Ended 2023 with approximately 106,000
Locations; added over 6,500 net new Locations in fourth quarter
Annualized recurring run-rate (ARR) as of
December 31, 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
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 December 31, 2023.
Financial Highlights for the Fourth Quarter of 2023
- ARR as of December 31, 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 March 31, 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 December 31, 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):
Three Months Ended December
31,
Year Ended December
31,
(dollars in millions)
2023
2022
2023
2022
Gross profit (GAAP):
Subscription services
$
94
$
63
$
334
$
212
Financial technology solutions
176
137
686
476
Adjustments:
Stock-based compensation expense and
related payroll tax
5
4
20
13
Depreciation and amortization
6
3
17
10
Non-GAAP Subscription Services and
Financial Technology Solutions Gross Profit (Non-GAAP)
$
281
$
207
$
1,057
$
711
____________________ (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.
Company Restructuring
On February 13, 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 February 13, 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 January 1, 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 January 1, 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, February 15, 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 September 30, 2023
and Toast’s Annual Report on Form 10-K for the year ended December
31, 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) (in millions, except per
share amounts)
Three Months Ended December
31,
Year Ended December
31,
2023
2022
2023
2022
Revenue:
Subscription services
$
142
$
95
$
500
$
324
Financial technology solutions
851
640
3,189
2,268
Hardware and professional services
43
34
176
139
Total revenue
1,036
769
3,865
2,731
Costs of revenue:
Subscription services
48
32
166
112
Financial technology solutions
675
503
2,503
1,792
Hardware and professional services
86
75
357
311
Amortization of acquired intangible
assets
1
1
5
5
Total costs of revenue
810
611
3,031
2,220
Gross profit
226
158
834
511
Operating expenses:
Sales and marketing
102
87
401
319
Research and development
94
79
358
282
General and administrative
86
91
362
294
Total operating expenses
282
257
1,121
895
Loss from operations
(56
)
(99
)
(287
)
(384
)
Other income (expense):
Interest income, net
10
6
37
11
Change in fair value of warrant
liability
8
(7
)
3
95
Other income, net
3
3
3
1
Loss before income taxes
(35
)
(97
)
(244
)
(277
)
Income tax (expense) benefit
(1
)
(2
)
(2
)
2
Net loss
$
(36
)
$
(99
)
$
(246
)
$
(275
)
Net loss per share attributable to common
stockholders:
Basic
$
(0.07
)
$
(0.19
)
$
(0.46
)
$
(0.54
)
Diluted
$
(0.07
)
$
(0.19
)
$
(0.47
)
$
(0.72
)
Weighted average shares used in computing
net loss per share:
Basic
541
519
532
512
Diluted
541
519
533
512
TOAST, INC. CONSOLIDATED BALANCE
SHEETS (unaudited) (in millions, except per share
amounts)
December 31,
2023
2022
Assets:
Current assets:
Cash and cash equivalents
$
605
$
547
Marketable securities
519
474
Accounts receivable, net
69
77
Inventories, net
118
110
Other current assets
259
199
Total current assets
1,570
1,407
Property and equipment, net
75
61
Operating lease right-of-use assets
36
77
Intangible assets, net
26
29
Goodwill
113
107
Restricted cash
55
28
Other non-current assets
83
52
Total non-current assets
388
354
Total assets
$
1,958
$
1,761
Liabilities and Stockholders’
Equity:
Current liabilities:
Accounts payable
$
32
$
30
Deferred revenue
39
39
Accrued expenses and other current
liabilities
592
427
Total current liabilities
663
496
Warrants to purchase common stock
64
68
Operating lease liabilities,
non-current
33
80
Other long-term liabilities
4
19
Total liabilities
764
663
Commitments and Contingencies
Stockholders’ Equity:
Preferred stock - par value $0.000001; 100
million shares authorized, no shares issued or outstanding
—
—
Common stock, $0.000001 par value:
Class A - 7,000 shares authorized, 429 and
353 shares issued and outstanding as of December 31, 2023 and 2022,
respectively;
Class B - 700 shares authorized, 114 and
170 shares issued and outstanding as of December 31, 2023 and 2022,
respectively
—
—
Treasury stock, at cost - no shares and 0
shares outstanding at December 31, 2023 and 2022, respectively
—
—
Accumulated other comprehensive loss
—
(2
)
Additional paid-in capital
2,817
2,477
Accumulated deficit
(1,623
)
(1,377
)
Total stockholders’ equity
1,194
1,098
Total liabilities and stockholders’
equity
$
1,958
$
1,761
TOAST, INC. CONSOLIDATED STATEMENTS
OF CASH FLOWS (unaudited) (in millions)
Three Months Ended December
31,
Year Ended December
