Toast Plans To lay Off 10% of its Workforce, As Growth Slows

Toast, ( TOST ) maker of restaurant management software, stated on Thursday it will lay off 550 employees, about 10% of its workforce. The company also reported fourth-quarter earnings that beat Wall Street’s expectations.

Several Tech companies have instituted layoffs in 2024. On Wednesday Cisco ( CSCO ) said it would eliminate 4,000 jobs as sales declined and clients became even more cautious about spending.

Toast’s ( TOST ) shares were initially up as much as 16%.88 after hours but then gave back much of the gains.

According to the recently published report, the company's earnings per share were a loss of 7 cents per share, which is better than the expected loss of 11 cents per share. The revenue for the quarter was $1.04 billion, which exceeded expectations of $1.02 billion. Toast ( TOST ), as per the statement released by the company, saw an increase of nearly 35% in revenue as compared to the previous year. Its net loss of $36 million in the current quarter is an improvement from the $99 million loss in the same quarter last year. The company has allocated $250 million for share buybacks.

The pandemic led many restaurants to adopt Toast’s mobile ordering and payment tools, which helped double the company’s revenue. Shares debuted on the New York Stock Exchange in 2021, amid that uptick. Demand has sublimed since then, down from 37% in the third quarter and about 45% in the second quarter.

Toast ( TOST ) faces increasing competition from the likes of Block, Fiserv, and Shift4, Bank of America analysts wrote in a December note as they reduced their rating on the stock from buy to neutral.

Toast’s ( TOST ) new layoffs should result in $45 million to $55 million in charges, mostly in the first quarter, and $100 million in annualized savings.

Those cuts come weeks after Aman Narang, Toast’s co-founder and COO, replaced Chris Comparato as CEO. Under Comparato’s leadership last summer, Toast ( TOST ) began to charged a fee of 99 cents for each online order that totaled more than $10. Consumers and restaurant owners objected, prompting urging the company to eliminate the surcharge.