Toast Announces Second Quarter 2024 Financial Results

Added approximately 8,000 net new Locations in second quarter 2024

Annualized recurring run-rate (ARR) as of 30 Giugno 2024 grew 29% to $1.5 billion

Achieved GAAP operating income of $5 million in second quarter

Net income was $14 million and Adjusted EBITDA was $92 million in second quarter

BOSTON–(BUSINESS WIRE)–Toast (NYSE: TOST), the all-in-one digital technology platform built for restaurants, today reported financial results for the second quarter ended 30 Giugno 2024.

“Our team executed incredibly well in the second quarter and delivered strong results, including adding a record number of net locations and achieving GAAP profitability ahead of expectations. We are sustaining growth at scale while expanding margins by taking a disciplined approach to investing our resources against our most important priorities,” said Toast CEO and Co-Founder Aman Narang. “We continue to see strong growth domestically across restaurant types while building on our momentum internationally and across exciting new verticals like food and beverage retail. Our best-in-class customer experience, further strengthened by our platform and data investments, remains the foundation helping us scale and grow.”

Financial Highlights for the Second Quarter of 2024

• ARR as of 30 Giugno 2024 was $1.5 billion, up 29% year over year.
• Gross Payment Volume (GPV) increased 26% year over year to $40.5 billion.
• Total Locations increased 29% year over year to approximately 120,000.
• GAAP subscription services and financial technology solutions gross profit was up 27% year over year from Q2 2023 to $330 million. Non-GAAP subscription services and financial technology solutions gross profit grew 29% year over year to $344 million.
• GAAP operating income was $5 million in Q2 2024 compared to GAAP operating loss of $(80) million in Q2 2023.
• GAAP net income was $14 million in Q2 2024 compared to net loss of $(98) million in Q2 2023. Adjusted EBITDA was $92 million in Q2 2024 compared to Adjusted EBITDA of $15 million in Q2 2023.
• Net cash provided by operating activities of $124 million and Free Cash Flow of $108 million in Q2 2024, compared to net cash provided by operating activities of $50 million and Free Cash Flow of $39 million, respectively, in Q2 2023.

Percentages may not tie due to rounding. For more information on the non-GAAP financial measures and key metrics discussed in this press release, please see the sections titled “Key Business Metrics” and “Non-GAAP Financial Measures,” as well as the reconciliations of non-GAAP financial measures to their nearest comparable GAAP financial measures at the end of this press release.

Outlook¹

For the third quarter ending 30 Settembre 2024, Toast expects to report:

• Non-GAAP subscription services and financial technology solutions gross profit in the range of $345 million to $355 million (23-27% growth compared to Q3 2023)
• Adjusted EBITDA in the range of $70 million to $80 million

For the full year ending 31 Dicembre 2024, Toast expects to report:

• Non-GAAP subscription services and financial technology solutions gross profit in the range of $1,340 million to $1,360 million (27-29% growth compared to 2023, up from 25-27% growth)
• Adjusted EBITDA in the range of $285 million to $305 million (up from $250 million to $270 million)

The outlook provided above constitutes forward-looking information within the meaning of applicable securities laws and is based on a number of assumptions and subject to a number of risks. See cautionary note regarding “Forward-looking Statements” in this press release.

Recent Business Highlights

• Showing continued momentum with larger customers, Toast recently signed customers including Sonny’s BBQ, Uno Pizzeria & Grills, Hwy 55, and PPX Hospitality Group, which owns brands including Legal Sea Foods, representing a cumulative commitment of more than 200 locations across the U.S.
• Toast garnered a host of workplace awards in the second quarter, including being named a Great Place to Work in Canada, India, Ireland, Taiwan, the United Kingdom, and the United States; named to the U.S. News Best Companies To Work For list; and named a Fortune Best Workplaces for Millennials™ in the United States. These build on being awarded to Glassdoor Best Places to Work 2024 list earlier in the year.
• In June, Toast launched an AI innovation hub, highlighting some of Toast’s AI-powered innovations released to date such as Benchmarking, Instant Toast Support, and an AI-Powered Marketing Assistant. A recent survey from Toast showed that 57% of restaurants surveyed reported already using or wanting to use AI-powered experiences².

