10-Q · August 4, 2026
Toast delivered strong Q2 operating growth, with revenue up 23% year over year to $1.908 billion, gross margin up to 27.0%, operating margin up to 8.0%, and diluted EPS doubling year over year to $0.26. Growth was broad…
Earnings analysis · 10-Q
TOST earnings analysis
Filed November 3, 2026 · Our reading of the company's report
The latest report
Toast delivered strong operating momentum in Q3 2026, with revenue up 21% to $1.981 billion, gross margin reaching 27.4%, operating margin reaching 8.3%, and diluted EPS increasing to $0.29 from $0.16 a year earlier.…
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Toast delivered strong operating momentum in Q3 2026, with revenue up 21% to $1.981 billion, gross margin reaching 27.4%, operating margin reaching 8.3%, and diluted EPS increasing to $0.29 from $0.16 a year earlier. Locations, GPV, and ARR grew 21%, 20%, and 24%, respectively, while nine-month free cash flow remained substantial at $426 million. However, cash declined by $150 million year to date due largely to $486 million of share repurchases, inventory rose to $244 million, and newly filed FTC litigation creates a material but unquantifiable risk; the filing states that there were no material changes to the previously disclosed risk factors.
Gross and operating margin
How much of each revenue dollar the business keeps.
One point per quarterly or annual filing. Both margins are shares of that report's revenue.
From revenue to operating profit
Where each $100 of revenue went in this report.
Cost of sales, operating expenses, and what remained. Figures are rounded to whole dollars.
Where revenue came from
The business segments reported by the company.
Shares of the segments disclosed in this filing, largest first.
How we read each report
Our analysis across the last few reports.
Our model's reading of each filing, not the share price or the market's reaction. Annual and quarterly reports each occupy one position.
Reported figures
- Earnings per share
- $0.29
What stood out
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Revenue growth remained strong
Revenue increased 21% year over year to $1.981 billion, driven by 30% growth in subscription services to $317 million and 20% growth in financial technology solutions to $1.619 billion. Nine-month revenue rose 22% to $5.519 billion.
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Margins expanded
Gross margin improved to 27.4% from 27.0% in Q2 2026 and 26.4% in Q3 2025. Operating margin increased to 8.3% from 8.0% in Q2 and 5.1% year over year.
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EPS improved year over year
Diluted EPS increased to $0.29 from $0.26 in Q2 2026 and $0.16 in Q3 2025, although it was below the $0.35 consensus estimate provided in the earnings data.
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Platform metrics accelerated
Platform scale continued to expand: Toast served approximately 189,000 locations as of September 30, 2026, up 21% year over year, while Q3 GPV rose 20% to $61.8 billion and ARR increased 24% to $2.503 billion.
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Cash generation remained positive
Nine-month operating cash flow was $474 million versus $467 million a year earlier, while free cash flow was $426 million versus $430 million. Capital expenditures were $48 million, equal to approximately 10% of operating cash flow.
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Strong liquidity and no debt
The company ended the quarter with $1.203 billion of cash and cash equivalents and $682 million of marketable securities. It had no borrowings under its credit facility and $347 million of available borrowing capacity.
What to watch
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FTC litigation creates material uncertainty
The FTC and seven states, along with San Francisco and Los Angeles County, filed a complaint on October 29, 2026 seeking an injunction, monetary relief, civil penalties, and other remedies. The company said the potential financial loss is currently not reasonably estimable and could materially affect results or operations.
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Inventory build pressured working capital
Inventories increased to $244 million from $114 million at December 31, 2025, while nine-month operating cash flow included a $131 million inventory use of cash. The increase raises working-capital and hardware-demand risk.
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Credit losses increased
The contingent liability for expected credit losses rose to $60 million from $46 million at December 31, 2025, and nine-month credit loss expense was $54 million versus $46 million in the prior-year period.
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Hardware economics remain pressured
Hardware and professional services revenue declined 4% year over year for the first nine months to $132 million, while related costs increased 21% to $357 million, indicating continued pressure in the hardware business.
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Repurchases reduced cash reserves
Cash, cash equivalents, marketable securities, customer-held cash, and restricted cash declined by $150 million during the first nine months, primarily reflecting $450 million of financing cash use, including $486 million of share repurchases.
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Near-term contractual commitments
The company had $191 million of non-cancellable hardware supplier commitments due within the next 12 months, in addition to $95 million of cloud and vendor commitments, of which $79 million is due within 12 months.
Management's outlook
The 10-Q provides no new quantitative revenue or EPS guidance. It states that approximately $1.178 billion of remaining performance obligations is expected to be recognized, including approximately $1.061 billion over the next 24 months, and that liquidity is expected to cover needs for at least the next 12 months.
Earlier filings 4
10-Q · May 7, 2026
Toast reported Q1 2026 results with revenue of $1.63 billion and an EPS of $0.20, both below analyst expectations. Despite this shortfall, the company experienced a notable growth in annualized recurring revenue, up 26%…
10-K · February 18, 2026
Toast positions itself as a vertically integrated, restaurant-focused platform combining POS, payments, hardware, back‑office and fintech services and is prioritizing expansion of platform adoption and AI features…
10-Q · May 9, 2025
Toast reported Q1 revenue of $1,337 million (+$262M, +24.4% YoY) and delivered net income of $56 million (diluted EPS $0.09) versus a loss of $(83) million (EPS $(0.15)) in Q1 2024. Gross margin expanded to 25.9% and…
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.