It has been about a month since the last earnings report for Toast (TOST - Free Report) . Shares have lost about 2.2% in that time frame, underperforming the S&P 500.
But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Toast due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Toast Q2 Earnings Beat on ARR and Location Growth, Outlook RaisedToast reported second-quarter 2026 earnings of 34 cents per share, beating the Zacks Consensus Estimate of 32 cents. Revenues rose 23.1% year over year to $1.91 billion and beat the consensus mark by $35.08 million, a 1.9% surprise.
Growth was led by subscription and financial technology solutions, supported by a larger location base and continued product adoption. Annualized recurring run-rate increased 25% to $2.41 billion, while Toast added a record 9,500 net locations.
Toast's Revenue Streams Deliver Broad-Based GrowthSubscription services revenues increased 27.8% year over year to $290 million. Financial technology solutions revenues rose 23% to $1.57 billion, while hardware and professional services revenues increased 2.1% to $48 million.
GAAP subscription and financial technology solutions gross profit advanced 30.9% to $585 million. On a non-GAAP basis, these recurring gross profit streams increased 28.2% to $595 million, reflecting growth in both software and payments economics.
Toast Expands Locations and Payment VolumeTotal locations increased 22% year over year to approximately 180,000. Gross Payment Volume rose 22% to $60.7 billion, while GPV per location was flat. Management noted better-than-expected core GPV, helped by strong same-store sales trends and a modest World Cup benefit late in June.
SaaS ARR increased 27%, while payments ARR grew 23%. Total take rate reached 98 basis points, up 5 basis points year over year. Non-payments fintech solutions, led by Toast Capital, generated $57 million of gross profit and contributed 9 basis points to take rate.
Toast Advances AI and New Market ExpansionToast IQ Grow, the company's digital marketing agent, is on track to become its fastest-growing product to $10 million in ARR. Management said early adoption has been strong, with the product already operating at positive margins and showing improving gross margins as it scales.
The company is also investing across enterprise, international and retail markets. ARR from these new total addressable markets is expected to nearly double to $200 million in 2026. Recent developments include Toast becoming an endorsed food and beverage vendor for Best Western, expanding its TGI Fridays relationship in the U.K. and launching initial fuel-payment deployments.
Toast Delivers Margin Gains Despite Higher InvestmentAdjusted EBITDA increased 38% year over year to $221 million, and the margin expanded 240 basis points to 37%.
Sales and marketing expenses rose 22% on a non-GAAP basis as Toast added capacity across its core business and new markets. Research and development expenses increased 23%, reflecting investment in agentic AI, vertical-specific products and internal AI tools aimed at improving productivity.
Toast Maintains Liquidity While Repurchasing SharesFree cash flow totaled $130 million, down from $208 million a year earlier, mainly because Toast chose to hold more hardware inventory. Net cash provided by operating activities was $144 million compared with $223 million in the prior-year quarter.
Cash and cash equivalents plus marketable securities totaled $1.71 billion as of June 30. Toast repurchased more than 19 million shares for $486 million through the first half of 2026, leaving approximately $100 million under its authorization.
Toast Raises Its 2026 OutlookFor the third quarter, Toast expects non-GAAP subscription services and financial technology solutions gross profit of $615-$625 million, representing 22%-24% year-over-year growth. Adjusted EBITDA is projected at $210-$220 million.
For 2026, recurring gross profit guidance was raised to $2,325-$2,355 million, implying 23%-25% growth compared with the prior 21%-23% outlook. Adjusted EBITDA guidance increased to $805-$825 million from $790-$810 million.
How Have Estimates Been Moving Since Then?In the past month, investors have witnessed a upward trend in estimates review.
VGM ScoresCurrently, Toast has a strong Growth Score of A, a score with the same score on the momentum front. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for value investors.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
OutlookEstimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Toast has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Shares of Toast (TOST -0.06%) have largely underperformed since the company's public market debut in 2021. The restaurant-technology business may be moving into a new era, though, and investors might see Toast reheated soon.
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Toast's fundamentals are looking better. The company beat second-quarter expectations, and its earnings per share (EPS) almost doubled year over year. Toast raised its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) guidance for Q3 to $220 million. A slew of analysts increased their price targets on the good news.
The company continues to add new restaurants to its customer base while simultaneously increasing the number of transactions it processes. It's also investing in artificial intelligence (AI) tools that will help customers with order taking and administrative tasks, and generate valuable customer insights. Lastly, Toast expanded its integrations with Alphabet's Google and entered into a new partnership with the Dutch payments company Adyen.
Image source: The Motley Fool.
Investors have been scared off by the consistent insider selling, including by the CEO and chief revenue officer. The company's valuation is still a bit rich in my opinion. Despite the stock declining 15% in the past year and more than 44% since its initial public offering (IPO), the trailing price-to-earnings (P/E) ratio still sits in the mid-40s.
The company is competing with powerhouse Square, which Block owns. Square has a slight advantage in market share, but Toast could gain ground as it focuses on its Google integration and partnerships.
Toast has an expanding platform and customer base; it added 9,500 new net customers in its latest quarter. I'm cautiously optimistic that there is room for this stock to run over the next few years as its metrics continue to improve. Investors will still need a bit of patience and appetite for Toast's volatility, however. Ultimately, I like where Toast is heading.
