Toast, maker of restaurant management software announced layoffs on Thursday of about 10% of its work force, about 550 employees. Toast also reported Q4 earnings that surpassed Wall Street’s expectations. Several technology companies have instituted layoffs in 2024. On Wednesday Cisco said it would cut 4,000 jobs as sales declined and clients became even more cautious about spending.
Toast Q4 earnings
How much was Toast’s revenue and earnings compared with the consensus among analysts polled by LSEG, formerly known as Refinitiv:
Toast’s earnings per share: Loss of 7 cents per share, vs. loss of 11 cents per share expected
Toast’s Revenue: $1.04 billion vs. $1.02 billion expected
Toast’s revenue increased almost 35% year over year during the quarter, according to a statement.
Toast’s net loss: of $36 million narrowed from $99 million in the year-ago quarter.
Toast’s buyback: The company has committed $250 million for share buybacks.
Decline in demand of Toast’s tools
The pandemic lead many restaurants to adopt Toast’s tools for mobile ordering and payments, which helped double the company’s revenue. Shares debuted on the New York Stock Exchange in 2021, in the midst of that uptick. Demand has cooled since then, down from 37% in the third quarter and about 45% in the second quarter.
Stiff competition
Toast faces increasing competition from the likes of Block, Fiserv and Shift4, Bank of America analysts wrote in a December note as they reduced their rating on the stock from buy to neutral.
Despite the competition, transactions using Toast products continue to grow. Gross payment volume, at $33.70 billion, was up 32%, higher than the $33.53 billion consensus among analysts surveyed by StreetAccount.
Toast’s new layoffs should result in $45 million to $55 million in charges, mostly in the first quarter, and $100 million in annualized savings.
Change in leadership
Toast layoffs come weeks after Aman Narang, Toast’s co-founder and COO, replaced Chris Comparato as CEO. Under Comparato’s leadership last summer, Toast started charging a fee of 99 cents for each online order that totaled more than $10. Consumers and restaurant owners objected, prompting the company to eliminate the surcharge.
Narang said on a conference call with analysts that management aims to report operating profit in the first half of 2025.
Toast stock update
Toast’s shares were initially up as much as 16% after hours but then gave back much of the gains.
