TOST earnings analysis
What we found in TOST's 10-Q: the parts that mattered, the offsets in the same document, and what the company said about what comes next.
Our reading of the filing · Free to read, no account needed
Toast delivered strong Q2 operating growth, with revenue up 23% year over year to $1.908 billion, gross margin up to 27.0%, operating margin up to 8.0%, and diluted EPS doubling year over year to $0.26. Growth was broad across subscription services and financial technology solutions, supported by 22% Location and GPV growth. The offset is weaker cash conversion: first-half free cash flow fell to $245 million from $277 million due primarily to higher inventory-related working-capital outflows, while substantial buybacks reduced liquidity.
The parts that mattered.
Pulled out of the filing itself, with the figures the company reported.
- Revenue growth accelerated to $1.908 billion
- Q2 revenue rose 23% year over year to $1.908 billion from $1.550 billion, led by financial technology solutions growth of $294 million and subscription-services growth of $63 million. Revenue also increased from $1.630 billion in Q1 2026.
- Margins expanded materially
- Gross margin was 27.0% in Q2 2026, up about 170 basis points from 25.3% a year earlier, as total revenue rose 23% while total cost of revenue increased 20%. Operating margin reached 8.0%, versus 5.2% in Q2 2025 and 6.8% in Q1 2026.
- Earnings and EBITDA improved
- Diluted EPS was $0.26, up from $0.13 in Q2 2025 and $0.20 in Q1 2026. Net income increased to $154 million from $80 million a year earlier, while adjusted EBITDA grew to $221 million from $161 million.
- Locations, GPV and ARR grew above 20%
- Platform scale continued to grow: Locations increased 22% year over year to approximately 180,000, Q2 GPV increased 22% to $60.7 billion, and ARR rose 25% to $2.409 billion.
- Recurring gross-profit pool expanded
- Subscription and financial-technology gross profit increased 31% to $585 million from $447 million. Subscription-services revenue increased 28% to $290 million while its cost of revenue was flat at $64 million.
- Liquidity remains substantial
- Toast had $1.713 billion of cash, cash equivalents and marketable securities and $347 million of unused credit-facility capacity at June 30, 2026, with no facility borrowings outstanding.
And the other side of it.
The offsets in the same document — the things a summary that only listed the good news would have left out.
- Working capital reduced cash conversion
- Six-month operating cash flow declined to $276 million from $302 million and free cash flow declined to $245 million from $277 million. Management attributed the operating-cash-flow decline primarily to higher inventory purchases and related working-capital outflows.
- Buybacks reduced liquidity balance
- Cash, cash equivalents and marketable securities declined $278 million to $1.713 billion at June 30, 2026 from $1.991 billion at December 31, 2025. Financing cash use was $412 million in the first half, including $486 million of share repurchases.
- Hardware gross loss widened
- Hardware and professional-services revenue was $48 million while its cost of revenue was $116 million, implying a $68 million gross loss, wider than the prior-year $54 million gross loss on $47 million of revenue and $101 million of costs.
- Margin included one-time tariff refund
- Cost of revenue benefited from approximately $10 million of one-time tariff refunds. Excluding that benefit, the reported 27.0% gross margin would have been lower.
- No new risk-factor disclosures
- Item 1A states there were no material changes to the risk factors disclosed in the 2025 Form 10-K. Nonetheless, management notes uncertainty around tariff timing and impacts; Q2 GPV was $60.7 billion, making payment-volume trends material to financial-technology revenue.
What they reported.
What the company itself reported, taken out of the document.
- Earnings per share
- $0.26
- Gross margin
- 27.0%
- Operating margin
- 8.0%
- Segment
- Subscription services revenue: $290 million, up 28% year over year from $227 million.
- Segment
- Financial technology solutions revenue: $1.570 billion, up 23% year over year from $1.276 billion.
- Segment
- Hardware and professional services revenue: $48 million, up 2% year over year from $47 million.
What they said about what is next.
The 10-Q does not provide quantitative revenue or EPS guidance. Management stated that existing cash and cash equivalents and available borrowing capacity should be sufficient for working-capital needs for at least the next 12 months.
The filing reads about the same as the one before it.
What came before.
- 10-Q · May 7, 2026
- Toast reported Q1 2026 results with revenue of $1.63 billion and an EPS of $0.20, both below analyst expectations. Despite this shortfall, the company experienced a notable growth in annualized recurring revenue, up 26%…
- 10-K · February 18, 2026
- Toast positions itself as a vertically integrated, restaurant-focused platform combining POS, payments, hardware, back‑office and fintech services and is prioritizing expansion of platform adoption and AI features…
- 10-Q · May 9, 2025
- Toast reported Q1 revenue of $1,337 million (+$262M, +24.4% YoY) and delivered net income of $56 million (diluted EPS $0.09) versus a loss of $(83) million (EPS $(0.15)) in Q1 2024. Gross margin expanded to 25.9% and…
- 10-Q · August 7, 2024
- Toast, Inc. reported strong revenue growth in Q2 2024, achieving $1.24 billion, a 27% increase over $978 million in Q2 2023. The company also returned to a profit with an EPS of $0.02, an improvement from a loss of…
This is our reading of a public filing, not the filing. Read the original on SEC.gov · Educational only. Nothing here is investment advice.
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