Catie Hogan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Adyen, Alphabet, Block, and Toast. The Motley Fool has a disclosure policy.
Toast ve 2. čtvrtletí překonal očekávání, zvýšil celoroční výhled a oznámil 9 500 čistých nových lokací. Tržby z opakovaných hrubých zisků vzrostly o více než 28 % a upravený EBITDA dosáhl 221 milionů USD.
Toast’s Comeback Story Is Getting Harder for Wall Street to IgnoreToast NYSE: TOST reported second-quarter results that exceeded its expectations, led by record location additions, growth in recurring gross profit streams and expanding operating margins. Management also raised its full-year outlook while outlining plans to reinvest in artificial intelligence products, international, enterprise and retail expansion.
CEO Aman Narang said recurring gross profit streams rose more than 28% in the quarter, while GAAP operating income margin reached 26%. The company added a record 9,500 net locations during the period, bringing its total location count to about 180,000, up 22% from a year earlier.
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Fiserv’s Debit Network Talks Raise a Bigger Question for Visa and Mastercard“Our core business continues to scale, our new markets are growing rapidly,” Narang said, adding that Toast is developing an AI-driven platform intended to take on operational work for restaurant customers.
Quarterly financial performance CFO Elena Gomez said annual recurring revenue grew 25% year over year, while recurring gross profit streams rose 28%. Adjusted EBITDA increased 38% to $221 million, with the adjusted EBITDA margin expanding 240 basis points to 37%.
Block’s Pivot to Profits and AI Is Turning HeadsGAAP operating income was $152 million, representing a 26% margin, while GAAP earnings per share reached $0.26. Gomez said recurring gross profit growth plus operating margin totaled 57% in the quarter on a GAAP basis.
Gross payment volume was $61 billion, up 22% year over year. GPV per location was flat, though management said core GPV exceeded expectations amid strong same-store sales trends and a modest benefit from the World Cup late in June.
SaaS ARR increased 27%, supported by location growth and mid-single-digit ARPU growth. Subscription gross profit rose 32%, while SaaS gross margin increased about 240 basis points. Payments ARR grew 23%, and fintech gross profit increased 26%. Total take rate was 98 basis points, up five basis points year over year. Non-payments fintech products, led by Toast Capital, generated $57 million in gross profit and contributed nine basis points to take rate. Toast said customer demand for capital remained strong and credit defaults remained within its expectations. The company attributed its underwriting performance to its data capabilities and disciplined underwriting process.
AI product strategy and Toast IQ Grow Management highlighted Toast IQ Grow, an AI-powered marketing offering, as the company’s fastest-growing product launch to date. Narang said the product is on track to become Toast’s fastest product to reach $10 million in ARR.
Toast IQ Grow combines website, search engine optimization, digital ordering and social-media marketing tools. It uses restaurant and guest data to develop marketing campaigns and connect those campaigns to resulting sales, according to Narang.
Narang cited Spirits Food & Friends, a Louisiana-based customer, as an example. The restaurant consolidated more than 10 systems onto Toast and subsequently adopted Toast IQ Grow. According to the company, the customer cut monthly agency spending by 70% and generated more than $100,000 in marketing-attributed sales in just under two months.
During the question-and-answer session, Narang said Toast intends to extend its agentic-product approach beyond marketing into areas where restaurants commonly outsource work, including scheduling, payroll and tax, inventory management, bookkeeping and accounting. He also identified voice AI for restaurant phone and drive-thru ordering as a potential use case.
Toast said the current marketing product combines AI-generated work with human oversight from marketing success managers. Narang said customers using Toast IQ Grow have shown same-store sales growth, while Gomez said gross margins have already improved as the product has begun to scale.
Expansion beyond core restaurants Toast continued to emphasize opportunities in enterprise, international and retail markets, which it describes as new total addressable markets. Narang said ARR across those markets is larger and scaling faster than the company’s core business did at comparable stages of maturity. The company expects ARR in the new markets to nearly double to $200 million this year.
The company announced several customer and partner developments during the quarter:
Kung Fu Tea, which has more than 300 locations, joined Toast’s core business. Best Western named Toast an endorsed food-and-beverage vendor, opening an opportunity to pursue hotel restaurants across the U.S. and Canada. Toast expanded its relationship with TGI Fridays in the United Kingdom. The company entered fuel payments, onboarding its first gas station convenience-store customers. In enterprise, Toast said it has momentum in restaurants, hotels and sports and entertainment venues. The company estimated the U.S. sports and entertainment opportunity at $500 million in ARR and said it roughly doubled its location count in that market over the past year.
In retail, Toast has doubled sales capacity over the past year and is targeting grocery stores, convenience stores and bottle shops. Narang said retail ARPU is closest to the company’s core business and that grocery offers particularly attractive GPV and ARPU characteristics.
Costs, capital returns and outlook Toast’s hardware and professional-services gross profit was negative 11% of recurring gross profit streams. The company received an approximately $10 million tariff refund during the quarter that had not been included in its guidance. Gomez said Toast expects the refund to represent the bulk of anticipated tariff refunds.
