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Toast falls 20% on EPS miss, soft guidance

Published 08/11/2023, 13:00
© Reuters.
TOST
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Toast (TOST) reported its third-quarter results, which include a loss per share of $0.09, falling short of the analyst estimate by $0.13.

Toast's adjusted EBITDA came in at $35 million, surpassing the estimate of $20 million. Revenue figures for the third quarter met expectations, coming in at $1.03 billion.

TOST shares dropped 20% on the report.

Gross payment volume (GPV) reached $33.7 billion, somewhere in line with the consensus of $33.82 billion. The annualized recurring revenue was reported at $1.22 billion, while analysts were looking for $1.23 billion.

“Toast delivered solid results in the third quarter. ARR grew 40% to over $1.2 billion with our consistent go-to-market execution driving strong net location additions combined with continued ARPU growth. Our focus on balancing durable top line growth with efficiency led to our seventh consecutive quarter of Adjusted EBITDA margin expansion,” said Toast CEO Chris Comparato.

Toast anticipates Q4 revenue in the range of $1 billion to $1.03 billion, slightly lower than the consensus estimate of $1.03 billion. The company also expects its adjusted EBITDA to fall between $5 million and $15 million in the fourth quarter.

Analysts at Morgan Stanley cut the target by $6 to $22 per share.

“As the story evolves, leading secular position remains,” the analysts said and reiterated an Overweight rating.

Analysts at BTIG believe the stock reaction is a result of the GPV miss.

“TOST's CFO Elena Gomez shared that TOST restaurants have seen a modest slowdown in GPV per location growth since the back half of September and that the trend has continued through October. While the same-store-sales headwind will put pressure on TOST's revenue, we note it is a macro factor largely out of management's control,” the analysts said.

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