Toast Announces Fourth Quarter and Full Year 2023 Financial Results

Ended 2023 with approximately 106,000 Locations; added over 6,500 net new Locations in fourth quarter

Annualized recurring run-rate (ARR) as of 31 Dicembre 2023 increased 35% to over $1.2 billion

Toast’s Board of Directors authorized a share repurchase program

Anticipate GAAP Operating Income profit by first half 2025

BOSTON–(BUSINESS WIRE)–Toast (NYSE: TOST), the all-in-one digital technology platform built for restaurants, today reported financial results for the fourth quarter and full year ended 31 Dicembre 2023.

Financial Highlights for the Fourth Quarter of 2023

• ARR as of 31 Dicembre 2023 was $1.2 billion, up 35% year over year.
• Gross Payment Volume (GPV) increased 32% year over year to $33.7 billion.
• Total Locations increased 34% year over year to approximately 106,000.
• Revenue for Q4 2023 grew 35% year over year to $1.0 billion.
• Gross profit of $226 million was up 43% year over year from Q4 2022. Non-GAAP gross profit grew 42% year over year to $245 million.
• Subscription services and financial technology solutions gross profit was up 35% year over year from Q4 2022 to $270 million. Non-GAAP subscription services and financial technology solutions gross profit grew 36% year over year to $281 million.
• Net loss was $(36) million in Q4 2023 compared to net loss of $(99) million in Q4 2022. Adjusted EBITDA was $29 million in Q4 2023 compared to Adjusted EBITDA of $(18) million in Q4 2022.
• Net cash provided by operating activities of $92 million and Free Cash Flow of $81 million in Q4 2023, compared to net cash used in operating activities of $(19) million and Free Cash Flow of $(29) million in Q4 2022.

Financial Highlights for the Full Year 2023

• Revenue for the full year 2023 grew 42% year over year to $3.9 billion.
• GPV for the full year 2023 increased 38% year over year to $126.1 billion.
• Gross profit of $834 million was up 63% year over year from full year 2022. Non-GAAP gross profit grew 61% year over year to $903 million.
• Subscription services and financial technology solutions gross profit was up 48% year over year from full year 2022 to $1.0 billion. Non-GAAP subscription services and financial technology solutions gross profit grew 49% year over year to $1.1 billion.
• Net loss was $(246) million in full year 2023 compared to net loss of $(275) million for the full year 2022. Adjusted EBITDA was $61 million in full year 2023 compared to Adjusted EBITDA of $(115) million in full year 2022.
• Net cash provided by operating activities of $135 million and Free Cash Flow of $93 million in full year 2023, compared to net cash used in operating activities of $(156) million and Free Cash Flow of $(189) million in full year 2022.

For more information on the non-GAAP financial measures and key metrics discussed in this press release, please see the sections titled “Non-GAAP Financial Measures” and “Key Business Metrics,” as well as the reconciliations of non-GAAP financial measures to their nearest comparable GAAP financial measures at the end of this press release.

Outlook⁽¹⁾

For the first quarter ending 31 Marzo 2024, Toast expects to report:

• Non-GAAP subscription services and financial technology solutions gross profit in the range of $275 million to $285 million (20-24% growth compared to Q1 2023)
• Adjusted EBITDA in the range of $15 million to $25 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 $1,300 million to $1,320 million (23-25% growth compared to 2023)
• Adjusted EBITDA in the range of $200 million to $220 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.

Beginning in fiscal year 2024, Toast is providing forward-looking guidance for Non-GAAP Subscription Services and Financial Technology Solutions Gross Profit which Toast considers its recurring gross profit streams. This is defined as subscription services gross profit (GAAP) and financial technology solutions gross profit (GAAP), adjusted to exclude stock-based compensation expense and related payroll tax expense, and depreciation and amortization expense, as set forth below (including historical comparison for reference):

Company Restructuring

On 13 Febbraio 2024, Toast’s Board of Directors approved a restructuring plan (the “Plan”) designed to promote overall operating expense efficiency, including a reduction in force that is expected to impact approximately 550 employees, as well as certain other actions to reorganize the Company’s facilities and operations. The Company expects to complete the Plan by the end of fiscal year 2024. As part of this Plan, the Company expects to incur restructuring and restructuring-related charges of approximately $45 to $55 million, primarily related to severance and severance-related costs and certain other costs related to facilities. Substantially all of these charges are expected to be incurred in the first quarter of fiscal year 2024.

Share Repurchase Program

On 13 Febbraio 2024, Toast’s Board of Directors authorized a share repurchase program of up to $250 million of its Class A common stock. The Company intends to opportunistically repurchase shares based on market conditions, providing a way to return capital to stockholders and offset a portion of dilution associated with employee equity grants. The Company plans to repurchase shares through open market repurchases or Rule 10b5-1 plans. The timing and actual number of shares repurchased will depend on a variety of factors, including price, general business and market conditions, and alternative investment opportunities.

Recent Business Highlights

• Effective 1 Gennaio 2024, Aman Narang became Toast’s Chief Executive Officer, taking over from Chris Comparato. Mr. Narang previously served as Toast’s Co-President since December 2012 and Chief Operating Officer since June 2021. Both Mr. Comparato and Mr. Narang remain on Toast’s Board of Directors. Lead Independent Director Mark Hawkins became Chair of Toast’s Board of Directors, also effective 1 Gennaio 2024.
• Toast signed agreements with Caribou Coffee and Choice Hotels International. Caribou Coffee will implement Toast Enterprise Solutions across 500 initial coffeehouse locations in the United States. Choice Hotels International will make Toast for Hotel Restaurants technology a brand standard for two of Choice’s upscale brands, Cambria Hotels and Radisson. Toast is also a qualified vendor for Choice’s other brands.
• Toast announced a milestone for its Toast Fundraising feature, which enabled restaurants to raise $1.5M for various causes in 2023. Created in 2023 and available to Toast customers at no additional cost, the Toast Fundraising feature enables restaurants to select a charitable cause to support, giving guests the option to round up their check to the next dollar and donate the difference or contribute a flat donation.

Conference Call Information

Toast will host a live conference call at 5:00 p.m. Eastern Time on Thursday, 15 Febbraio 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.

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; statements about expected timeline and plan to reach profitability on an GAAP operating income basis; guidance on financial results for the first 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; the growth rates in the markets in which Toast competes; Toast’s investments in technology and infrastructure; statements regarding the arrangement between Toast and its customers, including the planned and future implementation of the Toast platform at such customers’ locations; Toast’s ability to deliver innovative solutions; Toast’s ability to attract and retain customers; financing plans; business strategy; operating plans; competitive positions; growth opportunities for existing products; statements regarding Toast’s share repurchase program; and statements regarding Toast’s restructuring plan.

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 Quarterly Report on Form 10-Q for the three and nine months ended 30 Settembre 2023 and Toast’s Annual Report on Form 10-K for the year ended 31 Dicembre 2023, 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.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

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TOAST, INC.

CONSOLIDATED BALANCE SHEETS

(unaudited)

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CONSOLIDATED STATEMENTS OF CASH FLOWS

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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.

Contacts

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

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