Toast Announces Second Quarter 2022 Financial Results

Added over 6,000 net new locations for the first quarter ever

Second quarter subscription revenue grew 100% year-over-year

Annualized recurring run-rate (ARR) as of June 30, 2022 grew 59% year-over-year

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 June 30, 2022.

“Toast had another great quarter, sustaining our operating momentum with a record number of net new locations and strong revenue growth, both of which highlight the power of our industry leading digital platform for restaurants. We continue to balance disciplined investments to enhance our platform and drive sustained growth, with a commitment to increasing efficiency, which was evident in our healthy Adjusted EBITDA margin improvement in the second quarter,” said Toast CEO, Chris Comparato. “With restaurants operating in a challenging environment, the benefits that Toast’s platform provides our customers are even more important, and true to our mission we are focused on helping restaurants adapt and thrive.”

Financial Highlights for the Second Quarter of 2022

Total locations increased over 40% year-over-year to approximately 68,000.

Revenue grew 58% year-over year to $675 million.

ARR as of June 30, 2022 was $787 million, up 59% year-over-year.

Gross Payment Volume (GPV) increased 62% year-over-year to $23.3 billion.

Gross profit of $113 million was up 27% year-over-year from Q2 2021. Non-GAAP gross profit grew 33% year-over year to $125 million.

Net loss was $54 million in Q2 2022 compared to net loss of $135 million in Q2 2021. Adjusted EBITDA was $(33) million in Q2 2022 compared to Adjusted EBITDA of $11 million in Q2 2021.

Net cash used in operating activities of $(68) million and Free Cash Flow of $(80) million in Q2 2022, compared to net cash provided in operating activities of $51 million and Free Cash Flow of $39 million, respectively, in Q2 2021.

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.

Outlook

For the third quarter ending September 30, 2022, Toast expects to report:

Revenue in the range of $700 million to $730 million

Adjusted EBITDA in the range of $(40) million to $(30) million

For the full year ending December 31, 2022, Toast expects to report:

Revenue in the range of $2,620 million to $2,660 million (up from $2,500 to $2,550 million)

Adjusted EBITDA in the range of $(160) million to $(140) million (up from $(195) million to $(175) 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” below.

Recent Business Highlights

Last month, Toast acquired Sling, a leading employee scheduling and communications solution. The addition of Sling adds to Toast’s growing suite of Team Management products, including Toast Payroll, Toast Tips Manager and Toast Pay Card & PayOut. Toast can empower restaurants to simplify scheduling and communication across their team, control their labor costs, and pay employees faster through one integrated platform.

At the National Restaurant Association conference in May, Toast announced enhancements to its mobile ordering, payments and digital menu solutions. With these products, guests can easily scan a QR code to browse the menu, order, and pay, all from their mobile device. Key new updates include server-started ordering, allowing both servers and guests to start and add to a tab and customizable digital menus by service area.

In May, Toast released its first Environmental, Social and Governance (ESG) Overview, which provides baseline metrics and a summary of Toast’s ESG initiatives. Embedding stakeholder impact and ESG into the company’s strategy strengthens its mission to empower every stakeholder across the restaurant ecosystem, including owners, operators, employees, guests and suppliers.

Conference Call Information

Toast will host a live conference call at 5:00 p.m. Eastern Time on Thursday, August 11, 2022 to discuss the results. 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 single platform of software as a service, or SaaS, products and financial technology solutions that give restaurants everything they need to run their business across point of sale, operations, digital ordering and delivery, marketing and loyalty, and team management. By serving as the restaurant operating system across dine-in, takeout, and delivery channels, Toast helps restaurants streamline operations, increase revenue and deliver amazing guest experiences. For more information, visit www.toasttab.com.

Toast Pay Cards are issued by Sutton Bank, Member FDIC, pursuant to license by Mastercard. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard.

