TOST

It has been about a month since the last earnings report for Toast (TOST). 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 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. Subscription 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. Total 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 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. Adjusted 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. Free 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. For 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. In the past month, investors have witnessed a upward trend in estimates review. Currently, 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. Estimates 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. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Toast, Inc. (TOST) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Block, Inc. XYZ has entered the second half of 2026 with stronger operating momentum, improving profitability and several growth initiatives across Cash App and Square. The fintech company is also putting more focus on connecting its consumer and merchant ecosystems, while investments in artificial intelligence are aimed at improving product development and efficiency. This gives investors more to consider than a simple earnings beat.XYZ shares had considerably advanced in 2026 heading into second-quarter earnings, reflecting renewed confidence in Block's execution. The stock fell more than 6% on Aug. 6 after the results as investors weighed higher planned investments against stronger earnings and guidance. Through Aug. 12, XYZ remained below its pre-results level. Over the broader period, Block's performance has compared favorably with PayPal Holdings PYPL, while Toast TOST has also seen notable swings as investors reassessed growth expectations across fintech and payments.The key question now is whether Block can maintain stronger growth and margins while stepping up spending on sales, product development and AI. Its second-quarter results provided encouraging evidence, but the balance between growth investment and operating discipline remains important. Image Source: Zacks Investment Research Block delivered second-quarter adjusted EPS of $1.02, while revenues rose 9% year over year to $6.62 billion. Gross profit increased 25% from the prior-year period. More important for the longer-term earnings story, adjusted operating income reached $864 million, and the adjusted operating margin hit a record 27%.Cash App remained the stronger growth engine, with gross profit rising 31% year over year. Monthly transacting actives increased 3% in June, while Cash App Commerce Enablement volume climbed 17%, and consumer lending origination volume increased 59%. Block is seeking to deepen engagement rather than relying only on user additions, an approach that could support monetization even if active-user growth remains modest.Square also showed better momentum. Gross profit and gross payment volume both increased 13%, while U.S. GPV growth accelerated to its strongest pace since the second quarter of 2023. Management said new seller additions through independent sales organization partners increased more than 150% sequentially as Block continued expanding its distribution channels. Management increased its 2026 outlook following the stronger first half. Block now expects gross profit of $12.51 billion, representing 21% year-over-year growth, along with adjusted operating income of $3.47 billion and a 28% margin. Adjusted EPS is expected to grow 70% for the full year. For the third quarter, management expects gross profit growth of 18% and another 28% adjusted operating margin.The raised outlook is encouraging because it reflects more than the second-quarter beat. Management said performance heading into the third quarter remained healthy, with Square GPV growth in July consistent with second-quarter strength and Cash App inflows and monetization trends remaining solid. Block is also trying to create stronger links between Square and Cash App. Neighborhoods is an important part of that effort. Annualized seller GPV on the platform crossed $1 billion in June, up 220% year over year, while seller onboarding accelerated sharply into July.Product development has accelerated as well. Block said code changes per engineer increased 150% since the start of 2026, while Square shipped 130 features during the first half, more than three times the number delivered in the comparable 2025 period.The opportunity comes with added costs. Management plans to increase investment in go-to-market efforts, Neighborhoods and AI when it sees attractive returns. This strategy could support longer-term growth, but investors will want evidence that higher spending does not interrupt recent margin progress. The Zacks Consensus Estimate for Block’s 2026 sales calls for a year-over-year rise of 7.50%, while that for earnings per share (EPS) suggests a 65.40% increase year over year. EPS estimates for both 2026 and 2027 have been trending upward over the past month. Image Source: Zacks Investment Research Block's valuation looks more balanced after its earnings and profit growth improved, although it should be viewed alongside expectations for continued execution. In terms of forward 12-month Price/Earnings (P/E), Block is trading at 17.05X, which is at a discount to Toast’s 21.32X, but at a premium to PayPal’s 10.50X. Block's premium to PayPal can be supported if gross-profit growth remains strong and margins continue expanding. At the same time, comparisons with Toast show that investors are already willing to pay more for faster payments and merchant-technology growth, leaving Block with less room for execution setbacks.Valuation Image Source: Zacks Investment Research Block's second-quarter report strengthened the investment case without removing the reasons for caution. Gross profit growth accelerated, profitability reached record levels, and management raised its full-year outlook. Square's improving GPV trends and deeper Cash App engagement also provide several ways to sustain growth into 2027.Still, the post-earnings share-price decline shows that investors are watching spending closely. Cash App active growth remains modest, lending growth should normalize, and increased AI and sales investments could limit additional margin expansion if returns take time to emerge. For existing investors, the improving fundamentals support staying with the position while waiting for clearer evidence that Block can sustain stronger growth and disciplined spending together.At present, Block carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Block, Inc. (XYZ) : Free Stock Analysis Report PayPal Holdings, Inc. (PYPL) : Free Stock Analysis Report Toast, Inc. (TOST) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Image source: The Motley Fool. Tuesday, Aug. 4, 2026, at 5 p.m. ET Senior Vice President of Finance - Michael Senno CEO - Aman Narang CFO - Elena Gomez Operator: Good afternoon. My name is Christine, and I will be your conference operator today. At this time, I would like to welcome everyone to Toast Second Quarter 2026 Earnings Conference Call. Today's call will be 45 minutes. I will now turn the call over to Michael Senno, Senior Vice President of Finance. You may begin your conference. Michael Senno: Thank you. Welcome to Toast Second Quarter 2026 Earnings Call. First, CEO, Aman Narang; and CFO, Elena Gomez, will open with prepared remarks followed by Q&A. Before we start, I'd like to remind everyone that today's call may include forward-looking statements, which are subject to risks and uncertainties and reflect our views and assumptions only as of today. These forward-looking statements include expectations around financial and operational metrics, products, business and investment strategy and guidance. Actual results may vary significantly, and we expressly disclaim any obligation to update the forward-looking statements made today. For a detailed discussion of risks, please refer to the cautionary language in today's press release and our SEC filings. During this call, we will discuss certain non-GAAP financial measures, including, but not limited to, non-GAAP subscription services gross profit and non-GAAP financial technology solutions gross profit, which we refer to collectively as our recurring gross profit streams. These are the basis for our top line guidance. These non-GAAP measures are not intended to be a substitute for our GAAP results. Please refer to our earnings release and SEC filings for detailed reconciliations of these non-GAAP measures to the most comparable GAAP measures. Unless otherwise stated, all references on this call to cost of revenue, gross profit and gross margin, sales and marketing expense, research and development expense and general and administrative expense are on a non-GAAP basis. And with that, let me turn the call over to Aman. Aman Narang: Thanks, Michael, and thank you all for joining us today. We had another great quarter. In Q2, we grew recurring gross profit streams over 28% and expanded GAAP operating income margins to 26%. We had a record 9,500 net location adds in the quarter, 1,000 more than our previous high watermark. Our core business continues to scale. Our new markets are growing rapidly, and we're reinventing our platform with AI to agents and software, working together to drive real business outcomes for customers. For example, Toast IQ Grow, our marketing agent is the fastest-growing product we have ever launched, and it's giving us more conviction in our AI opportunity and its potential to scale ARPU over time. I'm so thankful for our incredible Toast team who continue to execute and deliver at a very high level. We're excited to announce a number of notable new customers to toast across the different market segments we serve. In our core business, we welcome Kung Fu Tea, a brand with over 300 locations. In Enterprise, we're thrilled to become an endorsed provider by a leading hospitality brand, Best Western, to continue our momentum across hotels. And internationally, we expanded our relationship with TGI Fridays in the U.K. In addition to this momentum across our restaurant segments, in retail, we continue to see really strong traction including our very first gas stations where we're processing fuel payments for the very first time. We've had a great first task, and our top priorities heading into the back half of 2026 remain unchanged. Number one, expand what Toast can do for customers with AI, from software to an Agentic platform that takes on critical work and delivers business outcomes for customers. Number two, expand the markets we serve. And lastly, reinvent how we work with AI to accelerate our most important goals and drive durable growth. We are well positioned as a vertically integrated platform across software, hardware, payments and lending. Customers recognize the role we play as the most important technology partner and are looking to us to help them take advantage of the opportunity AI creates. I continue to believe executing against these priorities, sets us up to scale Toast $10 billion in ARR and beyond. Okay. Let's jump into the priorities. Number one, expand what Toast can do for customers. Toast has spent 14 years evolving from a point-of-sale system to a system of record, software that helps restaurants manage their operations, staff, guests and suppliers. But many of our customers don't have the time to leverage everything those offers and end up outsourcing important functions, functions such as marketing, payroll and bookkeeping. With AI, we are showing that we can take on some of that work and do it even better. Digital marketing is the first Agentic workflow we launched, and we have seen tremendous success thus far. In fact, Toast IQ Grow is on track to become the fastest-growing product to $10 million in ARR. The early customer reception reinforces that we're solving a real problem and