third quarter 2026
Filed Nov 3, 2026Toast Announces Third Quarter 2026 Financial Results
Toast reported growth across ARR, Locations, GPV and total revenue, while operating income, net income, Adjusted EBITDA, operating cash flow and free cash flow all increased year over year. The company also raised its full-year 2026 outlook for Non-GAAP subscription services and financial technology solutions gross profit and Adjusted EBITDA.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Total revenue, three months ended September 30, 2026GAAP | $1.98B | – | – |
| Subscription services revenue, three months ended September 30, 2026GAAP | $317M | – | – |
| Financial technology solutions revenue, three months ended September 30, 2026GAAP | $1.62B | – | – |
| Hardware and professional services revenue, three months ended September 30, 2026GAAP | $45M | – | – |
| Total costs of revenue, three months ended September 30, 2026GAAP | $1.44B | – | – |
| Gross profit, three months ended September 30, 2026GAAP | $543M | – | – |
| Subscription services gross profit, three months ended September 30, 2026GAAP | $250M | – | – |
| Financial technology solutions gross profit, three months ended September 30, 2026GAAP | $380M | – | – |
| Hardware and professional services gross profit, three months ended September 30, 2026GAAP | −$85M | – | – |
| Total operating expenses, three months ended September 30, 2026GAAP | $378M | – | – |
| Sales and marketing expenses, three months ended September 30, 2026GAAP | $171M | – | – |
| Research and development expenses, three months ended September 30, 2026GAAP | $103M | – | – |
| General and administrative expenses, three months ended September 30, 2026GAAP | $98M | – | – |
| Restructuring expenses, three months ended September 30, 2026GAAP | $6M | – | – |
| Operating income, three months ended September 30, 2026GAAP | $165M | – | – |
| Income before taxes, three months ended September 30, 2026GAAP | $176M | – | – |
| Income tax expense, three months ended September 30, 2026GAAP | −$7M | – | – |
| Net income, three months ended September 30, 2026GAAP | $169M | – | – |
| Diluted earnings per share, three months ended September 30, 2026GAAP | $0.29 | – | – |
| Basic earnings per share, three months ended September 30, 2026GAAP | $0.29 | – | – |
| Adjusted EBITDA, three months ended September 30, 2026non-GAAP | $240M | – | – |
| Non-GAAP subscription services and financial technology solutions gross profit, three months ended September 30, 2026non-GAAP | $642M | – | 27% |
| Non-GAAP gross profit, three months ended September 30, 2026non-GAAP | $560M | – | – |
| Non-GAAP costs of revenue, three months ended September 30, 2026non-GAAP | $1.42B | – | – |
| Non-GAAP subscription services gross profit, three months ended September 30, 2026non-GAAP | $262M | – | – |
| Non-GAAP financial technology solutions gross profit, three months ended September 30, 2026non-GAAP | $380M | – | – |
| Non-GAAP hardware and professional services gross profit, three months ended September 30, 2026non-GAAP | −$81M | – | – |
| Non-GAAP non-payments financial technology solutions gross profit, three months ended September 30, 2026non-GAAP | $69M | – | – |
| Net cash provided by operating activities, three months ended September 30, 2026GAAP | $198M | – | – |
| Capital expenditures, three months ended September 30, 2026other | −$17M | – | – |
| Free cash flow, three months ended September 30, 2026non-GAAP | $181M | – | – |
| Gross Payment Volume (GPV), three months ended September 30, 2026other | $61.8B | – | 20% |
| Total Annualized Recurring Run-Rate (ARR), as of September 30, 2026other | $2.50B | – | 24% |
| Payments Annualized Recurring Run-Rate, as of September 30, 2026other | $1.22B | – | 21% |
| Subscription Annualized Recurring Run-Rate, as of September 30, 2026other | $1.28B | – | 28% |
| Total revenue, nine months ended September 30, 2026GAAP | $5.52B | – | – |
| Gross profit, nine months ended September 30, 2026GAAP | $1.51B | – | – |
| Operating income, nine months ended September 30, 2026GAAP | $427M | – | – |
| Net income, nine months ended September 30, 2026GAAP | $449M | – | – |