The company is also managing higher memory costs through hardware and supply-chain actions, including using earlier hardware generations, shifting certain products to lower-cost memory and purchasing components in the spot market. Gomez said the company expects the impact on its profit-and-loss statement to be greater in 2027 than in 2026 because of inventory accounting, but management expects the optimization work to lead to structurally better hardware margins once the memory market stabilizes.
Operating expenses rose 19% year over year, excluding $29 million of bad-debt and credit-related expenses. Sales and marketing spending increased 22%, while research and development expense rose 23%, reflecting investments in location growth, new markets, AI products and internal AI tools.
Free cash flow was $130 million, down from a year earlier as Toast chose to acquire and hold more hardware inventory. The company expects adjusted EBITDA-to-free-cash-flow conversion to improve in the second half of 2026.
Toast repurchased more than 19 million shares for $486 million year to date, with about $100 million remaining under its authorization.
For the third quarter, Toast expects subscription and fintech gross profit growth of 22% to 24% year over year and adjusted EBITDA of $210 million to $220 million. For full-year 2026, the company raised its outlook and now expects recurring gross profit growth of 23% to 25% and adjusted EBITDA of $805 million to $825 million.
Gomez said the company plans to reinvest part of its outperformance, including the tariff refund, into growth initiatives and longer-term bets. Toast continues to target gradual margin expansion and said it remains on a path toward adjusted EBITDA margins above 40% over the long term.
About Toast (NYSE:TOST)Toast, Inc NYSE: TOST is a technology company that builds a cloud-based platform for restaurants and other foodservice businesses. Headquartered in Boston, Massachusetts, Toast offers integrated point-of-sale (POS) systems and a suite of software and hardware designed to streamline front-of-house and back-of-house operations. The company went public in 2021 and has positioned itself as a vertically integrated provider for the restaurant industry.
Toast's product portfolio includes touchscreen POS terminals and handheld order-and-pay devices, kitchen display systems, and peripherals tailored for high-volume foodservice environments.
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Rossana Niola, hlavní účetní společnosti Toast, prodala 2 298 akcií za zhruba 76 900 USD v rámci povinného prodeje za účelem úhrady daní. Po transakci jí zůstalo 4 306 akcií.
Rossana Niola, Principal Accounting Officer of Toast, Inc. (TOST +2.93%), sold 2,298 shares of Class A Common Stock on August 4, 2026, according to the SEC Form 4 filing.
Transaction summaryMetricValueShares sold (directly held)2,298Transaction value~$76,900Post-transaction shares (directly held)4,306Post-transaction value$145,585.86Transaction value based on SEC Form 4 weighted average sale price ($33.45); post-transaction value based on August 04, 2026 market close ($33.81).
Key questionsWhat were the specific circumstances surrounding this disposition?
The transaction was a non-discretionary "sell-to-cover" event mandated by the company's equity incentive policy to manage tax liabilities. Such sales are standard procedure for executives receiving equity-based compensation and occur automatically upon the vesting of restricted stock units (RSUs).How much equity does the insider retain in the company?
Rossana Niola maintains a direct stake of 4,306 shares, representing approximately 0.0007% of the total shares outstanding. This remaining position ensures continued alignment with shareholder interests despite the 35% reduction in direct holdings.What is the scale of Toast operations?
Headquartered in Boston, the company employs 6,500 people and maintains a market cap of $19.6 billion as of the August 4, 2026 market close.Company OverviewMetricValueShare Price (as of market close 2026-08-04)$33.81Market Capitalization$19.6 billionRevenue (TTM)$6.8 billionNet Income (TTM)$486.0 millionCompany SnapshotToast delivers a comprehensive cloud-based digital technology platform specifically designed for the restaurant sector, offering an extensive product suite that includes hardware solutions such as the Toast Point of Sale (POS) system and Toast Flex, which functions as an on-counter order and payment terminal, server workstation, guest kiosk, kitchen display system, and order fulfillment device.The company generates revenue through a subscription-based software model combined with hardware sales, enabling restaurant operators to streamline operations, enhance customer engagement, and optimize financial management through its integrated platform.Toast serves restaurant businesses across the United States and Ireland, targeting establishments of varying sizes that require comprehensive digital solutions to manage point-of-sale operations, inventory, labor, and customer relationships.Toast, Inc. operates as a leading provider of cloud-based restaurant management technology. The company maintains significant scale with 6,500 employees and a market cap of $19.6 billion.
The company demonstrates profitability with trailing 12-month net income of $486.0 million, reflecting strong operational leverage in its software-as-a-service (SaaS) business model. Toast's competitive advantage derives from its vertically integrated approach, offering both software and hardware solutions tailored specifically to the restaurant industry, enabling comprehensive digital transformation for its customer base.
What this transaction means for investorsThe August 4 sale of Toast stock by Principal Accounting Officer Rossana Niola is not a red flag for investors, since the disposition was made to fulfill tax withholding obligations associated with the vesting of restricted stock units.
While the transaction reduced Niola’s direct holdings by a substantial 35% to 4,306 shares, she has more than 46,000 RSUs that can be converted into common stock upon vesting. This remaining stake maintains her alignment with the interests of shareholders.
