Core Insights - Toast (TOST) reported revenue of $1.55 billion for the quarter ended June 2025, reflecting a year-over-year increase of 24.8% and a surprise of +1.1% over the Zacks Consensus Estimate of $1.53 billion [1] - The company's EPS for the quarter was $0.24, compared to $0.02 in the same quarter last year, aligning with the consensus EPS estimate [1] Financial Performance Metrics - Gross Payment Volume (GPV) reached $49.90 billion, exceeding the four-analyst average estimate of $49.05 billion [4] - Subscription Annualized Recurring Run-Rate was $950 million, slightly above the average estimate of $945.59 million [4] - Total Annualized Recurring Run-Rate (ARR) stood at $1.93 billion, compared to the $1.9 billion average estimate [4] - Revenue from Financial Technology Solutions was $1.28 billion, surpassing the average estimate of $1.26 billion [4] - Revenue from Subscription Services was $227 million, compared to the average estimate of $221.09 million [4] - Revenue from Hardware and Professional Services was $47 million, below the average estimate of $51.74 million [4] Stock Performance - Toast's shares have returned +10% over the past month, outperforming the Zacks S&P 500 composite's +1% change [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3]

Group 1: Earnings Performance - Toast reported quarterly earnings of $0.24 per share, matching the Zacks Consensus Estimate, and showing a significant increase from $0.02 per share a year ago [1] - The company posted revenues of $1.55 billion for the quarter ended June 2025, exceeding the Zacks Consensus Estimate by 1.10% and up from $1.24 billion year-over-year [2] - Over the last four quarters, Toast has surpassed consensus EPS estimates two times and revenue estimates three times [2][1] Group 2: Stock Performance and Outlook - Toast shares have increased approximately 35.3% since the beginning of the year, significantly outperforming the S&P 500's gain of 7.6% [3] - The future stock price movement will largely depend on management's commentary during the earnings call and the company's earnings outlook [4][3] - The current consensus EPS estimate for the upcoming quarter is $0.24 on revenues of $1.57 billion, and for the current fiscal year, it is $0.95 on revenues of $6.01 billion [7] Group 3: Industry Context - The Internet - Software industry, to which Toast belongs, is currently ranked in the top 32% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact Toast's stock performance [5]

Part I. Financial Information [Item 1. Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) The company's financial statements show significant revenue growth and a shift to profitability, with improved cash flow from operations [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets grew to $2.77 billion, driven by increased cash, while stockholders' equity improved to $1.82 billion Balance Sheet Highlights (in millions) | Balance Sheet Item | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $1,194 | $903 | +$291 | | Total current assets | $2,317 | $1,975 | +$342 | | Total assets | $2,767 | $2,408 | +$359 | | Total current liabilities | $894 | $811 | +$83 | | Total liabilities | $949 | $863 | +$86 | | Total stockholders' equity | $1,818 | $1,545 | +$273 | [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company reported a 25% year-over-year revenue increase for Q2 2025 and swung to a net income of $136 million for the six-month period Q2 2025 vs Q2 2024 Performance (in millions) | Metric | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Total Revenue | $1,550 | $1,242 | +25% | | Gross Profit | $392 | $286 | +37% | | Income from Operations | $80 | $5 | +1500% | | Net Income | $80 | $14 | +471% | | Diluted EPS | $0.13 | $0.02 | +550% | Six Months Ended June 30 Performance (in millions) | Metric | 2025 | 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Total Revenue | $2,887 | $2,318 | +25% | | Gross Profit | $738 | $537 | +37% | | Income (Loss) from Operations | $123 | $(49) | N/A | | Net Income (Loss) | $136 | $(69) | N/A | | Diluted EPS | $0.23 | $(0.13) | N/A | [Condensed Consolidated Statements of Cash Flows](index=13&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities significantly increased to $302 million for the first six months of 2025 Cash Flow Summary - Six Months Ended June 30 (in millions) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $302 | $104 | | Net cash (used in) investing activities | $(16) | $(33) | | Net cash provided by financing activities | $51 | $47 | | **Net increase in cash...