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1. Company Snapshot

1.a. Company Description

Toast, Inc.operates a cloud-based and digital technology platform for the restaurant industry in the United States and Ireland.The company offers Toast Point of Sale (POS), a hardware product; Toast Order & Pay, which allows guests to order and pay from their mobile devices; Toast Flex that is used for on-counter order and pay, as well as used as a server station, guest kiosk, kitchen display system, or order fulfillment station; Toast Go, a handheld POS device that enhances the table turn times through tableside ordering and payment acceptance; and Toast Tap, a card reader.


It also provides kitchen display system software that connects the front of the house with the kitchen staff; multi-location management software, which allows customers to manage and standardize their operations and configure menus; xtraCHEF that provides back-office tools; and Toast Flex for Kitchen, a larger format mountable piece of hardware that can be used as a kitchen screen.In addition, the company offers Toast Online Ordering & Toast TakeOut app, a software-based platform that provides restaurants to take off-premises orders directly through their branded website; First-Party Delivery services for restaurants to manage a fleet of drivers, and customize delivery hours, zones, fees, and minimum ticket sizes; Toast Delivery Services, which enables restaurants to utilize a partner network of delivery drivers; and Toast Delivery Partners services.Further, it provides loyalty programs and gift cards; payroll and team management products; business owner policy insurance and restaurant-specific add-ons; payment processing solutions; loans advanced to restaurants; purchase financing; reporting and analytics solutions; Toast Partner Connect that allows customers to discover, select, and connect their restaurant to its partners; and bi-directional APIs. The company was incorporated in 2011 and is headquartered in Boston, Massachusetts.

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1.b. Last Insights on TOST

Toast, Inc.'s recent performance has been impacted by mixed quarterly earnings, with Q4 earnings per share missing estimates at $0.23 per share, versus the expected $0.24 per share. Despite this, the company reported solid FY25 results, showcasing 24% revenue growth and significant GAAP profitability. A $500 million addition to its share repurchase program also underscores the company's confidence in its financials. However, potential risks include the Credit Card Competition Act, which may pressure transaction fees. Analysts have a "Moderate Buy" consensus rating on the stock.

1.c. Company Highlights

2. Toast's Q4 2025 Earnings: Strong Growth and Expanding Margins

Toast reported a robust financial performance in 2025, with recurring gross profits growing 33% and adjusted EBITDA margins expanding to 34%. The company's earnings per share (EPS) came in at $0.2523, beating estimates of $0.24. Revenue growth was robust, driven by the addition of over 30,000 net locations on the platform, taking the total to a significant number. The company's ability to scale efficiently is reflected in its free cash flow of $608 million in 2025.

Publication Date: Feb -17

📋 Highlights
  • 2025 Financial Performance:: Recurring gross profit grew 33%, adjusted EBITDA reached $633M, and free cash flow hit $608M, with net adds increasing every quarter compared to prior year.
  • Location Expansion:: Added 30,000 net locations in 2025, driven by core U.S. SMB/mid-market restaurants, with 2026 targeting "record" net location growth and consistent ARPU gains.
  • AI & Innovation:: Over 50% of locations adopted ToastIQ (conversational AI), with weekly usage by tens of thousands, and R&D investments focused on AI-driven workflows to enhance customer value.
  • New Market Expansion:: Retail, international, and sub-TAMs (e.g., drive-thru, sports, non-English operators) identified as "outsized growth drivers," with a planned 2026 drive-thru product rollout.

Growth Drivers

Toast's growth is driven by its core U.S. SMB and mid-market restaurants, as well as new markets, including retail and international. The company's Toast IQ, a conversational AI assistant, has been successful, with over half of all Toast locations using it. According to Aman Narang, "We're seeing early success with ToastIQ and plan to invest further to improve the product based on customer feedback." The company's focus on investing in R&D to drive innovation is evident, with Elena Gomez stating that "we do think about that margin framework as a dynamic thing. We don't want to overinvest in R&D, but at the same time, we do believe that there are opportunities to lean in and really drive more innovation and more value for our customers."

Valuation and Outlook

With a P/E Ratio of 46.99 and an EV/EBITDA of 38.01, Toast's valuation suggests that the market is pricing in significant growth expectations. Analysts estimate revenue growth at 18.2% for next year. The company's ROIC of 13.45% and ROE of 17.93% indicate a healthy return on investment. Toast's guidance for 2026 suggests another year of record net location adds and consistent ARPU growth, indicating a strong outlook for the company.

Investment Strategy

Toast is committed to investing in its most important priorities while expanding margins over time. The company has achieved its medium-term margin targets and is confident in its ability to innovate and grow while working towards its long-term margins of 40% plus. Aman Narang emphasized that building a generational company over the next decade is the top priority, and investing across the business, including R&D, is crucial to achieving this goal.

