Shares of Toast (TOST +6.99%) soared 15.1% higher on Wednesday morning, spiced up by a tasty first-quarter earnings report. By 3 p.m. ET, the stock had cooled down somewhat to a 13.6% one-day gain.
A closer look at Toast's first-quarter financials
In the first quarter of 2025, Toast, which sells restaurant management software, reported a net loss of $0.15 per share and revenue of $1.08 billion. The average Wall Street analyst had expected a slightly lower loss of $0.14 per share on lower revenue near $1.04 billion. That's a mixed bag of headline results.
But revenue rose by 31% year over year, supported by 32% growth in its annualized recurring run-rate (ARR). Transaction volumes in Toast's payment processing system also jumped 30% higher and the number of customer locations grew by 32%.
NYSE: TOST
Key Data Points
Toast's path to sustained hypergrowth
Toast is generating robust growth across the board in an organic manner. The company is mostly expanding its client network with steady prices and service fees at this point. Higher fees and other margin-boosting activities can wait until it shifts into a lower-growth, higher-profit business model.
Perhaps that's the big takeaway from last year's unpopular attempt to introduce a new payment processing fee, which the company quickly canceled.
After Wednesday's jump, the stock is setting multiyear highs again. It still stands far below the much loftier valuations seen in 2021, before the inflation crisis hamstrung high-octane growth stocks like this one. And it's still quite affordable, trading at just 3.6 times sales today.
Toast is one of the most interesting growth stories related to the restaurant business, and I can't wait to see where it goes in the long run.
