Toast Announces First Quarter 2024 Financial Results

Added over 6,000 net new Locations in first quarter 2024

Annualized recurring run-rate (ARR) as of March 31, 2024 grew 32% to $1.3 billion

First quarter net loss was $(83) million and Adjusted EBITDA was $57 million

BOSTON–(BUSINESS WIRE)–Toast (NYSE: TOST), the all-in-one digital technology platform built for restaurants, today reported financial results for the first quarter ended March 31, 2024.

“Toast is off to a strong start in 2024. Our first quarter results demonstrate strong topline growth and margin expansion that we will continue to build on throughout the year. We executed well against our priorities: scaling restaurant locations; driving ARR by delivering products customers love; continuing to expand our addressable market; and building operating leverage as we scale,” said Toast CEO and Co-Founder Aman Narang. “With a differentiated business model that scales efficiently, we are positioned for durable growth and ongoing margin expansion, while investing in exciting new growth vectors to expand our long-term opportunity. Thank you to our entire Toast team for a great start to the year. Our confidence and enthusiasm for the future has never been stronger.”

Financial Highlights for the First Quarter of 2024

ARR as of March 31, 2024 was $1.3 billion, up 32% year over year.

Gross Payment Volume (GPV) increased 30% year over year to $34.7 billion.

Total Locations increased 32% year over year to approximately 112,000.

GAAP subscription services and financial technology solutions gross profit was up 32% year over year from Q1 2023 to $291 million. Non-GAAP subscription services and financial technology solutions gross profit grew 33% year over year to $303 million.

GAAP gross profit of $249 million was up 43% year over year from Q1 2023. Non-GAAP gross profit grew 42% year over year to $268 million.

GAAP net loss was $(83) million in Q1 2024 compared to $(81) million in Q1 2023. Adjusted EBITDA was $57 million in Q1 2024 compared to Adjusted EBITDA of $(17) million in Q1 2023.

Net cash (used in) operating activities of $(20) million and Free Cash Flow of $(33) million in Q1 2024, compared to net cash (used in) operating activities of $(55) million and Free Cash Flow of $(65) million, respectively, in Q1 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 second quarter ending June 30, 2024, Toast expects to report:

Non-GAAP subscription services and financial technology solutions gross profit in the range of $320 million to $330 million (20-24% growth compared to Q2 2023)

Adjusted EBITDA in the range of $55 million to $65 million

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

Non-GAAP subscription services and financial technology solutions gross profit in the range of $1,325 million to $1,345 million (25-27% growth compared to 2023, up from 23-25% growth)

Adjusted EBITDA in the range of $250 million to $270 million (up from $200 million to $220 million)

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.

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

Toast announced its new Restaurant Management Suite providing restaurants of all sizes with the tools they need to manage their operations at scale. Capabilities include multi-location management tools such as scheduling menu and price changes, partner integrations, and benchmarking analytics. Toast’s new Benchmarking product enables operators to compare restaurant and menu category performance against aggregated data from the approximately 112,000 locations on the Toast platform, leveraging AI-based classification. Expanding on Toast’s commitment to enterprise brands, the suite includes an enterprise tier with solutions for the largest customers including Point-to-Point Encryption (P2PE) security solutions and Enterprise Toast Care for the more complex configurations, technology stacks, and scale of enterprise brands.

Toast announced details for its Digital Storefront and Marketing Suites. Toast’s Digital Storefront Suite offers robust website and online ordering capabilities, and its Marketing Suite combines marketing tools with automation technology. Together, the suites create a seamless digital hospitality experience for restaurants, integrate across the Toast platform, and allow restaurants to gather data from online and point-of-sale (POS) transactions. The Digital Storefront Suite includes a new intuitive website builder and robust online ordering capabilities. The Marketing Suite includes an AI-powered writing assistant to help create and send marketing emails, powerful marketing automations and enhancements designed to make it easier to generate targeted marketing campaigns to bring guests back.

Conference Call Information

Toast will host a live conference call at 5:00 p.m. Eastern Time on Tuesday, May 7, 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; guidance on financial results for the second 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; 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 December 31, 2023, Toast’s Quarterly Report on Form 10-Q for the three months ended March 31, 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 March 31,

 

 

2024

 

 

 

2023

 

Revenue:

 

 

 

Subscription services

$

151

 

 

$

107

 

Financial technology solutions

 

873

 

 

 

673

 

Hardware and professional services

 

51

 

 

 

39

 

Total revenue

 

1,075

 

 

 

819

 

Costs of revenue:

 

 

 

Subscription services

 

50

 

 

 

36

 

Financial technology solutions

 

683

 

 

 

523

 

Hardware and professional services

 

92

 

 

 

85

 

Amortization of acquired intangible assets

 

1

 

 

 

1

 

Total costs of revenue

 

826

 

 

 

645

 

Gross profit

 

249

 

 

 

174

 

Operating expenses:

 

 

 

Sales and marketing

 

107

 

 

 

99

 

Research and development

 

83

 

 

 

85

 

General and administrative

 

74

 

 

 

82

 

Restructuring expenses

 

41

 

 

 

 

Total operating expenses

 

305

 

 

 

266

 

Loss from operations

 

(56

)

 

 

(92

)

Other income (expense):

 

 

 

Interest income, net

 

10

 

 

 

8

 

Change in fair value of warrant liability

 

(36

)

 

 

3

 

Loss before income taxes

 

(82

)

 

 

(81

)

Income tax expense

 

(1

)

 

 

 

Net loss

$

(83

)

 

$

(81

)

Net loss per share attributable to common stockholders:

 

 

 

Basic

$

(0.15

)

 

$

(0.15

)

