11. Toast Inc. (NYSE:TOST)
Market Capitalization as of September 13: $14.72 billion
Number of Hedge Fund Holders: 43
Toast Inc. (NYSE:TOST) is a leading restaurant management software platform that offers a range of tools and technologies to help restaurants streamline their operations, from point-of-sale (POS) systems and online ordering to inventory management and employee scheduling.
In Q2, the company set a new record by adding 8,000 net new locations. The company is broadening its Total Addressable Market by targeting important international markets, large enterprise chains, and the food and beverage retail sector.
Revenue for the quarter was $1.24 billion, up 26.99% year-over-year. The earnings per share were $0.04, missing Street estimates by $0.06.
Management announced that Bizoria, a fast-casual concept in Greater Atlanta, switched to Toast Inc. (NYSE:TOST) and increased its revenue by 25% after integrating the POS terminals. Similarly, Canadian quick-serve restaurant Tahini rolled out Toast Inc. (NYSE:TOST) in 42 locations and plans to double it next year, based on a 15% increase in check sizes.
The company added 100 stores to its partnership with Mussels Pretzels, expanding from 300. It is also being deployed with brands like Wet Soils and Barbecue Holdings. It entered grocery and convenience stores, totaling 220,000 locations and $660 billion in US spending, securing 1,000 new customers.
With 2,000 live locations as of Q2, Toast Inc. (NYSE:TOST) is improving its offerings by catering to all stakeholders in the restaurant industry, generating value by facilitating new revenue opportunities and streamlining operations. These elements position the company for growth.
Here is what Baron Opportunity Fund has to say about Toast, Inc. in its Q3 2021 investor letter:
“Toast, Inc. is a cloud-based end-to-end technology platform purpose-built for the restaurant industry. Its platform provides a comprehensive suite of cloud software products and financial technology solutions to its customers to connect front-of-house with back-of-house operations across all customer channels. Toast’s core module is its point-of-sale software solution and requires all customers to use Toast as their payment processor. Customers then have the option to bundle or add-on additional modules across operations, digital ordering and delivery, marketing and loyalty, team management, and back office. Toast today powers 48,000 restaurants within the 860,000 U.S. restaurant industry, largely focusing on small- and medium-sized (“SMB”) restaurant customers (generally fewer than 10 locations but up to 50), with some larger enterprise customers as well. Toast is the clear market leader in SMB restaurant technology with the best product offering and only full, end-to-end platform. We believe that as restaurants continue to invest in technology at an accelerated pace emerging from COVID, Toast will be a big beneficiary given its leading market position and best-in-class product. At less than 6% penetration of U.S. restaurants and 3% penetration of its $15 billion recurring-revenue TAM, Toast has a long runway for growth by signing on additional locations to the platform and increasing the attach rate of its value-add modules. Only 54% of customers today use 4 or more of Toast’s 10-plus modules, each of which provide significant value to the customer and would drive Toast’s recurring revenue stream higher.”