31,
2023
2022
2023
2022
Cash flows from operating
activities:
Net loss
$
(36
)
$
(99
)
$
(246
)
$
(275
)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Depreciation and amortization
10
6
32
24
Stock-based compensation expense
71
61
277
228
Amortization of deferred contract
acquisition costs
18
12
62
44
Change in fair value of warrant
liability
(8
)
7
(3
)
(95
)
Credit loss expense
20
16
64
34
Stock-based charitable contribution
expense
—
10
10
10
Asset impairments
—
—
15
—
Other non-cash items
(3
)
2
(17
)
3
Changes in operating assets and
liabilities:
Accounts receivable, net
21
(5
)
(3
)
(35
)
Other current assets
(5
)
(19
)
(12
)
(36
)
Deferred contract acquisition costs
(30
)
(18
)
(107
)
(71
)
Inventories, net
(20
)
(15
)
(7
)
(68
)
Accounts payable
4
1
1
(11
)
Accrued expenses and other current
liabilities
64
25
81
116
Deferred revenue
(11
)
(2
)
(5
)
(11
)
Operating lease right-of-use assets and
operating lease liabilities, net
1
—
1
—
Other assets and liabilities
(4
)
(1
)
(8
)
(13
)
Net cash provided by (used in) operating
activities
92
(19
)
135
(156
)
Cash flows from investing
activities:
Cash paid for acquisition, net of cash
acquired
—
—
(9
)
(46
)
Capital expenditures
(11
)
(10
)
(42
)
(33
)
Purchases of marketable securities
(144
)
(247
)
(623
)
(434
)
Proceeds from the sale of marketable
securities
12
5
35
46
Maturities of marketable securities
142
179
556
369
Other
—
—
(3
)
—
Net cash used in investing activities
(1
)
(73
)
(86
)
(98
)
Cash flows from financing
activities:
Proceeds from issuance of common stock
5
3
36
15
Change in customer funds obligations,
net
—
—
27
26
Other financing activities
—
(1
)
—
(3
)
Net cash provided by financing
activities
5
2
63
38
Net increase (decrease) in cash, cash
equivalents, cash held on behalf of customers and restricted
cash
96
(90
)
112
(216
)
Effect of exchange rate changes on cash
and cash equivalents and restricted cash
1
1
—
—
Cash, cash equivalents, cash held on
behalf of customers and restricted cash at beginning of period
650
724
635
851
Cash, cash equivalents, cash held on
behalf of customers and restricted cash at end of period
$
747
$
635
$
747
$
635
Reconciliation of cash, cash equivalents,
cash held on behalf of customers and restricted cash
Cash and cash equivalents
$
605
$
547
$
605
$
547
Cash held on behalf of customers
87
60
87
60
Restricted cash
55
28
55
28
Total cash, cash equivalents, cash held on
behalf of customers and restricted cash
$
747
$
635
$
747
$
635
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 associated
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:
- 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 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 as the sum of (i) Toast’s monthly
billings of 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. MRR
does not include fees derived from Toast Capital or related costs.
MRR is also not burdened by the impact of SaaS credits offered. The
MRR calculation includes all locations on the Toast platform and
locations on legacy solutions, which have a negligible impact on
ARR. ARR is determined by taking the sum of (i) twelve times the
subscription component of MRR and (ii) four times the
trailing-three-month cumulative payments component of MRR. Toast
believes this approach provides an indication of its scale, while
also controlling for short-term fluctuations in payments volume.
ARR may decline or fluctuate as a result of a number of factors,
including customers’ satisfaction with the Toast platform, pricing,
competitive offerings, economic conditions, or overall changes in
Toast’s customers’ and their guests’ spending levels. ARR is an
operational measure, does not reflect Toast’s revenue or gross
profit determined in accordance with GAAP, and should be viewed
independently of, and not combined with or substituted for, Toast’s
revenue, gross profit, and other financial information determined
in accordance with GAAP. Further, ARR is not a forecast of future
revenue and investors should not place undue reliance on ARR as an
indicator of Toast’s future or expected results.
Locations
We define a live location, or Location, as a unique location
that has used Toast Point of Sale to record transaction volumes
above a minimum threshold, and has not been marked as a churned
location as of the date of determination. A Location can use Toast
payment services, which we refer to as a Toast Processing Location,
or for select enterprise customers, not use Toast’s payment
services, which we refer to as a Non-Toast Processing Location.
Customers of legacy solutions provided by companies that we have
acquired, that do not use Toast Point of Sale, are not included in
our Location count.
