Toast Inc (NYSE:TOST) reported its fourth quarter and full-year 2025 financial results, delivering a performance that presented a mixed picture for investors. While the company surpassed earnings expectations, its revenue fell slightly short of analyst forecasts, contributing to a negative after-hours market reaction.
Earnings and Revenue Performance vs. Estimates
For the quarter ended December 31, 2025, Toast posted total revenue of $1.63 billion, marking a 22% increase year-over-year. However, this figure came in just below the analyst consensus estimate of $1.65 billion. The company's profitability metrics told a stronger story. Toast reported a non-GAAP earnings per share (EPS) of $0.23, which significantly exceeded the $0.13 per share that analysts had projected.
The market's immediate response was negative, with the stock declining approximately 5.7% in after-hours trading following the release. This reaction suggests investors were focusing on the revenue miss and potentially weighing it against the company's forward-looking guidance.
Management's Outlook and Analyst Expectations
Looking ahead, Toast provided guidance for both the first quarter and the full year of 2026. The company's outlook centers on non-GAAP subscription and fintech gross profit and Adjusted EBITDA, making a direct comparison to the provided analyst sales and revenue estimates somewhat indirect.
- For Q1 2026, Toast expects non-GAAP subscription and fintech gross profit between $505 million and $515 million, representing 22-24% growth. This compares to analyst sales estimates of $1.66 billion for the quarter.
- For the full year 2026, the company guided for non-GAAP subscription and fintech gross profit in the range of $2.27 billion to $2.30 billion, implying 20-22% growth. This is set against full-year analyst sales expectations of $7.55 billion.
The guidance indicates management expects continued, albeit slightly decelerating, growth in its core recurring profit streams. The market's post-earnings dip may reflect concerns about this growth trajectory or the broader economic environment for restaurant spending.
Key Highlights from the 2025 Report
Beyond the quarterly comparisons, Toast's full-year 2025 results demonstrated significant scaling and improved financial health. The press release highlighted several foundational strengths:
- Strong Top-Line Growth: Annual Recurring Run-Rate (ARR) surpassed $2.0 billion, up 26% year-over-year. Gross Payment Volume (GPV) for the year grew 23% to $195.1 billion.
- Expanding Customer Base: The company added a net 30,000 locations in 2025, bringing its total to approximately 164,000, a 22% increase.
- Substantial Profitability Improvement: Full-year GAAP net income was $342 million, a dramatic increase from $19 million in 2024. Adjusted EBITDA more than doubled to $633 million.
- Robust Cash Generation: The company generated $661 million in net cash from operations and $608 million in Free Cash Flow for the year, strengthening its balance sheet.
- Strategic Initiatives: Recent business highlights included a major expansion with MTY Food Group to roll out Toast across 1,000+ Papa Murphy's locations, platform updates for retail clients, and a new strategic partnership with Instacart.
- Capital Return: The Board authorized an additional $500 million for share repurchases, signaling confidence in the company's financial position and future.
Conclusion
Toast's Q4 2025 earnings report painted a picture of a company successfully scaling its platform and translating growth into substantial profitability and cash flow. The earnings beat was notable, but the slight revenue miss and the market's focus on future guidance appear to have driven the negative short-term stock reaction. Investors are now tasked with balancing the company's demonstrable operational execution and strong financial metrics against questions about the pace of growth in the coming year.
For a detailed look at upcoming earnings dates and analyst estimates, you can review Toast's earnings and estimates page here.
Disclaimer: This article is for informational purposes only and does not constitute financial advice, nor does it recommend buying or selling any securities. Investors should conduct their own research and consult with a qualified financial advisor before making any investment decisions.
