Toast, Inc. reported third‑quarter 2025 results that included a revenue of $1.63 billion, up 25.1 % year‑over‑year, and a net income of $105 million. Adjusted earnings per share were $0.16, falling short of the $0.24 consensus estimate, while adjusted EBITDA rose to $176 million and gross profit reached $432 million. The company added 7,500 net new locations, bringing its global footprint to 156,000 sites, and its annual recurring revenue surpassed $2 billion.
Revenue growth was driven by strong demand for Toast’s subscription‑based point‑of‑sale and financial‑technology services. The company’s core U.S. SMB segment continued to expand, while international and enterprise initiatives added incremental top‑line lift. The 25.1 % YoY increase reflects both higher sales volume and a favorable mix shift toward higher‑margin SaaS contracts, offsetting modest pricing pressure in the legacy POS market.
The adjusted EPS miss can be attributed to a combination of higher cost of sales, one‑time charges related to restructuring and share‑count changes, and a heavier allocation of marketing spend to accelerate growth. While the company’s revenue beat analysts, the additional costs and share dilution pushed the adjusted EPS below the $0.24 consensus, resulting in a $0.08 shortfall or a 33 % negative surprise.
Gross profit expanded by 34.2 % YoY to $432 million, and the adjusted EBITDA margin climbed to 35 %, up 5 percentage points from the prior year. The margin improvement is largely due to operational leverage as the platform scales, cost control in the payments layer, and a higher mix of high‑margin SaaS revenue. These gains offset the impact of the one‑time charges that weighed on earnings.
Toast raised its full‑year 2025 gross‑profit guidance to $1.865 billion–$1.875 billion, up from the previous $1.865 billion range, and maintained a Q4 gross‑profit outlook of $480 million–$490 million. Management emphasized confidence in continued revenue momentum, margin expansion, and the acceleration of AI‑driven products such as ToastIQ and Toast Advertising. The company also highlighted its focus on expanding into enterprise, international, and food‑and‑beverage retail segments.
After the release, the market reacted positively. Investors highlighted the revenue beat, the 30 % YoY growth in ARR, the raised full‑year guidance, and the margin expansion as key drivers of the favorable reaction. The company’s CEO, Aman Narang, said, “We delivered another strong quarter—ARR grew 30 % to over $2.0 billion, Adjusted EBITDA was $176 million, and we added approximately 7,500 net locations.” CFO Elena Gomez added, “Adjusted EBITDA was $176 million for the quarter, with margins expanding 5 percentage points year‑over‑year to 35 %.”
The company’s guidance signals confidence that the growth trajectory will continue, with AI and partner ecosystem investments expected to further enhance revenue and profitability.
The market’s positive reaction underscores investor focus on top‑line growth and margin improvement, even as the EPS miss highlights the need for continued cost discipline and share‑count management.
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