Toast’s (NYSE:TOST) Q4 CY2025 Sales Beat Estimates But Stock Drops

Toast’s (NYSE:TOST) Q4 CY2025 Sales Beat Estimates But Stock Drops

Kayode Omotosho

Fri, February 13, 2026 at 6:35 AM GMT+9 4 min read

In this article:

TOST

-6.71%

Restaurant technology platform Toast (NYSE:TOST) reported Q4 CY2025 results exceeding the market’s revenue expectations , with sales up 22% year on year to $1.63 billion. Its GAAP profit of $0.16 per share was 33.1% above analysts’ consensus estimates.

Is now the time to buy Toast? Find out in our full research report.

Toast (TOST) Q4 CY2025 Highlights:

**Revenue:** $1.63 billion vs analyst estimates of $1.62 billion (22% year-on-year growth, 0.5% beat)

**EPS (GAAP):** $0.16 vs analyst estimates of $0.12 (33.1% beat)

**Adjusted EBITDA:** $298 million vs analyst estimates of $150.2 million (18.2% margin, 98.3% beat)

**EBITDA guidance for the upcoming financial year 2026** is $785 million at the midpoint, below analyst estimates of $790.6 million

**Operating Margin:** 5.2%, up from 2.4% in the same quarter last year

**Free Cash Flow Margin:** 10.9%, up from 9.4% in the previous quarter

**Annual Recurring Revenue:** $2.05 billion vs analyst estimates of $2.06 billion (25.9% year-on-year growth, in line)

**Market Capitalization:** $16.48 billion

Company Overview

Born from the frustrations of three friends waiting too long for their restaurant bill, Toast (NYSE:TOST) provides a cloud-based digital technology platform with software, payment processing, and hardware solutions built specifically for restaurants.

Revenue Growth

A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Thankfully, Toast’s 49.5% annualized revenue growth over the last five years was incredible. Its growth beat the average software company and shows its offerings resonate with customers, a helpful starting point for our analysis.

Toast Quarterly Revenue

Long-term growth is the most important, but within software, a half-decade historical view may miss new innovations or demand cycles. Toast’s annualized revenue growth of 26.2% over the last two years is below its five-year trend, but we still think the results suggest healthy demand.

Toast Year-On-Year Revenue Growth

This quarter, Toast reported robust year-on-year revenue growth of 22%, and its $1.63 billion of revenue topped Wall Street estimates by 0.5%.

Looking ahead, sell-side analysts expect revenue to grow 20.6% over the next 12 months, a deceleration versus the last two years. Still, this projection is noteworthy and indicates the market is forecasting success for its products and services.

Software is eating the world and there is virtually no industry left that has been untouched by it. That drives increasing demand for tools helping software developers do their jobs, whether it be monitoring critical cloud infrastructure, integrating audio and video functionality, or ensuring smooth content streaming. Click here to access a free report on our 3 favorite stocks to play this generational megatrend.

Story Continues  

Annual Recurring Revenue

While reported revenue for a software company can include low-margin items like implementation fees, annual recurring revenue (ARR) is a sum of the next 12 months of contracted revenue purely from software subscriptions, or the high-margin, predictable revenue streams that make SaaS businesses so valuable.

Toast’s ARR punched in at $2.05 billion in Q4, and over the last four quarters, its growth was fantastic as it averaged 29.4% year-on-year increases. This alternate topline metric grew faster than total sales, which likely means that the recurring portions of the business are growing faster than less predictable, choppier ones such as implementation fees. That could be a good sign for future revenue growth.

Toast Annual Recurring Revenue

Customer Acquisition Efficiency

The customer acquisition cost (CAC) payback period measures the months a company needs to recoup the money spent on acquiring a new customer. This metric helps assess how quickly a business can break even on its sales and marketing investments.

Toast’s recent customer acquisition efforts haven’t yielded returns as its CAC payback period was negative this quarter, meaning its incremental sales and marketing investments outpaced its revenue. The company’s inefficiency indicates it operates in a competitive market and must continue investing to grow.

Key Takeaways from Toast’s Q4 Results

We were impressed by how significantly Toast blew past analysts’ EBITDA expectations this quarter. We were also glad its EBITDA guidance for next quarter exceeded Wall Street’s estimates. On the other hand, its full-year EBITDA guidance slightly missed, and this is weighing on shares. Investors were likely hoping for more, and shares traded down 8% to $24.53 immediately after reporting.

So should you invest in Toast right now? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here, it’s free.

Terms and Privacy Policy

Privacy Dashboard

More Info