Toast (NYSE:TOST) executives highlighted strong growth, expanding profitability, and accelerating product innovation during the company’s fourth-quarter and full-year 2025 earnings call, while outlining priorities for 2026 centered on market share gains, new growth markets, and broader adoption of its platform—particularly through AI-driven tools like Toast IQ.
2025 performance: location growth, ARR scale, and margin expansion
CEO Aman Narang said Toast grew recurring gross profits 33% in 2025, expanded adjusted EBITDA margins to 34%, and added more than 30,000 net locations. CFO Elena Gomez added that Toast ended 2025 with 164,000 locations, ARR up 26% and “over $2 billion in ARR,” alongside $195 billion in payment volume for the year.
In the fourth quarter, Toast’s recurring gross profit streams increased 28%, and the company added approximately 8,000 net locations. Gomez said total monetization—recurring gross profit as a percentage of GPV—reached 98 basis points, up 5 basis points from a year earlier.
Q4 operating details: SaaS, payments, and unit economics
Gomez said SaaS ARR and subscription revenue each grew 28% year-over-year in Q4, alongside “consistent mid-single-digit increases in SaaS ARPU on an ARR basis.” Subscription gross profit increased 33% and SaaS gross margin expanded 300 basis points to 80% in Q4. She also said the SaaS net retention rate was 109% in 2025, driven by upsell and location expansion.
On the payments side, Gomez reported payments ARR grew 24% and fintech gross profit grew 25% in Q4. Fourth-quarter GPV was $51 billion, up 22% year-over-year, while Q4 GPV per location was down 1% versus last year. She said fintech net take rate was 58 basis points, with payments take rate at 48 basis points (up 2 basis points year-over-year). Non-payments fintech solutions led by Toast Capital contributed $51 million in gross profit and 10 basis points in take rate, and she said defaults “remain consistent and well within our risk guardrails.”
Hardware and professional services gross profit was -12% of recurring gross profit streams in Q4. Gomez said the company is “absorbing higher tariff costs” while maintaining healthy payback periods due to scale and unit economics.
Toast also discussed operating leverage and cost discipline. Gomez said full-year operating expenses (excluding bad debt and credit-related expenses) grew 15%, providing 8 percentage points of operating leverage. In Q4, sales and marketing expense increased 21% as Toast invested in core market share gains, expanded account management, and scaled international and retail go-to-market teams. R&D rose 7% as the company invested in product differentiation and capabilities for newer markets.
Strategic priorities: core market share, new TAMs, and AI-led adoption
Narang said Toast’s priorities for 2026 include: growing market share in its core U.S. SMB and mid-market restaurant business; proving newer markets can become material growth drivers; increasing customer adoption across the platform; and gradually expanding margins while investing “with discipline.” He said Toast now powers 20% of SMB and mid-market restaurants in the U.S., nearly doubling share over the past three years.
In newer markets, Narang cited enterprise, international, and retail as key drivers. He noted Toast signed its two largest enterprise customers in 2025—Applebee’s and Firehouse Subs—expanded with MTY Group in Q4, and signed Papa Murphy’s (a 1,000-plus unit chain). He said Toast plans to launch a drive-thru product later in 2026, which he described as opening a larger portion of the enterprise market where multi-lane drive-thru complexity has historically limited Toast’s focus.
Internationally, Narang said Toast is seeing strong location growth and “great early signals” from Australia, its fourth international market. He said Toast plans to bring more platform support into these markets, including Toast Go 3 handhelds and inventory management, with the expectation that win rates and ARPU improve as the platform expands.
In retail, Narang said Toast scaled a dedicated go-to-market team outside restaurants for the first time in 2025 and has seen strong results. He highlighted planned deeper retail capabilities and integrations in 2026, including a partnership with Instacart to sync in-store inventory with Instacart’s marketplace.
AI was a central theme across prepared remarks and Q&A. Narang said Toast’s product team released more than 500 new features in 2025, including Toast IQ, a conversational AI assistant that can generate reports and insights and also execute tasks within Toast. He said that less than four months after launch, more than half of Toast locations had used Toast IQ, with more than 1 million queries and tens of thousands of locations using it weekly.
Narang and Gomez also described AI’s impact internally, particularly in support. Narang said Toast Support has been reimagined with AI, with over half of support interactions now starting digitally through an AI agent and 70% of those never reaching a human. Gomez said “the early benefit from leveraging AI to transform our customer support experience” is contributing to margin expansion.
2026 outlook: growth expectations, investment posture, and cost headwinds
For 2026, Gomez said Toast expects net location adds to increase compared to 2025 and to sustain mid-single-digit SaaS ARPU growth on an ARR basis. For the full year, the company guided to 20% to 22% growth in recurring gross profit streams and adjusted EBITDA of $775 million to $795 million, implying margins “slightly up year-over-year.”
Gomez said guidance incorporates higher tariff costs and an additional hardware headwind from memory chip costs—about a 150 basis point negative impact—emerging since the prior quarter due to surging global demand for chips. She said the cost pressure is expected to be weighted toward the second half of 2026 as higher-cost inventory rolls out, but added it does not change the long-term financial profile.
For Q1 2026, Toast guided to total fintech and subscription gross profit growth of 22% to 24% year-over-year and adjusted EBITDA of $160 million to $170 million, reflecting expected seasonal softness in net adds and GPV.
Capital allocation and shareholder returns
Gomez said Toast has repurchased about 8 million shares for $235 million since initiating its buyback authorization in 2024, including 3 million shares for $107 million in 2025. She added the board approved a $500 million increase to the share repurchase authorization, with repurchases expected to remain opportunistic rather than tied to a fixed timetable.
In closing remarks and Q&A, management emphasized that while margins can expand faster, the company is choosing to invest to support long-term growth opportunities, including AI and newer TAMs. Narang said Toast is aiming to build “a generational company,” and Gomez reiterated that the pace of margin expansion is “in our control” while maintaining a long-term target of 40%+ margins.
About Toast (NYSE:TOST)
Toast, Inc (NYSE: TOST) is a technology company that builds a cloud-based platform for restaurants and other foodservice businesses. Headquartered in Boston, Massachusetts, Toast offers integrated point-of-sale (POS) systems and a suite of software and hardware designed to streamline front-of-house and back-of-house operations. The company went public in 2021 and has positioned itself as a vertically integrated provider for the restaurant industry.
Toast’s product portfolio includes touchscreen POS terminals and handheld order-and-pay devices, kitchen display systems, and peripherals tailored for high-volume foodservice environments.
