BOSTON, May 8, 2026, 11:05 (EDT)
- Toast bumped up its 2026 adjusted EBITDA target after posting a 22% jump in Q1 revenue, yet the stock still tumbled hard on Friday.
- The company tacked on roughly 7,000 net locations and reported that its annualized recurring run-rate—a key metric of subscription and payments volume—climbed 26%, hitting around $2.2 billion.
- Investors still face a handful of hurdles: hardware expenses, inventory purchases, and the lingering threat of tariffs.
Toast Inc. tumbled nearly 15% Friday, with shares trading at $24.93 late in the morning—off $4.45 from their last close—even after the restaurant tech company lifted its full-year profit outlook. Investors shrugged at stronger location growth and higher payments volume, zeroing in on hardware cost headwinds and guidance for earnings instead.
The slide is significant: Toast has been working to prove it can expand past restaurant point-of-sale into payments, enterprise chains, retail, and AI, all while holding onto margin improvements. For the first quarter, the Boston firm posted $1.63 billion in revenue, a 22% increase from the prior year. Net income came in at $126 million—more than double last year’s $56 million.
Toast reported a 22% jump in gross payment volume, hitting $51.3 billion as more dollars flowed through its payments platform. The company’s annualized recurring run-rate climbed to $2.15 billion, up from $1.71 billion a year ago—a key measure Toast relies on to track the scale of its subscription and payments business.
The company bumped up its 2026 adjusted EBITDA outlook, now expecting $790 million to $810 million, compared with the previous range of $775 million to $795 million. Adjusted EBITDA, a non-GAAP metric, leaves out interest, taxes, depreciation and stock-based comp; Toast cautioned investors not to treat it as a replacement for GAAP numbers.
Chief Executive Aman Narang called out a “strong start” to 2026, highlighting recurring gross profit up 27%, an expanded GAAP operating income margin, and more locations. Narang also linked the quarter to Toast’s AI efforts, noting that Toast IQ Grow debuted as the company’s first AI agent to help restaurants boost digital reach and demand. Business Wire
The numbers out of Toast didn’t land quite as badly as the market’s response suggested. According to Investing.com, analysts expected 27 cents per share, but Toast reported earnings of 20 cents; revenue, though, was right in line with forecasts.
Hardware remains the sticking point. On the earnings call, Chief Financial Officer Elena Gomez described the situation as “very fluid” in response to UBS analyst Timothy Chiodo, and noted that Toast has built up inventory to cover supply through 2027. Gomez added that the effect on the 2027 profit-and-loss statement will be greater than what’s expected for 2026, but emphasized the company doesn’t foresee a permanent structural impact. The Motley Fool
Toast pointed to tariffs as a risk in its latest quarterly filing, noting that global tensions could hit consumer spending, squeeze restaurants, or disrupt its own business. The company added that it’s unclear when certain tariffs might kick in—or what impact those potential increases could have on demand.
Toast has been active on the buyback front, scooping up $327 million in Class A shares during the first quarter. Another $51 million was repurchased from March 31 through May 6, according to a filing. That leaves around $208 million still available under the current authorization.
The race is close. According to a January Baird analysis featured by Payments Dive, Fiserv’s Clover held roughly 20% of the small restaurant point-of-sale card processing space. Toast trailed at 17%, with Block’s Square capturing 13%. Large chains usually enjoy cheaper rates, Baird analyst David Koning noted, but Toast, Square, and Clover mostly serve restaurants not in the top 250 groups.
Toast is pushing further into the upmarket segment. This week, the company said it’s partnering with The Alinea Group, which will install Toast systems at Alinea, Next, The Aviary, and The Office. “Toast’s product roadmap made it the clear choice for our growth plans,” said Jason Weingarten, CEO of Alinea Group. Business Wire
Investors seem to be zeroing in on something more specific: Can Toast ramp up restaurant sign-ups, push payments volume higher, and invest in fresh AI features—all while handling hardware and tariff expenses? Judging by Friday’s reaction, the brighter outlook still left those questions hanging.
