34% year-over-year growth in top-line revenue, with adjusted EBITDA margins expanding to 35% [5][20][25] - Annual Recurring Revenue (ARR) surpassed $2 billion for the first time, doubling from $1 billion in just two years [18][20] - Total fintech and subscription gross profit increased by 34% year-over-year, with a total take rate of 98 basis points, up 7 basis points from the previous year [20][22] Business Line Data and Key Metrics Changes - SaaS ARR grew 28% year-over-year, driven by location growth and a mid-single-digit increase in SaaS ARPU [21][22] - Payments ARR increased by 31%, with fintech gross profit growing 35% year-over-year [22][23] - The company added approximately 7,500 net locations in Q3, bringing the total to 156,000, a 23% increase from the previous year [21][22] Market Data and Key Metrics Changes - International SaaS ARPU rose by 20% year-over-year, indicating strong traction in international markets [11] - The company is expanding its presence in food and beverage retail, with new customer acquisitions contributing to growth [12] Company Strategy and Development Direction - The company aims to double its market share in the core U.S. SMB business while expanding into new verticals and geographies [5][6][16] - Key priorities include scaling locations, demonstrating growth in new markets, increasing platform adoption, and investing in high-priority areas [7][16] - The company is focused on leveraging AI and data to enhance its platform, with products like Toast IQ driving customer engagement and operational efficiency [14][15][48] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining strong growth and expanding margins, with a target of reaching $10 billion in ARR over the next decade [18][19][26] - The company remains optimistic about its ability to navigate macroeconomic challenges, citing resilience in the restaurant sector [38] Other Important Information - Free cash flow grew to $153 million in Q3, with nearly 100% conversion from adjusted EBITDA [25] - The company repurchased 1.5 million shares, totaling $54 million, as part of its capital allocation strategy [25] Q&A Session Summary Question: How much of the GPV per location increase was driven by customer mix versus Toast's technology? - Management noted that GPV per location exceeded expectations, attributing part of the success to the platform's ability to help restaurants operate more profitably [30] Question: What are the competitive concerns regarding market share? - Management highlighted improved win rates against competitors and emphasized the strength of their core platform as a differentiator [31][33] Question: What opportunities does the dense restaurant network provide? - Management discussed the potential for enhanced consumer experiences and new product offerings due to the growing network of restaurants [36][37] Question: How did the business perform during the AWS outage? - Management confirmed that the platform's design allowed restaurants to operate effectively during the outage, minimizing impact on operations [42][43] Question: What is the outlook for net adds in 2026? - Management expects continued strong performance in net adds, driven by both core business growth and contributions from new TAMs [52]

Toast, Inc. (NYSE:TOST) shares were up released its third-quarter earnings report after Tuesday's closing bell, beating estimates on the top and bottom lines. Here's a look at the details in the report. TOST stock is moving. See the real-time price action here.The Details: Toast reported quarterly earnings of 16 cents, which beat the Street estimate of 15 cents.Quarterly revenue came in at $1.63 billion, which beat the $1.58 billion analyst estimate.Read Next: Michael Burry Is Super-Bearish On Palantir — Wi ...

Core Viewpoint - Toast Inc. reported a significant earnings miss for Q3 2025, with adjusted EPS of $0.16 compared to expectations of $0.23, yet the stock price surged 7.6% in after-hours trading, indicating investor confidence in future growth despite the quarterly setback [2][4]. Financial Performance - Revenue for Q3 2025 reached $1.63 billion, exceeding the consensus estimate of $1.59 billion by 2.8% and representing a year-over-year increase of 25.1% [3][10]. - Gross profit increased by 34.2% to $432 million, while operating income more than doubled to $84 million from $34 million in Q3 2024 [5][10]. - Free cash flow was reported at $153 million, and adjusted EBITDA rose to $176 million from $113 million a year ago [5][10]. - Annual recurring revenue (ARR) surpassed $2.0 billion, marking a 30% increase from the previous year [3][10]. Earnings Miss Analysis - The adjusted EPS miss of $0.16 was 30% below the expected $0.23, marking the first miss after two consecutive beats in Q1 and Q2 2025 [6][10]. - Net income was reported at $105 million, an increase of 87.5% year over year, suggesting that the EPS miss may be attributed to share count changes or one-time charges [6][10]. Investor Sentiment - The after-hours rally indicates that investors view the earnings miss as a temporary issue rather than a sign of fundamental weakness [7][12]. - Management's optimistic guidance for Q4 2025, projecting non-GAAP gross profit of $480 million to $490 million, contributed to the positive market reaction [8][10]. Strategic Initiatives - Toast launched Toast Advertising and expanded its Toast IQ intelligence platform with conversational AI capabilities, indicating a focus on growth beyond traditional restaurant operations [9][10]. - A strategic partnership with Uber Technologies highlights Toast's ambitions to expand its market reach [9][11]. Future Outlook - Management emphasized the potential for growth in new markets and use cases over the next decade, reinforcing a long-term growth narrative [11][12]. - The upcoming Q4 execution will be critical for Toast to meet its guidance and demonstrate sustainable profitability while investing in AI and market expansion [14][15].

