Toast Raised Guidance While Fighting the FTC: What the Earnings Call Says About Fee Transparency

Toast’s 3 November earnings call was the first public test of how the Federal Trade Commission lawsuit might affect the company’s business outlook. The results delivered a clear, if incomplete, answer: Toast raised its full year guidance while facing litigation over fee transparency.

That combination matters for merchants. Toast’s payment take rate also increased, with the company attributing the change in part to targeted price adjustments. The increase was disclosed in the same week the FTC filed suit over alleged fee and cancellation practices. The timing does not establish a connection between the two issues, but it puts pricing decisions and disclosure under a brighter spotlight.

Strong growth, with a mixed earnings signal

Toast reported revenue of $1.98 billion for the third quarter, slightly ahead of consensus estimates of about $1.97 billion. Financial technology solutions contributed $1.619 billion, while subscription services generated $317 million.

Non-GAAP gross profit from subscription services and financial technology solutions reached $642 million, up 27 per cent year on year. Fintech gross profit was $380 million, an increase of 21 per cent. Toast’s annual recurring revenue reached $2.5 billion, up 24 per cent, and the company added around 8,500 net locations, bringing its total to approximately 189,000.

But not every measure beat expectations. GAAP earnings per share were $0.29, below consensus estimates of roughly $0.36 to $0.37. Toast reported net income of $169 million and adjusted EBITDA of $240 million. Shares fell after hours following the results.

The reported take rates add another layer to the story. Toast’s total take rate was 104 basis points, up six basis points. Its payments take rate was 50 basis points, up one basis point, while its fintech net take rate was 61 basis points. The company attributed the payments take rate increase to product adoption, cost efficiencies and targeted price adjustments.

That last factor is strategically relevant. Take rate is one way to understand how payment revenue relates to payment volume, but it does not by itself explain the fees faced by an individual merchant. Product mix, services and contract terms all matter. Still, when a provider reports take rate growth and cites price adjustments, merchants have good reason to ask how pricing is communicated and what changes mean for their own costs.

For the reported figures, see Toast’s SEC earnings exhibit and BusinessWire results release. The earnings call transcript and PYMNTS coverage provide further context on management’s commentary.

Higher guidance is a signal, not a legal verdict

Toast raised its FY26 outlook to 26 per cent recurring gross profit growth and adjusted EBITDA of $840 million to $850 million. It also expects Q4 subscription and fintech gross profit growth of 22 to 24 per cent.

Raising guidance while the FTC case is pending signals that management currently sees the litigation as contained enough not to change its near term operating outlook. It is not proof that the case will be immaterial. Legal costs, reputational effects, changes to contracting practices or a court ruling could still influence the business over time.

CEO Aman Narang said he was “incredibly disappointed” by the lawsuit. He argued that applying the Restore Online Shoppers’ Confidence Act, or ROSCA, to negotiated business to business contracts is unprecedented and could have implications for commercial contract law. Toast says it will defend itself. Its public response describes the company’s position; the FTC’s press release sets out the agency’s allegations. Those allegations have not been determined by a court.

The central industry question is not simply whether ROSCA applies to Toast’s contracts. It is how regulators and courts distinguish a consumer subscription from a negotiated commercial agreement, and what evidence of clear disclosure and genuine agreement they expect to see. The case could influence how payment providers structure pricing, renewals and cancellation processes, even for businesses that are not parties to the dispute.

Our earlier analysis of the FTC case and its merchant implications covers the complaint’s details. In brief, the allegations include early termination charges of $150 per remaining contract month, terms disclosed through linked Merchant Agreement pages and a 30 day written cancellation notice requirement. The current earnings call moves the focus from the complaint to the business impact and the wider questions about provider pricing.

A CFO change is also part of the company’s near term context, though it was not the central earnings story. Elena Gomez will step down on 31 December 2026, with SVP Finance Michael Senno becoming CFO on 1 January 2027. Gomez will remain in an advisory role until 2 July 2027.

Why Australian merchants should pay attention

This US lawsuit does not determine how Australian law applies. But Australian merchants are also seeing a stronger focus on the visibility and comparability of payment costs. The RBA’s new merchant fee tables transparency regime gives businesses published benchmarks to use when assessing provider pricing.

As we explain in our analysis of what the RBA’s first merchant fee tables show, averages are not individual quotes and need to be interpreted against a merchant’s transaction profile. They can, however, give operators a useful starting point for questions about their own rates, services and contract terms.

Together, these developments make fee disclosure a practical operating issue for restaurant POS contracts, not just a legal or investor relations concern. Merchants should be able to identify what each fee covers, where the term is disclosed, how pricing can change and what it takes to exit.

A six point POS and payments contract review

Frequently asked questions

Did the FTC lawsuit prevent Toast from raising its guidance?

No. Toast raised its FY26 recurring gross profit growth and adjusted EBITDA outlook while the litigation was pending. That indicates the company did not change its current guidance because of the suit, but it does not predict the case’s eventual outcome.

What is the key issue in Toast’s ROSCA argument?

Toast argues that ROSCA, a consumer protection law, should not apply to its negotiated business to business contracts with restaurants. Whether the law can reach those agreements is a legal question, and the case remains unresolved.

Does a higher take rate mean every merchant’s fees increased?

No. A company wide take rate does not show the price paid by a particular merchant. Individual costs depend on contract terms, transaction mix, products and services. Merchants should review their own statements and agreements.

How can Australian restaurants use the RBA fee tables?

Treat them as benchmarks, not price quotes. Compare the published averages with your actual costs and payment mix, then ask providers to explain differences and clarify what each fee includes.