Toast, Inc. 10-Q Summary: Q1 2026
Business Context and Reporting Period
This report covers the quarterly period ended March 31, 2026. Toast, Inc. operates a global technology platform for restaurant and retail businesses, integrating software, agentic AI, payments, and hardware. As of the period end, the company served approximately 171,000 live locations, a 22% increase year-over-year, and processed $204 billion in gross payment volume (GPV) over the trailing 12 months.
Key Financial Metrics
| Metric | Q1 2026 | Q1 2025 | Change |
|---|---|---|---|
| Total Revenue | $1,630 million | $1,337 million | +22% |
| Gross Profit | $447 million | $346 million | +29% |
| Operating Income | $110 million | $43 million | +156% |
| Net Income | $126 million | $56 million | +125% |
| Diluted EPS | $0.20 | $0.09 | +122% |
| Operating Cash Flow | $132 million | $79 million | +67% |
| Free Cash Flow | $115 million | $69 million | +67% |
| Cash & Marketable Securities | $1,770 million | $1,991 million | -11% |
| Debt | $0 outstanding | $0 outstanding | N/A |
Liquidity: The company holds $1,098 million in cash and cash equivalents and $672 million in marketable securities. It maintains a $350 million credit facility with $347 million available.
Material Changes vs. Prior Period
- Revenue Growth: Driven by a 28% increase in Subscription Services ($268M) and a 22% increase in Financial Technology Solutions ($1.323B). Hardware and professional services revenue declined 15% to $39M.
- Profitability Expansion: Operating margin improved significantly from 3.2% in Q1 2025 to 6.7% in Q1 2026, aided by the elimination of restructuring expenses ($7M in Q1 2025 vs. $0 in Q1 2026) and operating leverage.
- Share Repurchases: The company repurchased $327 million of Class A common stock in Q1 2026, compared to only $17 million in Q1 2025. This was a primary driver of the decrease in total cash and stockholders' equity.
- Key Metrics: Gross Payment Volume (GPV) grew 22% to $51.3 billion, and Annualized Recurring Run-Rate (ARR) grew 26% to $2.151 billion.
Guidance, Outlook, and Risks
Management Commentary: Management attributes growth to a higher number of locations and continued product adoption. The company expects seasonality to continue impacting financial technology solutions revenue, which is historically stronger in Q2 and Q3.
Capital Allocation: On February 10, 2026, the Board approved a $500 million increase to the share repurchase program. As of March 31, 2026, $259 million remained authorized. Subsequent to the quarter end (through May 6, 2026), an additional $51 million was repurchased.
Risks and Contingencies:
- Forward-Looking Statements: Subject to risks including global economic conditions, inflation, interest rates, and geopolitical events (e.g., tariffs).
- Legal: No material litigation expected to have a material adverse effect.
- Tax: The company maintains a full valuation allowance against U.S. net deferred tax assets; release timing remains uncertain.
Investor Verification Checklist
- Verify the sustainability of the 22% GPV growth rate and its correlation to Financial Technology Solutions revenue.
- Confirm the impact of the $327 million share repurchase on future liquidity and capital allocation priorities.
- Monitor the "Cash held on behalf of customers" balance ($241M), which is excluded from operating cash flow analysis but impacts total cash position.
- Review the $231 million in non-cancellable hardware purchase commitments due within 12 months.
- Assess the potential impact of the full valuation allowance on future effective tax rates if profitability trends continue.