Financial Performance - ARR increased 30% year over year to over $2.0 billion as of September 30, 2025[7] - Gross Payment Volume (GPV) increased 24% year over year to $51.5 billion[7] - Adjusted EBITDA was $176 million in Q3 2025, compared to $113 million in Q3 2024[7] - Net income for the three months ended September 30, 2025, was $105 million, compared to $56 million for the same period in 2024, reflecting an increase of 87.5%[22] - Net cash provided by operating activities for the nine months ended September 30, 2025, was $467 million, significantly higher than $213 million for the same period in 2024, marking a 119.3% increase[22] - Cash and cash equivalents rose to $1,605 million at the end of the period, compared to $944 million at the end of the previous year, an increase of 69.8%[22] - Adjusted EBITDA for the full year 2025 is projected to be in the range of $610 million to $620 million, up from previous guidance[9] - Net income for the nine months ended September 30, 2025, was $241 million, a turnaround from a net loss of $13 million in the same period of 2024[33] - Free cash flow for the nine months ended September 30, 2025, was $430 million, significantly higher than $172 million in the same period of 2024[39] Growth Metrics - Total locations increased 23% year over year to approximately 156,000[7] - GAAP subscription services and financial technology solutions gross profit grew 34% year over year to $490 million[7] - Non-GAAP subscription services and financial technology solutions gross profit expected in the range of $1,865 million to $1,875 million for the full year 2025, representing 32% growth compared to 2024[6] - Total Annualized Recurring Run-Rate (ARR) increased to $2,016 million in 2025, up 30% from $1,554 million in 2024[33] - Payments Annualized Recurring Run-Rate rose to $1,014 million, reflecting a 31% growth compared to $774 million in 2024[33] - Subscription Annualized Recurring Run-Rate reached $1,002 million, a 28% increase from $780 million in the previous year[33] Strategic Initiatives - Toast launched Toast IQ, an AI assistant for restaurants, and partnered with The Coca-Cola Company to enhance beverage sales[14] - Toast signed large-scale operators like Nordstrom and TGI Fridays to its platform, expanding its market presence[14] - A multi-year strategic partnership with Uber Technologies, Inc. was announced to enhance digital ordering operations for restaurants[14] - The company continues to focus on enhancing its product offerings and expanding market presence through strategic initiatives and potential acquisitions[23] Asset and Liability Overview - Total assets increased to $2,971 million as of September 30, 2025, up from $2,408 million at December 31, 2024, representing a growth of 23.4%[20] - Total liabilities increased to $957 million as of September 30, 2025, from $863 million at December 31, 2024, a rise of 10.9%[20] - The company reported a total stockholders' equity of $2,014 million, up from $1,545 million, indicating a growth of 30.4%[20] Operational Metrics - The number of live locations using Toast Point of Sale increased, contributing to the overall growth in transaction volumes[30] - Adjusted EBITDA for the nine months ended September 30, 2025, was not specified but is a key metric used to evaluate core operating performance[25] - Non-GAAP Subscription Services Gross Profit for Q3 2025 was $192 million, up from $146 million in Q3 2024[35] - Non-GAAP Financial Technology Solutions Gross Profit for Q3 2025 was $313 million, compared to $232 million in Q3 2024[36] - Sales and marketing expenses for Q3 2025 totaled $128 million, an increase from $105 million in Q3 2024[39]

I’ve been watching Uber Technologies, Inc. (NYSE: UBER ) and Toast, Inc. (NYSE: TOST ) work around the same restaurant customers for years without fully teaming up. Uber operates out on the streets, coordinatingI focus on producing objective, data-driven research, mostly about small- to mid-cap companies, as these tend to be overlooked by many investors. From time to time, though, I also look at large-cap names, just to give a fuller sense of the broader equity markets.Analyst’s Disclosure:I/we have a benef ...