Toast’s third quarter results were well received by the market, as the company surpassed analyst expectations for both revenue and profitability. Management attributed the outperformance to consistent growth in its core U.S. restaurant platform, with notable wins among large operators like Nordstrom and TGI Fridays. CEO Aman Narang highlighted the company’s investments in AI-powered tools and ongoing expansion into new market segments as key contributors, stating, “We surpassed $2 billion in ARR for the first time, and I’m even more energized about where we’re headed.”
Is now the time to buy TOST? Find out in our full research report (it’s free for active Edge members).
Toast (TOST) Q3 CY2025 Highlights:
- Revenue: $1.63 billion vs analyst estimates of $1.59 billion (25.1% year-on-year growth, 3% beat)
- Adjusted EPS: $0.28 vs analyst estimates of $0.23 (19.6% beat)
- Adjusted Operating Income: $176 million vs analyst estimates of $141.1 million (10.8% margin, 24.7% beat)
- EBITDA guidance for the full year is $615 million at the midpoint, above analyst estimates of $587.9 million
- Operating Margin: 5.1%, up from 2.6% in the same quarter last year
- Annual Recurring Revenue: $2.02 billion vs analyst estimates of $2.00 billion (29.7% year-on-year growth, 1% beat)
- Billings: $1.64 billion at quarter end, up 25.4% year on year
- Market Capitalization: $22.45 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Toast’s Q3 Earnings Call
- Josh Baer (Morgan Stanley) asked about drivers of higher gross payment volume per location. CEO Aman Narang explained that platform enhancements and product adoption contributed, but emphasized that results had normalized post-quarter.
- William Nance (Goldman Sachs) questioned sustainability of market share gains amid rising competition. Narang cited year-over-year improvements in win rates and strong execution as reasons for continued momentum in new customer adds.
- Timothy Chiodo (UBS) inquired about the potential of Toast’s consumer-facing network as restaurant density increases. Narang highlighted opportunities in digital ordering, loyalty, and seamless payments, noting the dense network's value for both guests and operators.
- Rayna Kumar (Oppenheimer) asked about the sustainability of improving take rates. CFO Elena Gomez pointed to targeted pricing moves, cost optimization, and new products like surcharging as levers to maintain or increase take rates over time.
- Stephen Sheldon (William Blair) asked about monetization plans for Toast IQ. Narang indicated the focus is currently on adoption, with usage-based monetization or SaaS pricing increases considered for the future.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will be monitoring (1) the pace of adoption and monetization for AI-driven solutions like Toast IQ and Toast Advertising, (2) the company’s ability to expand net location adds through international and retail segments, and (3) ongoing progress in cost optimization and pricing discipline to support margin expansion. Success in scaling new partnerships and integrating product updates will also serve as key indicators of Toast’s execution.
Toast currently trades at $38.31, up from $35.67 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free for active Edge members).
Our Favorite Stocks Right Now
Fresh US-China trade tensions just tanked stocks—but strong bank earnings are fueling a sharp rebound. Don’t miss the bounce.
Don’t let fear keep you from great opportunities and take a look at Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.
StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.