Toast (TOST -1.96%), which sells hardware and software for managing restaurants, said first-quarter revenue surged, though the company reported a substantial net loss.
In a promising sign, revenue rose 31% to $1.075 billion from $819 million in the year-ago quarter, the company said in a statement yesterday. The company also reported a net loss of $83 million, or negative earnings per share (EPS) of $0.15, compared with a net loss of $81 million, or $0.16, a year earlier.
Some other metrics also showed signs of improvement. Adjusted EBITDA (earnings before interest taxes, depreciation and amortization) swung to a positive $57 million from a negative $17 million in Q1 2023. Gross payment volume, which measures the value of transactions processed using its systems, rose 30% to $34.7 billion from $26.7 billion in the 2023 quarter.
| Metrics | Q1 2024 | Q1 2023 | % Change |
|---|---|---|---|
| Revenue | $1.075B | $819M | 31% |
| ARR | $1.3B | $987M | 32% |
| GPV (Billion) | $34.7 | $26.7 | 30% |
| Adjusted EBITDA (Million) | $57 | ($17) | N/A |
| Net Loss (Million) | ($83) | ($81) | N/A |
Data sources: Company results from company.
Business overview
Toast's platform handles a number of critical tasks in restaurant management, from point of sale (POS) systems to comprehensive financial technology solutions. Its platform is designed not only to streamline operations but also to boost revenue opportunities for restaurants of all sizes.
Toast has diversified its offerings to meet the evolving demands of consumers and restaurants alike. By integrating digital ordering, delivery solutions, and marketing programs, Toast supports restaurants in adapting to new dining trends while capturing a larger market share.
Quarterly highlights
The first quarter of 2024 was notable on several fronts, particularly the 32% increase in revenue that Toast defines as annualized recurring run rate (ARR), which reached $1.3 billion, up from $987 million. The company also reported that its first-quarter loss from operations narrowed to $56 million from $92 million a year earlier.
Looking at the market side, Toast has demonstrated solid financial performance, with notable improvements in operating margins and free cash flow. The stock market's response has been favorable, reflecting confidence in Toast's growth trajectory, and the shares have gained about 48% this year. However, operational restructuring, including a 10% headcount reduction, highlighted the challenges of rapid expansion and the need for efficient scaling.
Despite these positive trends, the company still faces challenges, as shown by persistent net losses.
Looking ahead
For the coming quarter and full year of 2024, Toast offered a positive financial outlook, projecting increased gross profit from non-GAAP (generally accepted account principle) subscription services and financial technology solutions. Projections suggest continued momentum, with gross profit expected to range between $320 million to $330 million for Q2 and $1.325 billion to $1.345 billion for the full year.