have a large opportunity to monetize our offerings. Toast IQ Grow brings together the tools and capabilities to improve a customer's website, SEO, digital ordering and social presence, leveraging the customer's data to build effective marketing campaigns that drive better guest conversion. I'll give you an example. Spirits Food & Friends is a family-owned restaurant in Louisiana that started with Toast in 2025, consolidating more than 10 disparate systems onto a single platform across POS, payroll, scheduling and more. Now they're using Toast IQ Grow to power their marketing. For the first time ever, they are segmenting marketing campaigns using their data and are able to conduct these campaigns directly to sales. As a result, they have not only cut their monthly agency spend by 70%, they've also generated over $100,000 in marketing attributed sales in just under 2 months. We are uniquely positioned to bring the benefits of Toast IQ Grow to restaurants across our platform. We can optimize the full revenue cycle, the digital presence that gets restaurants discovered, drives orders and reaches new guests to customize advertising, the point-of-sale system that captures transactions in-store and online, and the multichannel marketing engine that brings guests back. Fueled by transaction data, we know what guests ordered, how often they return and when they stop coming back. We know the restaurants too. the sales trends, the slow niches and the overall capacity. Toast IQ Grow will use all of that to drive guest back across e-mail, text, push notifications and social, moving us towards personalized on marketing at scale. And because we power the point of sale, we can close the loop with each campaign tied directly to the orders it drives. As you can see, our success with Toast IQ Grow comes out of 2 things: data and context. That is the foundation of our Toast IQ ecosystem. First on data. As a customer's system of record, Toast understands how it operates, sales, guest preferences, scheduling, order flow and many changes are recorded as they happen. But data alone isn't the advantage. The context from that data and knowing how to read it is. Over 14 years, we've watched good and bad operators to run their businesses, so long enough to learn what they do and how the best ones think and adapt. We know what a smart many change looks like versus a bad one, when a staffing pattern signals trouble and which pricing moves hold up in a given market. Over time, we plan to build on Toast IQ Grow and roll out a series of agent products on top of our software platform using our data and content advantage. This opens up a market opportunity beyond software, marketing, scheduling and payroll and bookkeeping and tax, are services restaurants often pay for today. And in many cases, they're spending a multiple of what they spend on software. Longer term, imagine a series of agents across these services. Working in concert, they'll be able to build restaurants projected demand, look at food cost and availability, labor schedules and projected guest patterns to drive suggestions that improve profitability. That's an incredibly exciting future, especially in an industry known for slim margins and long hours. Okay. Let's shift gears now to our second priority, which is to expand the markets we serve. In our core business, our sales team continues to drive strong win rates. We're gaining GPV share faster than any other major provider in our space. Kung Fu Tea is a great example of a growing brand that chose Toast because they saw us as a leader and an innovative partner that will help them invest in automation and surface actionable intelligence to keep them step ahead. Across our new terms, enterprise, international and retail, the vertical playbooks that build our restaurant business, product depth, operational expertise and local go-to market is working just as well. In fact, ARR in each of the new TAMs is both larger than the core was and scaling faster than the core did at the same stage of maturity. Internationally, we expanded our partnership with TGI Fridays in the U.K. They are 1 of dozens of customers that have locations with us across multiple countries now. These operators tend to be in the largest global cities around the world where average restaurant sales are higher, which is best aligned with our value proposition. As we expand Toast to more of these Tier 1 markets, I'm confident we can continue to drive durable growth with strong aback periods. In enterprise, we have momentum across the market in restaurants, hotels as well as sports and entertainment venues. We're excited to become an endorsed food and beverage vendor for Best Western giving us the opportunity to go after the thousands of hotel restaurants they have across the U.S. and Canada. Sports and entertainment is a large TAM in the enterprise space, estimated to be a $500 million error opportunity in the U.S. alone. These customers across stadium and corporate dining environments like schools, museums and theme parks, represent an adjacent market to the traditional restaurant TAM we serve. And we have roughly doubled our location count in this market over the past year. It's brands such as VenuWorks, whose portfolio of arenas and stadiums include the Ford Center, which runs on Toast or Alaskan tour company, Allen Marine Tours, running our Toast Go 3 devices on their excursion vessels. Next, shifting gears to retail. We continue to see great progress here as well with ARPUs that are closest to our core business. We have doubled our retail sales capacity over the last year, and we expect that to continue to scale to meet the market opportunity we see. Today, we're primarily targeting grocery, convenience stores and bottle shops. Grocery remains a priority for us given that this part of the market has particularly attracted GPV and ARPU. We also recently launched fuel payments, bringing our first 2 gas station convenience stores out of the platform, a large opportunity for us over time. We're also testing into other parts of the broader retail TAM and will expand further where we see product market fit. Internally, we talk a lot about how Toast emerged as the leading provider for restaurants over the past decade and how we have a broader opportunity to not to scale within restaurants that support local businesses of all types with our platform. Over time, you should expect to see us launch in more sub verticals just as we have within grocery, convenience stores and bottle shops. All right. To wrap it up, our third priority is to reinvent how we work, scale with AI and invest in durable growth. We are delivering world-class growth and margins at scale. The results of decisions we've made over time, leading to growth opportunities while simultaneously driving efficiency across the business. Our core growth algorithm continues to deliver great results. We're gaining market share, increasing ARPU and our new AI offerings open up more opportunities to scale ARR over time. The margins in our core business are already over 40%, and we expect the margin to continue to scale and be meaningfully higher longer term. In our new TAMs, we're scaling quickly and on a path to nearly ARR to $200 million this year. Given the strong market demand and the progress we have made on our unit economics, we're investing behind them to scale faster and expect them to be even larger drivers of growth over time. In addition, we're also seeing longer-term bets in areas such as consumer, and new retail TAMs where our scale and platform advantage gives us a unique opportunity to compete and win. Given these are earlier stage opportunities, we will be disciplined in how we invest, and we'll keep you updated as they progress. As we have shared with you before, we want to compound this business over time to $10 billion in ARR and beyond. As margins continue to scale in our core business, we will remain disciplined in how we invest back into our newer TAMs and emerging bets and apply the same rigor around capital allocation that got us here. I want to thank every Toaster for their dedication and commitment to Toast. We would not be here without all of your work. And thank you to our customers and investors for your continued support as well. With that, I'll turn the call over to Elena. Elena Gomez: Thank you, Aman, and everyone, for joining us today. I want to start by recognizing our team. Q2 came in ahead of expectations across the board, and our results reflect the consistent execution happening throughout the company every day. We posted strong top and bottom line results in the second quarter. ARR grew 25%, and our recurring gross profit streams increased 28% year-over-year. Adjusted EBITDA grew to $221 million and GAAP operating income was $152 million, a 26% margin. On a GAAP basis, we are operating above Rule of 50 with recurring gross profit growth plus operating margin reaching a high of 57% in 2Q, demonstrating the strength of our business model and persistent focus on balancing durable growth and profitability. We added a record 9,500 net new locations in Q2, growing total locations 22% from a year ago to approximately 180,000. Our net add momentum reflects demand for the Toast platform and the strength of our go-to-market execution across our core and new TAMs. The breadth of our platform and value we provide customers is also driving sustained growth in monetization. Total take rate measured by recurring gross profit as a percentage of GPV was 98 basis points in Q2, up 5 basis points from a year ago. SaaS ARR grew 27% year-over-year, driven by location volume and consistent mid-single-digit ARPU growth. Subscription gross profit increased 32%, outpacing subscription ARR and revenue growth, benefiting from continued margin expansion. SaaS gross margins were up approximately 240 basis points year-over-year from ongoing optimization efforts, including leveraging AI to transform customer support. Payments ARR grew 23% and fintech gross profit increased 26% in the second quarter versus a year ago. GPV was $61 billion, up 22% with GPV per location flat. In the core, GPV came in better than expected with strong same-store sales trends throughout the quarter, including a modest benefit from the World Cup at the end of June. Fintech net take rate was 59 basis points with Payments take rate at 50 basis points. Payments take rate grew year-over-year from the same levers we've seen over the last several quarters, adoption of new products, cost optimization efforts and small targeted pricing moves. Nonpayments fintech solutions led by Toast Capital contributed $57 million in gross profit and 9 basis points to take rate. Customer demand for capital remains strong and defaults remain within our expectations, thanks to our data advantage and disciplined underwriting approach. Moving down the P&L. Hardware and Professional services gross profit was negative at 11% of our recurring gross profit streams. During the quarter, we received a tariff refund of approximately $10 million that was not contemplated in our Q2 guidance. Based on the current landscape, this represents the bulk of the refunds we expect to receive. With respect to the dynamic memory market, we've taken several mitigation steps to manage hardware COGS in our supply chain and have already reduced the memory cost impact for 2026 and 2027 versus our original expectations. A few examples of actions we've taken, leveraging earlier generations of our hardware, transitioning certain hardware to lower-cost memory, and opportunistically buying at attractive prices in the spot market to complement our direct vendor relationships. We'll continue to pull these levers and evaluate other areas to lower costs while meeting customer demand and maintaining our best-in-class hardware. When the memory market stabilizes, we're going to come out with structurally better hardware margins than before, thanks to the optimization work we're doing across harbor product