Why Toast, Inc. (TOST) Soared 11.6%: Earnings, Applebee’s Deal, and AI Innovation Ignite Momentum

On May 9, 2025, Toast, Inc. (NYSE: TOST) surged 11.6%, closing at $40.82, as investors reacted to a trifecta of positive catalysts: stellar first-quarter earnings, transformative partnerships, and advancements in its AI-driven platform. The stock’s jump defied broader market declines, marking a pivotal moment for the restaurant technology leader. Let’s dissect what’s fueling this momentum—and whether it’s sustainable.

The Earnings Catalyst: Profitability and Growth

Toast’s Q1 2025 results were a stark turnaround from the prior year. Net income of $56 million compared to a $83 million loss in Q1 2024, while revenue jumped 24% year-over-year to $1.3 billion. The company’s Annual Recurring Revenue (ARR) surged 31% to $1.3 billion, underscoring the strength of its subscription-based business model. Even though EPS of $0.09 missed some estimates, the broader narrative was clear: Toast is transitioning to profitability.

The chart above highlights how the stock has trended upward since late 2024, with May 9’s surge pushing it near its 52-week high of $43.54. Analysts note this momentum reflects investor confidence in Toast’s ability to capitalize on the $120 billion global restaurant software market.

Landmark Partnerships: Applebee’s and Beyond

The surge was amplified by news of Toast’s landmark partnership with Applebee’s, its largest client win to date. With over 2,000 Applebee’s locations, this deal signals Toast’s capacity to secure enterprise clients—a critical step toward scaling revenue. A prior partnership with Topgolf, where Toast deployed its POS systems nationwide, further demonstrates its expanding footprint.

AI Innovation: ToastIQ as a Growth Engine

Central to Toast’s appeal is its AI-driven ToastIQ platform, which provides restaurants with data analytics, predictive insights, and operational efficiencies. The technology aims to optimize everything from inventory management to customer engagement—a key differentiator in a competitive space.

The company’s focus on AI aligns with a $2.2 trillion global AI market expected by 2030. Analysts argue ToastIQ positions the firm to capture a larger share of the market, particularly as restaurants increasingly rely on cloud-based solutions.

Financial Health and Guidance

Toast’s revised full-year 2025 EBITDA guidance of $540–560 million far exceeded prior estimates, while Q2 subscription revenue is projected to grow 26–29%. A leverage ratio of 1.6 and a current ratio of 2.4 highlight strong liquidity, supported by $147 million in Q1 operating cash flow. These metrics suggest Toast can weather macroeconomic volatility while investing in growth.

The Bigger Picture: Market Leadership Ambitions

With a year-to-date gain of 12.4% and a stock price up 65% since its 2021 IPO, Toast is no longer just a niche player. Its push into international markets, retail segments, and new tools like SMS marketing apps signals a bid to become a “Gorilla” in enterprise software—a category reserved for dominant market leaders like Microsoft and Apple.

Conclusion: Toast’s Recipe for Long-Term Success

The May 9 surge wasn’t a fluke. Toast’s Q1 earnings turnaround, strategic partnerships, and AI-driven innovation form a compelling thesis for sustained growth. Key data points:
- Revenue growth: 24% YoY to $1.3B, with ARR up 31%.
- Client retention: 6,000 new restaurants signed in Q1.
- EBITDA guidance: Raised by $90M from prior forecasts.

With a stock near its 52-week high and a market cap of ~$10 billion, Toast is pricing in its ambitions. However, risks remain, including competition and macroeconomic pressures. Yet, the company’s focus on recurring revenue, enterprise wins, and AI-first strategy positions it to capitalize on secular trends in cloud software and automation. For investors, Toast’s May 9 surge isn’t just a short-term win—it’s a sign of a company primed to dominate a $120B industry.

This visual underscores the confidence Toast’s management has in its trajectory—a confidence now shared by the market.