Summary
Toast closed the first quarter of fiscal 2026 with growth on every major line. Revenue rose 21.9% to $1.63 billion from $1.34 billion in the prior-year quarter. Gross profit grew 29.2% to $447 million, faster than revenue, and operating income climbed 155.8% to $110 million. Net income was $126 million, up 125%, and diluted earnings per share was $0.20 against $0.09 a year earlier. Gross margin reached 27.4%, up 1.5 percentage points, while operating margin was 6.7%, up 3.5 percentage points.
The platform kept adding scale. Annualized recurring run-rate rose 26% to $2.2 billion as of March 31, 2026, split between subscription ARR of $1,125 million, up 27%, and payments ARR of $1,026 million, up 24%. Toast added roughly 7,000 net new locations in the quarter, taking the total to about 171,000, up 22% from a year earlier. Gross payment volume was $51.3 billion in the quarter, up 22%, and the trailing twelve-month figure reached $204 billion.
Profitability held up on a non-GAAP basis too. Adjusted EBITDA was $179 million against $133 million in the prior-year quarter. Non-GAAP subscription services and financial technology solutions gross profit rose 27% to $529 million, and non-GAAP gross profit was $462 million against $374 million. Non-GAAP sales and marketing expenses were $141 million, non-GAAP research and development expenses came to $73 million, and non-GAAP general and administrative expenses were $69 million.
Cash generation improved. Net cash provided by operating activities was $132 million, up 67.1% from $79 million, and free cash flow, a non-GAAP measure, was $115 million against $69 million. Capital expenditures were $17 million, up 70% from $10 million. The balance sheet offers some forward visibility as well: deferred revenue was $73 million, up 21.7%, and remaining performance obligations were $1.02 billion, up 16.3%.
Management returned capital aggressively. Toast repurchased $327 million of Class A common stock during the quarter. Year-to-date through May 6, 2026, it repurchased 14 million shares for $378 million. Between March 31, 2026 and May 6, 2026, it bought back 2 million shares for $51 million, leaving about $208 million authorized as of May 6, 2026. Cash and cash equivalents stood at $1,098 million and marketable securities at $672 million, or $1,770 million combined, down from $1,991 million at December 31, 2025. Available borrowing capacity was $347 million.
Guidance points to continued momentum. For the second quarter ending June 30, 2026, Toast expects non-GAAP subscription services and financial technology solutions gross profit of $565 million to $575 million, growth of 22% to 24% compared with the second quarter of 2025, and Adjusted EBITDA of $185 million to $195 million. For the full fiscal year ending December 31, 2026, the company raised its outlook to $2,290 million to $2,320 million of non-GAAP subscription services and financial technology solutions gross profit, or 21% to 23% growth compared with 2025, and Adjusted EBITDA of $790 million to $810 million, up from $775 million to $795 million.
The risks are familiar. Toast flags seasonality in financial technology solutions revenue, noting that revenue per processing location has historically been stronger in the second and third quarters, so the shape of the year matters. Tariffs and geopolitical events could weigh on consumer spending or restaurant operations. The company also depends on continued location growth and product adoption to keep its recurring revenue compounding, and the buyback pace has pulled cash, cash equivalents and marketable securities below the year-end level.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2026 | Q4 FY2025 | QoQ | Q1 FY2025 | YoY |
|---|---|---|---|---|---|
| Revenue | $1.63B | $1.63B | -0.2% | $1.34B | +21.9% |
| Gross profit | $447.0M | $423.0M | +5.7% | $346.0M | +29.2% |
| Gross margin | 27.4% | 25.9% | +1.5 pp | 25.9% | +1.5 pp |
| Research & development | $97.0M | $97.0M | ±0.0% | $84.0M | +15.5% |
| Sales & marketing | $156.0M | $153.0M | +2.0% | $133.0M | +17.3% |
| General & administrative | $84.0M | $84.0M | ±0.0% | $79.0M | +6.3% |
| Total operating expenses | $337.0M | $338.0M | -0.3% | $303.0M | +11.2% |
| Operating income (loss) | $110.0M | $85.0M | +29.4% | $43.0M | +155.8% |
| Operating margin | 6.8% | 5.2% | +1.5 pp | 3.2% | +3.5 pp |
| Net income (loss) | $126.0M | $101.0M | +24.8% | $56.0M | +125.0% |
| Net margin | 7.7% | 6.2% | +1.6 pp | 4.2% | +3.5 pp |
| Diluted EPS | $0.20 | $0.17 | +$0.03 | $0.09 | +$0.11 |
Risks
Tariffs and geopolitical events could pressure restaurant operators and consumer spending. Management states there is uncertainty as to when specific tariffs may go into effect and what impact higher tariffs may have on consumer demand or on the business, and that customer sales are also sensitive to global financial, economic, and political events.
Financial technology solutions revenue is tied to Gross Payment Volume and is seasonal: revenue per Toast Processing Location has historically been stronger in the second and third quarters, so quarterly results may not track annual trends and comparisons between quarters may be uneven.
Financial technology solutions revenue was $1,323 million of the $1,630 million total revenue for the quarter ended March 31, 2026, so results depend heavily on payment volumes at Toast Processing Locations. Management notes the mix toward financial technology solutions revenue is expected to remain a significant proportion of overall revenue.
Q1 FY2026 used $327 million to repurchase Class A common stock, contributing to a $227 million net cash used in financing activities and a $170 million net decrease in cash, cash equivalents, cash held on behalf of customers and restricted cash for the quarter. Cash and cash equivalents and marketable securities fell to $1,770 million at March 31, 2026 from $1,991 million at December 31, 2025, leaving approximately $259 million authorized under the repurchase program.
Hardware and professional services revenue declined to $39 million for the quarter ended March 31, 2026 from $46 million in the prior-year quarter, a decrease of 15%, with related costs of revenue up 19% over the same period, which may pressure overall gross margin if the mix shift continues.
Management cautions that Annualized Recurring Run-Rate, reported at $2,151 million as of March 31, 2026, up 26% from $1,713 million, may decline or fluctuate due to customer satisfaction, pricing, competitive offerings, economic conditions, or spending levels, and that ARR is an operational measure that is not a forecast of future revenue.
SaaS KPIs
All quarters →Adjusted EBITDA
Free Cash Flow
Gross Payment Volume (GPV)
Total Locations
Net New Locations
Payments Annualized Recurring Run-Rate
Subscription Annualized Recurring Run-Rate
Non-GAAP Subscription Services and Financial Technology Solutions Gross Profit
Total Annualized Recurring Run-Rate (ARR)
Summary, forecast, risks and KPIs are extracted from Toast, Inc.'s SEC filings for Q1 FY2026 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 6, 2026.