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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 was negatively impacted by a Q3 earnings miss on EPS, with adjusted EPS of $0.16, falling short of expectations of $0.23. Additionally, Alberta Investment Management Corp decreased its stake in the company by 11.7%. The company's revenue growth, although beating estimates, was not enough to offset the EPS miss. Investor sentiment was also affected by a decrease in stake by Yousif Capital Management LLC. These factors contributed to downward pressure.

1.c. Company Highlights

2. Strong Q3 Earnings: Toast's Growth Momentum Continues

Toast's Q3 earnings report was impressive, with ARR growing 30% to $2 billion, total fintech and subscription gross profit increasing 34% year-over-year, and adjusted EBITDA reaching $176 million with margins expanding 5 percentage points year-over-year to 35%. The company's SaaS ARR grew 28% year-over-year, driven by location growth and a mid-single-digit increase in SaaS ARPU on an ARR basis. The EPS came out at $0.25, beating estimates at $0.24.

Publication Date: Nov -13

📋 Highlights
  • $2 Billion ARR Milestone:: Achieved $2 billion in annual recurring revenue (ARR), doubling from $1 billion in two years with 30% Q3 growth.
  • Margin Expansion:: Adjusted EBITDA reached $176 million with 35% margins, a 5-point increase year-over-year, and free cash flow hit $153 million in Q3.
  • Location Growth:: Added 7,500 net locations in Q3, totaling 156,000 locations, up 23% YoY, with 34% top-line revenue growth.
  • Product Adoption:: Over 25,000 locations adopted Toast IQ (AI assistant), driving new product-led growth and personalized marketing automation.
  • International Expansion:: Expanded partnerships with Uber and global brands like Nordstrom, targeting new markets and doubling core market share by 2026.

Revenue Growth and Margin Expansion

The company's revenue growth was driven by a 23% increase in total locations to 156,000, and a 31% increase in payments ARR. The fintech gross profit grew 35% in the third quarter versus a year ago. The company's ability to drive strong growth and expand adjusted EBITDA margins demonstrates the power and leverage of its business model. As Elena Gomez mentioned, "Doubling our ARR underscores the strength and diversity of our business model, with both payments and SaaS ARR each exceeding $1 billion for the first time."

Valuation Metrics

Toast's current valuation metrics indicate a premium valuation. The stock trades at a P/S Ratio of 3.85 and an EV/EBITDA of 64.85. The company's ROE is 15.49%, and ROIC is 11.43%. The Free Cash Flow Yield is 2.5%, indicating a reasonable cash return for investors. Analysts estimate next year's revenue growth at 20.5%, which is in line with the company's guidance.

Growth Prospects

The company is confident in its medium- and long-term targets, including sustaining growth over 20% in 2026 and exceeding that goal. Toast is investing in Horizon 2 and 3 growth areas, with a deliberate gated approach to investing across core and Horizon areas. The company's new TAMs have shown initial product market fit and a path to market leadership.

Key Drivers

The company's growth is driven by its ability to expand its platform adoption, drive differentiation through data and AI, and demonstrate that new market segments can be material drivers of growth. Toast IQ, a true AI assistant for restaurant operators, has seen strong adoption, and the company is confident in its ability to drive real results for its customers.

3. NewsRoom

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JPMorgan Benches PayPal, Bets on Toast

Dec -04

Source: gurufocus.com

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Toast Stock Upgraded on Strong Growth Expectations

Dec -04

Source: schaeffersresearch.com

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Here Are Thursday’s Top Wall Street Analyst Research Calls: AutoZone, BXP, Fiserv, Meta Platforms, PayPal, Salesforce, Toast and More

Dec -04

Source:

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Toast, Inc. (TOST) Presents at UBS Global Technology and AI Conference 2025 Transcript

Dec -03

Source: seekingalpha.com

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Here Are Monday’s Top Wall Street Analyst Research Calls: Archer Aviation, Beta Technologies, Carvana, Chevron, MPLX, Toast, Zscaler and More

Dec -01

Source: 247wallst.com

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Toast: Away From The AI Trade - And That's A Good Thing, I'm Long

Nov -24

Source: seekingalpha.com

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Toast Announces Participation at UBS Conference

Nov -19

Source: businesswire.com

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Honeywell Stock Catches a Rare Double Downgrade. Why the Bull Case Is Toast.

Nov -18

Source:

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

Stock-Card
Toast

A-Score: 4.6/10

Value: 0.9

Growth: 9.1

Quality: 6.4

Yield: 0.0

Momentum: 7.5

Volatility: 4.0

1-Year Total Return ->

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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

1-Year Total Return ->

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Robinhood Markets

A-Score: 4.5/10

Value: 0.3

Growth: 7.2

Quality: 7.0

Yield: 0.0

Momentum: 10.0

Volatility: 2.3

1-Year Total Return ->

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Affirm

A-Score: 3.8/10

Value: 0.7

Growth: 9.1

Quality: 3.1

Yield: 0.0

Momentum: 8.0

Volatility: 2.0

1-Year Total Return ->

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DigitalOcean

A-Score: 3.8/10

Value: 3.8

Growth: 9.2

Quality: 5.3

Yield: 0.0

Momentum: 2.5

Volatility: 2.0

1-Year Total Return ->

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HashiCorp

A-Score: 3.8/10

Value: 4.2

Growth: 4.4

Quality: 3.6

Yield: 0.0

Momentum: 5.5

Volatility: 5.0

1-Year Total Return ->

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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

36.01$

Current Price

36.01$

Potential

-0.00%

Expected Cash-Flows