Toast, Inc. (TOST) Income Statement

Revenue growth has been consistently above 20% for the past eight quarters, with a slight deceleration from the 31.3% peak in 2024Q1 to 23.1% in 2026Q2. This suggests a durable expansion in the restaurant software market, likely driven by increased adoption of integrated payment and software solutions. The sequential acceleration from 21.9% in 2026Q1 to 23.1% in 2026Q2 indicates that growth is not only stable but may be re-accelerating, possibly due to new product launches or market share gains.

The 400 basis point expansion in gross margin over two years suggests that Toast is successfully upselling higher-margin software and services, or benefiting from scale economies in payment processing. This trend is particularly notable given the competitive landscape, where peers like PAR Technology have gross margins around 43.5%, but Toast's improvement indicates a narrowing gap. The consistent quarterly gains, with only minor fluctuations, point to structural improvements rather than one-off benefits.

Operating income grew from $5M in 2024Q2 to $152M in 2026Q2, a 30-fold increase, while revenue only grew about 58% over the same period. This indicates that SG&A and R&D expenses are growing at a slower pace than revenue, allowing fixed costs to be spread over a larger base. The operating margin trajectory, from negative in 2024Q1 to positive and expanding, suggests that Toast's business model is becoming increasingly efficient, though investors should monitor whether this pace of improvement is sustainable.

While R&D spending has remained relatively stable as a percentage of revenue (around 6-7%), SG&A has shown a clear downward trend, from 16.5% in 2024Q1 to 13.4% in 2026Q2. This suggests that Toast is scaling its sales and marketing efforts more efficiently, possibly due to brand recognition and a larger customer base. The reduction in SG&A intensity is a key driver of operating leverage and suggests management is focused on profitability.