Toast (TOST 1.65%), a leading provider of cloud-based restaurant management software, released its third-quarter earnings on November 7, 2024. The company reported substantial growth in key financial metrics, showing strong execution of its strategy. Revenue rose to $1.305 billion, a 26.5% increase from $1.032 billion in Q3 2023, although no revenue estimates were provided for comparison. The company achieved a net income of $56 million, a remarkable recovery from a $31 million net loss in the previous year. Earnings per share (EPS) were $0.10 basic and $0.07 diluted. The results were below the analyst earnings estimate of $0.138315 per share. Overall, the quarter marked significant progress with notable profitability improvements.
| Metric | Actual (Q3 2024) | Estimate | Prior Year (Q3 2023) | % Change |
|---|---|---|---|---|
| Revenue | $1.305 billion | Not provided | $1.032 billion | 26.5% |
| Net Income | $56 million | N/A | $(31) million | N/A |
| Adjusted EBITDA | $113 million | N/A | $35 million | 222.9% |
| EPS (Basic) | $0.10 | $0.138315 | $(0.06) | N/A |
| EPS (Diluted) | $0.07 | $0.138315 | $(0.09) | N/A |
Source: Analyst estimates for the quarter provided by FactSet.
Toast is a comprehensive technology platform designed for the restaurant industry, incorporating point of sale (POS), payment processing, and restaurant operations management. It provides a suite of tools for digital ordering, delivery, marketing, and financial solutions.
In recent years, Toast has concentrated on expanding its integrated platform to cater to the varying needs of restaurants. This strategic focus is central to its value proposition, offering cohesive management across multiple operational aspects. Key success factors include increasing the number of restaurants using its platform and improving recurring revenue streams.
In the third quarter of 2024, Toast launched several innovative products, including a branded mobile app and SMS marketing tools, which addressed critical needs in the restaurant space. These introductions have helped Toast expand its market presence, as evidenced by the growth to nearly 127,000 locations, a 28% rise from the previous year.
The company’s Gross Payment Volume (GPV) reached $41.7 billion, illustrating a 24% increase and strong user engagement with its payment solutions. These metrics underscore the importance of integrated solutions for Toast's clients, aiding in enhancing customer retention and driving sales.
Net income turned positive at $56 million from a previous net loss, driven by revenue growth and operational efficiencies. Adjusted EBITDA also soared to $113 million, demonstrating effective cost management and scalable growth.
Despite strong domestic performance, Toast’s international operations remain limited. The future poses both a challenge and an opportunity for global expansion. The company will require substantial investments to replicate its success in international markets.
For the fourth quarter of 2024, Toast forecasts non-GAAP gross profit from subscriptions and financial technology solutions to be between $370 million and $380 million. Adjusted EBITDA is projected between $90 million and $100 million. These expectations emphasize the confidence in continuing its current growth trajectory.
The full-year outlook anticipates non-GAAP gross profit growth of 32-33%, reflecting ongoing expansion in market penetration and product offerings. Investors should watch for Toast’s efforts to decrease churn rates and strategies to facilitate international growth in the forthcoming quarters.
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