Image: Toast (product illustration)
Toast raised its full-year adjusted profit outlook Tuesday after the close as third-quarter revenue grew 21% and its restaurant and retail technology platform reached about 189,000 locations. The company also announced that President and Chief Financial Officer Elena Gomez will step away from her role at year-end.
Revenue was $1.981 billion for the quarter ended September 30, and net income increased to $169 million from $105 million a year earlier, according to the company’s earnings release. Diluted earnings were 29 cents a share under generally accepted accounting principles, compared with 16 cents a year earlier. That is GAAP earnings, not an adjusted earnings figure.
Toast shares traded at $32.22 at 5:34pm Eastern, down $1.31, or 3.91%, from the $33.53 regular-session close, according to CNBC’s extended-hours quote. The timestamped move describes the market reaction; it does not establish which part of the report drove the decline.
More locations and payments, with higher profits
Toast added about 8,500 net locations during the quarter, taking the total to roughly 189,000, up 21% from a year earlier. Gross payment volume rose 20% to $61.8 billion. Payment volume measures transactions processed through the platform, not revenue Toast keeps.
Annualized recurring run-rate, or ARR, increased 24% to $2.5 billion. ARR is a measure of the business’s recurring revenue pace, rather than the revenue recognized in the quarter.
Operating income rose to $165 million from $84 million a year earlier. Adjusted earnings before interest, taxes, depreciation and amortization reached $240 million, compared with $176 million. That adjusted measure differs from the company’s $169 million GAAP net income.
Cash provided by operating activities was $198 million, up from $165 million. Free cash flow, a non-GAAP measure, increased to $181 million from $153 million. The figures give investors another way to assess how growth is translating into cash.
Higher outlook and a finance leadership handoff
Toast raised its 2026 adjusted EBITDA forecast to $840 million to $850 million from $805 million to $825 million. For the fourth quarter, it expects adjusted EBITDA of $200 million to $210 million and non-GAAP subscription-services and financial-technology gross profit of $610 million to $620 million. These are management forecasts, not guaranteed results.
Gomez will leave her president and CFO role at the end of the calendar year. Senior Vice President of Finance Michael Senno will become CFO on January 1, 2027. Gomez will remain a non-executive employee in an advisory role through July 2, 2027, to support the transition, Toast said.
The company said Gomez had decided to take a break after five and a half years at Toast, including its 2021 stock-market debut. The release did not describe the change as a dismissal.
Toast also pointed to its fall product updates, including expanded IQ Grow marketing tools and the new IQ Team labor-management product, which combines forecasting, scheduling, payroll and tip tools. It has also launched Toast Fuel for independent fuel and convenience operators and expanded into Quebec.
For restaurant operators, these products address the daily costs of staffing, payments and attracting customers. For investors, the next tests are whether location additions and transaction growth continue to support cash generation and the higher profit target as the finance leadership changes.
JBizNews Desk | Boston
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