Toast's Earnings Rise: A Recipe for Success or Just Toasted Bread?

May 8, 2025 | By Matt Levine

In a world where restaurant tech is becoming as essential as the salt shaker, Toast (NYSE: TOST) is serving up a strong plate of first-quarter financial results. The company reported its earnings today, showcasing an earnings surprise that delighted investors and management alike. With a net income of $56 million and an adjusted EBITDA of $133 million, Toast is not just buttering its bread; it's baking an entire loaf.

Key Financial Highlights

For the quarter ending March 31, 2025, Toast's EPS came in strong, growing 31% year-over-year in its annualized recurring run-rate to an impressive $1.7 billion. This growth is no small feat, particularly when you consider that the company added over 6,000 net new locations in the same period?its largest deal in history with Applebee's, no less.

Here are some key takeaways:

ARR: $1.7 billion, up 31% year-over-year.
Total locations increased to approximately 140,000, marking a 25% rise year-over-year.
Gross Payment Volume (GPV): Climbed 22% year-over-year to $42.2 billion.
GAAP income from operations was $43 million, a significant turnaround from a loss of $56 million in Q1 2024.
Free cash flow grew to $69 million compared to a negative $33 million in the same quarter last year.

What This Means for Toast and the Sector

Toast?s robust figures reflect a broader trend in the restaurant tech sector. As more establishments turn to digital solutions for efficiency and customer engagement, Toast is well-positioned to capitalize on this shift. With a growing revenue forecast and the ability to attract significant new business, the question arises: Can Toast maintain this momentum?

CEO Aman Narang expressed optimism, stating, ?We continue to see strong momentum across both our core business as well as our new verticals in international, retail, and enterprise.? His confidence might be contagious?at least for investors looking for a slice of the restaurant tech pie.

Looking Ahead

As Toast gears up for the second quarter ending June 30, 2025, it expects to maintain its growth trajectory. The company projects non-GAAP subscription services and financial technology solutions gross profit in the range of $435 million to $445 million, representing a 26-29% growth compared to Q2 2024. Adjusted EBITDA is estimated between $130 million to $140 million.

Investors will be watching closely to see if Toast can deliver on these lofty expectations. With an EPS consensus that reflects confidence in its strategy, only time will tell if this digital platform can continue its rise or face the challenges that often buffet the tech sector.