Niola’s sale comes amid a rally in Toast stock’s price after an excellent second-quarter earnings report. The company experienced a 22% year-over-year increase in new customer locations, which now totals approximately 180,000. This helped Toast hit $1.9 billion in Q2 revenue, up from $1.6 billion in 2025.
As a result, the company delivered diluted earnings per share of $0.26, representing a significant increase over the prior year’s $0.13, another factor in the rise in Toast’s share price.
Robert Izquierdo has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Toast. The Motley Fool has a disclosure policy.
Toast oznámil zisk 0,34 USD na akcii a tržby 1,91 mld. USD za čtvrtletí, obojí nad odhady. Zisk byl meziročně vyšší z 0,24 USD na akcii a tržby vzrostly z 1,55 mld. USD.
Toast (TOST - Free Report) came out with quarterly earnings of $0.34 per share, beating the Zacks Consensus Estimate of $0.32 per share. This compares to earnings of $0.24 per share a year ago. These figures are adjusted for non-recurring items.
This quarterly report represents an earnings surprise of +6.25%. A quarter ago, it was expected that this restaurant software provider would post earnings of $0.28 per share when it actually produced earnings of $0.29, delivering a surprise of +3.57%.
Over the last four quarters, the company has surpassed consensus EPS estimates three times.
Toast, which belongs to the Zacks Internet - Software industry, posted revenues of $1.91 billion for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 1.89%. This compares to year-ago revenues of $1.55 billion. The company has topped consensus revenue estimates four times over the last four quarters.
The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call.
Toast shares have lost about 7.7% since the beginning of the year versus the S&P 500's gain of 11%.
What's Next for Toast?While Toast has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock?
There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.
Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.
Ahead of this earnings release, the estimate revisions trend for Toast was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.36 on $1.95 billion in revenues for the coming quarter and $1.35 on $7.38 billion in revenues for the current fiscal year.
Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Internet - Software is currently in the bottom 40% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
Docebo Inc. (DCBO - Free Report) , another stock in the same industry, has yet to report results for the quarter ended June 2026. The results are expected to be released on August 7.
This company is expected to post quarterly earnings of $0.22 per share in its upcoming report, which represents a year-over-year change of -24.1%. The consensus EPS estimate for the quarter has been revised 20% lower over the last 30 days to the current level.
Docebo Inc.'s revenues are expected to be $67.87 million, up 11.8% from the year-ago quarter.
The upcoming report from Toast (TOST - Free Report) is expected to reveal quarterly earnings of $0.32 per share, indicating an increase of 33.3% compared to the year-ago period. Analysts forecast revenues of $1.87 billion, representing an increase of 20.8% year over year.
Over the past 30 days, the consensus EPS estimate for the quarter has remained unchanged. This demonstrates the covering analysts' collective reassessment of their initial projections during this period.
Prior to a company's earnings announcement, it is crucial to consider revisions to earnings estimates. This serves as a significant indicator for predicting potential investor actions regarding the stock. Empirical research has consistently demonstrated a robust correlation between trends in earnings estimate revision and the short-term price performance of a stock.
While investors usually depend on consensus earnings and revenue estimates to assess the business performance for the quarter, delving into analysts' forecasts for certain key metrics often provides a more comprehensive understanding.
Given this perspective, it's time to examine the average forecasts of specific Toast metrics that are routinely monitored and predicted by Wall Street analysts.
The combined assessment of analysts suggests that 'Revenue- Financial technology solutions' will likely reach $1.55 billion. The estimate suggests a change of +21.2% year over year.
Analysts predict that the 'Revenue- Subscription services' will reach $283.46 million. The estimate indicates a change of +24.9% from the prior-year quarter.
The consensus estimate for 'Revenue- Hardware and professional services' stands at $44.25 million. The estimate points to a change of -5.9% from the year-ago quarter.
According to the collective judgment of analysts, 'Gross Payment Volume (GPV)' should come in at $60.31 billion. Compared to the current estimate, the company reported $49.90 billion in the same quarter of the previous year.
Based on the collective assessment of analysts, 'Locations' should arrive at 179,376 . The estimate compares to the year-ago value of 148,000 .
Analysts' assessment points toward 'Subscription Annualized Recurring Run-Rate' reaching $1.19 billion. The estimate compares to the year-ago value of $950.00 million.
Analysts expect 'Payments Annualized Recurring Run-Rate' to come in at $1.20 billion. The estimate compares to the year-ago value of $978.00 million.
It is projected by analysts that the 'Total Annualized Recurring Run-Rate (ARR)' will reach $2.39 billion. Compared to the present estimate, the company reported $1.93 billion in the same quarter last year.
View all Key Company Metrics for Toast here>>>
Shares of Toast have demonstrated returns of +12% over the past month compared to the Zacks S&P 500 composite's +0.2% change. With a Zacks Rank #3 (Hold), TOST is expected to mirror the overall market performance in the near future. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>> .
Toast vykázal ve 1. čtvrtletí tržby 1,6 mld. USD, meziročně o 22 %, a volný peněžní tok vzrostl o 67 % na 115 mil. USD. Společnost zároveň zvýšila výhled upravené EBITDA na 790–810 mil. USD.
