Core Insights - Toast Inc (TOST) started 2025 with strong momentum, adding over 6,000 net locations in Q1 2025, totaling approximately 140,000 customer locations globally, reflecting a 25% year-over-year growth [1] - The company aims to achieve record net additions in the current quarter and expects 2025 to surpass 2024's full-year net additions [1] - Toast is focusing on expanding its presence in the U.S. SMB restaurant market, with only 10% penetration into its total addressable market (TAM) of 1.4 million locations, indicating significant long-term growth potential [1] - The company is also pursuing growth in three new areas: enterprise, international, and food & beverage retail, targeting over 10,000 locations by the end of 2025 in these segments [1] Technology and Innovation - Toast's AI-powered tools, such as Sous Chef and ToastIQ, are enhancing its competitive edge in restaurant technology [2] - The company has improved its reporting, payroll, and accounting tools, and introduced a Benchmarking tool to assist restaurants in managing costs [2] - These advancements position Toast as a full-stack solutions provider, which is expected to support its growth trajectory beyond the current quarter [2] Financial Projections - Toast projects a 26% growth in fintech and subscription gross profit for 2025 at the midpoint, with adjusted EBITDA estimated at $550 million and a 31% margin, reflecting a five percentage point increase from 2024 [3] Market Environment - Management is closely monitoring the macro environment, acknowledging the restaurant industry's sensitivity to consumer spending, labor inflation, and supply chain volatility [4] - A downturn in consumer spending or increased cost pressures could potentially impact restaurant technology budgets, affecting TOST's performance [4] Competitive Landscape - Competitor Lightspeed Commerce Inc. is pivoting towards North America's Retail and Europe's Hospitality sectors, reporting a 3% year-over-year increase in customer locations and a 6% rise in GTV for these customers [5][6] - Block, Inc. offers a comprehensive commerce ecosystem, including Square for Restaurants, which competes directly with TOST's offerings, generating $1.48 billion in transaction revenues, up 5.9% year over year [7][8] Stock Performance and Valuation - TOST shares gained 13.9% year to date, slightly underperforming the Internet-Software industry's growth of 14.2% [9] - The shares are currently trading at a price/book ratio of 12.34X, higher than the industry average of 6.49X [11] - The Zacks Consensus Estimate for TOST's earnings for 2025 has remained unchanged over the past 30 days [12]

Core Insights - Toast, Inc. (TOST) reported a strong first-quarter 2025 performance, with revenue increasing by 24.4% year-over-year to $1.34 billion and adjusted EBITDA reaching $133 million, reflecting a margin of approximately 32% [1][2] - The company is experiencing significant growth in annual recurring revenues, which reached $1.7 billion, a 31% increase year-over-year, and operates in about 140,000 locations, marking a 25% growth [3] - Toast has raised its full-year EBITDA outlook to around $550 million with a 31% margin, an increase from the previous estimate of $510-$530 million at a 30% margin [5] Financial Performance - Operating costs, excluding bad-debt charges, rose only about 12%, primarily due to increased spending on sales and marketing [2] - Free cash flow turned positive at $69 million, compared to a loss of $33 million a year ago [2] - Toast's adjusted EBITDA margin improved significantly, driven by gross profit growth and strict cost discipline [1][2] Market Position and Growth Potential - Toast has only 10% penetration into its total addressable market (TAM) of 1.4 million locations, indicating substantial long-term expansion opportunities [3] - The company is leveraging its scale to introduce new services, including AI-powered analytics and fintech products, which contribute to revenue without proportional cost increases [4] - Management anticipates record net additions in the current quarter, with expectations for 2025 to surpass 2024's full-year net additions [3] Competitive Landscape - Block (formerly Square) reported an adjusted EBITDA of $812.8 million for Q1 2025, with an operating margin of 8.1% [7] - Lightspeed Commerce (LSPD) achieved total revenues of $253.4 million in Q1 2025, with an adjusted EBITDA margin of 32% [9] - TOST's shares have increased by 61.4% over the past year, outperforming the Zacks Internet-Software industry's growth of 34.3% [12] Valuation Metrics - TOST trades at a forward price-to-sales ratio of 3.12X, which is lower than the industry's average of 5.76X [13] - The Zacks Consensus Estimate for TOST's earnings for 2025 has been rising over the past 60 days, indicating positive market sentiment [14]

Key Takeaways TOST is targeting enterprise chains and now supports 140,000 restaurant locations globally. AI features helped boost order sizes, ad returns and guest engagement across multiple restaurant types. TOST raised the 2025 EBITDA outlook to $550M with a 31% margin, citing fintech and subscription profit growth.Toast Inc. (TOST) is on a mission to expand its footprint across geographies, verticals and segments, empowering restaurants of all sizes with digital tools that streamline operations. While ...

Key Takeaways TOST stock gained 19% in 3 months, outperforming the S&P 500 and nearing its 52-week high of $45.56. Declining GPV per location and rising operating costs pose near-term profitability concerns for TOST. Stretched valuation and intensifying competition may limit TOST's upside despite recent market momentum.Toast, Inc. (TOST) shares have gained 19.2% in the past three months, outperforming the Internet Software market and the Zacks Computer & Technology sector’s growth of 12.5% and 9.7%, respe ...