Diluted

$

(0.15

)

 

$

(0.16

)

Weighted average shares used in computing net loss per share:

 

 

 

Basic

 

547

 

 

 

524

 

Diluted

 

547

 

 

 

525

 

TOAST, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

(in millions, except per share amounts)

 

 

March 31, 2024

 

December 31, 2023

Assets:

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

578

 

 

$

605

 

Marketable securities

 

537

 

 

 

519

 

Accounts receivable, net

 

86

 

 

 

69

 

Inventories, net

 

120

 

 

 

118

 

Other current assets

 

330

 

 

 

259

 

Total current assets

 

1,651

 

 

 

1,570

 

Property and equipment, net

 

82

 

 

 

75

 

Operating lease right-of-use assets

 

34

 

 

 

36

 

Intangible assets, net

 

25

 

 

 

26

 

Goodwill

 

113

 

 

 

113

 

Restricted cash

 

57

 

 

 

55

 

Other non-current assets

 

90

 

 

 

83

 

Total non-current assets

 

401

 

 

 

388

 

Total assets

$

2,052

 

 

$

1,958

 

Liabilities and Stockholders’ Equity:

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

49

 

 

$

32

 

Deferred revenue

 

50

 

 

 

39

 

Accrued expenses and other current liabilities

 

614

 

 

 

592

 

Total current liabilities

 

713

 

 

 

663

 

Warrants to purchase common stock

 

100

 

 

 

64

 

Operating lease liabilities

 

30

 

 

 

33

 

Other long-term liabilities

 

6

 

 

 

4

 

Total liabilities

 

849

 

 

 

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; 450 and 429 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively

Class B – 700 shares authorized; 102 and 114 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively

 

 

 

 

 

Accumulated other comprehensive loss

 

(1

)

 

 

 

Additional paid-in capital

 

2,910

 

 

 

2,817

 

Accumulated deficit

 

(1,706

)

 

 

(1,623

)

Total stockholders’ equity

 

1,203

 

 

 

1,194

 

Total liabilities and stockholders’ equity

$

2,052

 

 

$

1,958

 

TOAST, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited) (in millions)

 

 

Three Months Ended March 31,

 

 

2024

 

 

 

2023

 

Cash flows from operating activities:

 

 

 

Net loss

$

(83

)

 

$

(81

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

Depreciation and amortization

 

11

 

 

 

6

 

Stock-based compensation expense

 

66

 

 

 

63

 

Amortization of deferred contract acquisition costs

 

19

 

 

 

14

 

Change in fair value of warrant liability

 

36

 

 

 

(3

)

Credit loss expense

 

15

 

 

 

13

 

Other non-cash items

 

(2

)

 

 

(1

)

Changes in operating assets and liabilities:

 

 

 

Accounts receivable, net

 

(22

)

 

 

(20

)

Other current assets

 

(19

)

 

 

(6

)

Deferred contract acquisition costs

 

(30

)

 

 

(24

)

Inventories, net

 

(2

)

 

 

(1

)

Accounts payable

 

16

 

 

 

6

 

Accrued expenses and other current liabilities

 

(37

)

 

 

(20

)

Deferred revenue

 

11

 

 

 

3

 

Other assets and liabilities

 

1

 

 

 

(4

)

Net cash used in operating activities

 

(20

)

 

 

(55

)

Cash flows from investing activities:

 

 

 

Cash paid for acquisition, net of cash acquired

 

 

 

 

(9

)

Capital expenditures

 

(13

)

 

 

(10

)

Purchases of marketable securities

 

(145

)

 

 

(176

)

Proceeds from the sale of marketable securities

 

18

 

 

 

7

 

Maturities of marketable securities

 

111

 

 

 

147

 

Other investing activities

 

 

 

 

(1

)

Net cash used in investing activities

 

(29

)

 

 

(42

)

Cash flows from financing activities:

 

 

 

Change in customer funds obligations, net

 

49

 

 

 

37

 

Proceeds from issuance of common stock

 

28

 

 

 

11

 

Repurchases of Class A common stock

 

(4

)

 

 

 

Net cash provided by financing activities

 

73

 

 

 

48

 

Net increase (decrease) in cash, cash equivalents, cash held on behalf of customers and restricted cash

 

24

 

 

 

(49

)

Effect of exchange rate changes on cash and cash equivalents and restricted cash

 

 

 

 

 

Cash, cash equivalents, cash held on behalf of customers and restricted cash at beginning of period

 

747

 

 

 

635

 

Cash, cash equivalents, cash held on behalf of customers and restricted cash at end of period

$

771

 

 

$

586

 

Reconciliation of cash, cash equivalents, cash held on behalf of customers and restricted cash

 

 

 

Cash and cash equivalents

$

578

 

 

$

451

 

Cash held on behalf of customers

 

136

 

 

 

99

 

Restricted cash

 

57

 

 

 

36

 

Total cash, cash equivalents, cash held on behalf of customers and restricted cash

$

771

 

 

$

586

 

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 (loss) income, 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 (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.

Key Business Metrics

In addition, Toast also uses the following key business metrics to help it evaluate its business, identify trends affecting its business, formulate business plans, and make strategic decisions:

1. Gross Payment Volume (“GPV”) is defined as the sum of total dollars processed through the Toast payments platform across Toast Processing Locations in a given period. GPV is a key measure of the scale of Toast’s platform, which in turn drives our financial performance. As Toast customers generate more sales and therefore more GPV, Toast generally sees higher financial technology solutions revenue.

2. Annualized Recurring Run-Rate (“ARR”) is defined as a key operational measure of the scale of Toast’s subscription and payment processing services for both new and existing customers.

Contacts

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

Read full story here