** | **$340** | **$117** | [Notes to Condensed Consolidated Financial Statements](index=14&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail revenue obligations, a share repurchase program, stock-based compensation, and purchase commitments - As of June 30, 2025, the company has approximately **$911 million of revenue** expected to be recognized from remaining performance obligations, with **$853 million expected in the next 24 months**[58](index=58&type=chunk) - Total stock-based compensation expense was **$120 million** for the six months ended June 30, 2025, a decrease from $133 million in the prior year period[61](index=61&type=chunk) - Under its share repurchase program, the company repurchased **$31 million in Class A common stock** during the first six months of 2025, with approximately **$163 million remaining authorized** for repurchase[67](index=67&type=chunk) - As of June 30, 2025, the company has non-cancellable purchase obligations of **$78 million to hardware suppliers** and **$146 million to cloud service providers** and other vendors[82](index=82&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses strong growth in customer locations and key metrics like GPV and ARR, leading to improved non-GAAP profitability [Key Business Metrics](index=27&type=section&id=Key%20Business%20Metrics) Key metrics like Gross Payment Volume (GPV) and Annualized Recurring Run-Rate (ARR) demonstrated robust double-digit year-over-year growth - As of June 30, 2025, Toast served approximately **148,000 locations**, representing a **24% year-over-year increase**[88](index=88&type=chunk) Key Metrics Performance | Metric | Q2 2025 | Q2 2024 | YoY Growth | | :--- | :--- | :--- | :--- | | Gross Payment Volume (GPV) | $49.9B | $40.5B | 23% | | **Metric** | **As of June 30, 2025** | **As of June 30, 2024** | **YoY Growth** | | Annualized Recurring Run-Rate (ARR) | $1,928M | $1,473M | 31% | [Results of Operations](index=28&type=section&id=Results%20of%20Operations) Revenue growth of 25% in Q2 2025 was driven by subscription and financial technology solutions, outpacing cost increases - The increase in subscription services revenue was attributed to **growth in locations and higher product adoption**[98](index=98&type=chunk) - The increase in financial technology solutions revenue was attributed to the **increase in locations on the platform**[99](index=99&type=chunk) - Sales and marketing expenses for the six months ended June 30, 2025 increased by **$52 million (23%)** primarily due to higher employee-related costs and marketing expenses[102](index=102&type=chunk) [Non-GAAP Financial Measures](index=29&type=section&id=Non-GAAP%20Financial%20Measures) Non-GAAP metrics showed significant improvement, with Adjusted EBITDA more than doubling and Free Cash Flow increasing substantially Adjusted EBITDA Reconciliation (in millions) | | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net income (loss) | $136 | $(69) | | **Adjusted EBITDA** | **$294** | **$148** | Free Cash Flow Reconciliation (in millions) | | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $302 | $104 | | Capital expenditures | $(25) | $(29) | | **Free cash flow** | **$277** | **$75** | [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintained a strong liquidity position of $2.05 billion and continued its share repurchase program - Total liquidity, including cash, marketable securities, and available credit, was **$2.05 billion** as of June 30, 2025[118](index=118&type=chunk) - In May 2025, the company amended its credit facility, increasing revolving commitments to **$350 million** and extending the term to 2030; no borrowings were outstanding as of June 30, 2025[124](index=124&type=chunk) - The total fully diluted share count as of June 30, 2025, was **630 million shares**, including 581 million shares issued and outstanding[126](index=126&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=34&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's exposure to market and credit risk has not materially changed since its 2024 Annual Report - There have been **no material changes** in the company's exposure to market risks, including interest rates, foreign currency exchange rates, and credit risk, since the end of fiscal year 2024[128](index=128&type=chunk) [Item 4. Controls and Procedures](index=34&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective with no material changes to internal controls - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were **effective** as of June 30, 2025[129](index=129&type=chunk) - **No changes occurred** during the quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[130](index=130&type=chunk) Part II. Other Information [Item 1. Legal Proceedings](index=35&type=section&id=Item%201.%20Legal%20Proceedings) The company is not party to any litigation expected to have a material adverse effect on its business - Toast is not currently involved in any legal proceedings that are expected to have a **material adverse impact** on the company[133](index=133&type=chunk) [Item 1A. Risk Factors](index=35&type=section&id=Item%201A.%20Risk%20Factors) No material changes have occurred regarding the risk factors previously disclosed in the 2024 Annual Report - **No material changes** to the risk factors disclosed in the 2024 Form 10-K have occurred[134](index=134&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=35&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company details its Q2 2025 share repurchase activity under its publicly announced program Issuer Purchases of Equity Securities - Q2 2025 | Period | Total Shares Purchased (thousands) | Average Price Paid Per Share | | :--- | :--- | :--- | | April 2025 | 409 | $32.33 | | May 2025 | — | — | | June 2025 | — | — | | **Total Q2** | **409** | **$32.33** | - As of the end of Q2 2025, approximately **$163 million remained available** for future repurchases under the authorized share repurchase program[136](index=136&type=chunk)

