Toast, Inc. (TOST): BCG Matrix [Dec-2025 Updated]

You're looking at where Toast, Inc. should place its capital right now, and the BCG Matrix tells a clear story about its portfolio as of late 2025. We see Subscription and Fintech acting as clear Stars, with Annual Recurring Revenue jumping 30% to over $2.0 billion, while the massive Gross Payment Volume, hitting $51.5 billion in Q3, fuels the strong $610 million to $620 million Adjusted EBITDA guidance from the Cash Cow side. Still, the low-margin hardware drags down the Dogs quadrant, and you need to watch the high-investment, low-share international push and new AI bets in the Question Marks area closely. Dive in to see exactly where the next dollar needs to go to maximize long-term value.

Background of Toast, Inc. (TOST)

You're looking at Toast, Inc. (TOST) as of late 2025, and the story is one of strong, accelerating growth despite some recent earnings noise. Toast is the all-in-one digital technology platform built specifically for restaurants, offering everything from order taking to payment processing. Honestly, the operational metrics they reported for the third quarter of 2025 really tell the tale of a business finding its stride.

Let's look at the numbers from their Q3 2025 report, which ended September 30, 2025. Revenue came in at $1.63 billion, which was a solid beat and represented a 25.1% jump year-over-year. More importantly for the long-term story, their Annual Recurring Revenue (ARR) finally crossed the $2.0 billion mark, growing 30% from the prior year. That's the kind of sticky revenue we like to see; it took them ten years to hit the first billion, but only two more to double it. Plus, for the first time, both Payments ARR and SaaS ARR individually topped $1 billion.

The physical footprint is expanding, too. Toast powered 156,000 locations globally by the end of Q3, adding about 7,500 net new locations just in that quarter. That's a 23% increase in total locations year-over-year. They are clearly moving upmarket, securing big names like TGI Fridays for their entire U.S. operation and rolling out to nearly 200 dining locations at Nordstrom. These enterprise wins prove the platform can handle serious scale beyond the small-to-medium business (SMB) core.

On the profitability front, the underlying economics are humming. GAAP Net Income for Q3 2025 hit $105 million, which was an 87.5% increase from Q3 2024. Adjusted EBITDA for the quarter reached $176 million, and Free Cash Flow was $153 million. Because of this strong performance, management actually raised their full-year 2025 guidance, now projecting Adjusted EBITDA between $610 million and $620 million. They are also pushing innovation, launching things like Toast Advertising and evolving their AI tool, Toast IQ, which is already seeing strong adoption.

Toast, Inc. (TOST) - BCG Matrix: Stars

You're looking at the engine driving future stability for Toast, Inc. (TOST), the segment where high growth meets significant market penetration. These are the units demanding capital now because they are winning in expanding territory. Specifically, the Subscription and Fintech solutions segment hit an Annual Recurring Revenue (ARR) of over $2.0 billion as of Q3 2025, representing a growth rate of 30% year-over-year.

This performance places the core US restaurant Point-of-Sale (POS) platform firmly in the Star quadrant. It's a leader, but leading in a growing market costs money for promotion and placement, which is why cash flow can look tight even with high revenue. Here's a quick look at the key performance indicators defining this Star status:

The estimated 15% market share in the core US restaurant POS platform is solid, especially when you factor in the strong net location additions Toast, Inc. has been securing. Honestly, the all-in-one platform model is the secret sauce here; it creates high customer switching costs, defintely solidifying that market position against competitors. If onboarding takes 14+ days, churn risk rises, but their integrated ecosystem helps keep that risk low.

To be fair, these Stars are where the strategic investment dollars need to go right now to ensure they mature properly into Cash Cows when the overall market growth inevitably slows. The financial expectation supports this investment thesis:

• Subscription and Fintech ARR: Over $2.0 billion as of Q3 2025.
• ARR Growth Rate: 30%.
• Projected Full Year 2025 Recurring Gross Profit Growth: 32%.
• Market Position: Leader in a growing segment.