| Diluted earnings per share, nine months ended September 30, 2026GAAP | $0.74 | – | – |
| Adjusted EBITDA, nine months ended September 30, 2026non-GAAP | $640M | – | – |
| Net cash provided by operating activities, nine months ended September 30, 2026GAAP | $474M | – | – |
| Free cash flow, nine months ended September 30, 2026non-GAAP | $426M | – | – |
| Gross Payment Volume (GPV), nine months ended September 30, 2026other | $173.8B | – | 21% |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Subscription services, three months ended September 30, 2026Subscription Annualized Recurring Run-Rate was $1,279 million as of September 30, 2026. | $317M | – | – |
| Financial technology solutions, three months ended September 30, 2026Gross Payment Volume increased 20% to $61.8 billion. | $1.62B | – | – |
| Hardware and professional services, three months ended September 30, 2026Toast announced more than 20 product updates across the platform as part of its Fall release. | $45M | – | – |
| Subscription services, nine months ended September 30, 2026Subscription services gross profit was $684 million. | $875M | – | – |
| Financial technology solutions, nine months ended September 30, 2026Financial technology solutions gross profit was $1,051 million. | $4.51B | – | – |
| Hardware and professional services, nine months ended September 30, 2026Hardware and professional services gross profit was $(225) million. | $132M | – | – |
fourth quarter ending December 31, 2026; full year ending December 31, 2026 outlook
- NoteQ4 2026 Non-GAAP subscription services and financial technology solutions gross profit: $610 million to $620 million (22-24% growth compared to Q4 2025).
- NoteQ4 2026 Adjusted EBITDA: $200 million to $210 million.
- NoteFull-year 2026 Non-GAAP subscription services and financial technology solutions gross profit: $2,375 million to $2,385 million (26% growth compared to 2025, up from 23-25% growth).
- NoteFull-year 2026 Adjusted EBITDA: $840 million to $850 million (up from $805 million to $825 million).
Capital returns
- Cash paid to repurchase Class A common stock was $(486) million for the nine months ended September 30, 2026.
- Cash paid to repurchase Class A common stock was $— million for the three months ended September 30, 2026.
What drove it
- Toast added approximately 8,500 net new Locations in the third quarter, and Total Locations increased 21% to approximately 189,000.
- ARR increased 24% to $2.5 billion as of September 30, 2026, including 21% growth in Payments ARR and 28% growth in Subscription ARR.
- GPV increased 20% to $61.8 billion in the third quarter.
- Toast expanded Toast IQ Grow, introduced Toast IQ Team and launched Toast Fuel.
- Toast expanded into Quebec and now operates across all 10 Canadian provinces.
Concerns
- Hardware and professional services gross profit was $(85) million in the third quarter and $(225) million for the nine months ended September 30, 2026.
- Restructuring expenses were $6 million in the third quarter, including $6 million of severance benefits.
- President and Chief Financial Officer Elena Gomez will step away from her role at the end of the calendar year. Michael Senno will become Chief Financial Officer effective January 1, 2027.
- Free cash flow was $426 million for the nine months ended September 30, 2026, compared with $430 million for the prior-year period.
What to watch
- Delivery against Q4 2026 Non-GAAP subscription services and financial technology solutions gross profit guidance of $610 million to $620 million.
- Delivery against Q4 2026 Adjusted EBITDA guidance of $200 million to $210 million.
- Execution of the increased full-year 2026 outlook for Non-GAAP subscription services and financial technology solutions gross profit and Adjusted EBITDA.
- The January 1, 2027 transition of the Chief Financial Officer role to Michael Senno.
- Adoption of Toast IQ Grow, Toast IQ Team and Toast Fuel, as well as the Quebec expansion.
Balance sheet and cash flow
- Cash and cash equivalents were $1,203 million as of September 30, 2026, compared with $1,353 million as of December 31, 2025.
- Marketable securities were $682 million as of September 30, 2026, compared with $638 million as of December 31, 2025.
