Toast Launches New AI Tools For Competitive Restaurant Industry - Conquering a $110 Billion Opportunity is Just The Beginning!

Restaurant stocks are currently booming, which could also benefit Growth-Stock Toast (TOST). The operation of a restaurant is complex and complete solutions are in demand, ranging from point-of-sale systems, tablets and various handheld devices, local ordering terminals and online ordering solutions to software for supply chain and inventory management, personnel management or marketing and customer management tools. Toast has better bundled its offering, which should boost sales. Serving only 13% of US restaurants, the market potential here alone is $55 billion. In the last quarter, 6,000 net new stores were added to 112,000 outlets, with 860,000 locations appearing achievable. The internationalization launched in the UK, Canada and Ireland is picking up speed, increasing the sales opportunity to over $110 billion.

Importantly, Toast is scaling the business with high-margin annual recurring revenues, which increased by 32% in the last quarter. DA Davidson analysts also rewarded "impressive net liquidity" and raised the price target from $27 to $32 (Buy). A new restaurant management suite was launched in April, which for the first time provides AI-based benchmarking tools based on the industry's largest data sets to better understand and improve the sales and menu performance of stores in individual categories. Data from POS systems is collected and used automatically. AI also helps with the creation of websites - the customer Whisk was able to halve the time required for guest loyalty campaigns with generated layouts and texts for emails using an AI writing assistant.

With a P/S ratio of 3, the valuation seems expandable. Toast believes it is on track to increase the EBITDA margin by more than 13 percentage points to 19% without significantly impairing the pace of growth and innovation in the recurring business. For the current fiscal year 2024, the forecast for adjusted EBITDA has been raised from previously $200 to 220 million to $ 250 to 270 million. The gross profit outlook for subscription services and financial technologies now stands at $1.33 to $1.35 billion, raising the previous growth forecast from 23% to 25% to 25% to 27%. The bottoming out could now be complete with new buy signals.

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