Toast (TOST 16.77%) stock is posting big gains Friday trading. The fintech company’s share price was up 15.3% as of 2 p.m. ET, according to data from S&P Global Market Intelligence.
Toast stock is gaining ground following the publication of the company’s fourth-quarter earnings results. While the company’s sales for the period fell short of the market’s target, earnings came in better than expected. The company also announced it would be reducing expenses by trimming its workforce.
Sales and margins were strong in Q4
Toast posted a loss per share of $0.07 on sales of $1 billion in last year’s fourth quarter. Meanwhile, the average analyst estimate had called for the business to post a loss of $0.11 per share on sales of $1.02 billion. While sales fell slightly short of the average analyst target, revenue still grew 30% year over year in the period. The business also closed out the period with an annualized recurring revenue run rate of $1.2 billion — up 35% year over year.
In addition to strong sales growth, Toast continued to post solid margin expansion. The company’s non-GAAP (adjusted) gross profit grew significantly faster than overall sales and increased 42% year over year to hit $245 million. Meanwhile, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) came in at $29 million — a big improvement over the $18 million adjusted EBITDA loss it posted in last year’s quarter.
What comes next for Toast?
For the first quarter of the current fiscal year, Toast is guiding for adjusted subscription services and financial technology solutions to deliver gross profit between $275 million and $285 million.
For the full year, management is guiding for gross profit from the category to be between $1.3 billion and $1.32 billion. At the midpoint of the target, this would represent roughly 24% growth compared to performance in 2023.
Meanwhile, adjusted EBITDA is projected to come in between $200 million and $220 million. The midpoint of the target would represent a 244% improvement over the $61 million in adjusted EBITDA it posted last year.
Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Toast. The Motley Fool has a disclosure policy.