Financial Data and Key Metrics Changes - In Q2 2025, the company reported a 31% growth in Annual Recurring Revenue (ARR) and a 35% increase in total FinTech and subscription gross profit year over year [25][27] - Adjusted EBITDA reached $161 million with margins expanding by 8 percentage points year over year to 35% [25][26] - GAAP operating income was $80 million, significantly up from $14 million a year ago [33] Business Line Data and Key Metrics Changes - The company added a record 8,500 net new locations, ending Q2 with 148,000 locations, a 24% increase from the previous year [27] - SaaS ARR grew by 30% year over year, driven by location growth and a 5% increase in SaaS ARPU [29] - Payments ARR increased by 32%, while FinTech gross profit grew by 30% in Q2 [30] Market Data and Key Metrics Changes - The company crossed 10,000 live locations across enterprise, food and beverage retail, and international markets [27][15] - Total Gross Payment Volume (GPV) was $50 billion, growing 23% year over year, with GPV per location down 1% [30] - The net take rate for FinTech was 57 basis points, and for Payments, it was 49 basis points, both showing a slight increase from the previous year [30] Company Strategy and Development Direction - The company aims to scale locations and market share in its core US restaurant business while expanding into new customer segments [11][12] - Key priorities include increasing customer adoption of the platform, driving differentiation through data and AI, and investing in high-priority areas while gradually expanding margins [11][12][23] - The partnership with American Express aims to enhance customer experiences and broaden the platform's capabilities [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth opportunities, citing strong execution and market share gains [9][23] - The company plans to continue investing in its core business and new segments, with expectations for sustained long-term growth [28][36] - Management acknowledged the impact of tariffs and seasonal dynamics on margins in the second half of the year [55][36] Other Important Information - The company launched in Australia, marking its fourth international market, and plans to leverage learnings from previous launches [10][18] - The introduction of Toast Go 3 and Toast IQ reflects the company's commitment to innovation and enhancing customer service [20][32] Q&A Session Summary Question: Can you provide context on retail ARPUs and product enhancements? - Management highlighted that retail ARPU is over $10,000, indicating strong growth potential and ongoing investments in sales capacity [41][42] Question: What are the trends in GPV per location? - Management noted that GPV trends have been largely flat, with a slight decrease in GPV per location, but expressed confidence in unit economics across segments [47][48] Question: Can you elaborate on the expected EBITDA for Q3? - Management indicated that increased investments and tariff expenses would impact margins, but emphasized the importance of these investments for long-term growth [54][55] Question: How does the Amex partnership enhance the business? - The partnership aims to create personalized dining experiences by integrating reservation listings and leveraging customer data [118] Question: What feedback has been received on the AI-powered assistant, SUSHAF? - Positive customer feedback has been received, with the product providing valuable insights and recommendations for restaurant operators [124]

Financial Data and Key Metrics Changes - In Q2 2025, the company reported a 31% growth in Annual Recurring Revenue (ARR) and a 35% increase in total FinTech and subscription gross profit year over year [23][24] - Adjusted EBITDA reached $161 million with margins expanding by 8 percentage points year over year to 35% [23][24] - GAAP operating income was $80 million, significantly up from $14 million a year ago [31][32] Business Line Data and Key Metrics Changes - The company added a record 8,500 net new locations, ending Q2 with 148,000 locations, a 24% increase from the previous year [24][27] - The enterprise, food and beverage retail, and international segments collectively surpassed 10,000 live locations in Q2 [24][27] - SaaS ARR grew by 30% year over year, driven by location growth and a 5% increase in SaaS ARPU [27][30] Market Data and Key Metrics Changes - Total Gross Payment Volume (GPV) was $50 billion, growing 23% year over year, with GPV per location down 1% [28][30] - The take rate across SaaS and FinTech gross profit was 93 basis points, an increase of 8 basis points from a year ago [23][28] Company Strategy and Development Direction - The company aims to scale locations and market share in its core US restaurant business while expanding into new customer segments [9][10] - Key priorities include increasing customer adoption of the platform, driving differentiation through data and AI, and maintaining disciplined investment while expanding margins [9][10][21] - The partnership with American Express aims to enhance customer experiences and broaden the platform's reach [8][9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth opportunities, citing strong execution and market share gains [6][21] - The company anticipates continued growth in new market segments, expecting them to become significant contributors to overall business [24][25] - Management acknowledged the impact of tariffs and planned investments to drive sustained growth in the second half of the year [50][51] Other Important Information - The company launched in Australia, marking its fourth international market, and plans to leverage learnings from previous markets for a successful rollout [8][15] - The introduction of Toast Go 3 handhelds is expected to enhance customer service and operational efficiency [19][20] Q&A Session Summary Question: Can you provide context on retail ARPUs and product enhancements? - Management noted that retail ARPU is above $10,000, indicating strong growth potential and ongoing investments in sales capacity [36][38] Question: What are the latest trends in GPV per location? - Management clarified that GPV trends have been largely flat, with retail GPVs higher than restaurants, but overall GPV per location was down 1% [41][43] Question: Can you elaborate on the expected sequential decline in Q3 EBITDA? - Management explained that increased investments in customer segments and tariff impacts are contributing to the expected decline [48][50] Question: How does the Amex partnership enhance the business? - The partnership combines reservation listings and aims to create personalized dining experiences for customers [107][110] Question: What feedback is being received on the AI-powered assistant, SUSHAF? - Positive feedback has been received, with customers appreciating the human interface for insights and recommendations [113][115]

[Toast Second Quarter 2025 Financial Results](index=1&type=section&id=Toast%20Second%20Quarter%202025%20Financial%20Results) [Financial and Business Highlights](index=1&type=section&id=Financial%20and%20Business%20Highlights) Toast achieved record net new locations, 35% YoY recurring gross profit growth, and $161 million Adjusted EBITDA, alongside international expansion and new product launches - CEO Aman Narang highlighted a strong quarter with a record **8,500 net new locations**, **35% YoY growth in recurring gross profit**, and Adjusted EBITDA of **$161 million**[3](index=3&type=chunk) Q2 2025 Key Performance Indicators (YoY Growth) | Metric | Q2 2025 Value | YoY Growth | | :--- | :--- | :--- | | Annualized Recurring Run-Rate (ARR) | $1.9 billion | 31% | | Total Locations | ~148,000 | 24% | | Gross Payment Volume (GPV) | $49.9 billion | 23% | | GAAP Recurring Gross Profit¹ | $447 million | 35% | | Non-GAAP Recurring Gross Profit¹ | $464 million | 35% | | GAAP Net Income | $80 million | 471% | | Adjusted EBITDA | $161 million | 75% | | Free Cash Flow | $208 million | 93% | - The company expanded its international presence by launching its first customer in Australia and introduced the new Toast Go® 3 handheld POS device[3](index=3&type=chunk)[15](index=15&type=chunk) - A strategic partnership was announced with American Express to enhance guest experiences and expand reach for restaurants on the Toast, Resy, and Tock networks[15](index=15&type=chunk) [Business Outlook](index=1&type=section&id=Business%20Outlook) Toast raised its full-year 2025 guidance, projecting Non-GAAP recurring gross profit of $1,815-$1,835 million and Adjusted EBITDA of $565-$585 million Q3 2025 Outlook | Metric | Q3 2025 Range | YoY Growth | | :--- | :--- | :--- | | Non-GAAP subscription services and financial technology solutions gross profit | $465 million - $475 million | 23% - 26% | | Adjusted EBITDA | $140 million - $150 million | N/A | Full Year 2025 Outlook (Updated) | Metric | Full Year 2025 Range | YoY Growth | Previous Guidance | | :--- | :--- | :--- | :--- | | Non-GAAP subscription services and financial technology solutions gross profit | $1,815 million - $1,835 million | 28% - 29% | 25% - 27% growth | | Adjusted EBITDA | $565 million - $585 million | N/A | $540 million - $560 million | [Consolidated Financial Statements](index=4&type=section&id=Consolidated%20Financial%20Statements) The statements show Q2 2025 revenue growth to $1.55 billion, net income of $80 million, total assets of $2.77 billion, and $223 million in operating cash flow [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q2 2025 total revenue grew 25% to $1.55 billion, with gross profit up 37% to $392 million, and net income reaching $80 million Q2 2025 Statement of Operations