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%…
Earnings analysis · 10-Q
TOST earnings analysis
Filed August 4, 2026 · Our reading of the company's report
The latest report
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…
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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.
Gross and operating margin
How much of each revenue dollar the business keeps.
One point per quarterly or annual filing. Both margins are shares of that report's revenue.
From revenue to operating profit
Where each $100 of revenue went in this report.
Cost of sales, operating expenses, and what remained. Figures are rounded to whole dollars.
Where revenue came from
The business segments reported by the company.
Shares of the segments disclosed in this filing, largest first.
How we read each report
Our analysis across the last few reports.
Our model's reading of each filing, not the share price or the market's reaction. Annual and quarterly reports each occupy one position.
Reported figures
- Earnings per share
- $0.26
What stood out
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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.
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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.
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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.
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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.
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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.
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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.
What to watch
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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.
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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.
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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.
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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.
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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.
Management's outlook
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.
Earlier filings 4
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 itself. Analysis can contain errors; check the source document for full context.