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Toast Announces 550 Layoffs As Growth Stalls

By Nithya Bose in Business News, posted February 16, 2024

Software company Toast has revealed plans to terminate 550 employees, or almost 10 percent of its headcount.

The announcement comes during a period of decelerating growth for the company despite a strong Q4 earnings report.

It has exceeded the expectations set by Wall Street analysts.

Toast, a restaurant management software provider, is the latest tech company to shed part of its workforce.

The year kicked off with a spate of layoffs, with companies like Cisco reducing 4,000 roles due to falling sales and heightened caution in client spending.

Following the announcement, Toast's stock experienced a volatile after-hours trading session, initially surging by up to 16 percent before relinquishing most of those gains.

The company had a nearly 35 percent year-over-year increase in revenue for the quarter, along with a reduction in its net loss to $36 million from $99 million in the corresponding period last year.

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Additionally, Toast has earmarked $250 million for share repurchase initiatives.

The surge in Toast’s revenue can be attributed to the pandemic-induced demand for its mobile ordering and payment solutions by restaurants.

It propelled the company's revenue to double and facilitated its debut on the New York Stock Exchange in 2021.

However, the growth momentum has shown signs of cooling off in recent quarters.

Competition is another challenge for Toast, facing rivals such as Block, Fiserv, and Shift4.

This competitive pressure led analysts at Bank of America to downgrade their outlook on Toast's stock late last year.

$100 million saving

The layoffs would lead to charges between $45 and $55 million, primarily within the first quarter.

The company expects to save $100 million annually through the restructuring.

Recently, Toast saw a leadership change, with Aman Narang, one of the firm’s co-founders, taking over as CEO from Chris Comparato.

Under new leadership, Toast aims to achieve operating profitability in the first half of 2025, a goal underscored by Narang during a recent analyst call.

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