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 2022; statements about future operating results; statements regarding the expected results of the acquisition of Sling on Toast’s financial performance and the benefits of the Sling integration on Toast’s business and operations; the expectations of demand for Toast’s products and growth of its business; the growth rates in the markets in which Toast compete; 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, 2021, Toast’s Quarterly Report on Form 10-Q for the three and six months ended June 30, 2022 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)

(in millions, except share and per share amounts)

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

2022

 

2021

 

2022

 

2021

Revenue:

 

 

 

 

 

 

 

Subscription services

$

76

 

 

$

38

 

 

$

139

 

 

$

69

 

Financial technology solutions

 

562

 

 

 

354

 

 

 

1,000

 

 

 

581

 

Hardware

 

30

 

 

 

29

 

 

 

59

 

 

 

50

 

Professional services

 

7

 

 

 

5

 

 

 

12

 

 

 

7

 

Total revenue

 

675

 

 

 

426

 

 

 

1,210

 

 

 

707

 

Costs of revenue:

 

 

 

 

 

 

 

Subscription services

 

27

 

 

 

13

 

 

 

51

 

 

 

23

 

Financial technology solutions

 

448

 

 

 

280

 

 

 

796

 

 

 

452

 

Hardware

 

61

 

 

 

31

 

 

 

113

 

 

 

51

 

Professional services

 

25

 

 

 

12

 

 

 

46

 

 

 

21

 

Amortization of acquired technology and customer assets

 

1

 

 

 

1

 

 

 

2

 

 

 

2

 

Total costs of revenue

 

562

 

 

 

337

 

 

 

1,008

 

 

 

549

 

Gross profit

 

113

 

 

 

89

 

 

 

202

 

 

 

158

 

Operating expenses:

 

 

 

 

 

 

 

Sales and marketing

 

77

 

 

 

41

 

 

 

148

 

 

 

74

 

Research and development

 

67

 

 

 

50

 

 

 

129

 

 

 

73

 

General and administrative

 

68

 

 

 

49

 

 

 

125

 

 

 

68

 

Total operating expenses

 

212

 

 

 

140

 

 

 

402

 

 

 

215

 

Loss from operations

 

(99

)

 

 

(51

)

 

 

(200

)

 

 

(57

)

Other income (expense):

 

 

 

 

 

 

 

Interest income (expense), net

 

1

 

 

 

(6

)

 

 

1

 

 

 

(12

)

Change in fair value of warrant liabilities

 

44

 

 

 

(5

)

 

 

123

 

 

 

(16

)

Change in fair value of derivative liability

 

 

 

 

(27

)

 

 

 

 

 

(103

)

Loss on debt extinguishment

 

 

 

 

(50

)

 

 

 

 

 

(50

)

Other income (expense), net

 

 

 

 

 

 

 

(1

)

 

 

 

Loss before benefit from income taxes

 

(54

)

 

 

(139

)

 

 

(77

)

 

 

(238

)

Benefit from income taxes

 

 

 

 

4

 

 

 

 

 

 

4

 

Net loss

$

(54

)

 

$

(135

)

 

$

(77

)

 

$

(234

)

Net loss per share attributable to common stockholders:

 

 

 

 

 

 

 

Basic

$

(0.11

)

 

$

(0.64

)

 

$

(0.15

)

 

$

(1.13

)

Diluted

$

(0.11

)

 

$

(0.64

)

 

$

(0.39

)

 

$

(1.13

)

Weighted average shares used in computing net loss per share:

 

 

 

 

 

 

 

Basic

 

509,532,418

 

 

 

211,799,234

 

 

 

507,420,257

 

 

 

207,091,280

 

Diluted

 

509,532,418

 

 

 

211,799,234

 

 

 

508,176,495

 

 

 

207,091,280

 

TOAST, INC.

CONSOLIDATED BALANCE SHEETS

(unaudited)

(in millions, except share and per share amounts)

 

 

June 30,
2022

 

December 31,
2021

Assets:

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

697

 

 

$

809

 

Marketable securities

 

482

 

 

 

457

 

Accounts receivable, net

 

68

 

 

 

55

 

Inventories

 

62

 

 

 

42

 

Deferred costs, net

 

36

 

 

 

30

 

Prepaid expenses and other current assets

 

141

 

 

 

92

 

Total current assets

 

1,486

 

 

 

1,485

 

Property and equipment, net

 

45

 

 

 

41

 

Operating lease right-of-use assets

 

74

 

 

 

79

 

Intangible assets

 

13

 

 

 

16

 

Goodwill

 

74

 

 

 

74

 

Deferred costs, non-current

 

34

 

 

 

25

 

Other non-current assets

 

24

 

 

 

15

 

Total non-current assets

 

