The stock market had a nice gain on Tuesday, but investors appeared ready for a brief pause in any upward recovery as major market benchmarks eased lower. As of 8:30 a.m. ET, futures on the Dow Jones Industrial Average (^DJI 2.12%) were down 76 points to 34,828. S&P 500 (^GSPC 1.45%) futures had declined 10 points to 4,455, while Nasdaq Composite (^IXIC) futures were down 34 points to 14,576.
Investors have paid particularly close attention to high-growth stocks to see whether they could make good on their potential when they release their actual financial results. For Roblox (RBLX -4.25%) and Toast (TOST -2.36%), the past few months have been painful for shareholders, and the news each of them released late Tuesday afternoon after the stock market's regular trading session had ended didn't inspire investors to change their bearish views on the two companies. Below, you'll learn more about what Roblox and Toast said about their results and their futures.
Roblox's strong growth still fell short
Shares of Roblox were trading lower by 17% in premarket trading on Wednesday morning. The global game platform and budding metaverse environment provider reported its fourth-quarter financial results, and while they showed substantial gains, they weren't enough to make its shareholders happy.
Many of Roblox's numbers were impressive on their face. Revenue for the quarter rose 83% year over year to $569 million, closing a year in which Roblox's sales more than doubled to $1.9 billion. Daily active user counts for the quarter rose 33% to 49.5 million, and hours engaged climbed 28% to 10.8 billion.
However, some were disappointed by Roblox's lack of more substantial progress toward achieving profitability. Net losses widened dramatically to $143 million for the quarter and $492 million for the full 2021 year, working out to $0.25 per share and $0.97 per share, respectively. Those per-share numbers narrowed only because Roblox's share count increased dramatically from year-earlier levels.
Moreover, some favorable tailwinds for Roblox from past periods showed signs of turning into headwinds, as early estimates had average bookings per daily active user in January falling 22% to 23% year over year. Tough comparisons could remain a problem for Roblox, and that seems to be affecting investor sentiment substantially.
Toast gets overdone
Elsewhere, shares of Toast were down 16% in premarket trading. The restaurant-focused digital platform provider's fourth-quarter numbers also revealed an ongoing growth story, but once again, growth-hungry investors seemed to leave the table feeling unsatisfied.
Toast's fourth-quarter figures included a 111% jump in revenue to $512 million, a 74% rise in annual recurring revenue to $568 million, and a 125% gain in gross platform volume to $17 billion. Toast even managed to post a modest profit for the quarter of $2 million, reversing a much more substantial loss in the year-earlier period. Although higher expenses ate into revenue growth, a 55% rise in gross profit was still noteworthy.
However, Toast investors were shocked at the extent to which the company sees its sales growth slowing in 2022. Full-year guidance set revenue expectations at $2.349 billion to $2.409 billion, which would work out to growth of just 38% to 41% from 2021's final numbers. Moreover, Toast expects its adjusted pre-tax operating losses to expand dramatically in the coming year.
The restaurant industry has faced huge struggles in the past two years due to the pandemic, and its recovery raises some big questions both for restaurateurs and for the companies that serve them. Toast has a difficult transition to navigate, and it will have to do better to allay investors' concerns.