stockrowWhat it does
Toast sells a cloud-based technology platform for restaurants and food and beverage retailers. Its software, payment services and hardware connect the parts of a business that serve guests with the operations behind the scenes. Customers can use it for dine-in, takeout, delivery, catering and retail.
The point-of-sale system lets staff take orders and payments on fixed terminals or handheld devices, while guests can use self-service kiosks. Kitchen displays and printers bring in-store and online orders together. Multi-location tools let operators manage menus and view performance across their sites.
Toast also offers online ordering and delivery tools, marketing and loyalty programs, payroll and scheduling, and inventory and supplier-management software. Its retail tools support businesses such as convenience stores, bottle shops and grocery stores. Toast Capital gives eligible restaurants access to loans issued by a bank partner, generally repaid through a portion of daily transactions.
Toast IQ is an artificial-intelligence assistant that uses customer operating data to help answer questions and support workflows. Toast has also introduced Toast IQ Team for scheduling and staffing, and added search, review and offer agents to its marketing product, Toast IQ Grow.
Toast was founded in 2012 and is headquartered in Boston. Aman Narang is its chief executive officer and a co-founder.
How it makes money
Toast generates revenue from financial technology solutions, subscriptions, and hardware and professional services. In FY2025, revenue from its reportable segment was $6.2 billion.
Financial technology solutions primarily earn transaction-based fees for processing payments. These are generally a percentage of the amount processed plus a fee per transaction. Toast records these transaction fees as gross revenue; it also pays fees to financial institutions and processors involved in card payments. Financial technology solutions revenue was $5.0 billion in FY2025, or 81.9% of total revenue.
As restaurants generate more sales through Toast’s payments platform, Toast generally earns more financial technology revenue. This revenue is seasonal: it has historically been stronger per processing location in the second and third quarters, when customers typically have higher sales. The category also includes fees for marketing and servicing working-capital loans originated by a bank partner.
Subscription revenue comes primarily from fees for access to software applications. Contracts generally run from 12 to 36 months, and pricing is primarily per location. The rate varies with the software products purchased, hardware configuration and number of employees. Subscription services generated $936.0 million in FY2025.
Toast also sells terminals, tablets, handheld devices and accessories, and charges for services such as installation, configuration and training. In some cases, an Easy Pay lease lets customers pay for hardware and onboarding through a portion of daily transactions.
Toast reported net income of $342 million for fiscal year ended December 31, 2025. In Q3 2026, it reported GAAP operating income of $165 million.
| Product or service | Revenue, FY2025 | Share | Change on the year |
|---|---|---|---|
| Financial technology solutions | $5.0 billion | 81.9% | 24.3% |
| Subscription services | $936.0 million | 15.2% | 32.6% |
| Hardware and professional services | $180.0 million | 2.93% | −10.4% |
Customers and how it sells
Toast serves small and mid-sized operators as well as larger, multi-location and enterprise customers. Its customers include restaurants across service formats and food and beverage retailers, including businesses that combine dining and retail. Select enterprise customers can use Toast’s point-of-sale software without using its payment services.
As of December 31, 2025, approximately 164,000 Locations used Toast, processing approximately $195 billion of gross payment volume in the trailing 12 months. Toast ended Q3 2026 with approximately 189,000 locations, up 21%. A location is counted when it has used Toast’s point-of-sale system above a minimum transaction threshold and has not been marked as churned.
Toast uses local sales teams to acquire customers and a separate growth team to sell more products to its existing base. Customers can implement the system on-site, remotely or through self-guided options, and receive ongoing support by chat or phone.
The United States is Toast’s core market. Outside it, Toast has launched a French-language product in Quebec and added Outback Steakhouse’s Australian restaurants as a customer. In enterprise, Bagel Brands plans to launch Toast at 800 locations. In retail, Zingerman’s moved its specialty grocer onto the platform.
| Segment | Revenue, FY2025 | Share | Change on the year |
|---|---|---|---|
| Reportable Segment | $6.2 billion | 100.0% | 24.1% |
Suppliers and costs
Toast’s cloud platform runs on Amazon Web Services. It also relies on financial institutions and third-party payment processors to access card networks, and pays those providers and financial institutions fees, including interchange fees. Hardware suppliers provide equipment used across its terminals and handheld devices.
Costs directly associated with revenue include customer-support and operational staff, facilities, depreciation and amortization. Toast’s financial technology costs increased in fiscal year ended December 31, 2025 as payment volume increased. Other operating expenses include sales and marketing staff and advertising, product development, and administrative functions such as finance, legal and information technology.