264

 

 

 

250

 

Total assets

$

1,750

 

 

$

1,735

 

Liabilities and Stockholders’ Equity:

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

37

 

 

$

40

 

Operating lease liabilities

 

14

 

 

 

22

 

Deferred revenue

 

43

 

 

 

44

 

Accrued expenses and other current liabilities

 

363

 

 

 

246

 

Total current liabilities

 

457

 

 

 

352

 

Warrants to purchase common stock

 

40

 

 

 

181

 

Operating lease liabilities, non-current

 

78

 

 

 

77

 

Deferred revenue, non-current

 

9

 

 

 

12

 

Other long-term liabilities

 

16

 

 

 

22

 

Total liabilities

 

600

 

 

 

644

 

Commitments and Contingencies

 

 

 

Stockholders’ Equity:

 

 

 

Preferred stock- par value $0.000001; 100,000,000 shares authorized, no shares issued or outstanding

 

 

 

 

 

Class A common stock, $0.000001 par value- 7,000,000,000 shares authorized as of June 30, 2022 and December 31, 2021, 305,457,431 and 167,732,925 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively

 

 

 

 

 

Class B common stock, $0.000001 par value- 700,000,000 shares authorized as of June 30, 2022 and December 31, 2021, 207,949,380 and 339,437,440 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively

 

 

 

 

 

Additional paid-in capital

 

2,334

 

 

 

2,194

 

Accumulated deficit

 

(1,179

)

 

 

(1,102

)

Accumulated other comprehensive loss

 

(5

)

 

 

(1

)

Treasury stock, at cost— 225,000 shares at June 30, 2022 and December 31, 2021

 

 

 

 

 

Total stockholders’ equity

 

1,150

 

 

 

1,091

 

Total liabilities and stockholders’ equity

$

1,750

 

 

$

1,735

 

TOAST, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(in millions)

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

2022

 

2021

 

2022

 

2021

Cash flows from operating activities:

 

 

 

 

 

 

 

Net loss

$

(54

)

 

$

(135

)

 

$

(77

)

 

$

(234

)

Adjustments to reconcile net loss to net cash (used in) provided by operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

 

6

 

 

 

5

 

 

 

12

 

 

 

9

 

Stock-based compensation expense

 

57

 

 

 

54

 

 

 

110

 

 

 

59

 

Amortization of deferred costs

 

10

 

 

 

6

 

 

 

20

 

 

 

11

 

Change in fair value of derivative liability

 

 

 

 

27

 

 

 

 

 

 

103

 

Change in fair value of warrant liabilities

 

(44

)

 

 

5

 

 

 

(123

)

 

 

16

 

Credit loss expense

 

4

 

 

 

(1

)

 

 

7

 

 

 

1

 

Change in deferred income taxes

 

 

 

 

(4

)

 

 

 

 

 

(4

)

Change in fair value of contingent consideration

 

 

 

 

 

 

 

2

 

 

 

 

Loss on debt extinguishment

 

 

 

 

50

 

 

 

 

 

 

50

 

Non-cash interest expense on convertible notes

 

 

 

 

6

 

 

 

 

 

 

12

 

Other non-cash items

 

1

 

 

 

 

 

 

1

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable, net

 

(13

)

 

 

(9

)

 

 

(15

)

 

 

(15

)

Merchant cash advances and acquired loans repaid

 

1

 

 

 

 

 

 

2

 

 

 

1

 

Prepaid expenses and other current assets

 

2

 

 

 

(16

)

 

 

(13

)

 

 

(18

)

Deferred costs, net

 

(18

)

 

 

(9

)

 

 

(35

)

 

 

(18

)

Inventories

 

(18

)

 

 

(15

)

 

 

(20

)

 

 

(15

)

Operating lease right-of-use assets

 

5

 

 

 

5

 

 

 

(1

)

 

 

9

 

Accounts payable

 

8

 

 

 

3

 

 

 

(4

)

 

 

 

Accrued expenses and other current liabilities

 

37

 

 

 

86

 

 

 

76

 

 

 

98

 

Deferred revenue

 

2

 

 

 

7

 

 

 

(4

)

 

 

4

 

Operating lease liabilities

 

(3

)

 

 

(5

)

 

 

1

 

 

 

(10

)