Key Takeaways Toast posted $1.6B in revenues, up 22%, as locations and payment volume also rose 22%.Recurring gross profit growth is forecast at 21%-23% for 2026, below the first quarter's 27%.Toast raised adjusted EBITDA guidance to $790M-$810M as free cash flow increased 67%. Toast, Inc. (TOST - Free Report) presents a balanced investment case. The restaurant technology platform continues to expand revenues, locations and payment volume, while profitability and cash generation have improved.
The question is whether those positives are enough when growth is no longer accelerating and the stock offers only limited upside to the current price target. For now, TOST looks neither like a clear bargain nor a pure momentum trade.
TOST Growth Is Strong but No Longer AcceleratingToast reported first-quarter 2026 revenues of $1.6 billion, up 22% year over year. Subscription services revenues increased 28% to $268 million, while total locations rose 22% to about 171,000.
Gross payment volume also advanced 22% to $51.3 billion. The pace has become more normalized, with total revenue growth at 25% in parts of 2025, subscription services growth easing from the mid-30% range to the high-20% range and location growth moderating to the low-20% range.
Management’s full-year 2026 outlook reinforces that message. Toast expects recurring gross profit streams to grow 21% to 23%, below the 27% growth delivered in the first quarter.
Image Source: Zacks Investment Research
Toast’s Valuation Leaves Limited Near-Term UpsideTOST recently traded at $32.34, compared with a 6- to 12-month price target of $34. That leaves only $1.66 of potential appreciation, suggesting that much of the improved profitability story may already be reflected in the stock.
The valuation is not stretched on a relative sales basis. Toast trades at 2.05X forward 12-month sales, below its five-year median of 2.69X and well under the 3.81X multiple for its Zacks sub-industry, 6.13X for the technology sector and 4.87X for the S&P 500.
That discount helps, but it does not automatically create a bargain. With growth normalizing, investors may need stronger proof of durable margin expansion or renewed estimate momentum before assigning TOST a higher multiple.
Image Source: Zacks Investment Research
TOST Profitability Supports the Bull CaseProfitability is the clearest support for a more constructive view. In first-quarter 2026, Toast generated net income of $126 million, operating income of $110 million and adjusted earnings before interest, taxes, depreciation and amortization of $179 million.
Cash generation also improved. Operating cash flow was $132 million and free cash flow was $115 million, both up 67% year over year. Non-GAAP software-as-a-service gross margin exceeded 80% for the first time at 81%.
Management raised its full-year 2026 adjusted EBITDA guidance to $790 million to $810 million. That gives the bull case substance, especially for investors focused on operating leverage rather than revenue growth alone.
Toast’s Execution Risks Keep the Setup BalancedBetter profitability does not remove the execution risk. Hardware and professional services remained loss-making in the first quarter, with $39 million in revenues against $111 million of costs.
Those losses reflect onboarding investments, new-market support and tariff pressure. Management also plans to reinvest top-line outperformance into growth initiatives and internal AI tools, which can limit near-term margin upside.
Competition adds another consideration. Shift4 Payments (FOUR - Free Report) also serves restaurants with payment processing and point-of-sale technology, while Lightspeed Commerce (LSPD - Free Report) offers restaurant point-of-sale and payments capabilities. Their presence reinforces that Toast must keep converting product breadth into profitable customer growth.
Slower location and subscription growth could also constrain valuation expansion. If growth settles into a lower range before new markets and AI products contribute meaningfully, the stock may struggle to sustain a higher sales multiple.
TOST Scores Point to a Selective ApproachThe bottom line is that TOST has a better earnings profile than it had in prior periods, but the setup still calls for selectivity. Profitability, cash flow and recurring gross profit growth are real strengths, while valuation upside and momentum remain less convincing.
The stock currently carries a Zacks Rank #3 (Hold). That aligns with a balanced risk-reward profile rather than a strongly bullish near-term call. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
TOST has a Growth Score of A, recognizing favorable projected earnings and sales expansion. Its Value Score of C is more neutral, while the Momentum Score of D points to weaker price and revision characteristics. The VGM Score of B offers some balance, but investors may want stronger upside, estimate revisions or price momentum before taking a more bullish stance.
Toast IQ má 40 000 týdně aktivních lokací a Toast rozšiřuje AI i do enterprise, hotelů, grocery a vybraných zahraničních trhů. Opakované roční tržby vzrostly o 26 % na 2,2 mld. USD a SaaS hrubá marže dosáhla 81 %.
Key Takeaways Toast IQ reached 40,000 weekly active locations, turning AI into a practical restaurant workflow tool.TOST expanded into enterprise, hotels, grocery, drive-thru and selected international markets.Toast's SaaS gross margin hit 81% as annualized recurring run rate rose 26% to $2.2 billion. Toast, Inc. (TOST - Free Report) is moving beyond its roots in restaurant payments and point-of-sale technology. Its platform now spans software, financial technology, hardware and connected operating workflows for restaurants and adjacent businesses.
AI adoption, new-market expansion and improving profitability are reshaping the growth story. The question is whether those gains can offset a more normalized pace of revenue, subscription and location growth.
Toast Turns AI Into a Restaurant Workflow LayerToast IQ is shifting AI from concept to daily restaurant use. In the first quarter of 2026, the product had 40,000 weekly active locations, with operators using it to identify revenue opportunities, save time and spot operating trends.