3. NewsRoom

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AI-Driven Fear Slashed Toast Stock by 43%, Even as Free Cash Flow Hit Records

Mar -23

Source: fool.com

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Toast: Stronger Business, Lower Price - Time To Turn Bullish

Mar -20

Source: seekingalpha.com

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Toast: Focus On ARR Growth And EBITDA Expansion

Mar -20

Source: seekingalpha.com

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Toast, Inc. $TOST Shares Bought by Alliancebernstein L.P.

Mar -16

Source: defenseworld.net

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Meta Platforms: Avocado Toast Never Tasted So Good

Mar -16

Source: seekingalpha.com

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Meta's New AI Model Is Reportedly Delayed Again. Is 'Avocado' Toast?

Mar -13

Source: cnet.com

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How Americans are Changing Their Coffee Drinking Habits

Mar -11

Source: businesswire.com

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Capital Group Private Client Services Inc. Sells 468,450 Shares of Toast, Inc. $TOST

Mar -11

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (11.21%)

6. Segments

Financial Technology Solutions

Expected Growth: 11.2%

Toast, Inc.'s 11.2% growth in Financial Technology Solutions is driven by increasing adoption of cloud-based restaurant management systems, rising demand for digital payment solutions, and growing need for data analytics to optimize operational efficiency. Additionally, the company's expanding partner network and strategic acquisitions are contributing to its rapid growth.

Subscription Services

Expected Growth: 11.53%

Toast, Inc.'s Subscription Services growth of 11.53% is driven by increasing adoption of cloud-based restaurant management solutions, expansion into new markets, and rising demand for digital ordering and delivery integrations. Additionally, the company's focus on customer retention and upselling/cross-selling of value-added services, such as online ordering and loyalty programs, contribute to the segment's growth.

Hardware and Professional Services

Expected Growth: 10.55%

Toast, Inc.'s 10.55% growth in Hardware and Professional Services is driven by increasing adoption of its point-of-sale systems among restaurants, expansion into new markets, and growing demand for digital transformation in the hospitality industry. Additionally, the company's focus on providing integrated solutions and exceptional customer service has led to higher sales of hardware and professional services.

7. Detailed Products

Toast POS

A cloud-based point-of-sale system designed for restaurants, cafes, and bars to manage orders, process payments, and track inventory.

Online Ordering

A platform that allows restaurants to integrate online ordering into their website and social media channels, providing customers with a seamless ordering experience.

Delivery

A delivery platform that integrates with Toast POS, allowing restaurants to manage their own delivery operations and provide customers with real-time tracking updates.

Digital Menu Boards

A digital signage solution that allows restaurants to easily update menu items, prices, and promotions across all locations.

Loyalty and Rewards

A loyalty and rewards program that integrates with Toast POS, allowing restaurants to reward customers and encourage repeat business.

Gift Cards

A gift card program that integrates with Toast POS, allowing restaurants to sell and redeem gift cards online and in-store.

Reporting and Analytics

A reporting and analytics platform that provides restaurants with insights into sales, labor, and inventory data.

8. Toast, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Toast, Inc. is medium because while there are some alternatives to toast, such as cereal or oatmeal, they are not perfect substitutes and many consumers still prefer toast.

Bargaining Power Of Customers

The bargaining power of customers for Toast, Inc. is low because individual customers do not have a significant impact on the market, and the company has a large customer base.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Toast, Inc. is medium because while there are some large suppliers of wheat and other ingredients, the company has some flexibility in its supply chain and can negotiate prices.

Threat Of New Entrants

The threat of new entrants for Toast, Inc. is high because the barriers to entry are relatively low, and new companies can easily enter the market with a new type of toast or a new brand.

Intensity Of Rivalry

The intensity of rivalry for Toast, Inc. is high because there are many established players in the market, and the company must compete on price, quality, and innovation to maintain its market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 3.55%
Debt Cost 12.74%
Equity Weight 96.45%
Equity Cost 12.74%
WACC 12.74%
Leverage 3.69%

11. Quality Control: Toast, Inc. passed 6 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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DigitalOcean

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Value: 5.2

Growth: 9.2

Quality: 7.2

Yield: 0.0

Momentum: 7.5

Volatility: 2.0

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Altair Engineering

A-Score: 4.5/10

Value: 2.0

Growth: 6.7

Quality: 5.3

Yield: 0.0

Momentum: 7.0

Volatility: 6.0

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Robinhood Markets

A-Score: 4.4/10

Value: 0.3

Growth: 7.2

Quality: 7.0

Yield: 0.0

Momentum: 10.0

Volatility: 2.0

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Toast

A-Score: 4.1/10

Value: 0.9

Growth: 9.1

Quality: 6.5

Yield: 0.0

Momentum: 4.0

Volatility: 4.0

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HashiCorp

A-Score: 4.1/10

Value: 4.2

Growth: 4.4

Quality: 3.7

Yield: 0.0

Momentum: 7.0

Volatility: 5.0

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Affirm

A-Score: 3.6/10

Value: 0.7

Growth: 9.1

Quality: 4.2

Yield: 0.0

Momentum: 6.0

Volatility: 1.7

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

27.56$

Current Price

27.56$

Potential

-0.00%

Expected Cash-Flows