Q1 2024 Earnings Summary
Reported on Feb 18, 2025 (After Market Close)
Pre-Earnings Price$23.73Last close (May 7, 2024)
Post-Earnings Price$25.18Open (May 8, 2024)
Price Change
$1.45(+6.11%)
- Toast has significant room for growth in its core U.S. market, with only 13% penetration in U.S. restaurants overall, and even in highly penetrated markets with 25-30% share, the company still sees some of the strongest growth in terms of net adds, indicating ongoing expansion potential.
- Strong net location adds exceeding guidance, with over 6,000 net adds in Q1, beating the first quarter guide by about 10%, and an expectation to add more locations in 2024 than in 2023, demonstrating robust growth momentum.
- New product suites like the Restaurant Management Suite and AI-enhanced capabilities are simplifying adoption and providing additional value to customers, helping to increase ARPU and appeal to larger merchants, supporting ARPU growth over time.
- SaaS ARPU growth is expected to remain in the mid-single digits on an ARR basis in the near term, with uncertainty about significant improvement beyond that period.
- Moving upmarket into enterprise customers may be challenging due to lower cloud adoption and competition with legacy solutions, which could limit Toast's ability to capture this segment of the market.
- Q2 recurring gross profit growth is expected to be lower than the back half of the year, due to factors like the implementation of the forward flow model and comping a one-time SaaS revenue benefit, potentially indicating slower growth in the near term.