By RTN Staff - 2.23.2024
Restaurant technology solution provider Toast, Inc. recently disclosed its financial results for the fourth quarter and the full year of 2023. Despite a net loss of $36 million in the fourth quarter, the company demonstrated significant growth and resilience, surpassing Wall Street’s expectations with a quarterly revenue of $1.04 billion, marking a 35% increase year over year. This growth is further highlighted by a 35% increase in Annualized Recurring Run Rate (ARR), reaching over $1.2 billion.
In a move towards operational efficiency and profitability, Toast announced this week a restructuring plan that includes reducing its workforce by approximately 550 employees. This decision, aimed at promoting operating expense efficiency, aligns with the company’s ambitious goal of achieving GAAP Operating Income profit by the first half of 2025. Despite the challenges posed by this decision, it reflects Toast’s dedication to sustainable growth.
Looking to the future, Toast remains focused on innovation and expansion. In an analyst call, CEO Aman Narang highlighted the addition of over 6,000 new locations in the latest quarter, bringing the total to more than 106,000. This expansion demonstrates Toast’s commitment to scaling its core business and solidifying its position as the technology platform of choice for the restaurant industry.
CFO Elena Gomez also emphasized the company’s innovative strides in non-payment-related FinTech solutions, which contributed $34 million in gross profit in the most recent quarter. With an expected 22% top-line growth in the current quarter, Toast is poised for continued success.
The company’s journey through the fiscal year of 2023 sets a promising stage for the future. With a doubled ARR since its IPO and a clear strategy for scaling and delivering operating leverage, Toast is not only navigating through challenges but also setting new benchmarks for success in the restaurant technology industry. The company’s financial performance and strategic initiatives lay a strong foundation for sustained growth and profitability, highlighting its role in the tech-driven transformation of the restaurant sector.
The workforce reduction decision is reportedly part of Toast’s efforts to navigate short-term financial losses, primarily related to severance payments, estimated between $45 million and $55 million. The layoffs, affecting a portion of Toast’s 4,500 global employees, are scheduled to occur before July.
In November, Toast announced significant updates to the Toast platform, including the launch of a new mobile app and an enhanced point-of-sale (POS) experience. The new Toast Now mobile app is designed to meet the dynamic nature of how owners and operators manage restaurants and help them remain in the know, on the go, and in control with real-time reporting and key controls.
Additionally, Toast’s new POS experience now provide users with more helpful features, workflows designed to help speed up service, and a comprehensive design update that introduces an attractive and streamlined new look—resulting in a system that is easier to set up, learn, and use.
This week, in an analyst call, Toast CEO Aran Narang acknowledged the company’s rapid growth in some areas and the need for recalibration. This strategic adjustment comes as Toast prepares to move its headquarters from Boston’s Fenway to the Seaport, with the new location at 333 Summer Street set to open in the next few months. This transition marks a new chapter for Toast as it continues to innovate and lead in the restaurant technology space.