As of December 31, 2025, Toast had $106 million in non-cancellable purchase obligations to hardware suppliers, all due within the next 12 months. It also had $157 million in non-cancellable commitments to cloud providers and other vendors, including $90 million due within the next 12 months.
Toast has responded to hardware cost pressure by using earlier device generations, transitioning some hardware to lower-cost memory and buying on the spot market. In Q3 2026, it said it had also acquired and held more hardware inventory in the near term.
- Revenue$6.2B
- Cost of revenue−$4.6B
- Research and development−$374.0M
- Selling, general and administrative−$915.0M
- Other operating costs−$12.0M
- Operating income$292.0M
Competitive position
Toast competes with cloud-based and legacy point-of-sale providers, payment solutions and companies offering individual front- or back-of-house tools. It competes on the breadth and integration of its platform, product performance, support, geographic coverage and the cost of connecting systems.
It was reported on 16 October 2026 that DoorDash offers DashOS as Toast expands its product set. It was reported on 15 October 2026 that Square and Clover also pursue full-suite roles in hospitality. Toast has described DoorDash as an important platform partner as well as operating in an overlapping market.
Toast estimates that U.S. restaurant locations on its platform account for approximately 20% of the U.S. restaurant market. Its platform connects customers to over 200 partners, and its support team offers implementation and ongoing assistance. Operators can use sales, staffing, payment and other data across its products.
Our reading: The integrated software, payments and hardware offer a meaningful potential advantage because customers can run several workflows together, although the evidence does not establish how costly it is for them to switch. Our reading: Restaurant-specific data and the partner ecosystem may strengthen that position as customers use more products, but specialists and other full-suite providers still compete for those functions.
| Competitor | Where they compete | Threat (our reading) |
|---|---|---|
| DoorDash | Restaurant technology and operating tools | Medium |
| Square | Full-suite hospitality technology | Medium |
| Clover | Full-suite hospitality technology | Medium |
Growth opportunities
Toast’s growth strategy includes adding U.S. restaurant locations, selling more products to existing customers and extending the platform to new types of businesses and countries. It plans to invest in sales, onboarding, customer support and research and development to serve those markets. Toast also intends to expand its partner ecosystem and selectively explore acquisitions of products and technology.
The company estimates that its U.S. restaurant locations represent approximately 20% of the U.S. restaurant market. It expects to add locations both through new customers and as existing customers open sites or extend Toast across their existing locations. Greater payment volume and adoption of additional products can increase what Toast earns from a customer.
Toast identifies enterprise, international and retail as expansion markets. It has launched in Quebec with a French-language product, introduced a retail field offering and added customers in Australia and specialty grocery. Toast said those three markets together were scaling to $200 million in annualized recurring run-rate in about four years. Annualized recurring run-rate is an operating measure, not a forecast of revenue.
Product development is another part of the strategy. Toast IQ Grow adds marketing agents, while Toast IQ Team brings scheduling and staffing together. Toast expects to extend its back-office work over time into areas such as inventory management and bookkeeping.
- $1.7BFY2021
- $2.7BFY2022
- $3.9BFY2023
- $5.0BFY2024
- $6.2BFY2025
Structural risks
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Restaurant spending and seasonality: Toast’s payment revenue depends on customers’ transaction volume. Customer business volatility, changes in consumer spending and economic conditions can affect results; financial technology revenue per processing location has historically been stronger in the second and third quarters.
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Competition: The markets Toast serves are competitive. Payment providers, processors and other participants may develop competing or replacement services, while technology changes could reduce use of Toast’s platform.
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Payments partners and regulation: Toast relies on third-party processors to process and settle payments. Its services are subject to payment-network rules and financial regulations, including anti-money-laundering and money-transmitter requirements. Changes in permissible interchange fees may adversely affect results.
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Technology and privacy: Service interruptions or cyberattacks could disrupt operations. Toast processes personal information and faces evolving privacy and security requirements, including additional obligations as it expands internationally.
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Legal proceedings: The Federal Trade Commission has filed a lawsuit involving the application of ROSCA to Toast’s negotiated business contracts. Toast disputes the application of the law to those contracts and says it is ready to defend itself.
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Growth and costs: If Toast cannot manage growth, retain customers and personnel, or scale its infrastructure, it may be unable to maintain service levels or execute its plans. It may not consistently maintain or increase profitability if expenses rise without adequate revenue growth.
Bottom line
Our reading
Toast combines restaurant operating software with payment processing, giving it recurring subscription fees and transaction revenue tied to customer sales. Our reading: Its integrated workflows and restaurant data can support adoption of more products, but payment volume, processor relationships and restaurant conditions remain central exposures. Expansion into new markets and AI products adds opportunities alongside execution and regulatory risks. (item1, item1a, item7, call_prepared)