Toast, Inc. (NYSE:TOST) President Stephen Fredette has sold a significant portion of his holdings in the company, according to recent filings with the Securities and Exchange Commission. The transactions, which took place on September 20 and 23, 2024, involved the sale of a total of 152,295 shares of Toast's Class A Common Stock for an aggregate amount exceeding $4.1 million.
The sales were executed at weighted average prices ranging from $27.341 to $28.016 per share. Specifically, on September 20, Fredette sold 144,238 shares at an average price of $27.341, while on September 23, an additional 8,057 shares were sold at an average price of $28.016. These transactions were made under a pre-arranged Rule 10b5-1 trading plan, which allows company insiders to sell stocks at predetermined times to avoid accusations of insider trading.
Following these transactions, Fredette's direct holdings in Toast, Inc. have decreased, but he remains a major shareholder with a total of 2,152,442 shares of Class A Common Stock directly held. Additionally, the SEC filing noted that Fredette also owns an aggregate of 25,722,670 shares of Toast's Class B common stock, which is convertible into Class A shares at any time.
In the same filing, it was disclosed that Fredette made a bona fide gift of 54,133 shares on September 23, which did not involve any payment in consideration. This transaction did not affect the total dollar value reported for the sales.
Investors and followers of Toast, Inc. will be keen to monitor any further transactions from company insiders, as these can provide insights into their perspectives on the stock's value and future performance.
In other recent news, Toast Inc. has been demonstrating robust growth, as indicated by its strong second-quarter 2024 results. The company surpassed expectations, adding a record 8,000 net new locations, contributing to a 29% year-over-year increase in recurring gross profit streams, reaching $344 million. Adjusted EBITDA also rose to $92 million, indicating a healthy 27% margin on these profit streams.
Furthermore, Toast reported a 35% year-over-year increase in SaaS ARR and a 24% rise in payments ARR. The fintech gross profit also increased by 23% in the second quarter, with GPV growing to $40.5 billion, a 26% year-over-year growth. This robust performance has led to an updated full-year financial outlook, with the company now expecting 27% to 29% growth in fintech and subscription gross profit, and adjusted EBITDA projections of $285 million to $305 million.
However, some challenges were noted in the recent developments. The company reported a 3% decline in GPV per location in Q2, primarily due to a decrease in same-store sales, and a slight increase in churn rate, now slightly above 10%. Despite these challenges, the company's core U.S. SMB and mid-market business significantly contributed to the net additions, and the top 10 cyber markets are showing 50% more wins compared to non-flywheel markets.
Finally, Toast Inc. plans to increase investment in key business areas in the second half of the year, with a projected adjusted EBITDA for Q3 between $70 million and $80 million. The company also expects to maintain breakeven on a GAAP basis for the remainder of the year.
InvestingPro Insights
Amid recent insider transactions at Toast, Inc. (NYSE:TOST), investors may gain additional insights by examining some key financial metrics and analyst expectations. According to recent data, Toast is trading near its 52-week high, with the price per share at 99.29% of this peak. This aligns closely with the prices at which President Stephen Fredette executed his recent sales. The company's market capitalization stands at $15.54 billion, reflecting investor confidence and the scale of Toast's operations in the market.
On the earnings front, analysts have revised their expectations upwards for Toast, indicating a positive outlook on the company's earning potential in the upcoming period. This is supported by predictions that Toast will achieve profitability this year, a significant milestone for any company, especially one with a Price to Earnings (P/E) ratio that currently sits at a negative -87.34. This forward-looking optimism is also bolstered by the company's strong revenue growth over the last twelve months, which was reported at 32.19%.
While Toast has demonstrated robust revenue growth, it's important to note that the company has been grappling with weak gross profit margins, which were 22.66% as of the last twelve months. This could be an area of concern for investors looking for sustainable profitability. However, with a substantial return of 51.42% year-to-date on the stock's price and a solid performance over the last month with a 16.77% return, investor sentiment appears to remain strong.
For those seeking a more in-depth analysis, InvestingPro offers additional insights, with over 10 InvestingPro Tips available for Toast, Inc., including further details on earnings revisions, profitability forecasts, and liquidity assessments. These tips can be found at InvestingPro Toast, Inc., providing investors with a comprehensive toolkit for making informed decisions.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.