Toast (NYSE:TOST) Announces Quarterly Earnings Results

Toast (NYSE:TOST) announced its quarterly 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. Toast had a net margin of 7.14% and a return on equity of 23.90%. The firm had revenue of $1.98 billion during the quarter, compared to the consensus estimate of $1.97 billion.

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 Stock Up 0.6%

Shares of NYSE TOST traded up $0.19 during mid-day trading on Tuesday, reaching $33.61. 17,466,247 shares of the company were exchanged, compared to its average volume of 10,872,009. Toast has a 52 week low of $22.26 and a 52 week high of $39.67. The stock has a market capitalization of $17.27 billion, a PE ratio of 43.09 and a beta of 1.74. The company’s 50 day moving average price is $32.00 and its 200 day moving average price is $29.39.

Analysts Set New Price Targets

Several research firms have recently weighed in on TOST. Royal Bank Of Canada upped their price target on shares of Toast from $36.00 to $44.00 and gave the stock a “sector perform” rating in a report on Monday, August 31st. Truist Financial lowered their price objective on Toast from $39.00 to $38.00 and set a “buy” rating on the stock in a research report on Monday, October 19th. BTIG Research reissued a “neutral” rating on shares of Toast in a research note on Thursday, August 27th. Barclays boosted their target price on Toast from $35.00 to $39.00 and gave the stock an “overweight” rating in a research report on Wednesday, August 5th. Finally, UBS Group raised their price target on Toast from $34.00 to $39.00 and gave the company a “buy” rating in a report on Wednesday, August 5th. Seventeen research analysts have rated the stock with a Buy rating and eleven have issued a Hold rating to the company’s stock. According to MarketBeat, Toast currently has a consensus rating of “Moderate Buy” and a consensus target price of $39.11.

Insider Activity at Toast

In other Toast news, CEO Aman Narang sold 124,542 shares of Toast stock in a transaction dated Wednesday, August 5th. The stock was sold at an average price of $35.29, for a total transaction of $4,395,087.18. Following the completion of the sale, the chief executive officer owned 175,458 shares of the company’s stock, valued at $6,191,912.82. The trade was a 41.51% decrease in their ownership of the stock. The sale 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 company’s stock in a transaction dated 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 completion of the transaction, the executive owned 69,966 shares of the company’s stock, valued at $2,542,564.44. The trade was a 54.93% decrease in their ownership of the stock. The SEC filing for this sale provides additional information. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Insiders have sold a total of 520,550 shares of company stock valued at $18,096,931 over the last 90 days. 10.03% of the stock is owned by insiders.

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.