Toast Posts Q4 Revenue Beat, Analysts Expect Fintech Pricing To Drive 2025 Growth

Shares of Toast Inc (NYSE:TOST) tanked in early trading on Thursday, after the company reported mixed fourth-quarter results.

The results came in amid an exciting earnings season. Here are some key analyst takeaways.

• RBC Capital Markets analyst Daniel Perlin reaffirmed a Sector Perfor
• Keefe Bruyette & Woods analyst Sanjay Sakhrani maintained a Market Perform rating, while lifting the price target from $40 to $42.
• Needham analyst Mayank Tandon maintained a Buy rating and price target of $50.

Check out other analyst stock ratings.

RBC Capital Markets: Toast reported revenues of $1.338 billion and adjusted EBITDA of $111 million, higher than Street expectations of $1.318 billion and $101 million, respectively, Perlin said in a note. Financial Technology Solutions contributed $1,090 million in revenue, while Subscription Services added $200 million, he stated.

Management announced mixed guidance for the first quarter and full year, the analyst added. "Our big takeaway is that its expansion into new markets, particularly international and enterprise, is proving to be successful with a 50% increase in international initial ARPU for 4Q24 go-lives and a marque win in Hilton, which is inclusive of payments," he further wrote.

Keefe, Bruyette & Woods: Toast reported a "generally positive" quarter, "with slightly better than expected benefits from fintech pricing and continued benefits from improved subscription ARR to revenue conversion," Sakhrani said. Both are likely to drive the company's performance in the first half of 2025, he added.

The 2025 outlook reflects "continued stable growth" in location adds, the analyst stated. "Adjusted EBITDA margins are trending better than preliminary expectations as management balances operating leverage with investments in key areas," he further wrote.

Needham: Toast reported revenue growth of 29.2% year-on-year, with strength in subscription services revenue, which jumped 40.8%, Tandon said. Recurring revenues grew 37.7% year-on-year to $438 million, driven by stronger subscription services revenue, he added.

"TOST provided a solid guide for both 1Q and FY25 guide, which we believe could turn out to be conservative given the strong sales momentum and cadence of new logo wins," the analyst wrote. The company's strong sales momentum and the large and underpenetrated addressable market suggest upside to Street estimates, he further stated.

Price Action: Shares of Toast had declined by 3.9% to $38.42 at the time of publication on Thursday.

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