costs and supply chain. Operating expenses increased 19% from a year ago, excluding $29 million of bad debt and credit-related expenses. Our investment priorities remain consistent, fueling continued share gains in the core scaling our new TAMs, building the AI product capabilities that will differentiate toast for years ahead and seeding long-term bets. Sales and marketing expenses increased 22%, reflecting incremental investments to support our sustained strong location growth. In the core, we're growing our upsell and account management teams and going deeper across subsegments of the TAM like non-native English speaking customers, plus we're increasing our go-to-market presence across new TAMs. R&D expenses grew 23%. We're investing to deepen the product capabilities that matter most: our Agentic platform, vertical-specific innovations in each new TAM and AI tooling across the organization to improve productivity. The early results with products like Toast IQ Grow give us confidence in our right to win when we harness our data and AI capabilities to do more for our customers. In Q2, adjusted EBITDA grew 38% to $221 million and margins expanded 240 basis points to 37%. This reflects strong top line execution continued discipline across the cost structure and the tariff refund benefit. Free cash flow was $130 million in the second quarter, down versus a year ago from our strategic decision to acquire and hold more hardware inventory in the near term. We expect the conversion of adjusted EBITDA into free cash flow to improve in the back half of 2026. Over time, we expect to see a corresponding benefit to free cash flow with higher conversion rates when we choose to scale down to more normalized inventory levels. GAAP operating income was $152 million, and GAAP EPS was $0.26, both nearly doubling from a year ago. We're complementing strong growth with leverage down the P&L, reflecting disciplined expense management, including stock-based compensation and a lower diluted share count. SBC was 10% of recurring gross profit, down 400 basis points from a year ago, a function of disciplined equity grant practices and lapping the elevated grant values following our IPO. Year-to-date, we repurchased over 19 million shares for $486 million. Approximately $100 million remains on our share repurchase authorization. We will continue to opportunistically buy back shares based on market conditions to support long-term shareholder value. Turning to guidance. For the third quarter, we expect total subscription and fintech gross profit to grow 22% to 24% year-over-year and adjusted EBITDA to be $210 million to $220 million. On the back of our strong first half results, we're raising our full year 2026 outlook. We now expect recurring gross profit to grow 23% to 25% and adjusted EBITDA to be $805 million to $825 million. We strategically chose to reinvest the tariff refund into key growth initiatives and to see long-term growth. As a result, we're increasing our full year adjusted EBITDA guidance by less than the 2Q beat. Let me provide some context on our guidance and how we're managing the business for the long term. We're building a generational company that compounds a top-tier growth rates over the next 5 to 10 years. We have a tremendous runway in front of us across core and Horizon 2 and the opportunity set to build new last curves keeps growing as we scale and expand. We remain disciplined capital allocators and manage our investments across these multiple horizons. The core business is Horizon 1 with a proven growth algorithm and strong cash flow generation. It operates at Rule of 60 with over 20% growth and over 40% margins. We're balancing ongoing efficiency gains with investments in AI products to unlock the significant opportunity to do more for customers. Deploying AI tooling internally will unlock more efficiency and productivity gains as we automate work and the teams reimagine how they operate. This positions us to sustain Rule of 60 in the core with healthy growth and ongoing margin expansion on the path to meaningfully higher margins over time. New TAMs, international enterprise and retail are Horizon 2, we expect total ARR to nearly double to $200 million this year, and each is on a path to healthy unit economics at scale. Given the positive signal, we're investing to scale even faster and accelerate our path to be a market leader in each. With the potential for billions of ARR across these businesses and high terminal margins given the leverage they get from our core, we're confident these investments will have significant ROI. Lastly, we're seeing longer-term Horizon bets like consumer and other retail verticals. As we scale and add capabilities are right to win across more areas of local commerce expands. Our goal is for these businesses to become key growth drivers for the company 3 to 5 years out. We'll take the same gated approach to incubating them like we did with retail and international, only deploying more capital as we find product market that and meet certain success criteria. If we don't see success over a period of time, we'll pull the investment back and either redeploy to the next opportunity or expand margin. With our momentum and the opportunities ahead, we believe reinvesting upside into long-term growth areas with high potential ROI is the best path to maximize our long-term enterprise value. In 2026, we're managing to modest margin expansion, consistent with the framework we laid out coming into the year and reiterated with today's guidance. We plan to continue operating with this general framework focused on sustained growth and gradual margin expansion as long as our investments are meeting our expectations. That keeps us on a path to 40% plus long-term adjusted EBITDA margins with the timing firmly in our control. With the strength of our core and confidence in the margin potential in new TAMs, we believe there's a path to a much higher margin profile over time. The first half of this year was a strong chapter for Toast. We're entering the back half with momentum and confidence in where we're headed, and we're incredibly excited about the opportunity ahead. Now I will turn the call back over to the operator to begin Q&A. Michael Senno: All right. We'll get our Q&A started. First question is from Tim Chiodo at UBS. Timothy Chiodo: Great. So Toast IQ Grow, this is a great example of an AI tool that's got a human aspect as well. It supports the restaurants, it supports your ARPU growth. You hit on this a little bit during the prepared remarks, meaning Toast IQ Grow might just be the first of many of these types of tools that could be supportive of both the restaurants and post ARPU. You touched on bookkeeping, tax, payroll scheduling. Maybe you could just talk a little bit more about these potential additional modules, if you will, and what they could mean to longer-term ARPU growth? Aman Narang: Tim, sure. That's exactly the vision over the long term to build out our Agentic platform. Maybe just to zoom out for a second and look at the context of how we got here. Toast started off as a point-of-sale system and then evolved to be really this broader platform. And customers love the fact that it's an all-in-one integrated platform that's got a single point of support. And that's what buys a lot of our growth today. One of the pieces of feedback we've gotten from operators over the past year is they have -- they find it hard to leverage everything Toast offer, the spread in -- they spread thin just to run their businesses. And so even when they're using the Toast software, they might outsource the function of like marketing, for example, or payroll and tax or inventory management or bookkeeping to a third-party provider. And so we saw that as an important opportunity for us where we said, could Toast take on not just the software that they either run the business, but actually take on some of that work, and we started off with this marketing agent, which is Toast IQ Grow. And I think what has been really powerful about Toast IQ Grow is that, one, we're leveraging data across -- and learning across 150,000-plus customers to figure out, okay, what are the best ways to have a great online ordering presence or a website, optimized SEO, advertising, marketing. And we're also leveraging data on both when the restaurant is busy and when it's not as well as data on guest. And that's what's really allowing us to build a platform where it's actually outperforming what humans can do. Restaurants that switch to our Toast IQ Grow platform, agents rather, are seeing better results. And so are seeing same-store sales growth. And so as we go beyond Toast IQ Grow, we're using the same approach and framework, and we're looking at what are areas where we cannot just provide software but start to take out some of that work. It's early. But you look at like something as simple as voice AI, for example, picking up the phone in the restaurant on the drive through. Over time, we're looking at use cases around scheduling in payroll and tax. So think about like kind of forecasting demand to be smarter about scheduling employees and then making sure that we're getting the best employees, the best shifts. And then we're also looking at use cases around inventory management, bookkeeping and accounting. And really, what we're focused on is, one, what are areas where restaurants are leveraging third-party services today and we have a right to win and create value that's outsized relative to -- because of the data and context we have. Michael Senno: Thanks, Tom. We'll take our next question from Harshita Rawat at Bernstein. Harshita Rawat: Just a follow-up on Toast IQ Grow. I know it's early days, but any indications on kind of how many locations are kind of converting from trial to paid and how should we also think about like the incremental ARPU here, because considering that some of the products are kind of all that restaurants are paying for, and then also considering the kind of dedicated marketing manager, how should we also be think about the long-term gross margin potential for this product considering some of the costs? Aman Narang: Yes. Great question, Harshita. One, as I shared, this product, incremental to the software we provide, this product is on track to be the fastest product to $10 million ARR. And we're seeing -- and that's really driven by really good traction, both -- especially in our upsell funnel where customers see the value, really, the main driver of that is we're showing that when customers take our platform, they're seeing same-store saw growth. I think in terms of margins, the -- if you look at all AI passed out there in the market today, it's often pick a use case, building -- coding software or support. It's often in a combination of AI and humans. And it's the same approach that we've taken, where the AI is generating, leveraging all the data and context we have, the first task is like, okay, how do you optimize restaurants, social -- digital presence was the best attempted a marketing campaign and the copy on the marketing campaign or on advertising. And then we've got humans reviewing and approving those workflows. And so as we've done some early scale, we've already seen the gross margins improve. And frankly, I have no concerns long term about what the gross margins of that business could be. Like we're a lot more focused right now to your earlier question about product market fit and looking at the funnel really closely to make sure that there is a path here to really accelerate growth on that product. Michael Senno: Thanks, Harshita. All right. We'll move on. We'll take our next question from Will Nance at Goldman Sachs. William Nance: I wanted to ask a question on margins. I think delivering a pretty clear message tonight about the continued runway you have to drive efficiencies. We'll also maintaining the top line growth rates and reinvesting into the business. I heard the commentary on