Toast IQ Grow adds a marketing use case. The agent builds campaigns from past performance data and sales forecasts, while future agents could extend into scheduling, payroll, inventory, food costs, bookkeeping and accounting.
TOST Expands Beyond Its Core Restaurant BaseToast is broadening its reach into drive-thru restaurants, enterprise accounts, hotels, grocery and selected international cities. Enterprise wins include Hungry Howie’s, Papa Murphy’s and The Alinea Group, while hotels add another channel through the Preferred Hotels & Resorts partnership.
The push also places Toast in a wider competitive set. Block, Inc. (XYZ - Free Report) offers Square for Restaurants, a cloud-based point-of-sale system for single- and multi-location restaurants. Lightspeed Commerce Inc. (LSPD - Free Report) also serves retail and hospitality customers through point-of-sale and commerce tools, making both companies relevant comparisons as Toast expands beyond independent restaurants.
Toast Converts Scale Into Stronger ProfitabilityScale is beginning to show in Toast’s economics. Locations rose from approximately 148,000 in the second quarter of 2025 to roughly 171,000 in the first quarter of 2026, while trailing 12-month gross payment volume increased to $204 billion from $176 billion.
Annualized recurring run rate reached $2.2 billion, up 26% year over year. Non-GAAP software-as-a-service gross margin reached 81% for the first time, and adjusted earnings before interest, taxes, depreciation and amortization rose to $179 million.
Image Source: Zacks Investment Research
TOST Still Faces Slower Growth and Cost PressureThe growth profile is still moderating. Total revenue growth was 22% in the first quarter of 2026, while subscription services growth eased from the mid-30% range to the high-20% range and location growth moved into the low-20% range.
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Costs also remain visible. Hardware and professional services were loss-making, onboarding investments and tariffs weighed on profitability, and management plans to reinvest top-line outperformance into growth initiatives and internal AI tools. Early AI workflows may also need time to prove consistent returns across every restaurant function.
Toast’s Mixed Signals Frame the Long-Term ViewThe bottom line is that Toast has a wider platform story than it did when the business was viewed mainly through payments and point-of-sale adoption. AI tools, new customer categories and stronger software margins support the long-term case, but normalization and execution costs keep the near-term setup more balanced.
The stock currently carries a Zacks Rank #3 (Hold). Its Growth Score of A and VGM Score of B point to favorable growth characteristics and a solid combined style profile. The Value Score of C and Momentum Score of D are less decisive, suggesting investors may want more evidence on valuation support, estimate momentum or share-price strength before taking a more aggressive stance. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Toast spustil AI marketingového agenta Toast IQ Grow a pilotní uživatelé zaznamenali v průměru o 8 % vyšší tržby než srovnatelné restaurace. AI také zvýšila rychlost vývoje kódu o více než 60 %.
Key Takeaways Toast launched an AI marketing agent to help restaurants create campaigns and attract more guests.Pilot users of Toast IQ Grow saw average sales rise 8% versus similar Toast restaurants.Toast's AI push lifted coding velocity 60% and resolved 40% of customer-support interactions. Toast, Inc. (TOST - Free Report) is making artificial intelligence (AI) a central part of its growth strategy. In May 2026, the company launched Toast IQ Grow, a marketing product built around its first AI agent. It creates campaigns using restaurant sales data across email, text messages and social channels, helping busy operators save time and attract guests.
Early results appear encouraging. Pilot customers using Toast IQ Grow recorded an average 8% increase in sales compared with similar Toast restaurants. Sahara Bistro Shawarma attributed nearly one-third of its March 2026 sales to Toast marketing tools. Its sales also rose more than 30% from the prior four weeks, suggesting that AI agents can produce measurable returns.
Toast also has a large base for expanding AI services. It ended the first quarter of 2026 with about 171,000 locations, up 22% year over year, after adding roughly 7,000 net locations. Toast IQ already had 40,000 weekly active locations, giving the platform more operating, payment and guest data to generate useful recommendations.
The AI push is also supporting Toast’s internal efficiency. Engineering coding velocity increased more than 60% year over year, helping the company launch its marketing agent three months earlier than planned. About 40% of customer-support interactions were resolved by AI, improving efficiency and enabling Toast to invest more in account management, product development and sales.
Investors need to watch whether AI usage is converting into stronger financial growth. First-quarter 2026 annualized recurring run-rate (ARR) rose 26% to $2.2 billion, while recurring gross profit grew 27%. Adjusted EBITDA reached $179 million, and operating income climbed to $110 million from $43 million.
How Are XYZ & LSPD Integrating AI?Block’s (XYZ - Free Report) Square has embedded AI into its merchant services through automated marketing, customer insights and operational recommendations. These tools help restaurants personalize promotions, simplify decisions and improve efficiency within the broader Square ecosystem. XYZ reported serving more than 4 million sellers across its global digital commerce platforms.
Lightspeed (LSPD - Free Report) applies AI to restaurant analytics, inventory planning and customer engagement. Its AI-driven features help operators interpret sales patterns, forecast demand and identify practical actions that may improve margins. LSPD ended the fourth quarter of fiscal 2026 with approximately 150,000 total customer locations using its commerce platform worldwide.
