Toast (TOST) To Report Earnings Tomorrow: Here Is What To Expect

Jabin Bastian /
2023/05/08 4:28 am EDT

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

Last quarter Toast reported revenues of $768 million, up 50% year on year, beating analyst revenue expectations by 1.97%. It was a mixed quarter for the company, with a meaningful improvement in gross margin but underwhelming guidance for the next year.

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 42.6% year on year to $763.1 million, slowing down from the 89.7% year-over-year increase in revenue the company had recorded in the same quarter last year. Adjusted loss is expected to come in at -$0.07 per share.

Toast Total Revenue

The analysts covering the company have had mixed opinions about the business heading into the earnings, with revenue estimates seeing two upward and two downward revisions over the last thirty days. The company has a history of exceeding Wall St's expectations, beating revenue estimates every single time over the past two years on average by 6.1%.

Looking at Toast's peers in the vertical software segment, some of them have already reported Q1 earnings results, giving us a hint what we can expect. nCino delivered top-line growth of 45.7% year on year, beating analyst estimates by 4.5% and PTC reported revenues up 7.31% year on year, exceeding estimates by 0.55%. nCino traded flat on the results, PTC was up 1.46%. Read our full analysis of nCino's results here and PTC's results here.

There is still much uncertainty in the markets. The Federal Reserve's hawkish stance on rates, meant to tame inflation, remains a key market narrative. There is an added wrinkle now with troubles in the banking sector, triggered by Silicon Valley Bank's fairly sudden and surprising collapse. Given these, the question is whether higher rates (which dampen economic activity) and potentially less lending from the overall banking sector will trigger a recession. While some tech stocks have recovered year-to-date, most are still well off their 52-week highs. Toast is up 6.84% over the last month, and is heading into the earnings with analyst price target of $22.5, compared to share price of $18.43.

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.