Toast’s fourth quarter results were shaped by continued expansion in its core restaurant technology platform and increased adoption of new AI-driven features. Management cited strong customer wins—including both independent restaurants and large enterprise chains—as key contributors to location growth and higher recurring gross profits. CEO Aman Narang credited the launch of over 500 new product features, including ToastIQ, for driving customer engagement and operational improvements. The company’s disciplined approach to investment and focus on product-driven differentiation helped maintain momentum across both its core and emerging markets.
Is now the time to buy TOST? Find out in our full research report (it’s free for active Edge members).
Toast (TOST) Q4 CY2025 Highlights:
- Revenue: $1.63 billion vs analyst estimates of $1.62 billion (22% year-on-year growth, 0.5% beat)
- Adjusted EPS: $0.27 vs analyst estimates of $0.24 (12.9% beat)
- Adjusted Operating Income: $163 million vs analyst estimates of $140.8 million (10% margin, 15.8% beat)
- EBITDA guidance for the upcoming financial year 2026 is $785 million at the midpoint, below analyst estimates of $790.6 million
- Operating Margin: 5.2%, up from 2.4% in the same quarter last year
- Annual Recurring Revenue: $2.05 billion vs analyst estimates of $2.06 billion (25.9% year-on-year growth, in line)
- Billings: $1.64 billion at quarter end, up 22.7% year on year
- Market Capitalization: $16.3 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 Q4 Earnings Call
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Timothy Chiodo (UBS) asked about the sustainability of SaaS average revenue per user growth across different business segments. CFO Elena Gomez detailed that core ARPU is growing faster than new markets, and as more products are rolled out to these new verticals, ARPU should improve over time.
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William Nance (Goldman Sachs) inquired about the contribution of new verticals to net location growth and whether these areas can be material drivers. CEO Aman Narang explained that incremental growth is increasingly coming from new markets, and the company expects this trend to continue in 2026.
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Nance also pushed on AI disruption risk, asking how Toast’s platform is protected from competitors using new AI. Narang argued that Toast’s integrated platform, including hardware, payments, and a broad ecosystem, creates defensible differentiation, and AI is seen as an enabler rather than a threat.
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Josh Baer (Morgan Stanley) requested clarity on the drive-thru product rollout and unaddressed U.S. market segments. Narang noted the upcoming launch of a dedicated drive-thru product and highlighted ongoing efforts to expand features for bars, pizzerias, and other sub-segments.
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Adam Frisch (Evercore ISI) asked if 2026 would be a peak investment year and about guidance conservatism. Gomez stated that the company is investing for long-term growth, not near-term margin maximization, and that guidance reflects balanced assumptions.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will be monitoring (1) customer adoption and usage of AI-driven tools like ToastIQ, (2) the pace of expansion into international and retail verticals, and (3) the company’s ability to manage hardware and tariff-related margin pressures. Execution on product enhancements and the rollout of new features, including the drive-thru solution, will also be important milestones to track.
Toast currently trades at $27.85, up from $26.14 just before the earnings. Is there an opportunity in the stock?Find out in our full research report (it’s free).
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