TOST’s Price Performance, Valuation & EstimatesShares of Toast have outperformed in the past three months compared with the broader industry.
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From a valuation standpoint, Toast’s shares have a Value Score of C. In terms of forward 12-month P/E, TOST stock is trading at 26.20X, which is at a discount to the Zacks Internet Software industry’s 27.43X.
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Toast’s estimate revisions reflect a positive trend. The Zacks Consensus Estimate for full-year 2026 earnings per share has been revised upward to $1.35 in the past two months. The consensus estimate for the metric indicates a year-over-year increase of 51.69%.
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Toast currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Key Takeaways Toast is expanding into enterprise, retail and international markets to broaden its growth opportunities.TOST won Hungry Howie's rollout, launched Drive-Thru and now serves 100-plus grocery locations.TOST posted 21.9% revenue growth, 26% ARR growth and added 7,000 net new locations in Q1. Toast (TOST - Free Report) is expanding beyond independent U.S. restaurants into enterprise chains, retail and international markets. Management said these newer markets are gaining traction, with annualized recurring run-rate (ARR) growing faster and software revenue per location exceeding that of Toast’s core business at a comparable stage.
Enterprise offers clear proof of Toast’s expansion strategy. Hungry Howie’s selected Toast’s enterprise technology suite for implementation across roughly 500 restaurants, including its point-of-sale (POS) terminals, Multi-Location Management, Kitchen Display System (KDS) and Toast Payment Processing. Toast also launched Toast Drive-Thru, an enterprise-grade solution designed to serve more than 140,000 U.S. locations.
Retail is another important growth path. Toast now serves more than 100 grocery locations, each generating more than $5 million in annual sales. Management estimates that more than 20,000 independent U.S. grocers generate more than $250 billion in sales, creating a sizable opportunity for Toast’s payments, inventory and supplier tools.
Internationally, Toast is focusing on dense, high-volume cities such as London, Toronto, Sydney and Melbourne. Its support for an International Chamber of Commerce UK Trade & Export initiative could raise its profile with hospitality groups expanding between the UK and the United States. Toast is backing that expansion with local teams, round-the-clock service and operating data that can be shared globally.
Toast entered 2026 with strong momentum, giving its broader expansion plan added weight. First-quarter revenues increased 21.9% to $1.63 billion, while ARR climbed 26% to $2.2 billion. It added 7,000 net new locations in the quarter, with total locations increasing 22% year over year to nearly 171,000.
How Are Block & Lightspeed Expanding?Block’s (XYZ - Free Report) Square is a strong direct competitor. Square combines restaurant POS, payments, handheld hardware, online ordering, inventory and franchise-management tools, while its Uber Eats integration is expanding internationally. Square said that food-and-beverage seller GPV grew 21% year over year in first-quarter 2026.
Lightspeed POS (LSPD - Free Report) competes across hospitality and retail. Its platform combines POS, global payments, inventory management, supplier connections, analytics and multichannel sales, helping multi-location merchants operate efficiently across physical and digital channels. Lightspeed serves businesses in more than 100 countries worldwide.
TOST’s Price Performance, Valuation & EstimatesShares of Toast have outperformed in the past three months compared with the broader industry.
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From a valuation standpoint, Toast’s shares has a Value Score of C. In terms of forward 12-month P/E, TOST stock is trading at 26.34X, which is at a discount to the Zacks Internet Software industry’s 28.50X.
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Toast’s estimate revisions reflect a positive trend. The Zacks Consensus Estimate for full-year 2026 EPS has been revised upward to $1.35 in the past two months. The consensus estimate for the metric indicates a year-over-year increase of 51.69%.
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Toast currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Goldman Sachs zvýšila hodnocení Toast z Neutral na Buy a cílovou cenu na 36 USD, protože věří, že platforma Toast IQ podpoří růst tržeb a ARR. V 1. čtvrtletí přibylo asi 7 000 čistých provozoven a ARR vzrostl meziročně o 26 % na 2,2 miliardy USD.
Toast Inc. NYSE: TOST shares have rallied sharply into mid-July. Analysts are becoming bullish on the company’s Toast IQ artificial intelligence (AI) platform that launched in October 2025.
Toast Today
$30.56 +0.16 (+0.54%)
As of 01:41 PM Eastern
This is a fair market value price provided by Massive. Learn more.
52-Week Range$22.26▼
$49.66P/E Ratio47.03
Price Target$37.59
The tool is boosting total revenue and annual recurring revenue (ARR). Toast’s first-quarter results showed approximately 7,000 net new locations and 26% year-over-year ARR growth to $2.2 billion.
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That was punctuated by The Goldman Sachs Group, which upgraded the stock from Neutral to Buy and raised its price target to $36. The firm was bullish about Toast IQ, which it believes will increase the company’s average revenue per user. Toast has also been increasing its number of accounts, a trend Goldman Sachs believes will continue.
Since the rally, TOST is about 20% below its consensus price target of $37.59. But at a time when investors have higher growth options, the simple question is whether TOST is fairly priced or undervalued.
Toast AI Platform Is Driving Revenue and ARR GrowthOn June 10, Toast published data about how its customers used Toast IQ in the first quarter of 2026. The results make clear that restaurant owners are looking for insights to increase the profitability and efficiency of their restaurants. That supports the idea that revenue gains will continue.
