Toast Announces Second Quarter 2023 Financial Results

Financial Highlights for the Second Quarter of 2023

Outlook

Recent Business Highlights

Conference Call Information

About Toast

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 2023; 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; success of Toast’s marketing and sales strategies; the agreement between Toast and Marriott International and its impact on Toast’s business and operations; the expected impact of Toast Catering & Events; Toast’s plan regarding its new headquarters in Boston; Toast’s ability to deliver innovative solutions; Toast’s ability to attract and retain customers both in the U.S. and globally; 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, 2022, Toast’s Quarterly Report on Form 10-Q for the three months ended June 30, 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.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

(in millions, except share and per share amounts)

TOAST, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

(in millions, except share and per share amounts)

TOAST, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(in millions)

			Three Months Ended June 30,												Six Months Ended June 30,
			2023						2022						2023						2022
Cash flows from operating activities:
Net loss			$	(98)					$	(54)					$	(179)					$	(77)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization			8						6						14						12
Stock-based compensation expense			72						57						135						110
Amortization of deferred costs			14						10						28						20
Change in fair value of warrant liability			26						(44)						23						(123)
Credit loss expense			12						4						25						7
Change in deferred income taxes			—						—						(1)						—
Asset impairments			15						—						15						—
Other			(12)						1						(12)						3
Changes in operating assets and liabilities:
Accounts receivable, net			(22)						(13)						(42)						(15)
Prepaid expenses and other current assets			3						3						(3)						(11)
Deferred costs, net			(26)						(18)						(50)						(35)
Inventories, net			5						(18)						4						(20)
Accounts payable			6						8						12						(4)
Accrued expenses and other current liabilities			44						37						24						76
Deferred revenue			4						2						7						(4)
Operating lease right-of-use assets and operating lease liabilities			1						2						1						—
Other assets and liabilities			(2)						(4)						(6)						(7)
Net cash provided by (used in) operating activities			50						(21)						(5)						(68)
Cash flows from investing activities:
Cash paid for acquisition, net of cash acquired			—						—						(9)						—
Capitalized software			(9)						(4)						(17)						(5)
Purchases of property and equipment			(2)						(5)						(4)						(7)
Purchases of marketable securities			(175)						(110)						(351)						(140)
Proceeds from the sale of marketable securities			6						14						13						32
Maturities of marketable securities			168						66						315						78
Other investing activities			—						—						(1)						—
Net cash used in investing activities			(12)						(39)						(54)						(42)
Cash flows from financing activities:
Change in customer funds obligations, net			(6)						10						31						37
Proceeds from issuance of common stock			4						3						15						7
Payment of contingent consideration			—						—						—						(2)
Net cash provided by (used in) financing activities			(2)						13						46						42
Net increase (decrease) in cash, cash equivalents, cash held on behalf of customers and restricted cash			36						(47)						(13)						(68)
Cash, cash equivalents, cash held on behalf of customers and restricted cash at beginning of period			586						830						635						851
Cash, cash equivalents, cash held on behalf of customers and restricted cash at end of period			$	622					$	783					$	622					$	783
Reconciliation of cash, cash equivalents, cash held on behalf of customers and restricted cash
Cash and cash equivalents			$	488					$	697					$	488					$	697
Cash held on behalf of customers			91						72						91						72
Restricted cash			43						14						43						14
Total cash, cash equivalents, cash held on behalf of customers and restricted cash			$	622					$	783					$	622					$	783
Supplemental disclosure of non-cash investing and financing activities:
Issuance of Class B common stock upon exercise of common stock warrants			1						—						1						18

Non-GAAP Financial Measures

Key Business Metrics

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. We believe this approach provides an indication of our scale, while also controlling for short-term fluctuations in payments volume. Our ARR may decline or fluctuate as a result of a number of factors, including customers’ satisfaction with our platform, pricing, competitive offerings, economic conditions, or overall changes in our customers’ and their guests’ spending levels. ARR is an operational measure, does not reflect our revenue or gross profit determined in accordance with U.S. Generally Accepted Accounting Principles, or GAAP, and should be viewed independently of, and not combined with or substituted for, our 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 our future or expected results.

Summary of Key Business Metrics and Non-GAAP Results

(unaudited)

Sums may not equal totals due to rounding.

Sums may not equal totals due to rounding.

Sums may not equal totals due to rounding.