Toast Inc
(MEX:TOST)
MXN
600
+4.2 (+0.7%)
Market Cap: 342.97 Bil
Enterprise Value: 312.80 Bil
PE Ratio: 44.21
PB Ratio: 9.95
GF Score: 84/100 
Q2 2026 Toast Inc Earnings Call Transcript
Aug 04, 2026 / 09:00PM GMT
Release Date Price:
MXN585.05
(+3.97%)
Key Points
Positve
- Toast Inc (TOST) delivered strong Q2 results with recurring gross profit streams growing over 28% year-over-year and GAAP operating income margins expanding to 26%.
- The company achieved a record 9,500 net new location additions in Q2, surpassing its previous high watermark and demonstrating strong market share gains.
- Toast IQ Grow, the company's AI-powered marketing agent, is on track to become the fastest-growing product to $10 million in ARR, showing strong early customer adoption and monetization potential.
- The company is successfully expanding into new markets, with ARR in each new TAM (enterprise, international, retail) scaling faster than the core business did at the same stage, and total new TAM ARR is expected to nearly double to $200 million this year.
- Toast Inc (TOST) raised its full-year 2026 guidance for recurring gross profit growth to 23%-25% and adjusted EBITDA to $805-$825 million, reflecting confidence in continued momentum.
- The company is seeing strong traction in new verticals, including its first gas station convenience stores with fuel payments, and has roughly doubled its location count in the sports and entertainment market over the past year.
- Toast Inc (TOST) is operating above the Rule of 50 with recurring gross profit growth plus operating margin reaching 57% in Q2, demonstrating a strong balance of growth and profitability.
- The company's core business is operating at Rule of 60 with over 20% growth and over 40% margins, providing a solid foundation for continued investment in growth initiatives.
- Toast Inc (TOST) has successfully mitigated the impact of memory market cost increases through supply chain optimization, positioning for structurally better hardware margins long-term.
- The company is seeing strong customer demand for its lending products (Toast Capital), with defaults remaining within expectations due to its data advantage and disciplined underwriting.
Negative
- Toast Inc (TOST) faces ongoing headwinds from the dynamic memory market, which is expected to have a greater P&L impact in 2027 than in 2026, despite mitigation efforts.
- Free cash flow in Q2 was down year-over-year due to a strategic decision to acquire and hold more hardware inventory in the near term, which could pressure near-term cash generation.
- The company's hardware and professional services gross profit remains negative, contributing a drag of 11% on recurring gross profit streams.
- Operating expenses increased 19% year-over-year, driven by significant investments in sales and marketing (up 22%) and R&D (up 23%), which could pressure near-term profitability if growth initiatives underperform.
- The company received a one-time tariff refund of approximately $10 million in Q2 that was not contemplated in guidance, and management expects this to represent the bulk of refunds, limiting future upside from this source.
- While Toast IQ Grow is growing rapidly, it is still in early stages, and the company is still learning about customer implementation and optimization, which could require more handholding and investment than initially anticipated.
- The company is making strategic choices to reinvest upside into long-term growth areas, which means full-year adjusted EBITDA guidance is increased by less than the Q2 beat, potentially disappointing investors expecting more immediate margin expansion.
- GPV per location remained flat year-over-year, indicating that growth is primarily driven by location adds rather than increased spending per location.
- The company's new TAMs, while scaling quickly, are still relatively small (expected to reach $200 million ARR this year) and may not yet be contributing meaningfully to overall profitability.
- Toast Inc (TOST) is investing in longer-term bets like consumer and other retail verticals, which carry execution risk and may not deliver returns for 3-5 years, potentially diluting near-term focus and returns.
Operator
Good afternoon. My name is Christine, and I will be your conference operator today. At this time, I would like to welcome everyone to Toast second quarter 2026 earnings conference call. Today's call will be 45 minutes. I will now turn the call over to Michael Senno, Senior Vice President of Finance. You may begin your conference.
Michael Senno
Toast Inc - Senior Vice President of Finance
Thank you. Welcome to Toast second quarter 2026 earnings call. First, CEO, Aman Narang; and CFO, Elena Gomez, will open with prepared remarks followed by Q&A. Before we start, I'd like to remind everyone that today's call may include forward-looking statements, which are subject to risks and uncertainties and reflect our views and assumptions only as of today.
These forward-looking statements include expectations around financial and operational metrics, products, business and investment strategy and guidance. Actual results may vary significantly, and we expressly disclaim any obligation to update the forward-looking statements made today. For a detailed
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