8-K: Toast Inc. Reports Strong Q1 2025 Results, Exceeds Expectations with Applebee's Deal

Toast Inc. announces impressive first quarter 2025 financial results, highlighted by a major deal with Applebee's and significant growth in key metrics.

Summary

• Toast, Inc. reported its financial results for the first quarter ended March 31, 2025.
• The company added over 6,000 net new locations during the quarter.
• Annualized Recurring Run-rate (ARR) grew by 31% year-over-year to $1.7 billion as of March 31, 2025.
• Net income for the quarter was $56 million, a significant improvement from the net loss of $(83) million in Q1 2024.
• Adjusted EBITDA was $133 million, compared to $57 million in the same quarter last year.
• Gross Payment Volume (GPV) increased by 22% year-over-year to $42.2 billion.
• Toast signed an agreement with Dine Brands Global, Inc. to implement Toast technology at Applebee's locations in the U.S.
• Toast also signed an agreement with Topgolf to implement Toast Enterprise Solutions across its venues in the United States.
• For the second quarter ending June 30, 2025, Toast expects Non-GAAP subscription services and financial technology solutions gross profit in the range of $435 million to $445 million and Adjusted EBITDA in the range of $130 million to $140 million.
• For the full year ending December 31, 2025, Toast expects Non-GAAP subscription services and financial technology solutions gross profit in the range of $1,775 million to $1,795 million and Adjusted EBITDA in the range of $540 million to $560 million.

Sentiment

Score: 9

Explanation: The document presents a highly positive outlook with strong financial results, key partnerships, and increased guidance, indicating a favorable trajectory for the company.

Positives

• Significant increase in net income from a loss of $(83) million to a profit of $56 million.
• Substantial growth in Adjusted EBITDA from $57 million to $133 million.
• Strong ARR growth of 31% to $1.7 billion.
• Increase in total locations by 25% year-over-year to approximately 140,000.
• Successful renewal of a credit facility, increasing it from $330 million to $350 million.
• Introduction of ToastIQ, a new intelligence engine, which could enhance customer value and drive further growth.

Negatives

• Hardware and professional services gross profit remains negative at $(47) million, although it improved slightly from $(41) million in the same quarter last year.

Risks

• The company's forward-looking statements are subject to various risks and uncertainties, as detailed in their SEC filings.
• The inability to accurately forecast the occurrence and financial impact of various adjusting items could affect future GAAP financial results.
• The forward looking Non-GAAP measures to the corresponding GAAP measure is not available without unreasonable effort because of the inherent difficulty of accurately forecasting the occurrence and financial impact of the various adjusting items necessary for such reconciliations that have not yet occurred, are out of our control, or cannot be reasonably predicted, including but not limited to the change in fair value of our warrant liability and stock-based compensation.

Future Outlook

Toast expects Non-GAAP subscription services and financial technology solutions gross profit in the range of $435 million to $445 million for Q2 2025 and $1,775 million to $1,795 million for the full year 2025. Adjusted EBITDA is expected to be in the range of $130 million to $140 million for Q2 2025 and $540 million to $560 million for the full year 2025.

Management Comments

• Toast kicked off the year with a fantastic first quarter we added over 6,000 net new locations, grew our recurring gross profit streams 37%, and delivered $133 million in Adjusted EBITDA, said Toast CEO and Co-Founder Aman Narang.
• We continue to see strong momentum across both our core business as well as our new verticals in international, retail, and enterprise including marquee wins in Applebees and Topgolf.
• We are starting to see our scale and data across our 140,000 locations help our customers be more successful, which sets us up well as we continue to build out the platform and scale globally.

Industry Context

Toast's strong Q1 results and key partnerships with major brands like Applebee's and Topgolf demonstrate its growing influence in the restaurant technology sector. The company's focus on providing an all-in-one digital platform is resonating with restaurants looking to streamline operations and enhance customer experiences. This announcement positions Toast favorably against competitors in the restaurant POS and management software market.

Comparison to Industry Standards

• Comparing Toast's 31% ARR growth to competitors like Block (formerly Square) in their payment processing segment shows a competitive edge in capturing recurring revenue.
• Toast's focus on the restaurant industry provides a specialized approach compared to broader POS providers like Shopify, which caters to a wider range of businesses.
• The Adjusted EBITDA margin of Toast is improving and is becoming comparable to established SaaS companies, indicating increasing operational efficiency.
• The addition of 6,000 net new locations is a strong indicator of market penetration, rivaling the expansion rates of other major players in the hospitality technology space.

Stakeholder Impact

• Shareholders will likely react positively to the strong financial results and increased guidance.
• Employees may experience increased job security and potential for career growth.
• Customers (restaurants) can expect continued innovation and improvements to the Toast platform.
• Suppliers may benefit from increased demand for Toast's products and services.
• Creditors are likely to view Toast as a lower-risk borrower due to its improved financial performance.

Next Steps

• Toast will host a live conference call on May 8, 2025, to discuss the financial results.
• The company will continue to focus on expanding its platform and scaling globally.
• Toast will continue to use its Investor Relations website as a means of disclosing material non-public information.

Key Dates

Keywords

financial results, ARR, Adjusted EBITDA, GPV, Toast, restaurants, technology, SaaS