Toast raises full-year profit guidance despite a third-quarter revenue miss

Chief executive Aman Narang said recurring gross profit streams grew 27% in the quarter, credited to two new Toast IQ products.

Toast beat on earnings but missed on sales in the third quarter. Revenue was $1.98B against $2.01B expected. Earnings per share were $0.29 on a GAAP basis, the standard US accounting measure, $0.03 better than expected.

The outlook is the bigger news. Toast raised its full-year Adjusted EBITDA guidance to $840m to $850m, up from $805m to $825m. For the fourth quarter it guides Adjusted EBITDA to $200m to $210m. These are management's own forecasts, but a higher range after a revenue miss suggests the company is leaning on profit rather than sales.

That profit comes from recurring gross profit. Toast raised its full-year guidance for gross profit from subscription services and financial technology solutions to $2,375m to $2,385m, having previously guided to growth of 23% to 25%. For the fourth quarter it guides that measure to $610m to $620m.

Narang said recurring gross profit streams grew 27%. He credited the Fall Release expansion of Toast IQ Grow and the launch of Toast IQ Team. Whether that pace carries into later quarters is the open question behind the new forecast.

The forecast now has a change of finance chief attached. Gomez, who is president and chief financial officer, steps down on December 31, 2026, so she is in post for the final quarter of the year. Michael Senno, senior vice president of finance, succeeds her as CFO on January 1, 2027.