TOST jumps 14% as it announces cost cuts and share repurchase program; Can it hold these gains?

Jay's InsightFriday, Feb 16, 2024 10:36 am ET

1min read

Toast, a restaurant-focused software company, reported its Q4 earnings on Thursday. The company missed the bottom line but did outpace revenue consensus and [provided an upbeat outlook on its EBITDA.

TOST announced a round of cost-cutting measures and a share buyback which has been a formula for success, at least in the short term, for tech companies this quarter. Shares of TOST have rallied 15% on the collective news.

The company reported a loss of $0.07 per share, which was $0.10 worse than analyst expectations for a profit of $0.03. Revenues for the quarter rose by 34.7% year-over-year to $1.04 billion, surpassing the consensus of $1.02 billion.

The company's board of directors approved a $250 million share repurchase program, which is positive news for investors. In addition, the board has approved a restructuring plan to promote overall operating expense efficiency. This plan includes a reduction in force that is expected to impact approximately 550 employees. The company expects to complete the plan by the end of FY24, incurring restructuring and restructuring-related charges of approximately $45 to $55 million. Most of the charges will be incurred in Q1.

The decision to implement job cuts is driven by the company's goal of achieving operating expense efficiency. The restructuring plan aims to reorganize Toast's facilities and operations to better align with the changing market dynamics.

The company's outlook is positive, with Toast projecting adjusted EBITDA of about $210 million for 2024, which is higher than analysts' estimates of $170 million. The company's strong outlook is due to its focus on the restaurant industry, which has shown resilience despite the slowdown in the food industry.

Toast's Q4 earnings report shows that the company is on track to achieve its goals and that its restructuring plan is expected to promote operating expense efficiency. We will see if the stock can hold gains as the tech sector comes under pressure today following some hot inflation data.

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