$TOST (Toast Inc.) operates a cloud-based technology platform for the restaurant industry in the US and Ireland. It offers Point of Sale, a hardware product, Toast Order & Pay allows guests to order and pay from their mobile devices and other hardware.
This enhances the overall efficiency of table turn times/customer experience and the generic management software of running a restaurant.
In addition to this, it offers the Toast Online Ordering & Toast TakeOut app, a software that connects online channels, points of sale, menu management, and kitchen operations in real time.
It also has software infrastructure that allows any restaurant to join a network of delivery services, e.g., GrubHub, UberEats, Deliveroo, PostMates, Etc. Therefore, every restaurant that uses Toast is competitive and can send takeout food.
𝗦𝗵𝗼𝗿𝘁 𝗙𝗶𝗴𝘂𝗿𝗲𝘀
Financials:
$1.8bn in revenue
$929.06m in cost of revenue
$254m in gross profit
$613.1m in Expenses
$-359.1m in Earnings
This might seem like quite a negative outlook for the company, but there are a few reasons for this.
Firstly, the company is recovering from the COVID-19 pandemic, and as this company operates in the restaurant industry, it was affected quite severely. However, the rebound has been rapid, and we should see sustained profitability within three years.
By 2023, 9 analysts estimate that the company will have approximately $ 2.9bn revenue.
However, earnings are forecasted to be approximately $ 484m.
Now, there could be a profitability margin/efficiency issue.
This isn’t great for a company as it shows inefficiency; however, as it focuses on cloud computing and software is constantly being streamlined, we might see the earnings looking better than forecasted.
TOST’s Revenue (28.3% per year) is forecast to grow faster than the US market (9.8%)
Short-term assets are $534.8m, and short-term liabilities are $252.6m.
Long-term assets are $161.3m, and long-term liabilities are $209.8m.
Short-term assets cover all liabilities, and TOST has a flawless balance sheet and no debt.
Even though TOST is not profitable, it has had a sufficient cash runway for more than three years due to positive free cash flow growing by 81% per year.
𝗪𝗵𝗼 𝗺𝗮𝗻𝗮𝗴𝗲𝘀 𝘁𝗵𝗶𝘀
Chris Comparato is the CEO with six years of tenure and a compensation of $374,668. This is good as it shows management isn’t being overpaid. The usual compensation for a company of similar size is around $11m.
The board has a wealth of experience, including some investors who have previously built billion-dollar companies. E.g., Steven Papa
Within the last three months, insiders have bought around $75.3m worth of shares, whereas in the same period, insiders have only sold $24.4m worth of shares. This means insiders have bought shares with a net value of $50.9m.
This is great to see as a potential investor as it shows that the insiders themselves have tremendous confidence in the business despite the lack of profitability at the moment.
Notable shareholders include Goldman Sachs, JP Morgan, Costco’s 401(K) retirement fund, and the Vanguard group. Some pretty big players have significant holdings in this company.
I am looking forward to the gains of this promising company.
Feel free to share your thoughts in the comment section.
