Toast (NYSE:TOST) Issues Quarterly Earnings Results

Toast (NYSE:TOST) posted its earnings results on Tuesday. The company reported $0.29 EPS for the quarter, missing the consensus estimate of $0.36 by ($0.07), FiscalAI reports. The firm had revenue of $1.98 billion during the quarter, compared to analyst estimates of $1.97 billion. Toast had a net margin of 7.14% and a return on equity of 23.90%.

Here are the key takeaways from Toast’s conference call:

• Strong Q3 execution: recurring gross profit grew 27% year over year, GAAP operating income nearly doubled to $165 million, and Toast added 8,500 net locations, ending the quarter with approximately 189,000 locations.
• Toast raised its full-year outlook to 26% recurring gross profit growth and $840 million-$850 million in adjusted EBITDA; management also expressed confidence in maintaining 20%+ growth into 2027.
• AI products are gaining traction, with Toast IQ Grow on track to exceed $10 million in ARR this year and IQ Team customers reporting a 41% reduction in overtime hours; subscription gross margin expanded 320 basis points year over year.
• Enterprise, international, and retail initiatives are scaling rapidly, collectively reaching approximately $200 million in ARR and expected to double for the second consecutive year, with new customers including Bagel Brands, Outback Steakhouse Australia, and Zingerman’s Deli.
• Management expects only modest adjusted EBITDA margin progression next year as it reinvests in new markets and long-term growth initiatives. Free-cash-flow conversion was pressured by higher hardware inventory, while the FTC lawsuit remains an unresolved legal risk.

Toast Trading Up 0.6%

NYSE:TOST traded up $0.19 during mid-day trading on Tuesday, hitting $33.61. 17,466,247 shares of the company’s stock were exchanged, compared to its average volume of 10,872,009. Toast has a fifty-two week low of $22.26 and a fifty-two week high of $39.67. The firm has a market capitalization of $17.27 billion, a P/E ratio of 43.09 and a beta of 1.74. The company has a 50 day simple moving average of $32.00 and a 200-day simple moving average of $29.39.

Analysts Set New Price Targets

A number of research firms have recently weighed in on TOST. Barclays upped their target price on Toast from $35.00 to $39.00 and gave the company an “overweight” rating in a research report on Wednesday, August 5th. Weiss Ratings raised shares of Toast from a “hold (c)” rating to a “hold (c+)” rating in a research report on Thursday, October 8th. Evercore reiterated an “outperform” rating on shares of Toast in a research note on Wednesday, August 5th. BMO Capital Markets raised their target price on shares of Toast from $35.00 to $40.00 and gave the company an “outperform” rating in a report on Wednesday, August 5th. Finally, Wall Street Zen cut shares of Toast from a “buy” rating to a “hold” rating in a research report on Sunday, October 4th. Seventeen analysts have rated the stock with a Buy rating and eleven have issued a Hold rating to the stock. Based on data from MarketBeat.com, the stock has a consensus rating of “Moderate Buy” and a consensus target price of $39.11.

Key Stories Impacting Toast

Here are the key news stories impacting Toast this week:

• Positive Sentiment: Revenue was $1.98 billion, topping analysts’ $1.97 billion estimate. One report said earnings were $0.37 per share, matching consensus and up from $0.25 a year earlier. Toast matches Q3 earnings estimates
• Neutral Sentiment: Another report gave quarterly EPS as $0.29, below the $0.36 consensus. Because this conflicts with the $0.37 figure reported elsewhere, the earnings signal is unclear; investors may look to the company’s official results for clarification. Toast Q3 earnings report
• Negative Sentiment: Toast is fighting an FTC lawsuit concerning its business contracts, creating potential legal and regulatory uncertainty. The article does not specify the case’s financial impact. Toast is fighting an FTC lawsuit

Insider Transactions at Toast

In related news, CFO Elena Gomez sold 16,176 shares of the stock in a transaction on Wednesday, August 5th. The stock was sold at an average price of $35.29, for a total value of $570,851.04. Following the completion of the sale, the chief financial officer directly owned 168,974 shares in the company, valued at $5,963,092.46. This represents a 8.74% decrease in their ownership of the stock. The transaction was disclosed in a document filed with the SEC, which is available at this hyperlink. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, CRO Jonathan Vassil sold 85,280 shares of the firm’s stock in a transaction on Friday, August 21st. The stock was sold at an average price of $36.34, for a total value of $3,099,075.20. Following the transaction, the executive directly owned 69,966 shares of the company’s stock, valued at approximately $2,542,564.44. This represents a 54.93% decrease in their ownership of the stock. The disclosure for this sale is available in the SEC filing. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Over the last 90 days, insiders have sold 520,550 shares of company stock worth $18,096,931. Company insiders own 10.03% of the company’s stock.

About Toast

Toast, Inc (NYSE:TOST) provides a cloud-based technology platform designed for restaurants. Its integrated system combines point-of-sale software and hardware with payment processing, helping restaurants manage sales, orders, menus, guest interactions and day-to-day operations from a unified platform.

The company offers products and services including online ordering, delivery management, digital ordering and payment tools, restaurant websites, gift cards, loyalty programs, marketing, labor management, payroll, inventory management, reporting and analytics.