Sustaining this success means continuing to pour resources into development and sales to keep that market share ahead of the curve. Recurring gross profit streams are projected to grow by 32% for the full year 2025, showing the underlying profitability of the installed base is strengthening even as the company invests heavily in growth. Finance: draft 13-week cash view by Friday detailing capital allocation for the next round of platform feature rollouts.

Toast, Inc. (TOST) - BCG Matrix: Cash Cows

You're looking at the engine room of Toast, Inc., the part of the business that consistently spits out more cash than it needs to maintain its dominant position. This is where high market share meets a mature, albeit still growing, market for restaurant technology and payments processing. The sheer scale of transactions flowing through the platform solidifies its Cash Cow status, providing the necessary fuel for other parts of the business.

Gross Payment Volume (GPV) is the main cash engine, reaching $51.5 billion in Q3 2025. That's a massive amount of economic activity being processed, which translates directly into predictable revenue streams. This volume underpins the stability you want to see in a Cash Cow; it's not a speculative bet, it's the daily bread and butter.

The financial discipline here is evident in the profitability metrics. Full-year 2025 Adjusted EBITDA is guided to a strong range of $610 million to $620 million. To be fair, Q3 2025 already delivered $176 million in Adjusted EBITDA, representing a 35% margin on that segment's gross profit, showing the efficiency of milking this established base. You don't need heavy promotion here; you need efficiency.

The net take rate on payments processing provides a stable, high-volume, and predictable revenue stream. The payments net take rate settled at 49 basis points in Q3 2025, while the broader fintech net take rate was 61 basis points. These basis points are increasing slightly due to cost optimization and new product attachments like surcharging, which is exactly how you 'milk' a Cash Cow-by improving margins on existing volume, not just chasing new, low-margin growth.

Total customer locations reached approximately 156,000 by Q3 2025, providing a massive installed base. This installed base is critical because it drives Annual Recurring Revenue (ARR), which surpassed $2.0 billion as of September 30, 2025, marking a 30% year-over-year increase. Investments here are focused on infrastructure to support this scale and improve efficiency, like the ongoing reliability enhancements following the AWS outage, rather than broad market entry campaigns.

Here's a quick look at the core financial output supporting this categorization:

The focus for this segment is maintaining productivity and extracting maximum cash flow, which is evident in the operational metrics that show scale and profitability:

• Annual Recurring Revenue (ARR) surpassed $2.0 billion.
• Total Locations stood at approximately 156,000.
• Net cash provided by operating activities was $165 million in Q3 2025.
• The company added approximately 7,500 net new locations in Q3 2025.
• Fintech net take rate was 61 basis points.

The strategy here is clear: maintain the competitive advantage that allows Toast, Inc. to command this market share, invest judiciously in infrastructure to lower the cost to serve, and harvest the resulting strong cash flows. Finance: draft 13-week cash view by Friday.

Toast, Inc. (TOST) - BCG Matrix: Dogs

You're looking at the parts of Toast, Inc. that aren't driving the high-growth story you see in the headlines. These are the units that require attention but don't offer significant upside, the classic Dogs in the portfolio.

Hardware sales, which are low-margin and non-recurring, account for a small portion of total revenue. For the third quarter of 2025, revenue attributed to Hardware and professional services was reported at $44 million, against a Total revenue of $1,633 million. Guidance for the full year ending December 31, 2025, factored in slightly higher tariff expenses related to this hardware segment.

Gross Payment Volume (GPV) per location saw a slight year-over-year decline in Q2 2025. Specifically, GPV per location was down 1% versus the prior year period. This metric contrasts sharply with the overall GPV growth of 23% year-over-year, reaching $49.9 billion in Q2 2025 across approximately 148,000 total locations.

