Toast stock bounces after second-quarter revenue beats estimates

Grill shares rose 12% on Friday after the restaurant software provider beat revenue estimates and said the number of locations it serves rose 40% in the second quarter.

Toast provides technology that can serve as a restaurant’s operating system across dining, takeout and delivery channels. Its products applied quickly during the pandemic as restaurants move to contactless payments and flock to digital.

According to Refinitiv, second-quarter revenue jumped 58% from a year ago to $675 million, beating the $651 million expected by analysts. Toast also issued a positive third-quarter forecast, while raising revenue and adjusting earnings guidance for the full year.

Friday’s rally in Toast stock is the latest sign of the resilience of the hardest-hit tech stocks in this year’s market. Toast is still down 42% in 2022, but is up 68% from the low reached in May.

CEO Chris Comparato said on an earnings call with analysts that Toast is excelling by helping restaurants become more efficient at selling while also managing their costs. This is especially important as the industry is facing rising costs due to high inflation over the past 40 years. Comparato said the restaurant workforce is still about 6% smaller than it was before the pandemic.

“Labor and food are the two biggest expenses for restaurants, and the current environment has increased pressure on both,” Comparato said. “We offer restaurants a range of products to automate processes and increase efficiency in their workflows so they can focus on what matters most: food, guests and staff. their members.”

Toast said the total number of locations it serves rose a record and hit 68,000 in the quarter.

Analysts at Piper Sandler say Toast has shown it can operate in a challenging macroeconomic environment.

“The expanding product portfolio appears to be resonating in an environment marked by rising food costs, labor shortages and supply chain challenges,” the analysts wrote in a note late on Thursday. , thus helping restaurants to digitize and automate operations”.

Needham analysts say the Toast guidance suggests demand remains strong.

“We believe TOST is a leading provider of restaurant software and payment solutions and has clear growth potential,” they wrote in a Friday note.

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