• In the past quarter, Toast reported that its annual recurring revenue reached US$1.93 billion in Q2, supported by positive outlooks from several major Wall Street analysts in August 2025.
• This combination of robust recurring revenue growth and growing analyst confidence highlights Toast’s continued market traction and strong customer engagement.
• We’ll explore how Toast’s significant annual recurring revenue climb may shape the company's broader investment narrative and future prospects.

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Toast Investment Narrative Recap

For an investor to own Toast, Inc., the key belief centers on the company's ability to drive sustained recurring revenue growth and increase market share as restaurants digitize operations. The recent boost in annual recurring revenue to US$1.93 billion and continued analyst confidence further reinforce enthusiasm around Toast’s software platform, but do not materially change the immediate catalyst, the company’s ability to improve customer acquisition cost efficiency. The biggest short-term risk remains elevated sales and marketing spending outpacing gains in productivity or market share, which could weigh on margins if revenue growth slows.

One recent announcement that stands out in light of these concerns is the Q2 earnings report showing US$80 million in net income, a substantial improvement from the same quarter last year. This uptick in profitability provides some tangible evidence that Toast’s investments in product innovation and partnership expansion (like the recent American Express integration) could begin contributing more meaningfully to bottom-line performance, aligning with the ongoing push for efficient growth.

However, despite impressive revenue expansion, investors should be aware that Toast continues to face pressure from high sales and marketing costs and...

Toast's outlook forecasts $8.9 billion in revenue and $738.5 million in earnings by 2028. Achieving this would require 17.3% annual revenue growth and an increase in earnings of $514.5 million from current earnings of $224.0 million.

Uncover how Toast's forecasts yield a $50.54 fair value, a 27% upside to its current price.

Exploring Other Perspectives

Simply Wall St Community analysts, representing 11 fair value estimates for Toast, range from US$26.29 to US$58.86 per share. While opinions widely differ, the company’s margin pressures tied to rising customer acquisition spend present a key issue you will want to compare across these viewpoints.

Explore 11 other fair value estimates on Toast - why the stock might be worth 34% less than the current price!

Build Your Own Toast Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Toast research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.
• Our free Toast research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Toast's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.