The category of legacy or older, less-adopted software modules that have been superseded by newer platform features, such as the recently released Toast Go® 3 and Toast IQ, represents a drag on engineering resources. These older modules compete for maintenance cycles against features that drive the 30% year-over-year growth in Annual Recurring Revenue (ARR) seen in Q3 2025, which reached over $2.0 billion.

Consider any non-core, low-adoption services that require maintenance but don't drive platform expansion. These units tie up capital that could be deployed to areas showing strong returns, like the Non-payments FinTech Solutions, led by Toast Capital, which contributed $40 million in gross profit during Q2 2025. The platform's core recurring revenue streams are clearly the focus for investment, evidenced by the Q2 2025 Adjusted EBITDA margin of 35%.

Here's a quick look at the scale of the high-growth versus the implied lower-return segments based on Q3 2025 figures:

You're seeing the core business generate significant cash flow, with GAAP income from operations at $84 million in Q3 2025. The decision point for these Dog assets is whether a turnaround plan is feasible or if divestiture frees up resources for Stars or Question Marks.

• Legacy software support costs.
• Low-margin hardware fulfillment.
• Non-core service maintenance overhead.
• Units not contributing to platform stickiness.

If onboarding for these older modules takes 14+ days, churn risk rises, definitely impacting future recurring revenue.

Finance: draft 13-week cash view by Friday.

Toast, Inc. (TOST) - BCG Matrix: Question Marks

You're looking at the areas of Toast, Inc. (TOST) that are burning cash now but hold the keys to future dominance. These are the high-growth, low-share plays that demand heavy investment to avoid becoming Dogs. Honestly, this is where the next Stars are born, but it requires serious capital commitment.

International expansion into markets like Australia, the UK, and Canada represents this high-growth, low-share dynamic perfectly. While the core U.S. business is mature, these new geographies are in high-growth phases where Toast, Inc. is still establishing its footprint. To give you a concrete example of the start, the international team launched its first customer in Australia during the second quarter of 2025. This is a classic land-grab scenario; you have to spend to secure that initial market share.

The Enterprise segment, targeting large chains, is a major strategic pivot, and it's showing early promise. This focus is on securing multi-unit operators, which is a different sales motion than the core small-to-medium business (SMB) base. Management has stated that the Enterprise segment, alongside international and food and beverage retail, is on track to reach over $100 million in Annual Recurring Revenue (ARR) by the end of 2025. That's a significant milestone for these emerging areas, especially when you consider the total company ARR was $2.0 billion as of September 30, 2025, growing at 30% year-over-year. You can see the relative size difference clearly.

These new focus areas-Enterprise, International, and Retail-hit a collective milestone of crossing 10,000 live locations in Q2 2025. This is the metric you need to watch to see if the investment is paying off. If these segments don't rapidly increase their share of the total 156,000 locations (as of Q3 2025), they risk stalling out.

Here's a quick look at the key metrics for these high-potential, cash-consuming areas as of the third quarter of 2025:

New AI-powered products like ToastIQ and Toast Advertising are definitely Question Marks because they require heavy Research and Development (R&D) investment now for scale later. These are the future differentiators, but they are cash-intensive upfront. The good news is that adoption is strong; as of the Q3 2025 earnings call, these AI tools were already helping over 25,000+ restaurants, with usage topping 235,000+ instances. Management is prioritizing product-led growth and adoption before implementing meaningful pricing changes, meaning the return on investment is deferred.

Finally, the expansion into new verticals, specifically food and beverage retail, is an unproven, high-potential market that fits this quadrant. This is about proving the vertical strategy works outside of the core restaurant space. The fact that retail is grouped with Enterprise and International in the $100 million ARR target shows management views them as a single, high-potential growth engine that needs fuel now. If you're an investor, you defintely want to see the location count in this specific vertical start to climb significantly in 2026.

• International expansion: High growth, low current share.
• Enterprise segment: New focus, targeting large chains.
• AI Products (ToastIQ/Advertising): High R&D spend for future scale.
• New Verticals (Retail): Unproven, high-potential market entry.