sustained Rule of 60 performance, margins in the core already being higher than 40%. And so I guess with the incremental commentary today, I'm wondering if you could just talk qualitatively about where some of that confidence is coming from. For instance, are you seeing -- is it coming more from the unlock and seeing more potential in the core to drive leverage over time? Or have you seen some more evidence on some of the expansion verticals that make you think that margins can trend significantly higher? I'm sure it's a mix of both, but maybe just qualitatively, what are some of the examples you've seen that's giving you that increased confidence? Elena Gomez: Yes. Thanks, Will, for the question. So the short answer is it's both, right? So we are really proud of being really disciplined in terms of capital allocation. And like zooming out, our framework is, we're really positioning the company to be a much bigger company or we're building a generational company where we believe we can be much bigger than we are today. And some of that comes from both the way we manage our capital allocation and the discipline that we see but also to the point you made, our new TAMs are showing incredible signal already. Aman talked about reaching $200 million in ARR. So we've always said to the extent that we see success, we're going to actively choose to invest, and that's exactly what we're doing. And now we're going to do it in a very sustained in a very disciplined way, we're going to sustain growth, but at the same time, deliver gradual margin expansion. And so we're seeing all of the proper signals. And then, of course, AI presents an opportunity for us as a business to reimagine how we work and continue this effort that we've had for many years really around efficiency. And we think we can unlock even more efficiency. That's why the commentary and the script is around meaningfully higher margins, that's because we're going to continue this focus on efficiency, but also as we become an AI-native company, AI first company, we'll see some benefit from that as well. Michael Senno: We'll move on to our next question, Darrin Peller at Wolfe. Darrin Peller: All right. Look, it's really nice to see the strength in the location adds this quarter. Can you just touch on the composition of the net adds look like? How would you assess the performance in the core NIM versus the expansion? I know you certainly are highlighting the success you're having in the ARR side. But just in terms of number of users that are showing up there and that's contributing? Aman Narang: Of course, yes. First off, if you -- the results we have in Q2 and really the first half are really, really strong. Really proud of the sales team's performance. We think we had a new watermark, 9,500 net adds this quarter. I think previously, the watermark was 8,500. And really, if you look at it, like the majority of that came from our core business, right? This is the SMB and mid-market business. We continue to see really strong win rates. We see -- I think we're taking stronger GPV in share gains versus anyone else in our core business. Haven't seen anything fundamentally change on the competitive side. I think this goes back to something I said earlier, which is I think 1 point that's maybe underappreciated a bit is if you look at why customers choose Toast, it's not just because of the point-of-sale, they're picking this all in 1 platform. Those -- that's what drives our win rate, it's capabilities around the operations of the restaurant, both front house and back of house. It's the guest experience and all the tools there. It's the employee experience, the suppliers, it's the fintech products, it's the lending product. And now increasingly, it's products like Toast IQ Grow. And so for us, that's the focus is to continue to drive more and more value for our customers, like we're big believers and continue to be customer obsessed and not competition obsessed. And that's showing up in our win rates and the productivity of the Toast. Michael Senno: We'll turn to Stephen Sheldon at William Blair for our next question. Stephen Sheldon: I guess just wanted to go back to Grow. And I'm just curious what the early learnings have been around getting customers to implement and optimize around these Agentic capabilities. I know Grow is the only solution you have out there right now from the Agentic side. But how much handholding are you needing to provide to get customers up and running? And is that going to be pretty common as we look forward? Aman Narang: Yes, we're still learning. I'll just start by saying, I think it's -- in the context of our business and our scale, even though Toast IQ Grow is growing at rapid click, it's still very early. I think what we see is -- I'll go back to what I said earlier, actually, which is if you look at how we build software, it's incredible tools, but we still need human oversight on top of those tools to make sure we're getting the most out of AI. And I think it's the same mindset where our customers are coming to us and saying, look, we're outsourcing this work of marketing to somebody already. If you could take that on and you can do it better, right? That's awesome. And so our approach is we're using all the data and context we have, and we are letting AI drive the first half of what, for example, a great website looks like or what are the ways in which you have great online ordering, digital presence. What are the right offers you need to generate? What's the best attempt at a marketing campaign or an ad on social? And then you've got our marketing success managers are viewing and approving that work. I think 1 of the reasons we've been able to see such strong impact where customers that switched to Toast IQ Grow increased same-store sales is because we've got like really unique data. An example is we're looking at the restaurants data in terms of when they're busy when they're not. What are the things that make that brand and the restaurant what it is. On the guest side, we know guest preferences. So over time, these campaigns can get hyper-personalized. And I think we're back to like we're learning a lot about what creates the best possible campaigns. But -- and I expect that over time, it will get better and better in terms of the quality of these campaigns at conversion rates. But the early traction so far has been really positive. This business is running positive margins already, it's increasing. And of course, the growth has been solid. Michael Senno: We'll take our next question from Dan Dolev at Mizuho. Dan Dolev: Great to see those results. I just wanted to ask a question about the hardware optimization cost. Maybe, Elena, can you unpack -- be a little more specific on some of the savings? And then maybe any initial views on the '27 impact, we're getting that a lot from investors today. Really appreciate the great results again. Elena Gomez: Yes. Thanks, Dan, for the question. It's definitely a very, I would say, a fluid environment. I would expect the P&L impact in '27 to be greater than '26 just based on how we account for inventory. I think there's really 3 things I'll leave you with, 1 -- and I said this in my remarks, I'll just reinforce a few points. One is we've done a lot of work to improve the impact that we originally shared for both '26 and '27. And that's really the great work from the hardware ops team deploying mitigation strategies, I can talk about those. Two, we feel very confident about the supply, and we have supply for both '26 and '27. And then three, a really important point because we've done this deep dive over the long term, we're really confident that this work will lead to improved hardware margins over the long run after the memory market stabilizes. So we've done a lot of work to not only impact the near term but also structurally what the hardware margins look like over the long term. So I feel really great about the work, and we're going to continue to do that and optimize anywhere we can really across the hardware P&L. Michael Senno: We'll take our next question from Adam Frisch at Evercore. Adam Frisch: Your message is crystal clear in the sense that you're investing for growth and for good reason. But for some who may question that, I thought I'd ask it a little bit differently. If you could ballpark it, how much of your increased operating cost is by choice, like your choice to invest in sales and product development and stuff like that? And how much is out of your control like memory costs? And then the question that we're getting tonight is, are you considering a rational -- a resource rationalization in the coming quarters? Elena Gomez: Yes. I'll take these. So number one, while hardware is an important part of our P&L, like zooming out, there's a much bigger cost structure that we're managing, and we're actively choosing to invest. And we've sort of laid out the reasons why we have a ton of conviction around not only these new TAMs, we're placing Horizon 3 bets. But if you just think about the position we're in, we're in an incredibly strong position as a company with our core business at 40% margins, operating at Rule of 60. And now we're in this position where we want to sustain growth over the long term, but also do that in a very disciplined way, which is why we said we'll always have some gradual margin expansion. But we're seeing great signal. It's a positive sign. That means we're investing behind that great signal. So that's sort of the overarching kind of theme you should take from it. In terms of head count and rationalization of head count, we're always incredibly disciplined frankly, around every head count we hire, and that's not going to change. And as we consider AI, that allows us to reimagine how we work and consider across the company how we can scale even more efficiently. So I do feel very confident in our ability to drive improved drive to meaningfully higher margins over the long term as we begin to adopt AI across the company. And that's not just for our customers, but just even in how we work. I hope I got most of your questions answered. Aman Narang: Just to bellow what you said, just to get specific for a second, right? Like if you look at our plan this year, we saw some opportunity based on the performance in our strategic cuisine, the non English-speaking reps, and we've added some additional investment. With retail, we see opportunity to increase in sales investments, we've been green light of that. Toast IQ Grow similarly, we've seen some great early signal with our AI products. And so that back to your question about choice, a lot of it's our choice. We are leaning into areas that are growth that will allow us to grow over the long term. I think as you can imagine, for example, our new TAMs getting from 100 million to 200 million this year gives us even more conviction, right, to say let's actually try to move even faster. And while there's always puts and takes in terms of the EBITDA in year like at least my expectation is hardware over time will normalize back to what the margins were free this memory issue. Like the thing to take away is a lot of the focus investment. In fact, even beyond is a right to investment, some investments in consumer, for example, or these new verticals beyond the ones we're in today are by choice because we believe in the long-term potential. Michael Senno: We're going to take our last question today from Tien-Tsin Huang at JPMorgan. Tien-Tsin Huang: I appreciate that. Kind of building on Adam's question there. I understand the incremental investment created by the tariff refund. It seems like the visibility on expenses is better, so building on what you just responded to, just I'm curious, just prioritization of your incremental investments, where are you seeing the fastest ROI? It sounds like there's a lot of interesting things going on like sports and entertainment. You mentioned fuel payments, things like that. Just hoping you