Conference Call Information

Toast will host a live conference call at 5:00 p.m. Eastern Time on Tuesday, 6 Agosto 2024. The live webcast of the conference call can be accessed through Toast’s investor relations website at http://investors.toasttab.com. A replay of the webcast will be available for a period of 90 days after the call.

Toast has used, and intends to continue to use, its Investor Relations website (http://investors.toasttab.com), as well as the Toast Newsroom (https://pos.toasttab.com/news), as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD. Information on or that can be accessed through Toast’s Investor Relations website, or that is contained in any website to which a hyperlink is provided herein is not part of this press release, and the inclusion of Toast’s Investor Relations website address, and any hyperlinks are only inactive textual references.

About Toast

Toast is a cloud-based, all-in-one digital technology platform purpose-built for the entire restaurant community. Toast provides a comprehensive platform of software as a service (SaaS) products and financial technology solutions that give restaurants everything they need to run their business across point of sale, payments, operations, digital ordering and delivery, marketing and loyalty, and team management. We serve as the restaurant operating system, connecting front of house and back of house operations across service models including dine-in, takeout, delivery, catering, and retail. Toast helps restaurants streamline operations, increase revenue and deliver amazing guest experiences. For more information, visit www.toasttab.com.

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1 A reconciliation of these forward looking Non-GAAP measures to the corresponding GAAP measure is not available without unreasonable effort because of the inherent difficulty of accurately forecasting the occurrence and financial impact of the various adjusting items necessary for such reconciliations that have not yet occurred, are out of our control, or cannot be reasonably predicted, including but not limited to the change in fair value of our warrant liability and stock-based compensation. For the same reasons, the Company is unable to assess the probable significance of the unavailable information, which could have a material impact on its future GAAP financial results.

2 To help better understand the restaurant industry, Toast conducted a blind survey of 755 restaurant decision-makers operating 16 or fewer locations in the United States from 17 Maggio 2024 to 2 Giugno 2024. Respondents include a mix of both full-service and quick-service restaurants. Respondents were not made aware that Toast was fielding the study. Panel providers granted incentives to restaurant respondents for participation. Using a standard margin of error calculation, at a confidence interval of 95%, the margin of error on average is +/- 4%.

Forward-looking Statements

This press release contains “forward-looking statements,” within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the context of the statement and generally arise when Toast or its management is discussing its beliefs, estimates or expectations. Such statements generally include the words “believes,” “plans,” “intends,” “targets,” “may,” “could,” “should,” “will,” “expects,” “estimates,” “suggests,” “anticipates,” “outlook,” “continues,” or similar expressions. These statements are not historical facts or guarantees of future performance, but represent the beliefs of Toast and its management at the time the statements were made regarding future events which are subject to certain risks, uncertainties and other factors, many of which are outside Toast’s control. Actual results and outcomes may differ materially from what is expressed or forecast in such forward-looking statements. Forward-looking statements include, without limitation, statements about expected financial positions or growth; results of operations; cash flows; guidance on financial results for the third fiscal quarter and full year of 2024; statements about future operating results; the expectations of demand for Toast’s products and growth of its business; statements about new products and offerings and the benefits thereof; the growth rates in the markets in which Toast competes; Toast’s investments in technology and infrastructure; Toast’s ability to deliver innovative solutions; Toast’s ability to attract and retain customers and the commitments from its customers; financing plans; business strategy; operating plans; competitive positions; and growth opportunities for existing products.

