Toast (TOST) - Q3 2025 Earnings Call
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Call Details
Call Title: Toast Q3 2025 Earnings Conference Call
Date Held: November 4, 2025
Management Team Members Present:
Aman Narang - Chief Executive Officer
Elena Gomez - Chief Financial Officer
Michael Senno - Senior Vice President of Finance
Call Summary
Financial Performance
Toast achieved a remarkable 34% top-line growth for the quarter, affirming its strong market position.
The Annual Recurring Revenue (ARR) surpassed $2 billion for the first time, highlighting significant growth from the previous $1 billion achieved two years ago.
The company reported adjusted EBITDA of $176 million, yielding a margin of 35%, which has improved by five percentage points year-over-year.
Subscription revenue increased 29% and SaaS gross margin rose to 79%, up from 77% a year ago, demonstrating effective cost optimization strategies.
The total FinTech and subscription gross profit grew 34% year-over-year, reflecting the strength and diversity of Toast’s offerings.
Net location ads totaled approximately 7,500, up from the previous year, contributing to the total of 156,000 locations.
The payments ARR increased by 31%, supported by higher GPV, which reached $52 billion, illustrating the strength of Toast’s payment processing capabilities.
Toast’s stock-based compensation as a percentage of recurring gross profit was 14%, showing a decline from the previous year, which signals disciplined management of equity incentives.
Guidance
For Q4, Toast anticipates total FinTech and subscription gross profit growth in the 22% to 25% range year-over-year.
The company has raised its full-year outlook, expecting 32% growth in FinTech and subscription gross profit and adjusted EBITDA of $615 million.
For 2026, management remains confident in sustaining growth over 20%, maintaining flat to slightly improved margins year-over-year.
The focus on disciplined capital allocation remains a priority to support long-term shareholder value.
Capital Allocation
Year-to-date, Toast repurchased 1.5 million shares for $54 million, indicating a commitment to returning capital to shareholders.
The company is strategically investing in key growth areas while maintaining a focus on balancing costs and margins to optimize returns.
Investments are directed towards expanding product capabilities in emerging market segments where Toast anticipates significant growth potential.
Toast’s long-term margin target of 40% EBITDA is intact, providing room for continued reinvestment in high-potential areas.
Macro & Demand Trends
Customer and restaurant performance has remained resilient despite broader economic anxieties, as stated by Aman Narang, “We’ve gone and studied previous recessions...and what we’ve seen is that restaurants tend to be resilient.”
Demand for Toast services has remained robust as customers leverage the platform for profitability, helping to mitigate risks associated with macroeconomic uncertainties.
October showed a normalization in consumer activity following a strong Q3, but overall performance remained within expectations.
Competition
Toast has shown improved win rates against major competitors, contributing to its ability to capture more market share in the SMB space.
Aman Narang stated, “Our win rates...are up year over year against all major competitors,” indicating Toast’s competitive strength in its offerings.
The company is focused on continuing to innovate in technology and customer service to sustain its competitive edge and expand market share.
Product Updates
The introduction of Toast IQ has been a pivotal enhancement, with over 25,000 restaurants utilizing the platform to gain insights and improve operational efficiencies.
Toast is leveraging partnerships, like the recent one with Uber, to enhance features available on its platform and drive customer engagement.
Continued improvements in online ordering and inventory management solutions reflect Toast’s commitment to evolving its offerings in line with customer needs.
AI Trends
Toast is integrating AI into its core offerings, such as utilizing Toast IQ to deliver proactive insights that enhance the decision-making capabilities for restaurant operators.
Aman Narang emphasized, “Our mission is to help our customers drive real results by making Toast IQ the intelligent platform of the future,” reflecting the importance of AI in Toast’s strategic roadmap.
NOTABLE QUOTES:
“We delivered another great quarter with 34% top-line growth and 35% margins.”
“Our momentum and execution thus far has us well positioned to deliver a strong 2025.”
“We surpassed $2 billion in ARR for the first time.”
“Many of the best restaurants in the country run on Toast.”
“International SaaS ARPU is up 20% year-over-year.”
“Toast IQ feels like having a personal assistant for our operators.”
“We’re on track to increase net ads in 2025.”
“It took us more than 10 years to reach our first billion in ARR, and just two years to double it.”
“The progress we’re making this year is a direct result of our team’s hard work and dedication.”
“We’re looking at ways to continue to make that even more resilient.”
Q&A SUMMARY:
Q: Josh Baer (Morgan Stanley), What contributed to the increase in GPV per location and how much was it influenced by customer mix versus Toast’s performance?
A: Aman Narang responded that “Q3 in the summer was GPV per location exceeded expectations,” affirming their platform’s ability to help restaurants run more profitable businesses.
Q: Will Nance (Goldman Sachs), What are Toast’s thoughts on competition and the sustainability of market share gains?
A: Aman Narang highlighted the team’s execution, stating “Our win rates...are up year over year,” and emphasized that the unique offerings and innovations of their platform underlie their competitive advantage.
Q: Timothy Chiodo (UBS), How does Toast’s growing network affect its consumer opportunities?
A: Aman Narang noted that increased density allows for improved customer experiences and potential product offerings based on extensive data they gather from restaurant operations.
Q: Dan Delis (Mizuho), What trends are observed in consumer behavior given the current macroeconomic conditions?
A: Aman Narang indicated that despite a normalization in consumer activity, “our customers and our restaurants are performing well,” reflecting resilience amid economic uncertainties.
Q: Dominic Ball (Rothschild), What early results can you share about Toast IQ?
A: Aman Narang remarked on strong adoption and value among customers, with many using the product to streamline operations and enhance identification of profitable opportunities.
Q: David Himes (Pedacord Genuity), How did Toast perform during the AWS outage?
A: Aman Narang confirmed that customers effectively used their offline capabilities during the outage, illustrating the robustness of Toast’s platform.
Q: Ryan Akumar (Oppenheimer), What is the outlook on the sustainability of the improved take rate?
A: Elena Gomez assured that “we have a lot of confidence in our ability to drive take rate up over time,” attributed to targeted pricing movements and operational efficiencies.
Q: Stephen Sheldon (William Blair), What financial impacts do you foresee from the adoption of Toast IQ?
A: Aman Narang noted that the focus is currently on expanding adoption and deriving value rather than immediate monetization, stating, “We see lots of opportunities to drive key agentic use cases within Toast IQ.”
Q: Samad Samana (Jefferies), Can you clarify the pricing changes discussed regarding the website and targeted fintech adjustments?
A: Elena Gomez described a human error regarding a website change but confirmed they are making targeted pricing adjustments while prioritizing customer value and market share gains.
Q: Darren Peller (Wolfe Research), What confidence do you have regarding increased net ads and future growth?
A: Aman Narang expressed optimism based on the sustained growth in net ads and promising signals from new market segments, indicating a clear path to increasing future net ads.
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