Key Points
- Toast achieved GAAP profitability with net income of $14 million.
- Revenue for Q2 2024 was $1.242 billion, exceeding consensus estimates by $21 million.
- Annual Recurring Revenue (ARR) grew by 29% year over year to reach $1.5 billion.
Toast (TOST -0.40%), a cloud-based digital technology platform for restaurants, released its earnings report for Q2 2024 on 2024-08-06.
The company reported a GAAP net income of $14 million, translating to Basic EPS of $0.03 and Diluted EPS of $0.02. This exceeded analysts' average expectations of $0.11 for Adjusted EPS. Toast's total revenue for the quarter was $1.242 billion, surpassing the estimated $1.221 billion and representing a 27% year-over-year increase from $978 million in Q2 2023. Overall, Toast demonstrated strong financial performance and notable growth across key metrics.
| Metric | Q2 2024 | Analyst Estimate | Q2 2023 | % Change YoY |
|---|---|---|---|---|
| Total Revenue | $1.242 billion | $1.221 billion | $978 million | 27% |
| GAAP Net Income (Loss) | $14 million | N/A | ($98) million | N/A |
| Adjusted EBITDA | $92 million | N/A | $15 million | 513% |
| Annual Recurring Revenue (ARR) | $1.5 billion | N/A | $1.1 billion | 32% |
Source: Analyst estimates for the quarter provided by FactSet.
Company Overview
Toast provides a comprehensive cloud-based digital technology platform aimed at streamlining restaurant operations. The platform includes various , integrated payment processing solutions, and durable, restaurant-grade hardware.
Recently, Toast has focused on expanding its integrated platform and product adoption, growing its market presence, and emphasizing customer success and support. Key success factors include continued product innovation, expansion into new markets, and maintaining a strong partner ecosystem.
Quarterly Performance
Toast reported strong financial results for Q2 2024. Total revenue reached $1.242 billion, a 27% increase from $978 million in Q2 2023. The company's GAAP net income was $14 million, a significant improvement from the net loss of $98 million in the same period last year.
grew by 29% year-over-year, reaching $1.5 billion. Gross Payment Volume (GPV) also saw a 26% increase, totaling $40.5 billion. This indicates a robust growth in transaction volumes processed through Toast's payment processing platform.
Operating expenses were controlled effectively, totaling $281 million, down from $288 million in the year-ago period. This effort in cost management was a contributing factor to the company's improved profitability.
On the customer acquisition front, Toast added around 8,000 net new locations in Q2 2024, bringing the total to approximately 120,000 locations, representing a 29% year-over-year growth.
Toast also made strides in product innovation and development. The launch of an artificial intelligence (AI) innovation hub, including tools like the AI-Powered Marketing Assistant, exemplifies the company's commitment to staying ahead in technology and addressing key pain points for its stakeholders.
"We are sustaining growth at scale while expanding margins by taking a disciplined approach to investing our resources against our most important priorities," said Aman Narang, CEO and Co-Founder of Toast.
Key Developments
Toast's comprehensive cloud-based platform continues to see widespread adoption, offering an all-in-one solution for restaurant management. This integrated approach across SaaS products and financial technology solutions has been crucial to the platform's success.
Market expansion remains a significant focus for Toast. Domestic growth has been strong, with continued momentum internationally. The company secured new customer acquisitions, including notable commitments from Sonny's BBQ, Uno Pizzeria & Grills, Hwy 55, and PPX Hospitality Group.
Customer success and support have been essential in an industry with historically low technology adoption rates. Toast emphasizes extensive support services, including multi-channel customer support available 24/7, aiding in customer retention and satisfaction.
Innovation and product development continue to be a priority for Toast. The company has been investing in research and development to expand its platform's functionality and broaden the subscription services and financial technology solutions offered. The recent launch of an AI innovation hub, including tools like the AI-Powered Marketing Assistant, highlights Toast's focus on innovation.
Toast's partner ecosystem, featuring over 200 integrated technology partners, remains a key strength. These partnerships enable granular customization of workflows and data integration, enhancing the platform's value for customers.
Looking Ahead
For Q3 2024, Toast projects non-GAAP gross profit from subscription services and financial technology solutions to be between $345 million and $355 million, reflecting a 23-27% annual growth. Adjusted earnings before interest, taxes, amortization, and depreciation (EBITDA) for the quarter is expected to range from $70 million to $80 million.
For the full year 2024, the company anticipates non-GAAP subscription services and financial technology solutions gross profit to range between $1.34 billion and $1.36 billion, representing a 27-29% growth. Adjusted EBITDA for the year is projected to be between $285 million and $305 million.
Investors should keep an eye on Toast's market expansion efforts, especially internationally, as well as its continued investment in AI and data-driven product enhancements. The competitive landscape and broader economic conditions, particularly their impact on the low-margin restaurant industry, will also be important to monitor going forward.