Other assets and liabilities

 

(4

)

 

 

(3

)

 

 

(7

)

 

 

(8

)

Net cash (used in) provided by operating activities

 

(21

)

 

 

57

 

 

 

(68

)

 

 

51

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Cash paid for acquisition, net of cash acquired

 

 

 

 

(26

)

 

 

 

 

 

(26

)

Capitalized software

 

(4

)

 

 

(2

)

 

 

(5

)

 

 

(4

)

Purchases of property and equipment

 

(5

)

 

 

(2

)

 

 

(7

)

 

 

(8

)

Purchases of marketable securities

 

(110

)

 

 

 

 

 

(140

)

 

 

 

Proceeds from the sale of marketable securities

 

14

 

 

 

 

 

 

32

 

 

 

 

Maturities of marketable securities

 

66

 

 

 

 

 

 

78

 

 

 

 

Net cash used in investing activities

 

(39

)

 

 

(30

)

 

 

(42

)

 

(38

)

Cash flows from financing activities:

 

 

 

 

 

 

 

Extinguishment of convertible notes

 

 

 

 

(245

)

 

 

 

 

 

(245

)

Change in customer funds obligations, net

 

10

 

 

 

6

 

 

 

37

 

 

 

16

 

Proceeds from exercise of stock options

 

3

 

 

 

15

 

 

 

7

 

 

 

17

 

Payment of contingent consideration

 

 

 

 

 

 

 

(2

)

 

 

 

Proceeds from issuance of restricted stock

 

 

 

 

10

 

 

 

 

 

 

10

 

Net cash provided by (used in) financing activities

 

13

 

 

 

(214

)

 

 

42

 

 

 

(202

)

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

 

(47

)

 

 

(187

)

 

 

(68

)

 

 

(189

)

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

 

830

 

 

 

592

 

 

 

851

 

 

 

594

 

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

$

783

 

 

$

405

 

 

$

783

 

 

$

405

 

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

 

 

 

 

 

 

 

Cash and cash equivalents

$

697

 

 

$

376

 

 

$

697

 

 

$

376

 

Cash held on behalf of customers

 

72

 

 

 

27

 

 

 

72

 

 

 

27

 

Restricted cash

 

14

 

 

 

2

 

 

 

14

 

 

 

2

 

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

$

783

 

 

$

405

 

 

$

783

 

 

$

405

 

Supplemental disclosure of non-cash investing and financing activities:

 

 

 

 

 

 

 

Purchase of property and equipment included in accounts payable and accrued expenses

$

1

 

 

$

1

 

 

$

1

 

 

$

1

 

Stock-based compensation included in capitalized software

 

1

 

 

 

 

 

 

2

 

 

 

 

Issuance of Class B common stock upon exercise of common stock warrants

 

 

 

 

 

 

 

18

 

 

 

 

Issuance of Class B common stock for payment of contingent consideration

 

 

 

 

 

 

 

1

 

 

 

 

Common stock issued for acquisition

 

 

 

 

15

 

 

 

 

 

 

15

 

Issuance of common stock warrants upon debt extinguishment

 

 

 

 

125

 

 

 

 

 

 

125

 

Deferred payments included in purchase price

 

 

 

 

5

 

 

 

 

 

 

5

 

Contingent consideration included in purchase price

 

 

 

 

2

 

 

 

 

 

 

2

 

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, other income (expense) net, acquisition-related expenses, fair value adjustments on warrant and derivative liabilities, expenses associated with early termination of leases, loss on debt extinguishment, charitable contribution stock-based expense, and income taxes, as applicable.

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 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 associated with early termination of leases, and charitable contribution stock-based 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.

Adjusted EBITDA, Non-GAAP Costs of Revenue, Non-GAAP Gross Profit, Non-GAAP Selling 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 Costs of Revenue, Non-GAAP 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:

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

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. To calculate ARR, Toast first calculates recurring run-rate on a monthly basis. Monthly Recurring Run-Rate (“MRR”) is measured on the final day of each month for all restaurant locations live on the Toast platform as the sum of (i) Toast’s monthly subscription services fees, which is referred to as the subscription component of MRR, and (ii) Toast’s in-month adjusted payments services fees, exclusive of estimated transaction-based costs, which is referred to as the payments component of MRR.
Contacts

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

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