- Total assets were $3,376 million as of September 30, 2026, compared with $3,145 million as of December 31, 2025.
- Total liabilities were $1,089 million as of September 30, 2026, compared with $1,021 million as of December 31, 2025.
- Total stockholders’ equity was $2,287 million as of September 30, 2026, compared with $2,124 million as of December 31, 2025.
- Net cash provided by operating activities was $198 million for the three months ended September 30, 2026 and $474 million for the nine months ended September 30, 2026.
- Free cash flow was $181 million for the three months ended September 30, 2026 and $426 million for the nine months ended September 30, 2026.
Analysis
Toast reported a strong third quarter, with Total revenue of $1,981 million versus $1,633 million in the prior-year quarter. Platform activity expanded, as GPV increased 20% to $61.8 billion, ARR increased 24% to $2.5 billion, and Total Locations increased 21% to approximately 189,000 after approximately 8,500 net new Locations were added in the quarter. Subscription ARR grew 28% to $1,279 million, ahead of the 21% increase in Payments ARR to $1,224 million.
Profitability improved materially in the period. GAAP gross profit was $543 million versus $432 million, operating income was $165 million versus $84 million, and net income was $169 million versus $105 million. The release stated that GAAP operating income margin expanded to 26%, calculated against GAAP subscription services and financial technology solutions gross profit. Adjusted EBITDA increased to $240 million from $176 million, while recurring gross profit streams, defined as Non-GAAP subscription services and financial technology solutions gross profit, grew 27% to $642 million.
Mix remains important. Financial technology solutions generated $1,619 million of quarterly revenue and $380 million of GAAP gross profit. Subscription services generated $317 million of revenue and $250 million of GAAP gross profit. In contrast, hardware and professional services produced $45 million of revenue but a GAAP gross loss of $(85) million. Operating cash flow increased to $198 million from $165 million and free cash flow increased to $181 million from $153 million in the quarter. For the nine-month period, however, free cash flow was $426 million compared with $430 million in the prior-year period.
Capital allocation included $(486) million of cash paid to repurchase Class A common stock during the nine months ended September 30, 2026. Cash and cash equivalents were $1,203 million and marketable securities were $682 million at quarter end. The company raised its full-year 2026 outlook for Non-GAAP subscription services and financial technology solutions gross profit to $2,375 million to $2,385 million, from 23-25% growth, and raised Adjusted EBITDA guidance to $840 million to $850 million from $805 million to $825 million.
Product and geographic initiatives included the expansion of Toast IQ Grow, the launch of Toast IQ Team, the launch of Toast Fuel, and expansion into Quebec. The executive transition is also consequential: Elena Gomez will step away at the end of the calendar year, with Senior Vice President of Finance Michael Senno becoming Chief Financial Officer effective January 1, 2027. Gomez will remain an advisory non-executive employee through July 2, 2027.
Management, verbatim
We had another strong quarter: recurring gross profit streams 1 grew 27%, GAAP Operating Income margin 2 expanded to 26% and we added approximately 8,500 net locations.
Aman Narang, CEO
With our Fall Release, we expanded Toast IQ Grow and launched Toast IQ Team, moving Toast beyond tools that help operators run their business toward agents that take on the work for them. Our results show our priorities at work, and I’m confident in our path to durable growth for years to come.
Aman Narang, CEO
Serving as Toast’s President and Chief Financial Officer has been the highlight of my professional career.
Elena Gomez, President and CFO
Not in the filing
stated, not guessed- Prior-quarter figures for reported quarterly financial metrics.
- GAAP gross margin for the third quarter of 2026.
- Non-GAAP earnings per share.
- Debt balance and net debt or net cash measure.
- Dividend declaration or dividend payment information.
- Prior-release outlook section for direct actual-versus-prior-guidance comparison.
- Revenue, gross margin, operating expenses and tax-rate guidance.
Written by an AI language model from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was checked against the filing text, and a metric whose value, prior period and change do not add up is dropped from the metrics. The model can still misread a table, in the metrics or in the text, so check a number in the filing before you rely on it. Consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.