Toast (TOST) Q2 Earnings Report Preview: What To Look For

Jabin Bastian /
2022/08/10 5:27 am EDT

Restaurant software platform Toast (NYSE:TOST) will be announcing earnings results tomorrow afternoon. Here's what to expect.

Last quarter Toast reported revenues of $535 million, up 52% year on year, beating analyst revenue expectations by 9.07%. It was an incredible quarter for the company, with a significant improvement in gross margin and a very optimistic guidance for the next quarter.

Is Toast buy or sell heading into the earnings? Read our full analysis here, it's free.

This quarter analysts are expecting Toast's revenue to grow 52.4% year on year to $647.6 million, slowing down from the 192% year-over-year increase in revenue the company had recorded in the same quarter last year. Adjusted loss is expected to come in at -$0.12 per share.

Toast Total Revenue

Majority of analysts covering the company have reconfirmed their estimates over the last thirty days, suggesting they are expecting the business to stay the course heading into the earnings. The company has a history of exceeding Wall St's expectations, beating revenue estimates every single time since going public on average by 8.72%.

Looking at Toast's peers in the vertical software segment, some of them have already reported Q2 earnings results, giving us a hint of what we can expect. Q2 Holdings delivered top-line growth of 13.5% year on year, beating analyst estimates by 0.03% and 2U reported revenues up 1.79% year on year, missing analyst estimates by 5.03%. Q2 Holdings traded down 4.01% on the results, and 2U was down 3.18%. Read our full analysis of Q2 Holdings's results here and 2U's results here.

There has been positive sentiment among investors in the software segment, with the stocks up on average 5.69% over the last month. Toast is up 15% during the same time, and is heading into the earnings with analyst price target of $21.4, compared to share price of $16.76.

One way to find opportunities in the market is to watch for generational shifts in the economy. Almost every company is slowly finding itself becoming a technology company and facing cybersecurity risks and as a result, the demand for cloud-native cybersecurity is skyrocketing. This company is leading a massive technological shift in the industry and with revenue growth of 70% year on year and best-in-class SaaS metrics it should definitely be on your radar.

The author has no position in any of the stocks mentioned.