Highlights (in millions) | Metric | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Total Revenue | $1,550 | $1,242 | +25% | | Gross Profit | $392 | $286 | +37% | | Income from Operations | $80 | $5 | +1500% | | Net Income | $80 | $14 | +471% | | Diluted EPS | $0.13 | $0.02 | +550% | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to $2.77 billion, driven by $1.19 billion in cash, with total liabilities at $949 million and equity at $1.82 billion Balance Sheet Summary (in millions) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $1,194 | $903 | | Total current assets | $2,317 | $1,975 | | Total assets | $2,767 | $2,408 | | **Liabilities & Equity** | | | | Total current liabilities | $894 | $811 | | Total liabilities | $949 | $863 | | Total stockholders' equity | $1,818 | $1,545 | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Q2 2025 net cash from operating activities rose to $223 million, resulting in Free Cash Flow of $208 million after capital expenditures Cash Flow Highlights (in millions) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $223 | $124 | | Capital expenditures | $(15) | $(16) | | **Free Cash Flow** | **$208** | **$108** | [Key Business Metrics and Non-GAAP Reconciliations](index=7&type=section&id=Key%20Business%20Metrics%20and%20Non-GAAP%20Reconciliations) This section defines key business metrics like GPV and ARR, and reconciles GAAP to non-GAAP measures such as Adjusted EBITDA and Non-GAAP Gross Profit [Key Business Metrics](index=9&type=section&id=Key%20Business%20Metrics) Q2 2025 saw strong growth in key metrics, with GPV up 23% to $49.9 billion and total ARR increasing 31% to $1.93 billion - Key metrics are used to evaluate the business, including **GPV** for total dollars processed, **ARR** for subscription and payment services scale, and **Locations** for unique sites[31](index=31&type=chunk)[32](index=32&type=chunk)[33](index=33&type=chunk) Key Metrics Performance | Metric | Q2 2025 Value | Q2 2024 Value | YoY Growth | | :--- | :--- | :--- | :--- | | Gross Payment Volume (GPV) | $49.9 billion | $40.5 billion | 23% | | Total ARR | $1,928 million | $1,473 million | 31% | [Reconciliation of GAAP to Non-GAAP Measures](index=10&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Measures) Non-GAAP results show Q2 2025 Adjusted EBITDA at $161 million, Non-GAAP Recurring Gross Profit at $464 million, and Free Cash Flow at $208 million Adjusted EBITDA Reconciliation (in millions) | Line Item | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net income (loss) | $80 | $14 | | Stock-based compensation & related tax | $64 | $70 | | Depreciation and amortization | $16 | $11 | | Other adjustments | $(0) | $7 | | **Adjusted EBITDA** | **$161** | **$92** | Non-GAAP Recurring Gross Profit¹ Reconciliation (in millions) | Line Item | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Subscription services gross profit (GAAP) | $163 | $113 | | Financial technology solutions gross profit (GAAP) | $284 | $217 | | Adjustments (Stock-based comp, D&A) | $17 | $14 | | **Non-GAAP Recurring Gross Profit** | **$464** | **$344** | Free Cash Flow Reconciliation (in millions) | Line Item | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $223 | $124 | | Capital expenditures | $(15) | $(16) | | **Free Cash Flow** | **$208** | **$108** |

Partnership Overview - American Express is partnering with restaurant management software company Toast to enhance personalized dining experiences using Toast's technology along with the guestbook capabilities of Resy and Tock, both owned by American Express [2][3] - The collaboration aims to provide restaurants, wineries, cafes, and bars with greater visibility by integrating their listings from Resy and Tock into the Local by Toast app and those using Toast Tables [3] Strategic Goals - The partnership is designed to help restaurants deliver smarter service and foster meaningful connections with guests, ultimately driving loyalty and growth [3] - American Express's acquisition of Tock and Roaam, which provide reservation and mobile payment technologies, supports this initiative by enhancing the technological capabilities available to restaurant partners [4] Market Insights - Research indicates that while 83% of consumers are open to personalized offers, only 44% find them very relevant, highlighting a gap in the effectiveness of personalization strategies [5] - The evolution of AI systems is expected to improve personalization efforts by moving beyond basic segmentation to real-time learning and contextual awareness, addressing previous shortcomings in delivering tailored experiences [6][7]