Key Business Metrics and Reconciliation of
Non-GAAP Results (unaudited)
Three Months Ended December
31,
Year Ended December
31,
(dollars in billions)
2023
2022
% Growth
2023
2022
% Growth
Gross Payment Volume (GPV)
$
33.7
$
25.5
32
%
$
126.1
$
91.7
38
%
As of December 31,
(dollars in millions)
2023
2022
% Growth
Payments Annualized Recurring Run-Rate
$
589
$
460
28
%
Subscription Annualized Recurring
Run-Rate
$
629
$
441
43
%
Total Annualized Recurring Run-Rate
(ARR)
$
1,218
$
901
35
%
Adjusted EBITDA
Three Months Ended December
31,
Year Ended December
31,
(dollars in millions)
2023
2022
2023
2022
Net loss
$
(36
)
$
(99
)
$
(246
)
$
(275
)
Stock-based compensation expense and
related payroll tax
72
62
288
232
Depreciation and amortization
10
6
32
24
Interest income, net
(10
)
(6
)
(37
)
(11
)
Change in fair value of warrant
liability
(8
)
7
(3
)
(95
)
Termination of leases
—
—
14
(1
)
Stock-based charitable contribution
expense
—
10
10
10
Acquisition expenses
—
—
1
2
Other expense, net
—
—
—
1
Income tax expense (benefit)
1
2
2
(2
)
Adjusted EBITDA
$
29
$
(18
)
$
61
$
(115
)
Non-GAAP Costs of Revenue
Three Months Ended December
31,
Year Ended December
31,
(dollars in millions)
2023
2022
2023
2022
Costs of revenue
$
810
$
611
$
3,031
$
2,220
Stock-based compensation expense and
related payroll tax
12
10
46
35
Depreciation and amortization
7
4
23
16
Non-GAAP costs of revenue
$
791
$
597
$
2,962
$
2,169
Non-GAAP Gross Profit
Three Months Ended December
31,
Year Ended December
31,
(dollars in millions)
2023
2022
2023
2022
Gross profit
$
226
$
158
$
834
$
511
Stock-based compensation expense and
related payroll tax
12
10
46
35
Depreciation and amortization
7
4
23
16
Non-GAAP gross profit
$
245
$
172
$
903
$
562
Non-GAAP Subscription Services Gross
Profit
Three Months Ended December
31,
Year Ended December
31,
(dollars in millions)
2023
2022
2023
2022
Subscription services gross profit
$
94
$
63
$
334
$
212
Stock-based compensation expense and
related payroll tax
5
4
20
13
Depreciation and amortization
6
3
17
10
Non-GAAP subscription services gross
profit
$
105
$
70
$
371
$
235
Non-GAAP Financial Technology Solutions
Gross Profit
Three Months Ended December
31,
Year Ended December
31,
(dollars in millions)
2023
2022
2023
2022
Financial technology solutions gross
profit
$
176
$
137
$
686
$
476
Stock-based compensation expense and
related payroll tax
—
—
—
—
Depreciation and amortization
—
—
—
—
Non-GAAP financial technology solutions
gross profit
$
176
$
137
$
686
$
476
Non-GAAP Hardware and Professional
Services Gross Profit
Three Months Ended December
31,
Year Ended December
31,
(dollars in millions)
2023
2022
2023
2022
Hardware and professional services gross
profit
$
(43
)
$
(41
)
$
(181
)
$
(172
)
Stock-based compensation expense and
related payroll tax
7
6
26
22
Depreciation and amortization
—
—
1
1
Non-GAAP hardware and professional
services gross profit
$
(36
)
$
(35
)
$
(154
)
$
(149
)
Non-GAAP Non-Payments Financial
Technology Solutions Gross Profit
Three Months Ended December
31,
Year Ended December
31,
(dollars in millions)
2023
2022
2023
2022
Financial technology solutions gross
profit
$
176
$
137
$
686
$
476
Payments financial technology solutions
gross profit
142
113
561
418
Non-GAAP non-payments financial technology
solutions gross profit
$
34
$
24
$
125
$
58
Non-GAAP Sales and Marketing
Expenses
Three Months Ended December
31,
Year Ended December
31,
(dollars in millions)
2023
2022
2023
2022
Sales and marketing expenses
$
102
$
87
$
401
$
319
Stock-based compensation expense and
related payroll tax
15
13
61
51
Depreciation and amortization
1
1
3
3
Non-GAAP sales and marketing expenses
$
86
$
73
$
337
$
265
Non-GAAP Research and Development
Expenses
Three Months Ended December
31,
Year Ended December
31,
(dollars in millions)
2023
2022
2023
2022
Research and development expenses
$
94
$
79
$
358
$
282
Stock-based compensation expense and
related payroll tax
25
20
97
73
Depreciation and amortization
1
1
4
2
Non-GAAP research and development
expenses
$
68
$
58
$
257
$
207
Non-GAAP General and Administrative
Expenses
Three Months Ended December
31,
Year Ended December
31,
(dollars in millions)
2023
2022
2023
2022
General and administrative expenses
$
86
$
91
$
362
$
294
Stock-based compensation expense and
related payroll tax
20
19
84
74
Depreciation and amortization
1
1
2
2
Acquisition expenses
—
—
1
2
Termination of leases
—
—
14
(2
)
Stock-based charitable contribution
expense
—
10
10
10
Non-GAAP general and administrative
expenses
$
65
$
61
$
251
$
208
Free Cash Flow
Three Months Ended December
31,
Year Ended December
31,
(dollars in millions)
2023
2022
2023
2022
Net cash provided by (used in) operating
activities
$
92
$
(19
)
$
135
$
(156
)
Capital expenditures
(11
)
(10
)
(42
)
(33
)
Free cash flow
$
81
$
(29
)
$
93
$
(189
)
Sums may not equal totals due to rounding.
TOST-FIN
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