What Happened:
Shares of restaurant software platform Toast (NYSE:TOST) jumped 6.57% in the after market session after the company reported an impressive "beat and raise" quarter. First quarter results exceeded analysts' revenue, adjusted EBITDA, and earnings per share estimates, though cash burn increased. While gross margin improved significantly relative to the previous quarter, it was still below estimates. Regardless, revenue guidance for the next quarter came in above Consensus, and the full-year revenue guidance was lifted. Adjusted EBITDA guidance for the full year was also raised with the mid-point of the guidance projected for margins to be nearly breakeven. After the initial pop the shares cooled down to $20.25, up 4.01% from previous close.
What is the market telling us:
Toast's shares are very volatile and over the last year have had 56 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business.
Toast is up 14.9% since the beginning of the year, but at $20.25 per share it is still trading 22% below its 52-week high of $25.96 from February 2023. Investors who bought $1,000 worth of Toast's shares at the IPO in September 2021 would now be looking at an investment worth $322.53.
Is now the time to buy Toast? Access our full analysis of the earnings results here, it's free.