The forward-looking statements contained in this release are also subject to other risks and uncertainties, including those more fully described in Toast’s filings with the Securities and Exchange Commission (“SEC”), including in the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Toast’s Annual Report on Form 10-K for the year ended 31 Dicembre 2023, Toast’s Quarterly Report on Form 10-Q for the three and six months ended 30 Giugno 2024 that will be filed following this earnings release, and Toast’s subsequent SEC filings. Toast can give no assurance that the plans, intentions, expectations or strategies as reflected in or suggested by those forward-looking statements will be attained or achieved. The forward-looking statements in this release are based on information available to Toast as of the date hereof, and Toast disclaims any obligation to update any forward-looking statements, except as required by law. These forward-looking statements should not be relied upon as representing Toast’s views as of any date subsequent to the date of this press release.

TOAST, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (in millions, except per share amounts)
	Three Months Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
Revenue:
Subscription services	$	166			$	121			$	318			$	227
Financial technology solutions		1,023				808				1,896				1,482
Hardware and professional services		53				49				104				88
Total revenue		1,242				978				2,318				1,797
Costs of revenue:
Subscription services		53				39				103				75
Financial technology solutions		806				631				1,488				1,155
Hardware and professional services		96				99				188				183
Amortization of acquired intangible assets		1				1				2				2
Total costs of revenue		956				770				1,781				1,415
Gross profit		286				208				537				382
Operating expenses:
Sales and marketing		115				100				222				199
Research and development		87				92				169				177
General and administrative		75				96				149				179
Restructuring expenses		4				—				46				—
Total operating expenses		281				288				586				555
Income (loss) from operations		5				(80	)			(49	)			(173	)
Other income (expense):
Interest income, net		10				9				20				17
Change in fair value of warrant liability		(1	)			(26	)			(37	)			(23	)
Other income (expense), net		—				—				(1	)			1
Income (loss) before taxes		14				(97	)			(67	)			(178	)
Income tax expense		—				(1	)			(2	)			(1	)
Net income (loss)	$	14			$	(98	)		$	(69	)		$	(179	)
Earnings (loss) per share attributable to common stockholders:
Basic	$	0.03			$	(0.19	)		$	(0.13	)		$	(0.34	)
Diluted	$	0.02			$	(0.19	)		$	(0.13	)		$	(0.34	)
Weighted-average shares used in computing earnings (loss) per share:
Basic		556				529				552				527
Diluted		587				529				552				527

TOAST, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (in millions, except per share amounts)
	30 Giugno 2024				31 Dicembre 2023
Assets:
Current assets:
Cash and cash equivalents	$	691			$	605
Marketable securities		528				519
Accounts receivable, net		101				69
Inventories, net		110				118
Other current assets		309				259
Total current assets		1,739				1,570
Property and equipment, net		90				75
Operating lease right-of-use assets		33				36
Intangible assets, net		23				26
Goodwill		113				113
Restricted cash		58				55
Other non-current assets		99				83
Total non-current assets		416				388
Total assets	$	2,155			$	1,958
Liabilities and Stockholders’ Equity:
Current liabilities:
Accounts payable	$	33			$	32
Deferred revenue		62				39
Accrued expenses and other current liabilities		641				592
Total current liabilities		736				663
Warrants to purchase common stock		101				64
Operating lease liabilities		29				33
Other long-term liabilities		6				4
Total liabilities		872				764
Commitments and Contingencies
Stockholders’ Equity:
Preferred stock- par value $0.000001; 100 shares authorized, no shares issued or outstanding		—				—
Common stock, $0.000001 par value:
Class A – 7,000 shares authorized; 458 and 429 shares issued and outstanding as of 30 Giugno 2024 and 31 Dicembre 2023, respectively Class B – 700 shares authorized; 102 and 114 shares issued and outstanding as of 30 Giugno 2024 and 31 Dicembre 2023, respectively		—				—
Accumulated other comprehensive loss		(1	)			—
Additional paid-in capital		2,976				2,817
Accumulated deficit		(1,692	)			(1,623	)
Total stockholders’ equity		1,283				1,194
Total liabilities and stockholders’ equity	$	2,155			$	1,958

