What Happened?

Shares of restaurant software platform Toast (NYSE:TOST) jumped 12.2% in the afternoon session after the company reported strong first quarter 2025 results and provided optimistic EBITDA guidance for next quarter, which blew past analysts' expectations. In addition, its EBITDA outperformed Wall Street's estimates by a wide margin.

The real story this time was Toast's deal with Applebee's, which was the biggest win in its history and opened doors for more big clients. Sales grew 24% from a year ago, helped by a big jump in recurring revenue and strong growth in payments, boosted by more than 6,000 new restaurant sign-ups. On the other hand, its revenue slightly missed. Zooming out, we think this quarter featured some important positives.

The shares closed the day at $40.82, up 11.6% from previous close.

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What The Market Is Telling Us

Toast’s shares are very volatile and have had 20 moves greater than 5% over the last year. But moves this big are rare even for Toast and indicate this news significantly impacted the market’s perception of the business.

The biggest move we wrote about over the last year was 6 months ago when the stock gained 22.8% on the news that the company reported strong third-quarter 2024 earnings and provided an optimistic EBITDA forecast for the next quarter, which blew past analysts' expectations. While sales were in line with Wall Street's expectations, EPS and EBITDA beat more convincingly during the quarter.

Sales growth was driven by an increase in the number of operational locations and higher SaaS revenue. This growth was further supported by the introduction of new product offerings, such as SMS marketing and branded apps, which effectively boosted customer engagement.

Despite some pressure on annual recurring revenue (ARR), the company maintained momentum in expanding its addressable market, notably in the international and retail segments, setting the stage for sustained long-term growth​. Zooming out, we think this was a good quarter with some key areas of upside.

Toast is up 12.3% since the beginning of the year, and at $40.85 per share, it is trading close to its 52-week high of $43.54 from November 2024. Investors who bought $1,000 worth of Toast’s shares at the IPO in September 2021 would now be looking at an investment worth $653.50.

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