Toast Announces Second Quarter 2022 Financial Results

·9 min read

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, August 11, 2022--(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