Toast Inc. recently announced its fourth-quarter financial outcomes, revealing a significant downturn in its stock valuation during after-hours trading. This decline occurred despite the company's performance surpassing analysts' projections for both revenue and earnings per share. The report highlighted robust growth in annualized recurring revenue and an expansion in its customer base, alongside a strategic increase in its share repurchase initiative.
In the fourth quarter, Toast reported revenues totaling $1.63 billion, marginally exceeding the estimated $1.62 billion. Concurrently, the company's earnings per share (EPS) reached 16 cents, surpassing the anticipated 13 cents. A notable achievement was the 26% year-over-year increase in annualized recurring run-rate (ARR), pushing it beyond the $2 billion mark by the end of 2025. Gross Payment Volume (GPV) also saw a healthy 22% rise, reaching $51.4 billion. Furthermore, Toast expanded its reach by adding 30,000 new locations in 2025, bringing the total number of establishments serviced to approximately 164,000, marking a 22% year-over-year growth.
Aman Narang, the CEO of Toast, expressed optimism about the company's trajectory, emphasizing its strong momentum in core restaurant operations, acceleration in new market penetration, increased platform adoption, and focused investment strategies. In a move to enhance shareholder value, Toast's board of directors approved an additional $500 million for its share repurchase program, augmenting the previously authorized amount.
Looking ahead to the first quarter, Toast projects its subscription services and financial technology solutions to generate gross profits between $505 million and $515 million, indicating a growth rate of 22% to 24%. The company also anticipates an adjusted EBITDA in the range of $160 million to $170 million for the same period. These projections were part of a detailed discussion held by Toast executives during a conference call following the earnings announcement.
Despite these positive financial and operational results, Toast's shares experienced an 8.11% drop in after-hours trading, settling at $24.02. This reaction from the market suggests that investors may be factoring in other considerations, perhaps related to future growth prospects, market competition, or broader economic uncertainties, despite the company's strong foundational performance and strategic initiatives for continued expansion and profitability.