However, the company is also facing the costs associated with AI. That means balancing higher hardware and memory costs that could put margins under pressure.
Why Interest Rates Still Matter for TOSTSince going public in 2021, TOST stock has been impacted by the direction of interest rates. It soared to around $51 a share after the IPO. However, this was a time when stimulus money flowed freely, and the revenge travel trade was just getting started.
Toast seemed like the right stock at the right time. That is, until it wasn’t. TOST fell sharply, along with most technology stocks, starting in November 2021.
That wasn’t just because of normal IPO price action. The Federal Reserve began raising interest rates from a level at or near zero percent. Before dismissing that as anecdotal evidence, consider that Toast relies on the restaurant sector. This sector came under pressure as they balanced higher input costs with a consumer who had only so much room to absorb price increases.
That situation is still in place today. Consumer spending remains strong, and the latest data show inflation moderating. That argues against interest rate hikes, which will be bullish for TOST.
Is Toast Stock Undervalued? DCF Models Tell Different StoriesA discounted cash flow (DCF) calculator offers two ways to answer the fair value question. At TOST's current price, both are worth checking because they tell noticeably different stories.
The Intrinsic Value (FCF) model discounts Toast's projected free cash flow to today's dollars, resulting in a fair value range of $35.68 to $65.40 per share. The high end of that range is about 54% above the price as of July 15, suggesting the stock is undervalued on a pure cash-generation basis.
The Intrinsic Value Range w/Earnings Per Share (EPS) model applies multiples of 18.75x to 25x to projected earnings, resulting in a fair value band of $4.59 to $8.37 per share. A 25x forward price-to-earnings (P/E) is below the stock's current P/E and is reasonably generous for a mature company. The gap comes from the earnings base, not the multiple.
Why the disconnect? Toast only recently crossed into sustained GAAP profitability, and its GAAP earnings per share remain small relative to the cash the business actually generates. Stock-based compensation and other non-cash charges weigh on reported EPS in a way that they don't weigh on free cash flow. Analysts project 33% earnings growth over the next 12 months. A static, current-year EPS multiple doesn't fully capture that growth.
That's the real takeaway: the FCF and EPS models aren't contradicting each other so much as measuring different things for a company early in its profitability curve. As GAAP earnings catch up to cash flow, expect that gap to narrow. Until then, the FCF model may be the more reliable gauge of what Toast is actually worth.
Toast, Inc. (TOST) Price Chart for Thursday, July, 16, 2026
Toast Stock Outlook: What to Watch Before August EarningsTOST is a stock that may be easier to buy than it is to hold. For investors who believe the stock is trading below its fair value, getting in at $30 seems like a safe bet. However, competition and higher costs could eat into the company’s margins, compressing earnings growth, which is the argument skeptics are making.
Toast is scheduled to report earnings on August 4. Confirmation of strong year-over-year revenue growth could go a long way toward affirming Goldman Sachs' outlook. It could also signal that more analysts will raise their TOST targets.
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Toast v poslední seanci vzrostl o 1,3 % na 30,39 USD a za měsíc přidal 19,67 %. Investoři sledují nadcházející výsledky, kde se čeká EPS 0,32 USD a tržby 1,87 miliardy USD.
In the latest close session, Toast (TOST - Free Report) was up +1.3% at $30.39. The stock outperformed the S&P 500, which registered a daily gain of 0.38%. Meanwhile, the Dow gained 0.29%, and the Nasdaq, a tech-heavy index, added 0.62%.
The stock of restaurant software provider has risen by 19.67% in the past month, leading the Computer and Technology sector's loss of 0.53% and the S&P 500's gain of 1.61%.
Investors will be eagerly watching for the performance of Toast in its upcoming earnings disclosure. On that day, Toast is projected to report earnings of $0.32 per share, which would represent year-over-year growth of 33.33%. Simultaneously, our latest consensus estimate expects the revenue to be $1.87 billion, showing a 20.82% escalation compared to the year-ago quarter.
For the full year, the Zacks Consensus Estimates project earnings of $1.35 per share and a revenue of $7.38 billion, demonstrating changes of +51.69% and +19.95%, respectively, from the preceding year.
Investors might also notice recent changes to analyst estimates for Toast. These latest adjustments often mirror the shifting dynamics of short-term business patterns. As such, positive estimate revisions reflect analyst optimism about the business and profitability.
Empirical research indicates that these revisions in estimates have a direct correlation with impending stock price performance. To take advantage of this, we've established the Zacks Rank, an exclusive model that considers these estimated changes and delivers an operational rating system.
Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. Toast currently has a Zacks Rank of #3 (Hold).
Valuation is also important, so investors should note that Toast has a Forward P/E ratio of 22.18 right now. This indicates a premium in contrast to its industry's Forward P/E of 19.89.
The Internet - Software industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 92, which puts it in the top 38% of all 250+ industries.
The strength of our individual industry groups is measured by the Zacks Industry Rank, which is calculated based on the average Zacks Rank of the individual stocks within these groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.
Remember to apply Zacks.com to follow these and more stock-moving metrics during the upcoming trading sessions.
