Toast reports Q2 revenue of $1.91B, up 23% YoY

Toast’s shares have surged back toward breakeven for 2024 after a spring rebound, lifting its stock to levels that now look cheap against its rapid growth. The restaurant software and payments company reported second-quarter revenue of $1.91 billion, up 23% year over year, while annual recurring revenue jumped 25% to $2.4 billion. The stock had fallen more than 35% early in the year after a broader sell-off in software-as-a-service stocks and concerns about the restaurant sector, but Toast’s fundamentals kept improving even when its shares lagged.

The company continues to outperform in a fragmented market of small and midsize restaurants that need simple, reliable tools rather than complex AI platforms. Unlike frontier AI companies chasing enterprise clients, Toast’s AI-powered solutions like Toast IQ Grow are built for operators who aren’t tech experts. Its agentic AI tools for marketing, payroll, scheduling, and bookkeeping are gaining traction, with Toast IQ Grow on track to become its fastest product to reach $10 million in annual recurring revenue. These tools help restaurants with slim margins optimize menus, control labor costs, and boost revenue per customer—key drivers that could lift long-term earnings.

Financial results show momentum across the board. Subscription revenue rose 28% to $290 million, financial technology revenue climbed 23%, and gross payment volume grew 22% to $60.7 billion. The company added a record 9,500 new locations in the quarter, bringing its total to 180,000, a 22% increase from last year. Analysts highlight its expanding take rates and strong payment processing scale as competitive advantages in a crowded market.

Investors are starting to see Toast not as an AI laggard but as a practical profit engine with clear room to grow. With its shares now near break-even for the year and growth accelerating, the stock looks undervalued compared to its expanding reach and recurring revenue base. If Toast continues to convert restaurant operators to its AI tools and payment platform, it could further widen its lead in a market where most rivals struggle to scale.