Toast Stock Pops on Guidance Lift

Toast, Inc. (TOST) shares surged on Thursday, November 7, 2024, following the release of its third-quarter earnings report and an optimistic outlook for the remainder of the year. The company's stock price jumped by 11.6% in the premarket session, reaching $36.47, as investors responded to the positive news.
Toast reported strong financial results for the third quarter, with Gross Payment Volume (GPV) increasing 24% year over year to $41.7 billion. The company's Annualized Recurring Run-Rate (ARR) as of September 30, 2024, was $1.6 billion, up 28% year over year. Additionally, Toast's net income for the quarter was $56 million, a significant improvement from the net loss of $31 million in the same period last year.

The company's positive performance was driven by its expanding customer base and new locations, as well as its subscription-based business model. Toast's revenue growth, coupled with operational efficiencies, resulted in a net income of $56 million in Q3 2024, a remarkable turnaround from a net loss of $31 million in the previous year.

Toast's expansion into new markets and product offerings has significantly influenced its financial performance. The company's strategic partnerships and acquisitions, such as the acquisition of Bread in 2021, have also played a crucial role in its growth and market penetration. These partnerships and acquisitions have not only expanded Toast's customer base but also strengthened its position in the competitive restaurant technology landscape.
Looking ahead, Toast expects to report Adjusted EBITDA in the range of $90 million to $100 million for the fourth quarter ending December 31, 2024. The company also anticipates non-GAAP subscription services and financial technology solutions gross profit to be between $370 million and $380 million, reflecting a 32% to 35% growth compared to Q4 2023. For the full year ending December 31, 2024, Toast anticipates non-GAAP gross profit from subscription services and financial technology solutions to be between $1.395 billion and $1.405 billion, which represents a 32% to 33% increase year over year.
Toast's focus on recurring revenue streams and customer retention is a key driver of its long-term financial outlook. The company's subscription services and financial technology solutions gross profit, which it considers its recurring gross profit streams, grew 35% year over year in Q3 2024. This growth is supported by a 28% increase in annualized recurring run-rate (ARR) and a 24% increase in Gross Payment Volume (GPV). By expanding its market penetration and product offerings, Toast is well-positioned to continue this growth trajectory.

In conclusion, Toast's strong financial performance and optimistic outlook have driven investor confidence in the company's stock. The company's expansion into new markets, strategic partnerships, and focus on recurring revenue streams have contributed to its impressive growth and market leadership in the restaurant technology sector. As Toast continues to innovate and execute on its strategic vision, investors can expect the company to maintain its momentum and deliver strong returns in the long run.