Q2 Fiscal 2025 Financial Highlights (Ended June 30, 2025):

• Revenue: $1.55 billion, representing a 25% increase year-over-year. This surpassed analyst consensus estimates of approximately $1.52 billion.

• Earnings Per Share (EPS): $0.13, a significant miss compared to analyst estimates of $0.22. It's important to note that while this was a miss, it was a dramatic improvement from the prior-year quarter.

• Adjusted EBITDA: A key positive metric, Adjusted EBITDA grew to $161 million from $92 million in Q2 2024, demonstrating strong margin improvement.

• Net New Locations: Toast added a record 8,500 net new locations in the quarter, bringing its total to approximately 148,000 restaurants globally.

Diving Deeper: Segment Performance & Analysis

The report painted a picture of a company with strong top-line momentum, driven by its core business and strategic expansion.

• Annual Recurring Revenue (ARR): Toast's annualized recurring run-rate (ARR) grew 31% year-over-year to $1.9 billion, indicating strong demand.

• Payments Volume: Gross Payment Volume (GPV) increased by 23% year-over-year to $49.9 billion. This shows that the restaurants on the Toast platform are healthy and generating more sales.

• Expansion and Partnerships: The company's continued expansion was a major theme, with a record 8,500 net new locations added. This includes its first customer in Australia and a new partnership with American Express.

Margins and the Path to Profitability

While the headline EPS number was a miss, a deeper look at the company’s margins reveals a more encouraging story. This quarter demonstrated significant progress on Toast's path to profitability:

• Adjusted EBITDA Margin: The Adjusted EBITDA margin saw a remarkable expansion of 8 percentage points year-over-year, reaching 35% in the quarter. This is a crucial metric as it strips away non-cash expenses like stock-based compensation and depreciation, providing a clearer view of the operational profitability of the business.

• Operating Margin: The company's operating margin was 5.2% in Q2 2025, a significant improvement from just 0.4% in the same quarter last year. This demonstrates that the company is effectively leveraging its scale to absorb its operational expenses, even as it continues to invest heavily in growth.

• Gross Profit Growth: The recurring gross profit from Toast's high-margin subscription and fintech segments grew an impressive 35% year-over-year to $1.9 billion on an annualized basis. This is a strong indicator of the long-term value and stickiness of its core platform.

Bottom Line

Toast's Q2 earnings report was fundamentally strong, showcasing a company that is successfully executing its land-and-expand strategy in the restaurant tech space. The record number of new locations, surging ARR, and robust gross profit growth are all highly encouraging signals for the company's long-term health.