TOAST, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (in millions)
	Three Months Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
Cash flows from operating activities:
Net income (loss)	$	14			$	(98	)		$	(69	)		$	(179	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		12				8				23				14
Stock-based compensation expense		67				72				133				135
Amortization of deferred contract acquisition costs		19				14				38				28
Change in fair value of warrant liability		1				26				37				23
Credit loss expense		17				12				32				25
Asset impairments		1				15				1				15
Other non-cash items		(1	)			(12	)			(3	)			(13	)
Changes in operating assets and liabilities:
Accounts receivable, net		(23	)			(22	)			(45	)			(42	)
Other current assets		5				3				(14	)			(3	)
Deferred contract acquisition costs		(33	)			(26	)			(63	)			(50	)
Inventories, net		10				5				8				4
Accounts payable		(14	)			6				2				12
Accrued expenses and other current liabilities		38				44				1				24
Deferred revenue		13				4				24				7
Operating lease right-of-use assets and operating lease liabilities, net		—				1				—				1
Other assets and liabilities		(2	)			(2	)			(1	)			(6	)
Net cash provided by (used in) operating activities		124				50				104				(5	)
Cash flows from investing activities:
Cash paid for acquisition, net of cash acquired		—				—				—				(9	)
Capital expenditures		(16	)			(11	)			(29	)			(21	)
Purchases of marketable securities		(131	)			(175	)			(276	)			(351	)
Proceeds from the sale of marketable securities		35				6				53				13
Maturities of marketable securities		108				168				219				315
Other investing activities		—				—				—				(1	)
Net cash used in investing activities		(4	)			(12	)			(33	)			(54	)
Cash flows from financing activities:
Change in customer funds obligations, net		(21	)			(6	)			28				31
Proceeds from issuance of common stock		26				4				55				15
Repurchases of Class A common stock		(32	)			—				(36	)			—
Net cash provided by (used in) financing activities		(27	)			(2	)			47				46
Net increase (decrease) in cash, cash equivalents, cash held on behalf of customers and restricted cash		93				36				118				(13	)
Effect of exchange rate changes on cash and cash equivalents and restricted cash		—				—				(1	)			—
Cash, cash equivalents, cash held on behalf of customers and restricted cash at beginning of period		771				586				747				635
Cash, cash equivalents, cash held on behalf of customers and restricted cash at end of period	$	864			$	622			$	864			$	622
Reconciliation of cash, cash equivalents, cash held on behalf of customers and restricted cash
Cash and cash equivalents	$	691			$	488			$	691			$	488
Cash held on behalf of customers		115				91				115				91
Restricted cash		58				43				58				43
Total cash, cash equivalents, cash held on behalf of customers and restricted cash	$	864			$	622			$	864			$	622

Non-GAAP Financial Measures

In this press release, Toast refers to non-GAAP financial measures that are derived on the basis of methodologies other than in accordance with United States generally accepted accounting principles (“GAAP”). Toast uses certain non-GAAP financial measures, as described below, to understand and evaluate its core operating performance. These non-GAAP financial measures, which may be different than similarly-titled measures used by other companies, are presented to enhance investors’ overall understanding of Toast’s financial performance and should not be considered substitutes for, or superior to, the financial information prepared and presented in accordance with GAAP. Toast believes that these non-GAAP financial measures provide useful information about its financial performance, enhance the overall understanding of its past performance and future prospects, and allow for greater transparency with respect to important metrics used by Toast’s management for financial and operational decision-making.

In the tables below, Toast has provided reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP. These non-GAAP financial measures should not be considered substitutes for financial measures calculated in accordance with GAAP, and the financial results that Toast calculates and presents in the table in accordance with GAAP, as well as the corresponding reconciliations from those results, should be carefully evaluated.

The following are the non-GAAP financial measures referenced in this press release and presented in the tables below:

• Adjusted EBITDA is defined as net income (loss), adjusted to exclude stock-based compensation expense and related payroll tax expense, depreciation and amortization expense, interest income (expense), net, income taxes and certain other items that are not considered to reflect our operating activities and performance within the ordinary course of business, such as restructuring and restructuring-related expenses, acquisition expenses, fair value adjustments on warrant liabilities, expenses related to early termination of leases (which includes associated asset impairments) and stock-based charitable contribution expense, as applicable.

