According to Toast, a provider of software for managing restaurants, it announced on Thursday that it will be laying off 10% of its employees, a total of 550 individuals.
Additionally, the company revealed its quarterly earnings for the fourth quarter, which exceeded the predictions of Wall Street. After hours, the shares saw an initial increase of 16%, but later they relinquished a significant portion of their gains.
According to the consensus of analysts polled by LSEG, previously known as Refinitiv, here is the performance of the company:
- EPS: A loss of 7 cents per share, compared to the expected loss of 11 cents per share
- Revenue: $1.04 billion, exceeding the expected $1.02 billion.
According to a report, Toast’s earnings rose by approximately 35% in the quarter compared to the previous year. Additionally, the company’s net loss decreased from $99 million in the same quarter of the previous year to $36 million.
The company has allocated $250 million for share repurchases. The outbreak of the pandemic resulted in numerous restaurants implementing Toast’s technology for mobile ordering and payments, leading to a significant increase in the company’s revenue.
In 2021, the company’s shares were launched on the New York Stock Exchange, coinciding with this surge. However, the demand has since decreased, dropping from 37% in the third quarter and approximately 45% in the second quarter.
According to a December note from Bank of America analysts, Toast is facing growing competition from companies such as Block, Fiserv, and Shift4. As a result, the analysts reduced their rating on the stock from buy to neutral.
Despite facing competition, there has been a continuous increase in transactions through the use of Toast products. The gross payment volume, which stands at $33.70 billion, has seen a growth of 32%. This is higher compared to the $33.53 billion estimated by analysts surveyed by StreetAccount.
The job cuts recently announced by Toast are expected to lead to charges between $45 million and $55 million, primarily in the first quarter. However, the company also anticipates annual savings of $100 million.
The recent reductions were made by Aman Narang, the COO and co-founder of Toast, who took over as CEO from Chris Comparato. During Comparato’s tenure in the previous summer, Toast implemented a 99-cent fee for every online order exceeding $10.
This decision was met with opposition from both customers and restaurant owners, leading the company to remove the additional charge. According to Narang in a conference call with analysts, the management’s goal is to achieve an operating profit by the first half of 2025.
