why is their qoq revenue decelarating

Measuring quarter-over-quarter (QoQ) revenue for a company heavily reliant on transaction volume exposes a blind spot in how you are modeling their business. Comparing Q1 to Q4 ignores the massive seasonality of the restaurant industry. Q4 contains the peak holiday dining rush, while Q1 holds January and February—the slowest months of the year for foot traffic. A flat or slightly negative QoQ print from Q4 to Q1 is seasonal mechanics, not a structural deceleration.

The metric you should be tracking is the deceleration in their year-over-year (YoY) revenue growth, which has compressed from 41% in 2023 to 24% in 2025, and down to roughly 22% in Q1 2026.

That broader, structural deceleration is driven by three factors you are missing:

• Gross Payment Volume (GPV) Stagnation: Toast is essentially a payment processor wrapped in a SaaS interface; over 80% of their revenue comes from fintech solutions, not software subscriptions. GPV per location actually went slightly negative (down 1% YoY) at the end of 2025. While inflation has pushed menu prices higher, lower consumer foot traffic is offsetting those gains. Existing customers are not generating compounding transaction volume.
• Hardware and Implementation Drag: Because their net new location additions have dropped from their peak of 8,500 down to 7,000, they are booking fewer upfront hardware sales and professional installation fees. Less top-of-funnel velocity translates directly to a drag on gross revenue.
• Upmarket Margin Dilution: As Toast exhausts its core SMB market, they are forced to chase mid-market and enterprise chains to maintain location growth. Larger chains hold the leverage to negotiate aggressively lower payment processing rates. They might add more enterprise doors, but the revenue yield extracted per location shrinks, pulling the aggregate revenue growth rate down even as the location count rises.