• Non-GAAP Subscription Services and Financial Technology Solutions Gross Profit is defined as subscription services gross profit and financial technology solutions gross profit, adjusted to exclude stock-based compensation expense and related payroll tax expense, and depreciation and amortization expense.

• Non-GAAP Costs of Revenue are defined as costs of revenue excluding stock-based compensation expense and related payroll tax expense, and depreciation and amortization expense.

• Non-GAAP Gross Profit is defined as gross profit excluding stock-based compensation expense and related payroll tax expense, and depreciation and amortization expense.

• Non-GAAP Subscription Services Gross Profit is defined as subscription services gross profit excluding stock-based compensation expense and related payroll tax expense, and depreciation and amortization expense.

• Non-GAAP Financial Technology Solutions Gross Profit is defined as financial technology solutions gross profit excluding stock-based compensation expense and related payroll tax expense, and depreciation and amortization expense.

• Non-GAAP Hardware and Professional Services Gross Profit is defined as hardware and professional services gross profit excluding stock-based compensation expense and related payroll tax expense, and depreciation and amortization expense.

• Non-GAAP Non-Payments Financial Technology Solutions Gross Profit is defined as financial technology gross profit excluding payments financial technology gross profit.

• Non-GAAP Sales and Marketing Expenses are defined as sales and marketing expenses excluding stock-based compensation expense and related payroll tax expense, and depreciation and amortization expense.

• Non-GAAP Research and Development Expenses are defined as research and development expenses excluding stock-based compensation expense and related payroll tax expense, and depreciation and amortization expense.

• Non-GAAP General and Administrative Expenses are defined as general and administrative expenses excluding stock-based compensation expense and related payroll tax expense, depreciation and amortization expense, acquisition expenses, expenses related to early termination of leases (which includes associated asset impairments), and stock-based charitable contribution expense.

• Free Cash Flow is defined as net cash provided by (used in) operating activities reduced by purchases of property and equipment and capitalization of internal-use software costs (collectively referred to as capital expenditures).

Adjusted EBITDA, Non-GAAP Subscription Services and Financial Technology Solutions Gross Profit, Non-GAAP Costs of Revenue, Non-GAAP Gross Profit, Non-GAAP Subscription Services Gross Profit, Non-GAAP Financial Technology Gross Profit, Non-GAAP Hardware and Professional Services Gross Profit, Non-GAAP Non-Payments Financial Technology Solutions Gross Profit, Non-GAAP Sales and Marketing Expenses, Non-GAAP Research and Development Expenses, Non-GAAP General and Administrative Expenses, and Free Cash Flow do not purport to represent profitability and liquidity measures as defined in accordance with GAAP. These measures are provided to investors and others to improve the quarter-to-quarter and year-to-year comparability of Toast’s financial results and to ensure that investors understand the information Toast uses to evaluate the performance of its businesses.

Our definitions may differ from the definitions used by other companies and therefore comparability may be limited. In addition, other companies may not publish these or similar metrics. Further, these metrics have certain limitations since they do not include the impact of certain expenses and cash flows that are reflected in our Consolidated Statements of Operations and Consolidated Statements of Cash Flows. Thus, our Adjusted EBITDA, Non-GAAP Subscription Services and Financial Technology Solutions Gross Profit, Non-GAAP Costs of Revenue, Non-GAAP Gross Profit, Non-GAAP Subscription Services Gross Profit, Non-GAAP Financial Technology Gross Profit, Non-GAAP Hardware and Professional Services Gross Profit, Non-GAAP Non-Payments Financial Technology Solutions Gross Profit, Non-GAAP Sales and Marketing Expenses, Non-GAAP Research and Development Expenses, Non-GAAP General and Administrative Expenses, and Free Cash Flow should be considered in addition to, not as substitutes for, or in isolation from, measures prepared in accordance with GAAP.

Contacts

Media: media@toasttab.com
Investors: IR@toasttab.com

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