Core Insights - Toast, Inc. (TOST) is scheduled to report its second-quarter 2025 results on August 5, with earnings expected at 24 cents per share and revenues projected at $1.53 billion, reflecting a year-over-year increase of 23.4% [1][8] Earnings Performance - TOST has a strong earnings surprise history, having outperformed the Zacks Consensus Estimate in three of the last four quarters, with an average earnings surprise of 197.15% [2][3] Financial Metrics - The company anticipates gross profit growth in its subscription and fintech segments between 26% and 29% year over year, with adjusted EBITDA expected to be between $130 million and $140 million [5][8] Market Expansion - TOST has expanded its presence in the U.S. SMB restaurant market, adding over 6,000 net locations in Q1 2025, totaling approximately 140,000 customer locations globally, which is a 25% year-over-year growth [6] Technological Advancements - The company is leveraging AI-powered tools, such as ToastIQ, to enhance its platform and improve restaurant operations, with reported positive impacts on clients' performance [7][9] Stock Performance - TOST shares have increased by 12.9% over the past six months, outperforming the Internet Software market and the Zacks Computer & Technology sector [12] Valuation Concerns - TOST is trading at a premium with a price/book multiple of 13.89X compared to the industry average of 6.74X, indicating a stretched valuation [16][18]

Core Insights - Companies delivering explosive revenue growth are positioned for significant upside potential, particularly in the tech sector [1] Palantir - Palantir Technologies reported a 39% increase in revenue to $883.9 million in Q1, marking its seventh consecutive quarter of accelerating revenue growth [2] - The U.S. commercial business revenue surged 71% year over year to $255 million, while revenue from the U.S. government increased by 45% [2] - The adoption of its AI Platform (AIP) is driving growth, with many customers still in early usage stages, indicating substantial growth opportunities [3][4] SoundHound AI - SoundHound AI experienced a remarkable 151% year-over-year revenue growth to $29.1 million, achieving six consecutive quarters of over 50% growth [5] - The company is making significant inroads in the automotive industry and the restaurant sector, leveraging its technology for customizable voice solutions [6] - The acquisition of Amelia enhances SoundHound's capabilities in agentic AI, with the potential for continued hypergrowth if its technology becomes the preferred interface across industries [7] AppLovin - AppLovin's revenue increased by 40% to $1.48 billion in Q1, with ad revenue soaring 73% due to its AI-powered Axon 2 engine [8] - The Axon 2 adtech engine optimizes ad targeting and placement, helping the company capture significant market share in mobile gaming, with expected growth of 20% to 30% [9] - AppLovin is expanding its ad engine into web-based and e-commerce advertising, presenting further growth opportunities [10] GitLab - GitLab achieved a 27% year-over-year revenue growth to $214.5 million in Q1, marking its eighth consecutive quarter of 25% to 40% growth [11] - The company is transforming into a full software-development life cycle platform, utilizing AI to automate processes and enhance value [12][13] - GitLab may shift from a seat-based model to a consumption-based model, which could drive significant revenue growth [13] Toast - Toast's revenue from subscription and fintech solutions grew by 35% year over year in Q1, with total restaurant locations using its platform increasing by 25% to 140,000 [15] - The company is evolving into a digital operating system for restaurants, offering tools for menu optimization, staffing, and marketing [16] - With expanding AI capabilities and a growing footprint, Toast is well-positioned for future growth in the restaurant tech sector [17]

Core Viewpoint - The market anticipates Toast (TOST) to report a significant year-over-year increase in earnings driven by higher revenues, with actual results being crucial for near-term stock price movements [1][2]. Earnings Expectations - Toast is expected to report quarterly earnings of $0.24 per share, reflecting a year-over-year increase of +1100% [3]. - Revenue projections stand at $1.53 billion, which is a 23.4% increase compared to the same quarter last year [3]. Estimate Revisions - The consensus EPS estimate has remained unchanged over the last 30 days, indicating stability in analysts' assessments [4]. - A positive Earnings ESP of +1.70% suggests that analysts have recently become more optimistic about Toast's earnings prospects [12]. Earnings Surprise Prediction - The Zacks Earnings ESP model indicates that a positive reading is a strong predictor of an earnings beat, especially when combined with a favorable Zacks Rank [10]. - Toast currently holds a Zacks Rank of 4, which complicates the prediction of an earnings beat despite the positive Earnings ESP [12]. Historical Performance - In the last reported quarter, Toast was expected to post earnings of $0.19 per share but exceeded expectations with earnings of $0.20, resulting in a surprise of +5.26% [13]. - Over the past four quarters, Toast has beaten consensus EPS estimates three times [14]. Conclusion - While Toast does not appear to be a compelling candidate for an earnings beat, investors should consider other factors influencing stock performance ahead of the earnings release [17].