Toast shares rise 5.4% after Q3 profit beat

Toast said on Nov. 3 that it earned 29 cents per diluted share in the quarter ended Sept. 30, topping the 26-cent consensus estimate. Revenue of $1.98 billion was below the $2.01 billion consensus estimate.

Shares rose 5.4% in regular trading as of 3:59 p.m. ET on Nov. 4, to $35.35, from a regular-session close of $33.53.

Toast is a global technology platform built for restaurant and retail businesses. Net income was $169 million, up from $105 million a year earlier. Adjusted EBITDA, or earnings before interest, taxes, depreciation and amortization, adjusted for stock-based compensation and certain other items, was $240 million, compared with $176 million a year earlier.

Here's how the company did:

• Diluted EPS: 29 cents vs. 16 cents a year earlier, 26 cents expected
• Revenue: $1.98 billion vs. $1.63 billion a year earlier, $2.01 billion expected
• Adjusted EBITDA: $240 million vs. $176 million a year earlier
• Net income: $169 million vs. $105 million a year earlier

Annualized recurring run-rate, or ARR, rose 24% to $2.5 billion as of Sept. 30, from $2.02 billion a year earlier. Gross Payment Volume increased 20% to $61.8 billion in the quarter. Total Locations increased 21% to approximately 189,000.

The company said it added approximately 8,500 net locations in the quarter.

“We had another strong quarter: recurring gross profit streams grew 27%, GAAP Operating Income margin expanded to 26% and we added approximately 8,500 net locations,” said Toast CEO Aman Narang.

2026 guidance

For the fourth quarter, the company expects non-GAAP subscription services and financial technology solutions gross profit of $610 million to $620 million, 22% to 24% growth from a year earlier. It expects adjusted EBITDA of $200 million to $210 million.

For the full year, the company expects non-GAAP subscription services and financial technology solutions gross profit of $2,375 million to $2,385 million, 26% growth from 2025, up from 23% to 25% growth.

Adjusted EBITDA for the full year is now expected at $840 million to $850 million, up from the $805 million to $825 million range it gave on Aug. 4.

Cash flow and capital returns

Net cash provided by operating activities was $198 million in the quarter, compared with $165 million a year earlier. Free cash flow was $181 million, against $153 million.

In the first nine months, the company paid $486 million to repurchase Class A common stock, compared with $54 million a year earlier.

Restructuring expenses were $6 million in the quarter, all of them severance benefits.

CFO transition

The company said in a regulatory filing that President and Chief Financial Officer Elena Gomez will step away effective Dec. 31. Her decision was not due to any disagreement with management, policies or practices. She will serve in an advisory role as a non-executive employee through July 2, 2027.

“Serving as Toast’s President and Chief Financial Officer has been the highlight of my professional career,” said Toast President and CFO Elena Gomez.

Michael Senno, Senior Vice President of Finance, will succeed Gomez as Chief Financial Officer effective Jan. 1, 2027, the filing said. He will receive a base salary of $460,000 a year and a target bonus of 75% of base salary.

Senno, 46, has been Senior Vice President of Finance since April 2023. He was previously Vice President, Investor Relations at Coupang, Inc.