Summary
Toast posted a much stronger second quarter of 2025, with revenue of $1.55 billion, up 24.8% from the prior-year quarter. Gross profit rose to $392 million, up 37.1%, and gross margin expanded to 25.3% from 23.0%. Operating income was $80 million, compared with $5 million a year earlier, and operating margin was 5.2%, up from 0.4%. Net income was $80 million, up from $14 million, while diluted EPS was $0.13, up from $0.02. The quarter marked a clear step up in profitability on the back of higher revenue and better gross margin. The MD&A attributed the revenue increase to growth in Locations on the Toast platform and continued product adoption.
Operationally, Toast added a record 8,500 net new Locations in the quarter. Total Locations rose 24% year over year to approximately 148,000. Annualized recurring run-rate grew 31% to $1.9 billion as of June 30, 2025, and Gross Payment Volume increased 23% to $49.9 billion. Non-GAAP subscription services and financial technology solutions gross profit was $464 million, up 35%. The company said enterprise, international, and food and beverage retail passed 10,000 live locations. It also welcomed a 1,300+ unit chain, took its first customer live in Australia, and introduced the Toast Go 3 handheld. A multi-year partnership with American Express aims to drive guest discovery and personalized hospitality across Resy, Tock, and Toast locations. Toast also noted that 20 of the 28 restaurants winning 2025 James Beard Awards are its customers.
Cash generation improved. Net cash provided by operating activities was $223 million, up from $124 million in the prior-year quarter. Free cash flow was $208 million, up from $108 million. Capital expenditures were $15 million, down from $16 million. Adjusted EBITDA was $161 million, compared with $92 million a year earlier. Deferred revenue was flat at $65 million, while remaining performance obligations rose 21.6% to $911 million.
Guidance points to continued growth. For the third quarter, Toast expects non-GAAP subscription services and financial technology solutions gross profit of $465 million to $475 million, or 23-26% growth compared with Q3 2024, and Adjusted EBITDA of $140 million to $150 million. For the full year, the company expects non-GAAP subscription services and financial technology solutions gross profit of $1,815 million to $1,835 million, or 28-29% growth compared with 2024, up from 25-27% growth. Full-year Adjusted EBITDA guidance is $565 million to $585 million, up from $540 million to $560 million. These are forward-looking non-GAAP measures. Toast says a reconciliation to the nearest GAAP measure is not available without unreasonable effort because items such as warrant fair value changes and stock-based compensation cannot be reliably predicted.
Risks remain tied to the restaurant economy. Toast's financial technology solutions revenue depends on GPV, and GPV is tied to customer sales and consumer spending. The company notes seasonality: sales are typically stronger in the warmer months, and financial technology solutions revenue per Toast Processing Location has historically been stronger in the second and third quarters. Tariffs and geopolitical events could influence consumer spending or restaurant operations. Toast also flags uncertainty over when specific tariffs may go into effect and how higher tariffs may affect demand. Execution risks include international expansion, new product adoption, and the American Express partnership. Management says existing cash and cash equivalents, along with available borrowing capacity, should be sufficient for working capital needs for at least the next 12 months. Forward-looking statements are subject to risks described in Toast's 10-K for 2024 and its 10-Q for the quarter ended June 30, 2025.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2025 | Q1 FY2025 | QoQ | Q2 FY2024 | YoY |
|---|---|---|---|---|---|
| Revenue | $1.55B | $1.34B | +15.9% | $1.24B | +24.8% |
| Gross profit | $392.0M | $346.0M | +13.3% | $286.0M | +37.1% |
| Gross margin | 25.3% | 25.9% | -0.6 pp | 23.0% | +2.3 pp |
| Research & development | $91.0M | $84.0M | +8.3% | $87.0M | +4.6% |
| Sales & marketing | $141.0M | $133.0M | +6.0% | $115.0M | +22.6% |
| General & administrative | $79.0M | $79.0M | ±0.0% | $75.0M | +5.3% |
| Total operating expenses | $312.0M | $303.0M | +3.0% | $281.0M | +11.0% |
| Operating income (loss) | $80.0M | $43.0M | +86.0% | $5.0M | +1500.0% |
| Operating margin | 5.2% | 3.2% | +1.9 pp | 0.4% | +4.8 pp |
| Net income (loss) | $80.0M | $56.0M | +42.9% | $14.0M | +471.4% |
| Net margin | 5.2% | 4.2% | +1.0 pp | 1.1% | +4.0 pp |
| Diluted EPS | $0.13 | $0.09 | +$0.04 | $0.02 | +$0.11 |
Risks
MD&A states that tariffs may influence consumer spending or restaurant operations, and there is uncertainty as to when specific tariffs go into effect and the impact higher tariffs may have on consumer demand. Because financial technology solutions revenue depends on GPV, which was $49.9 billion in FY2025 Q2, any tariff-driven slowdown in restaurant sales could pressure results.
General and administrative expenses for the six months ended June 30, 2025 increased primarily due to an $11 million increase in bad debt expense compared with the prior-year period, indicating rising customer payment defaults or credit risk among restaurant customers.
MD&A notes that Annualized Recurring Run-Rate may decline or fluctuate due to customer satisfaction, pricing, competitive offerings, economic conditions, or changes in customer and guest spending. ARR was $1,928 million as of June 30, 2025, up 31% year over year, but competitive pressure could slow growth.
MD&A states financial technology solutions revenue per Toast Processing Location has historically been stronger in the second and third quarters, and seasonality will continue to impact results of operations. This can cause quarterly fluctuations in revenue and GPV.
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 Q2 FY2025 (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.