Toast will reduce workforce by 10% as growth slows

Summary

A CNBC article by Jordan Novet, published February 15, 2024, reporting that Toast said it will let go of 550 employees, about 10% of its workforce, while reporting fourth-quarter results that beat Wall Street expectations. Key points say the layoffs will bring $45 million to $55 million in charges, mostly in the first quarter, and $100 million in annualized savings. Revenue was $1.04 billion against $1.02 billion expected, with a net loss of $36 million narrowed from $99 million a year earlier, and the company committed $250 million to share buybacks. The article notes Cisco's plan to cut 4,000 jobs, that Aman Narang replaced Chris Comparato as CEO weeks earlier, and that the 99 cent online-order fee was eliminated after objections.

Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used

Full text

Tech

Toast will lay off 10% of its workforce, about 550 employees, as growth slows

Published Thu, Feb 15 2024 5:25 PM EST Updated Thu, Feb 15 2024 8:56 PM EST

Jordan Novet @in/jordannovet/

WATCH LIVE

Key Points

- Toast said it would lay off 550 employees, resulting in $45 million to $55 million charges, mostly in the first quarter.
- The maker of restaurant software reported better-than-expected results, but growth continued to slow after an acceleration in 2021.
- Toast is beginning share buybacks.

In this article

A screen displays the company logo for Toast Inc. during the company’s initial public offering at the New York Stock Exchange in New York, Sept. 22, 2021.

Brendan Mcdermid | Reuters

Toast , maker of restaurant management software, said on Thursday it will let go of 550 employees, about 10% of its workforce. The company also reported fourth-quarter earnings that surpassed Wall Street's expectations.

Several technology companies have instituted layoffs in 2024. On Wednesday Cisco said it would eliminate 4,000 jobs as sales declined and clients became even more cautious about spending.

Toast's shares were initially up as much as 16% after hours but then gave back much of the gains.

Here's how the company did, compared with the consensus among analysts polled by LSEG, formerly known as Refinitiv:

- Earnings per share: Loss of 7 cents per share, vs. loss of 11 cents per share expected
- Revenue: $1.04 billion vs. $1.02 billion expected

Toast's revenue increased almost 35% year over year during the quarter, according to a statement . Its net loss of $36 million narrowed from $99 million in the year-ago quarter. The company has committed $250 million for share buybacks.

The pandemic lead many restaurants to adopt Toast's tools for mobile ordering and payments, which helped double the company's revenue. Shares debuted on the New York Stock Exchange in 2021, in the midst of that uptick. Demand has cooled since then, down from 37% in the third quarter and about 45% in the second quarter.

Toast faces increasing competition from the likes of Block, Fiserv and Shift4, Bank of America analysts wrote in a December note as they reduced their rating on the stock from buy to neutral.

Despite the competition, transactions using Toast products continue to grow. Gross payment volume, at $33.70 billion, was up 32%, higher than the $33.53 billion consensus among analysts surveyed by StreetAccount.

Toast's new layoffs should result in $45 million to $55 million in charges, mostly in the first quarter, and $100 million in annualized savings.

Those cuts come weeks after Aman Narang, Toast's co-founder and COO, replaced Chris Comparato as CEO. Under Comparato's leadership last summer, Toast started charging a fee of 99 cents for each online order that totaled more than $10. Consumers and restaurant owners objected, prompting the company to eliminate the surcharge.

Narang said on a conference call with analysts that management aims to report operating profit in the first half of 2025.

WATCH: Lightning Round: I'm not onboard with Toast until they make money, says Jim Cramer

watch now

VIDEO 4:08 04:08

Lightning Round: I'm not onboard with Toast until they make money, says Jim Cramer

Mad Money with Jim Cramer

Choose CNBC as your preferred source on Google and never miss a moment from the most trusted name in business news.

File and source

File

toast-will-reduce-workforce-by-10percent-as-growth-slows-html_82c00847c2af59d0.html

Size

791,241 bytes

SHA-256

f13e2ec11b4e8a2edb2b273a79fdc0cdc4d1790ac4001a6fd4a738304d2185a1

Our copy

toast-will-reduce-workforce-by-10percent-as-growth-slows-html_82c00847c2af59d0.html

Original

www.cnbc.com