Toast, a provider of point-of-sale systems to restaurants, touted its explosive growth before its initial public stock offering in September, noting it had more than doubled the numbers of locations it services, from about 20,000 in 2019 to about 48,000 as of the second quarter of 2021.

Now, the Boston-based company has had a change of heart with respect to naming those venues, much to the chagrin of Mizuho Americas Securities analyst Dan Dolev, who follows the company's stock.

"Regrettably, management no longer discloses locations," wrote Dolev in a note to his clients after Toast provided its first earnings report last week.

On Nov. 9, Toast reported a wider third-quarter net loss of $252.5 million, compared with a loss of $62.6 million in the year-earlier quarter. Revenue more than doubled to $486.4 million.

Dolev, one of the few analysts that doesn't recommend investing in Toast, pressed the issue with Chief Financial Officer Elena Gomez during a conference call last Tuesday after the company provided the quarterly earnings report. Her reply follows (Via The Motley Fool): 

"It's a fair question. We're going to be disclosing locations more likely on an annualized basis. But — the primary reason is because we're focused on — you know, as we talk about our powerful business model, we talk about both integrated payments, SaaS (Software as a service), and payments together. And so, ARR (annual recurring revenue) is a metric we believe is most reflective of the growth of our business and really how we manage the business internally. So, I would tell you both locations were in line with expectations even though we're not going to disclose our number."

'Important data point'

Gomez declined to elaborate. Her answer did not satisfy Dolev, a managing director, and senior analyst at Mizuho.

"Anytime you are omitting an important data point, it raises some eyebrows," Dolev said in an interview. "When the disclosure isn't there, it usually doesn't mean that they have something good to say right. Usually, it's the opposite. If it's a great number, why not show it?"

According to Dolev, the number of locations is a key performance indicator that helps investors gauge how Toast is faring compared with its rivals. "We respectfully disagree with the decision to not disclose," he wrote.

A spokesperson for Boston-based Toast didn't have an immediate comment on Dolev.

Shares of Toast have been on a rollercoaster ride since they began trading in September. They surged nearly 60 percent in their debut, only to fall more than 20 percent since then after reporting earnings that fell short of analysts' expectations last week.

In its filing with the Securities and Exchange Commission for the IPO, Toast spelled out its growth this way: "We have grown rapidly since our founding. As of June 30, 2021, we had 47,942 locations on our platform, increasing from 33,129 and 19,891 locations as of June 30, 2020 and 2019, respectively."

Among the issues of concern to investors is the growing competition Toast is facing in the restaurant technology market from rivals ranging from San Francisco-based Square to TouchBistro, whose headquarters are in Toronto.

To be sure, Toast has plenty of fans. "The restaurants like it because it's an easy solution," Dolev said, adding that the company's technology gives it a "competitive advantage" in the market.

William Blair's analyst Stephen Sheldon was less concerned about Toast not elaborating on the current venue count.

"Although the company did not report ending live locations, we believe location growth remained significant given performance this quarter (we estimate at least 4,000 sequential location additions)," he said in a Nov. 10 report. "Second, the (Toast management) team noted favorable trends in module uptake, with 56% of Toast customers using four or more products (on top of its baseline POS and payment solutions), which was up from 44% in the third quarter of 2020." 

Toast is holding a "Restaurant Innovation Event" called Spark on November 16, unveiling new products.