could reorganize the -- where you're seeing the fastest ROI, if that makes sense? Aman Narang: Yes. Tien-Tsin, I think first of all, like we want to make sure that any opportunities that exist in our core business to maximize growth. We're focused on that. So we talked about some sales capacity in our core and strategic cuisines. This is the non-English part of the TAM. Toast IQ Grow, we've seen some early signals that's really positive, and we actually unlock some investment there. And some of that is actually also more broadly on AI products beyond Toast IQ Grow, it will take time to materialize, but we're seeing the signal that we can take on some of the work that's beyond the software and take on some of the services work for restaurants over time with AI. And then our new TAMs, I think it's the -- I get this question internally a lot about authorization too. But I think that the -- maybe I'll start by saying in our retail business, we've got SaaS, ARPU is already there, closest just within a couple of years to our core business. And so we look at the self capacity we have and the productivity of the team that we have and we say we should try to go faster, especially because I think the team is building conviction that as we get to scale, we're going to see some of those liable effects where once you get to 3%, 4%, 5% market share and grow, we expect there to be tailwinds on top of funnel and conversion on win rate. And so we're leaning in there. And then I think internationally in an enterprise, we're being opportunistic. You said sports, entertainment is 1 example to find areas where we can invest. And then I think whether you look at the future, we've only talked about this horizon framework, lots of investment in our core investments against our new TAMs. And then we've also got some investments against that set up longer-term future growth. So for example, in retail, you see fuel expansion, for example, recently, leading into grocery. We're also looking at additional sub-verticals, we're looking at best around consumer. We didn't talk a lot about that in today's call, but we've seen really good monthly active user growth on that app as its host local. And so really across the board, where we see opportunity we're leaning in, and Elena and team do a great job of making sure that while we're leaning into growth, we're also looking at all the opportunities to drive efficiency in the business, especially with what AI will make possible. Michael Senno: That wraps up our call for today. Thanks, everyone, for joining. Please reach out with any questions, and I hope everyone has a great evening. Operator: This concludes today's call. Thank you for attending. You may now disconnect. Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this. On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves: Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $564,953!* Apple: if you invested $1,000 when we doubled down in 2008, you’d have $58,803!* Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $411,427!* Right now, we’re issuing “Double Down” alerts for three incredible companies, available when you join Stock Advisor, and there may not be another chance like this anytime soon. See the 3 stocks » *Stock Advisor returns as of August 3, 2026 This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has positions in and recommends Toast. The Motley Fool has a disclosure policy. Toast (TOST) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Toast’s results for Q2 reflected broad-based momentum, with management attributing growth to rapid adoption of its AI-driven offerings and ongoing expansion into new markets. CEO Aman Narang highlighted the rapid scaling of Toast IQ Grow, the company’s new marketing agent, as a primary contributor to customer growth and increased monetization. Management also pointed to record net location adds and strength across both core restaurant and emerging verticals, driven by demand for an integrated platform that simplifies restaurant operations. CFO Elena Gomez emphasized disciplined execution across the business, noting that margin expansion benefited from ongoing cost optimization and a one-time hardware tariff refund. Is now the time to buy TOST? Find out in our full research report (it’s free). Revenue: $1.91 billion vs analyst estimates of $1.87 billion (23.1% year-on-year growth, 1.8% beat) Adjusted EPS: $0.36 vs analyst estimates of $0.32 (11.4% beat) Adjusted EBITDA: $221 million vs analyst estimates of $195.1 million (11.6% margin, 13.3% beat) EBITDA guidance for the full year is $815 million at the midpoint, above analyst estimates of $807.9 million Operating Margin: 8%, up from 5.2% in the same quarter last year Annual Recurring Revenue: $2.41 billion vs analyst estimates of $2.40 billion (24.9% year-on-year growth, in line) Billings: $1.91 billion at quarter end, up 23.2% year on year Market Capitalization: $20.63 billion While we enjoy listening to the management’s commentary, our favorite part of earnings calls is 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. Timothy Chiodo (UBS): Asked about the long-term ARPU opportunity from new AI modules. CEO Aman Narang explained that Toast’s agentic platform aims to automate a broad range of services, including payroll and inventory, to increase customer value and ARPU. Harshita Rawat (Bernstein): Inquired about early customer adoption and margin potential for Toast IQ Grow. Narang said conversion rates are strong and the product is already running positive margins, with further scale expected to drive margin improvement. William Nance (Goldman Sachs): Questioned what drives Toast’s confidence in sustainable margin expansion. CFO Elena Gomez attributed it to a combination of proven core business leverage, early success in new verticals, and efficiency gains from AI adoption. Darrin Peller (Wolfe Research): Asked about the source of record location additions. Narang clarified that the majority came from the core restaurant segment, driven by demand for an integrated, all-in-one platform. Dan Dolev (Mizuho): Asked about hardware cost optimization and future impacts. Gomez said supply chain actions have reduced near-term headwinds, and she expects hardware margins to structurally improve after memory market stabilization. In the coming quarters, our analysts will focus on (1) the pace of adoption and customer retention for new AI-driven modules beyond Toast IQ Grow, (2) the growth trajectory and profitability of emerging verticals like retail and international, and (3) the impact of ongoing cost and supply chain optimizations on long-term margin expansion. Continued execution in expanding customer segments and product breadth will be key indicators of Toast’s ability to sustain durable growth. Toast currently trades at $35.58, up from $33.81 just before the earnings. Is the company at an inflection point that warrants a buy or sell? See for yourself in our full research report (it’s free for active Edge members). ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI is taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies. Our AI system flagged Palantir before it ran 1,662% between October 2022 and February 2026. AppLovin before it ran 753% between February 2024 and February 2026. Nvidia before it ran 1,178% between January 2023 and February 2026. Each week it produces 6 new names that pass the same tests. Get Our Top 6 Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.

Interested in Toast, Inc.? Here are five stocks we like better. Strong second-quarter performance: Toast added a record 9,500 net locations, lifting its total to roughly 180,000, while recurring gross profit grew 28%, adjusted EBITDA rose 38% to $221 million and GAAP operating margin reached 26%. AI and market expansion are key growth priorities: Toast IQ Grow is its fastest-growing product launch, with plans to extend agentic AI into scheduling, payroll, inventory and accounting. Enterprise, international and retail markets are expected to nearly double ARR to $200 million this year. Full-year outlook raised: Toast now expects 2026 recurring gross profit growth of 23%–25% and adjusted EBITDA of $805 million–$825 million, while continuing share repurchases and reinvesting in AI, new markets and longer-term growth initiatives. Toast’s Comeback Story Is Getting Harder for Wall Street to Ignore Toast (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. → No Hangover: Revisiting Microsoft One Week After Earnings 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. 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%. → MarketBeat Week in Review – 08/03 - 08/07 Block’s Pivot to Profits and AI Is Turning Heads GAAP 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. → Why the Landlord of the AI Boom Could Outlast the Chipmakers 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. 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. 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. 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. 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. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Toast Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Toast, Inc. TOST framed its second-quarter 2026 call around a broader shift from restaurant software to an agentic platform that can perform operational work for customers. Adjusted earnings of 34 cents per share beat the Zacks Consensus Estimate of 32 cents. Revenues were $1.91 billion, which beat the Zacks Consensus Estimate of $1.87 billion by 1.9%. Toast, Inc. price-consensus-eps-surprise-chart | Toast, Inc. Quote Co-Founder and CEO Aman Narang said Toast IQ Grow, the company’s marketing agent, is on track to become its fastest product to $10 million in annual recurring run-rate. CEO Narang said Toast plans to extend the model into voice ordering, scheduling, payroll, tax, inventory management and bookkeeping. The strategy uses transaction and operating data to move beyond software into services restaurants often outsource. A Bernstein analyst questioned adoption and margins. CEO Narang said the product already produces positive margins, with AI generating work and employees reviewing it, while early scaling has improved profitability. CEO Narang said enterprise, international and retail annual recurring run-rate is on track to nearly double to $200 million in 2026. Toast added Best Western as an endorsed provider, expanded TGI Fridays in the United Kingdom and began processing fuel payments. Retail sales capacity has doubled over the past year, with grocery, convenience stores and bottle shops remaining the initial focus. Management plans to enter additional subverticals where product-market fit is established. A Wolfe Research analyst asked about the record 9,500 net location additions. CEO Narang said most came from the core small and midsize business, where win rates remained strong and competition had not changed materially. CFO and president Elena Gomez guided third-quarter recurring gross profit to $615 million to $625 million, suggesting 22% to 24% growth. Adjusted EBITDA is expected between $210 million and $220 million. For 2026, CFO Gomez raised recurring gross profit guidance to $2.325 billion to $2.355 billion, or 23% to 25% growth. Adjusted EBITDA guidance increased to $805 million to $825 million. CFO Gomez said Toast will reinvest the $10 million tariff refund received in the quarter into growth initiatives. That decision explains why full-year adjusted EBITDA guidance rose by less than the second-quarter beat. Recurring gross profit streams rose 28%, while adjusted EBITDA increased 38% to $221 million. The adjusted EBITDA margin expanded 240 basis points to 37%, including the tariff refund benefit. CFO Gomez said the core business operates above 40% margins and at Rule of 60. Toast intends to pair sustained growth with gradual margin expansion while funding AI and newer markets. Goldman Sachs and Evercore ISI analysts pressed management on efficiency and spending. CFO Gomez said most incremental costs reflect deliberate investment choices, while AI adoption should create additional internal productivity and support meaningfully higher margins over time. Free cash flow declined to $130 million as Toast increased hardware inventory. CFO Gomez expects adjusted EBITDA conversion to improve during the second half as inventory levels begin moving toward normal. Toast has reduced its expected memory-cost exposure by using earlier hardware generations, lower-cost memory and spot purchases. In response to a Mizuho analyst, CFO Gomez said the 2027 income-statement effect should exceed the 2026 impact because of inventory accounting. CFO Gomez said supply is secured for 2026 and 2027 and that the optimization work should produce structurally better hardware margins after memory markets stabilize. CEO Narang prioritized core sales capacity, Toast IQ products and scaling enterprise, international and retail, while keeping longer-term consumer and retail bets subject to performance gates. CFO Gomez paired that agenda with gradual margin expansion and disciplined capital allocation. Toast repurchased more than 19 million shares for $486 million through June, with about $100 million remaining under its authorization. TOST carries a Zacks Rank #3 (Hold). Its Growth Score of A and VGM Score of B indicate favorable growth characteristics and a solid blended profile, while its Value Score of C is neutral. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. The Momentum Score of D is a weaker signal, and the Style Scores are most effective alongside a Zacks Rank #1 or 2 (Buy) stocks. The Zacks Rank can change as earnings estimates are revised following the newly reported results. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Toast, Inc. (TOST) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

This article first appeared on GuruFocus. Recurring Gross Profit Streams: Grew over 28% year-over-year in Q2. GAAP Operating Income: $152 million, a 26% margin. Adjusted EBITDA: $221 million, up 38% year-over-year, with margins expanding 240 basis points to 37%. Annual Recurring Revenue (ARR): Grew 25% year-over-year. Net Location Adds: Record 9,500 net new locations added in Q2, bringing total locations to approximately 180,000, up 22% year-over-year. Gross Payments Volume (GPV): $61 billion, up 22% year-over-year, with GPV per location flat. Total Take Rate: 98 basis points, up 5 basis points from a year ago. SaaS ARR: Grew 27% year-over-year, with subscription gross profit up 32%. Payments ARR: Grew 23% year-over-year, with fintech gross profit up 26%. Fintech Net Take Rate: 59 basis points, with Payments take rate at 50 basis points. Nonpayments Fintech Gross Profit: $57 million, contributing 9 basis points to take rate. Free Cash Flow: $130 million in Q2. GAAP EPS: $0.26, nearly doubling from a year ago. Operating Expenses: Increased 19% year-over-year, excluding $29 million of bad debt and credit-related expenses. Sales and Marketing Expenses: Increased 22% year-over-year. R&D Expenses: Grew 23% year-over-year. Stock-Based Compensation (SBC): 10% of recurring gross profit, down 400 basis points from a year ago. Share Repurchases: Year-to-date, repurchased over 19 million shares for $486 million. Warning! GuruFocus has detected 3 Warning Sign with TOST. Is TOST fairly valued? Test your thesis with our free DCF calculator. Release Date: August 04, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Toast Inc (NYSE:TOST) delivered strong Q2 results with recurring gross profit streams growing over 28% year-over-year and GAAP operating income margins expanding to 26%. The company achieved a record 9,500 net new location additions in Q2, surpassing its previous high watermark and demonstrating strong market share gains. Toast IQ Grow, the company's AI-powered marketing agent, is on track to become the fastest-growing product to $10 million in ARR, showing strong early customer adoption and monetization potential. The company is successfully expanding into new markets, with ARR in each new TAM (enterprise, international, retail) scaling faster than the core business did at the same stage, and total new TAM ARR is expected to nearly double to $200 million this year. Toast Inc (NYSE:TOST) raised its full-year 2026 guidance for recurring gross profit growth to 23%-25% and adjusted EBITDA to $805-$825 million, reflecting confidence in continued momentum. The company is seeing strong traction in new verticals, including its first gas station convenience stores with fuel payments, and has roughly doubled its location count in the sports and entertainment market over the past year. Toast Inc (NYSE:TOST) is operating above the Rule of 50 with recurring gross profit growth plus operating margin reaching 57% in Q2, demonstrating a strong balance of growth and profitability. The company's core business is operating at Rule of 60 with over 20% growth and over 40% margins, providing a solid foundation for continued investment in growth initiatives. Toast Inc (NYSE:TOST) has successfully mitigated the impact of memory market cost increases through supply chain optimization, positioning for structurally better hardware margins long-term. The company is seeing strong customer demand for its lending products (Toast Capital), with defaults remaining within expectations due to its data advantage and disciplined underwriting. Toast Inc (NYSE:TOST) faces ongoing headwinds from the dynamic memory market, which is expected to have a greater P&L impact in 2027 than in 2026, despite mitigation efforts. Free cash flow in Q2 was down year-over-year due to a strategic decision to acquire and hold more hardware inventory in the near term, which could pressure near-term cash generation. The company's hardware and professional services gross profit remains negative, contributing a drag of 11% on recurring gross profit streams. Operating expenses increased 19% year-over-year, driven by significant investments in sales and marketing (up 22%) and R&D (up 23%), which could pressure near-term profitability if growth initiatives underperform. The company received a one-time tariff refund of approximately $10 million in Q2 that was not contemplated in guidance, and management expects this to represent the bulk of refunds, limiting future upside from this source. While Toast IQ Grow is growing rapidly, it is still in early stages, and the company is still learning about customer implementation and optimization, which could require more handholding and investment than initially anticipated. The company is making strategic choices to reinvest upside into long-term growth areas, which means full-year adjusted EBITDA guidance is increased by less than the Q2 beat, potentially disappointing investors expecting more immediate margin expansion. GPV per location remained flat year-over-year, indicating that growth is primarily driven by location adds rather than increased spending per location. The company's new TAMs, while scaling quickly, are still relatively small (expected to reach $200 million ARR this year) and may not yet be contributing meaningfully to overall profitability. Toast Inc (NYSE:TOST) is investing in longer-term bets like consumer and other retail verticals, which carry execution risk and may not deliver returns for 3-5 years, potentially diluting near-term focus and returns. Q: Toast IQ Grow is a great example of an AI tool with a human aspect that supports restaurants and ARPU growth. You mentioned it might be the first of many such tools, touching on bookkeeping, tax, payroll, and scheduling. Could you elaborate on these potential additional modules and their impact on long-term ARPU growth?A: Aman Narang, Co-President, Co-Founder, COO, and Director: That's exactly the visionto build out our Agentic platform. We started as a POS system and evolved into a broader platform. Operators often outsource functions like marketing, payroll, or bookkeeping because they're spread thin. We saw an opportunity to take on that work. Toast IQ Grow leverages data from 150,000+ customers to outperform what humans can do, driving same-store sales growth. Beyond that, we're exploring voice AI, demand forecasting for smarter scheduling, inventory management, and bookkeeping. We're focused on areas where restaurants use third-party services and where our data and context give us a right to win. Q: On Toast IQ Grow, any indications on conversion from trial to paid, incremental ARPU, and long-term gross margin potential considering the costs?A: Aman Narang, Co-President, Co-Founder, COO, and Director: The product is on track to be the fastest to $10 million ARR, driven by strong traction in our upsell funnel as customers see same-store sales growth. On margins, we use a combination of AI and humans, where AI generates campaigns and humans review them. We've already seen gross margins improve with early scale, and I have no concerns about long-term gross margins. We're more focused on product-market fit and accelerating growth. Q: You delivered a clear message on continued runway for efficiencies while maintaining top-line growth and reinvesting. Where is the confidence coming fromcore leverage or expansion verticals?A: Elena Gomez, President and CFO: It's both. We're disciplined in capital allocation, positioning the company to be much bigger. Our new TAMs are showing incredible signal, with ARR reaching $200 million. We're investing in a sustained, disciplined way to deliver gradual margin expansion. AI also presents an opportunity to reimagine how we work and unlock more efficiency, which is why we're confident in meaningfully higher margins over time. Q: Can you touch on the composition of the record net location adds? How did the core perform versus expansion verticals?A: Aman Narang, Co-President, Co-Founder, COO, and Director: The majority of the 9,500 net adds came from our core SMB and mid-market business. We continue to see strong win rates and are gaining GPV share faster than any other major provider. Customers choose Toast for the all-in-one platformoperations, guest experience, employee experience, fintech, and now AI products like Toast IQ Grow. We remain customer-obsessed, not competition-obsessed, which is showing up in our win rates and sales productivity. Q: What early learnings have you had around getting customers to implement and optimize Agentic capabilities like Grow? How much handholding is needed?A: Aman Narang, Co-President, Co-Founder, COO, and Director: We're still learning, but customers are coming to us saying they already outsource marketing and want us to take it on. Our approach is to let AI drive the first draft of websites, campaigns, and ads, with our marketing success managers reviewing and approving. We've seen strong impact because of our unique data on restaurant operations and guest preferences, enabling hyper-personalized campaigns. The business is already running positive margins, and growth has been solid. Q: Can you unpack the hardware optimization savings and provide initial views on the 2027 impact?A: Elena Gomez, President and CFO: It's a fluid environment, and I expect the P&L impact in 2027 to be greater than 2026 due to inventory accounting. We've done a lot of work to improve the impact for both years through mitigation strategies. We feel confident about supply for both years. Importantly, this work will lead to improved hardware margins over the long run after the memory market stabilizes, as we've optimized hardware product costs and supply chain. Q: How much of your increased operating cost is by choice versus out of your control like memory costs? Are you considering resource rationalization?A: Elena Gomez, President and CFO: Hardware is an important part of the P&L, but there's a much bigger cost structure we're actively choosing to invest in. We have conviction in new TAMs and Horizon 3 bets. We're in a strong position with core margins at 40% and Rule of 60 performance. We're seeing great signal, so we're investing behind it. On headcount, we're always disciplined, and AI allows us to reimagine how we work and scale more efficiently. Aman Narang added that a lot of the investment is by choicewe're leaning into growth areas like strategic cuisines, retail sales capacity, and AI products based on early signals. Q: Where are you seeing the fastest ROI on incremental investments, given the tariff refund and better expense visibility?A: Aman Narang, Co-President, Co-Founder, COO, and Director: We're focused on maximizing growth in our core business, including sales capacity in strategic cuisines. Toast IQ Grow has shown positive early signals, and we've unlocked investment there. In retail, SaaS ARPU is already close to our core business, so we're leaning in to scale faster. Internationally and in enterprise, we're being opportunistic, like in sports and entertainment. We're also investing in longer-term bets like fuel payments and consumer, where we've seen good monthly active user growth. Elena and team ensure we balance growth investments with efficiency opportunities, especially with AI. