Toast will cut the workforce by 10% as growth slows

Toast, a maker of restaurant management software, said Thursday it would lay off 550 employees, about 10 percent of its workforce. The company also reported fourth-quarter earnings that beat Wall Street expectations.

Several tech companies announced layoffs in 2024 Wednesday Cisco said it would cut 4,000 jobs as sales slumped and customers became even more cautious about spending.

Shares of Toast were initially up as much as 16% after hours, but have since given back much of the gains.

Here’s how the company fared compared to the consensus among analysts polled by LSEG, formerly Refinitiv:

• Earnings per share: A loss of 7 cents per share versus an expected loss of 11 cents per share
• Income: $1.04 billion vs. $1.02 billion expected

Toast’s revenue rose nearly 35% year-over-year in the quarter, according to a statement. Its net loss of $36 million was down from $99 million in the year-ago quarter. The company has set aside $250 million for share buybacks.

The pandemic prompted many restaurants to adopt Toast’s mobile ordering and payment tools, which helped double the company’s revenue. The stock debuted on the New York Stock Exchange in 2021, at the height of that boom. Demand has cooled since then, down 37% in the third quarter and about 45% in the second quarter.

Toast faces increasing competition from Block, Fiserv and Shift4, Bank of America analysts wrote in a December note, while downgrading the stock from buy to neutral.

Despite the competition, transactions using Toast’s products continue to grow. Gross payment volume of $33.70 billion was up 32%, more than the $33.53 billion consensus among analysts polled by StreetAccount.

Toast’s new cuts should result in $45 million to $55 million in charges, mostly in the first quarter, and $100 million in annual savings.

These layoffs come weeks after Aman Narang, co-founder and COO of Toast, replaced Chris Comparato as CEO. Under Comparato’s leadership last summer, Toast began charging a 99-cent fee for any online order totaling more than $10. Consumers and restaurant owners objected, prompting the company to remove the surcharge.

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

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