Toast
| CURRENT PRICE | PROBABILITY-WEIGHTED FAIR VALUE | FAIR VALUE RANGE |
|---|---|---|
| ~$35 | ~$39 | $26 – $50 |
| Aug 6, 2026, roughly flat post-print — confirm on live feed | House view: Clean beat-and-raise | Record location adds; guide raised |
New coverage · August 2026: Toast reported Q2 2026 after the close on August 4, 2026. Figures below are verified against the company's SEC Form 8-K (Item 2.02) earnings release[1]; analyst actions and estimate beats/misses are from Benzinga Pro[2].
House View: The clean beat-and-raise of the batch (August 2026). Where Datadog, AppLovin and HubSpot all sold off on their prints, Toast beat and raised and held its ground — the stock traded roughly flat around $35 even as the broader software tape cratered on August 6. Q2 total revenue of $1.908B grew 23% and beat the ~$1.871B consensus; diluted EPS of $0.26 beat the $0.20 estimate by ~30%. The operating story is what matters: ARR grew 25% to $2.4B, Toast added a record ~9,500 net new locations (total ~180,000, +22%), GPV rose 22% to $60.7B, net income roughly doubled to $154M, and adjusted EBITDA reached $221M (helped ~$10M by a one-time tariff refund). Management raised full-year guidance — recurring gross-profit growth to 23–25% (from 21–23%) and adjusted EBITDA to $805–825M — while continuing to buy back stock ($486M YTD). New logos spanned enterprise (BWH/Best Western, expanded TGI Fridays in the UK) and the AI push (Toast IQ Grow, called the fastest-growing launch in company history) adds optionality. The sell-side responded by raising targets to a ~$35–45 band (Needham $45, Wells Fargo/Evercore/BMO $40, Citi/Barclays/Piper $39). At ~$35 the stock trades around ~8x EV/recurring gross profit and low-20s EV/adjusted EBITDA — a fair multiple for a 25% grower with expanding margins and a long location runway. Our base (~$40) sits within the raised Street range; the bull (~$50) needs 25% growth plus international and AI to compound, and the bear (~$26) is a restaurant-macro slowdown with intensifying POS competition.
CURRENT SNAPSHOT
| Metric | Value | Notes / Source |
|---|---|---|
| Stock price | ~$35 | Aug 6, 2026, roughly flat post-print [3] |
| Market cap | ~$20B | ~578M shares × ~$35 [1] |
| Q2 2026 revenue | $1.908B (+23% YoY) | Beat ~$1.871B estimate [2] |
| Q2 2026 EPS | $0.26 diluted | Beat $0.20 est by ~30% [2] |
| ARR / Locations | $2.4B (+25%) / ~180k (+22%) | Record ~9,500 net new locations [1] |
| GPV | $60.7B (+22%) | Recurring gross profit +28% [1] |
| Net income / Adj EBITDA | $154M / $221M | Adj EBITDA incl ~$10M tariff refund [1] |
| Free cash flow / cash | $130M / ~$1.7B | $486M repurchased YTD [1] |
| FY26 guide (raised) | Rec. GP $2.325–2.355B; Adj EBITDA $805–825M | Up from 21–23% GP growth and $790–810M [1] |
| Street PTs (post-print) | ~$35 – $45 | Needham $45, Wells/Evercore/BMO $40, Citi $39 (targets raised) [2] |
BULL / BASE / BEAR SCENARIOS
Toast is valued on recurring gross-profit growth and adjusted EBITDA, not headline revenue (most of which is low-margin payment volume). Scenarios flex the location/ARR growth trajectory and the EV/EBITDA multiple. Weights: Bull 25% / Base 50% / Bear 25%.
| Scenario (weight) | Driver | Approx. multiple | Fair value |
|---|---|---|---|
| Bull (25%) | 25%+ location and ARR growth sustained; international (UK) and Toast IQ/AI scale; retail expansion | ~26x FY27E EBITDA | ~$50 |
| Base (50%) | Growth moderates toward ~20%, margins keep expanding, buyback supports per-share value | ~22x FY27E EBITDA | ~$40 |
| Bear (25%) | Restaurant-macro slowdown, GPV/location growth decelerates, POS competition pressures pricing | ~15x FY27E EBITDA | ~$26 |
| Probability-weighted | — | — | ~$39 |
Probability-weighted fair value ~$39, ~11% above the ~$35 tape and within the raised Street range. This was the highest-quality print in the group — a real beat-and-raise with record location adds — and the valuation is reasonable; the upside depends on Toast sustaining 20%+ growth as it laps a larger base and pushes into international and retail.
Key Risks & Watch Points
- Restaurant macro: GPV and location growth are tied to restaurant health and consumer spending; a downturn hits both new adds and payment volume.
- Competition: Square/Block, SpotOn, Shift4 and others compete for restaurant POS; pricing and take-rate pressure is a persistent risk.
- Take-rate / fintech mix: Most gross profit is payments-driven; changes in interchange, Toast Capital credit performance, or take rate matter.
- Law of large numbers: At ~180k locations, sustaining 20%+ growth gets harder; international and retail are the next legs and are unproven at scale.
- One-time items: Q2 adjusted EBITDA included ~$10M of tariff-refund benefit; watch clean run-rate margins.
What Would Change Our View
- Upside: Continued record location adds, international traction (UK/Europe), retail vertical scaling, and Toast IQ/AI monetization lifting ARPU.
- Downside: Location-add or GPV deceleration, take-rate compression, rising Toast Capital credit losses, or a restaurant-spending slowdown.
Sources
[1] SEC Form 8-K (Item 2.02), Toast Q2 2026 earnings release, filed Aug 4, 2026 — sec.gov/Archives/…/tost-20260630xexhibit991.htm
[2] Benzinga Pro — Toast news feed & analyst actions (Q2 EPS $0.26 beat $0.20, rev $1.908B beat $1.871B est; FY guide raised; post-print PT raises: Needham Buy $45, Wells Fargo $40, Evercore $40, BMO $40, Citigroup Buy $39, Barclays $39, Piper Sandler $39, Oppenheimer $38, RBC $36) — pro.benzinga.com
[3] https://finance.yahoo.com/quote/TOST/
Disclaimer
This output is for informational and research-assistance purposes only. It does not constitute investment, legal, tax, accounting, or other professional advice, and it is not a recommendation to buy, sell, or hold any security or instrument or to pursue any strategy. Information may be incomplete, estimated, delayed, or inaccurate. Past performance does not guarantee future results. Verify material facts independently and consult qualified advisors before making decisions.