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Toast (TOST) reported $1.91 billion in revenue for the quarter ended June 2026, representing a year-over-year increase of 23.1%. EPS of $0.34 for the same period compares to $0.24 a year ago. The reported revenue compares to the Zacks Consensus Estimate of $1.87 billion, representing a surprise of +1.89%. The company delivered an EPS surprise of +6.25%, with the consensus EPS estimate being $0.32. While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to Wall Street expectations to determine their next course of action, some key metrics always provide a better insight into a company's underlying performance. Since these metrics play a crucial role in driving the top- and bottom-line numbers, comparing them with the year-ago numbers and what analysts estimated about them helps investors better project a stock's price performance. Here is how Toast performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts: Gross Payment Volume (GPV): $60.70 billion versus $60.31 billion estimated by four analysts on average. Locations: 180,000 versus 179,376 estimated by four analysts on average. Subscription Annualized Recurring Run-Rate: $1.21 billion compared to the $1.19 billion average estimate based on three analysts. Payments Annualized Recurring Run-Rate: $1.2 billion versus $1.2 billion estimated by two analysts on average. Total Annualized Recurring Run-Rate (ARR): $2.41 billion compared to the $2.39 billion average estimate based on two analysts. Revenue- Financial technology solutions: $1.57 billion compared to the $1.55 billion average estimate based on four analysts. The reported number represents a change of +23% year over year. Revenue- Subscription services: $290 million compared to the $283.46 million average estimate based on four analysts. The reported number represents a change of +27.8% year over year. Revenue- Hardware and professional services: $48 million versus the four-analyst average estimate of $44.25 million. The reported number represents a year-over-year change of +2.1%. Subscription services gross profit- Non-GAAP: $236 million compared to the $227.14 million average estimate based on four analysts. Financial technology solutions gross profit- Non-GAAP: $359 million versus the four-analyst average estimate of $345.25 million. Hardware and professional services gross profit- Non-GAAP: $-64 million versus $-73.72 million estimated by four analysts on average. Hardware and professional services gross profit- GAAP: $-68 million compared to the $-81.26 million average estimate based on two analysts. View all Key Company Metrics for Toast here>>> Shares of Toast have returned +11.2% over the past month versus the Zacks S&P 500 composite's +1.7% change. The stock currently has a Zacks Rank #3 (Hold), indicating that it could perform in line with the broader market in the near term. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Toast, Inc. (TOST) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Toast (TOST) 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%. 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), 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. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Toast, Inc. (TOST) : Free Stock Analysis Report Docebo Inc. (DCBO) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Added approximately 9,500 net new Locations in second quarterAnnualized recurring run-rate (ARR) grew 25% to $2.4 billion as of June 30, 2026Net income was $154 million and Adjusted EBITDA1 was $221 million in second quarterRepurchased 19 million shares for $486 million year-to-date through June 30, 2026 BOSTON, August 04, 2026--(BUSINESS WIRE)--Toast (NYSE: TOST), the global technology platform built for restaurants and retail businesses, today reported financial results for the second quarter ended June 30, 2026. "The first half of 2026 reflects the strength we have across the business. In Q2, recurring gross profit streams2 grew 28%, GAAP Operating Income margins expanded to 26%, and we added a record 9,500 net locations," said Toast CEO Aman Narang. "We welcomed a breadth of new customers this quarter, from enterprise hospitality partners like BWH® Hotels, parent company to Best Western, to well-loved bubble tea chain Kung Fu Tea, to an expanded TGI Fridays partnership in the UK. Toast IQ Grow is the fastest-growing new offering we've ever launched, and it's a clear signal of how we can use AI to transform what Toast can do for customers. We have incredible momentum across the business, and I have never been more confident in the long term opportunity." Financial Highlights for the Second Quarter of 2026 ARR increased 25% year over year to $2.4 billion as of June 30, 2026. Total Locations increased 22% year over year to approximately 180,000. Gross Payment Volume (GPV) increased 22% year over year to $60.7 billion. Subscription services and financial technology solutions gross profit grew 31% year over year to $585 million. Non-GAAP subscription services and financial technology solutions gross profit grew 28% year over year to $595 million. Operating income was $152 million in Q2 2026 compared to $80 million in Q2 2025. Net income was $154 million in Q2 2026 compared to $80 million in Q2 2025. Adjusted EBITDA was $221 million in Q2 2026, inclusive of a one-time benefit of approximately $10 million from tariff refunds, compared to $161 million in Q2 2025. Diluted earnings per share was $0.26 in Q2 2026 compared to $0.13 in Q2 2025. Net cash provided by operating activities was $144 million and Free Cash Flow was $130 million in Q2 2026. These compared to net cash provided by operating activities of $223 million and Free Cash Flow of $208 million in Q2 2025. Percentages may not tie due to rounding. For more information on the non-GAAP financial measures and key metrics discussed in this press release, please see the sections titled "Key Business Metrics" and "Non-GAAP Financial Measures," as well as the reconciliations of non-GAAP financial measures to their nearest comparable GAAP financial measures at the end of this press release. Outlook3 For the third quarter ending September 30, 2026, Toast expects to report: Non-GAAP subscription services and financial technology solutions gross profit in the range of $615 million to $625 million (22-24% growth compared to Q3 2025). Adjusted EBITDA in the range of $210 million to $220 million. For the full year ending December 31, 2026, Toast expects to report: Non-GAAP subscription services and financial technology solutions gross profit in the range of $2,325 million to $2,355 million (23%-25% growth compared to 2025, up from 21-23% growth). Adjusted EBITDA in the range of $805 million to $825 million (up from $790 million to $810 million). This outlook reflects our strategic decision to re-invest the $10 million tariff refund received in Q2. The outlook provided above constitutes forward-looking information within the meaning of applicable securities laws and is based on a number of assumptions and subject to a number of risks. See cautionary note regarding "Forward-looking Statements" in this press release. Recent Business Highlights BWH® Hotels, the parent company of Best Western® Hotels & Resorts, WorldHotels™, and SureStay® Hotels, has endorsed Toast as a point-of-sale (POS) solution available to its thousands of properties across the United States and Canada. This partnership provides these properties with access to Toast’s robust platform, including Toast Tables, Catering & Events, mobile ordering and handheld devices to help modernize operations and enhance the guest experience. Toast expanded its relationship with TGI Fridays, and rolled out the Toast platform in the United Kingdom. UK and US restaurants are leveraging Toast's Multi-Location Management, Mobile Order & Pay, Kitchen Display Systems (KDS), Toast Go® handhelds and APIs. TGI Fridays was impressed by how quickly their teams adapted to the Toast system in their initial UK pilot locations and chose to accelerate the rollout. Toast recently launched "Toast Lab," a new initiative to collaborate with a Greater Boston restaurant operator to open a new restaurant location and co-develop, test, and refine Toast's technology. As part of this hands-on partnership, the selected operator will receive strategic capital, executive mentorship, and early access to Toast products. Conference Call Information Toast will host a live conference call at 5:00 p.m. Eastern Time on Tuesday, August 4, 2026. The live webcast of the conference call can be accessed through Toast’s investor relations website at http://investors.toasttab.com. A replay of the webcast will be available for a period of 90 days after the call. Toast has used, and intends to continue to use, its Investor Relations website (http://investors.toasttab.com), as well as the Toast Newsroom (https://pos.toasttab.com/news), as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD. Information on or that can be accessed through Toast’s Investor Relations website, or that is contained in any website to which a hyperlink is provided herein is not part of this press release, and the inclusion of Toast’s Investor Relations website address, and any hyperlinks are only inactive textual references. About Toast Toast is a global technology platform built for restaurant and retail businesses. From the busiest local restaurants and shops to large hospitality brands, Toast helps owners and operators manage their businesses more efficiently, drive guest demand, and build lasting success. Toast integrates software, agentic AI, payments, financial technology solutions, and hardware with a broad partner ecosystem. Powering billions of purchases throughout local commerce, Toast delivers the precision and innovation required for modern restaurant and retail environments. For more information, visit www.toasttab.com. Forward-looking Statements This press release contains "forward-looking statements," within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the context of the statement and generally arise when Toast or its management is discussing its beliefs, estimates or expectations. Such statements generally include the words "believes," "plans," "intends," "targets," "may," "could," "should," "will," "expects," "estimates," "suggests," "anticipates," "outlook," "continues," or similar expressions. These statements are not historical facts or guarantees of future performance, but represent the beliefs of Toast and its management at the time the statements were made regarding future events which are subject to certain risks, uncertainties and other factors, many of which are outside Toast’s control. Actual results and outcomes may differ materially from what is expressed or forecast in such forward-looking statements. Forward-looking