Toast Shares Rebound on Solid Growth Outlook. Can the Stock's Momentum Continue?

Core Insights - Toast reported solid fourth-quarter results, with a significant rebound in share price following an initial sell-off after earnings release [1] Group 1: Financial Performance - Total Q4 revenue increased by 22% to $1.63 billion, with subscription revenue rising by 28% to $256 million and financial technology revenue growing by 22% [2] - Annual recurring revenue (ARR) jumped by 26% to $2 billion, driven by a 2-basis-point increase in payment processing take rate to 48 basis points [3] - Earnings per share (EPS) rose from $0.05 a year ago to $0.16, while adjusted EBITDA soared 47% from $111 million to $163 million [4] Group 2: Future Guidance - For 2026, Toast forecasts subscription services and fintech gross profit to be between $2.27 billion and $2.30 billion, indicating 20% to 22% growth, with adjusted EBITDA expected to be between $775 million and $795 million [4] - For Q1, the company projects subscription services and fintech gross profit of $505 million to $515 million, equating to 22%-24% growth, with adjusted EBITDA anticipated in the range of $160 million to $170 million [5] Group 3: Market Position and Growth Opportunities - Toast added approximately 8,000 new net restaurants in the quarter, a 22% year-over-year increase, totaling around 164,000 locations, with notable traction in international markets and food and beverage retailers [2] - The company sees opportunities for growth beyond its core small U.S. restaurant customer base and is embracing AI tools as a future growth driver [8]