statements include, without limitation, statements about Toast’s expected financial positions or growth, including guidance on financial results for the third fiscal quarter and full year of 2026; Toast’s operating strategy and view, including the expected product demand, ability and strategy to deliver innovative solutions, and growth of its business; statements about new products and offerings and the benefits thereof; Toast’s investments in technology and infrastructure, including the Toast Lab initiative; arrangements between Toast and its customers, including the planned and future implementation of the Toast platform at such customers’ locations; Toast’s ability to attract and retain customers and the commitments from its customers; competitive positions, financing and capital allocation strategy; and business strategy. The forward-looking statements contained in this release are also subject to other risks and uncertainties, including those more fully described in Toast’s filings with the Securities and Exchange Commission ("SEC"), including in the sections entitled "Risk Factors" and "Management’s Discussion and Analysis of Financial Condition and Results of Operations'' in Toast’s Annual Report on Form 10-K for the year ended December 31, 2025, Toast’s Quarterly Report on Form 10-Q for the three and six months ended June 30, 2026 that will be filed following this earnings release, and Toast’s subsequent SEC filings. Toast can give no assurance that the plans, intentions, expectations or strategies as reflected in or suggested by those forward-looking statements will be attained or achieved. The forward-looking statements in this release are based on information available to Toast as of the date hereof, and Toast disclaims any obligation to update any forward-looking statements, except as required by law. These forward-looking statements should not be relied upon as representing Toast’s views as of any date subsequent to the date of this press release. Non-GAAP Financial Measures In this press release, Toast refers to non-GAAP financial measures that are derived on the basis of methodologies other than in accordance with United States generally accepted accounting principles ("GAAP"). Toast uses certain non-GAAP financial measures, as described below, to understand and evaluate its core operating performance. These non-GAAP financial measures, which may be different than similarly-titled measures used by other companies, are presented to enhance investors’ overall understanding of Toast’s financial performance and should not be considered substitutes for, or superior to, the financial information prepared and presented in accordance with GAAP. Toast believes that these non-GAAP financial measures provide useful information about its financial performance, enhance the overall understanding of its past performance and future prospects, and allow for greater transparency with respect to important metrics used by Toast’s management for financial and operational decision-making. In the tables below, Toast has provided reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP. These non-GAAP financial measures should not be considered substitutes for financial measures calculated in accordance with GAAP, and the financial results that Toast calculates and presents in the table in accordance with GAAP, as well as the corresponding reconciliations from those results, should be carefully evaluated. The following are the non-GAAP financial measures referenced in this press release and presented in the tables below: Adjusted EBITDA is defined as net income (loss), adjusted to exclude stock-based compensation expense and related payroll tax expense, depreciation and amortization expense, interest income (expense), net, income taxes and certain other items that are not considered to reflect our operating activities and performance within the ordinary course of business, such as restructuring expenses, acquisition expenses, fair value adjustments on warrant liabilities, gain on warrant extinguishment, expenses related to early termination of leases (which includes associated asset impairments) and stock-based charitable contribution expense, as applicable. Non-GAAP Subscription Services and Financial Technology Solutions Gross Profit is defined as subscription services gross profit and financial technology solutions gross profit, adjusted to exclude stock-based compensation expense and related payroll tax expense, and depreciation and amortization expense. Non-GAAP Costs of Revenue are defined as costs of revenue excluding stock-based compensation expense and related payroll tax expense, and depreciation and amortization expense. Non-GAAP Gross Profit is defined as gross profit excluding stock-based compensation expense and related payroll tax expense, and depreciation and amortization expense. Non-GAAP Subscription Services Gross Profit is defined as subscription services gross profit excluding stock-based compensation expense and related payroll tax expense, and depreciation and amortization expense. Non-GAAP Financial Technology Solutions Gross Profit is defined as financial technology solutions gross profit excluding stock-based compensation expense and related payroll tax expense, and depreciation and amortization expense. Non-GAAP Hardware and Professional Services Gross Profit is defined as hardware and professional services gross profit excluding stock-based compensation expense and related payroll tax expense, and depreciation and amortization expense. Non-GAAP Non-Payments Financial Technology Solutions Gross Profit is defined as financial technology solutions gross profit excluding payments financial technology solutions gross profit. Non-GAAP Sales and Marketing Expenses are defined as sales and marketing expenses excluding stock-based compensation expense and related payroll tax expense, and depreciation and amortization expense. Non-GAAP Research and Development Expenses are defined as research and development expenses excluding stock-based compensation expense and related payroll tax expense, and depreciation and amortization expense. Non-GAAP General and Administrative Expenses are defined as general and administrative expenses excluding stock-based compensation expense and related payroll tax expense, depreciation and amortization expense, acquisition expenses, expenses related to early termination of leases (which includes associated asset impairments), and stock-based charitable contribution expense. Free Cash Flow is defined as net cash provided by (used in) operating activities reduced by purchases of property and equipment and capitalization of internal-use software costs (collectively referred to as capital expenditures). Adjusted EBITDA, Non-GAAP Subscription Services and Financial Technology Solutions Gross Profit, Non-GAAP Costs of Revenue, Non-GAAP Gross Profit, Non-GAAP Subscription Services Gross Profit, Non-GAAP Financial Technology Solutions Gross Profit, Non-GAAP Hardware and Professional Services Gross Profit, Non-GAAP Non-Payments Financial Technology Solutions Gross Profit, Non-GAAP Sales and Marketing Expenses, Non-GAAP Research and Development Expenses, Non-GAAP General and Administrative Expenses, and Free Cash Flow do not purport to represent profitability and liquidity measures as defined in accordance with GAAP. These measures are provided to investors and others to improve the quarter-to-quarter and year-to-year comparability of Toast's financial results and to ensure that investors understand the information Toast uses to evaluate the performance of its businesses. Our definitions may differ from the definitions used by other companies and therefore comparability may be limited. In addition, other companies may not publish these or similar metrics. Further, these metrics have certain limitations since they do not include the impact of certain expenses and cash flows that are reflected in our Consolidated Statements of Operations and Consolidated Statements of Cash Flows. Thus, our Adjusted EBITDA, Non-GAAP Subscription Services and Financial Technology Solutions Gross Profit, Non-GAAP Costs of Revenue, Non-GAAP Gross Profit, Non-GAAP Subscription Services Gross Profit, Non-GAAP Financial Technology Solutions Gross Profit, Non-GAAP Hardware and Professional Services Gross Profit, Non-GAAP Non-Payments Financial Technology Solutions Gross Profit, Non-GAAP Sales and Marketing Expenses, Non-GAAP Research and Development Expenses, Non-GAAP General and Administrative Expenses, and Free Cash Flow should be considered in addition to, not as substitutes for, or in isolation from, measures prepared in accordance with GAAP. Key Business Metrics In addition, Toast also uses the following key business metrics to help it evaluate its business, identify trends affecting its business, formulate business plans, and make strategic decisions: Gross Payment Volume ("GPV") is defined as the sum of total dollars processed through the Toast payments platform across Toast Processing Locations in a given period. GPV is a key measure of the scale of Toast’s platform, which in turn drives our financial performance. As Toast customers generate more sales and therefore more GPV, Toast generally sees higher financial technology solutions revenue. Annualized Recurring Run-Rate ("ARR") is defined as a key operational measure of the scale of Toast’s subscription and payment processing services for both new and existing customers. To calculate ARR, Toast first calculates recurring run-rate on a monthly basis. Monthly Recurring Run-Rate, or MRR, is measured on the final day of each month as the sum of (i) Toast’s monthly billings of subscription services fees, which we refer to as the subscription component of MRR, and (ii) Toast’s in-month adjusted payments services fees, exclusive of estimated transaction-based costs, which we refer to as the payments component of MRR. MRR does not include fees derived from Toast Capital or related costs. MRR is also not burdened by the impact of SaaS credits offered. The MRR calculation includes all locations on the Toast platform and locations on legacy solutions, which have a negligible impact on ARR.ARR is determined by taking the sum of (i) twelve times the subscription component of MRR and (ii) four times the trailing-three-month cumulative payments component of MRR. Toast believes this approach provides an indication of its scale, while also controlling for short-term fluctuations in payments volume. ARR may decline or fluctuate as a result of a number of factors, including customers’ satisfaction with the Toast platform, pricing, competitive offerings, economic conditions, or overall changes in Toast’s customers’ and their guests’ spending levels. ARR is an operational measure, does not reflect Toast’s revenue or gross profit determined in accordance with GAAP, and should be viewed independently of, and not combined with or substituted for, Toast’s revenue, gross profit, and other financial information determined in accordance with GAAP. Further, ARR is not a forecast of future revenue and investors should not place undue reliance on ARR as an indicator of Toast’s future or expected results. Locations We define a live location, or Location, as a unique location that has used Toast Point of Sale to record transaction volumes above a minimum threshold, and has not been marked as a churned location as of the date of determination. A Location can use Toast payment services, which we refer to as a Toast Processing Location, or for select enterprise customers, not use Toast’s payment services, which we refer to as a Non-Toast Processing Location. Customers of legacy solutions provided by companies that we have acquired, that do not use Toast Point of Sale, are not included in our Location count. TOST-FIN Source: Toast, Inc. View source version on businesswire.com: https://www.businesswire.com/news/home/20260804267340/en/ Contacts Media: [email protected] Investors: [email protected]