Toast Announces Third Quarter 2021 Financial Results

Third quarter revenue grew 105% year-over-year to $486.4 million
Annualized recurring run-rate (ARR) as of September 30, 2021 grew 77% year-over-year to $543.8 million
Third quarter gross payment volume (GPV) grew 123% year-over-year to $16.5 billion

BOSTON, MA – November 9, 2021 – Toast (NYSE: TOST), the all-in-one platform built for restaurants, today reported financial results for the third quarter ended September 30, 2021.

“In the third quarter, we delivered strong results across the board,” said Chris Comparato, CEO, Toast. “Toast’s performance is a result of our relentless focus on driving restaurant success with our all-in-one technology platform, unique go-to-market strategy and powerful business model. As restaurants invest more in technology to meet new expectations from guests, employees and partners, Toast is uniquely positioned to capture a growing share of its market opportunity.”

Financial Highlights for the Third Quarter of 2021

Revenue for the third quarter of 2021 was $486.4 million, an increase of 105% from the third quarter of 2020.
ARR as of September 30, 2021 was $543.8 million, an increase of 77% as compared to September 30, 2020.
GPV for the third quarter of 2021 was $16.5 billion, an increase of 123% from the third quarter of 2020.
Gross profit for the third quarter of 2021 was $83.3 million, an increase of 72% from the third quarter of 2020.
Non-GAAP gross profit for the third quarter of 2021 was $88.5 million, an increase of 75% from the third quarter of 2020.
Net loss for the third quarter of 2021 was $252.5 million, as compared to $62.6 million in the third quarter of 2020.
Adjusted EBITDA for the third quarter of 2021 was $(9.7) million, as compared to Adjusted EBITDA of $(0.3) million in the third quarter of 2020.
Net cash (used in) provided by operating activities for the third quarter of 2021 was $(17.2) million, as compared to $11.2 million for the third quarter of 2020.
Free Cash Flow for the third quarter of 2021 was $(21.1) million, as compared to Free Cash Flow of $0.4 million for the third quarter of 2020.

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 fourth quarter ending December 31, 2021, Toast expects to report:
Revenue in the range of $465 million to $495 million
Adjusted EBITDA in the range of $(50) million to $(40) million

For the full year ending December 31, 2021, Toast expects to report:
Revenue in the range of $1,655 million to $1,685 million
Adjusted EBITDA in the range of $(46) million to $(36) 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.




Conference Call Information

Toast will host a live video webcast at 5:00 p.m. Eastern Time on Tuesday, November 9, 2021 to discuss the results. The live video webcast 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 the all-in-one platform built for restaurants of all sizes. Toast provides a single 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, 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.

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 fourth fiscal quarter and full year of 2021; 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 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 the final prospectus for Toast’s initial public offering filed on September 22, 2021, Toast’s Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2021 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 COMPREHENSIVE LOSS
(unaudited)
(in thousands, except share and per share amounts)
Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Revenue:
Subscription services$45,803 $27,406 $113,844 $72,193 
Financial technology solutions404,224 188,195 983,699 450,265 
Hardware31,051 18,148 80,005 48,335 
Professional services5,301 3,008 12,579 9,806 
Total revenue486,379 236,757 1,190,127 580,599 
Costs of revenue:
Subscription services18,016 10,388 41,044 29,205 
Financial technology solutions327,235 145,945 779,111 358,402 
Hardware42,109 21,914 93,521 63,336 
Professional services14,585 9,282 35,276 33,655 
Amortization of acquired technology and customer assets1,180 908 3,147 2,695 
Total costs of revenue403,125 188,437 952,099 487,293 
Gross profit83,254 48,320 238,028 93,306 
Operating expenses:
Sales and marketing56,622 32,216 130,480 104,326 
Research and development39,700 34,274 112,978 78,658 
General and administrative40,633 20,481 105,095 73,558 
Total operating expenses136,955 86,971 348,553 256,542 
Loss from operations(53,701)(38,651)(110,525)(163,236)
Other income (expense):
Interest income137 61 819 
Interest expense(247)(5,661)(12,403)(6,846)
Change in fair value of warrant liabilities(198,389)(202)(214,881)60 
Change in fair value of derivative liability— (18,208)(103,281)(18,208)
Loss on debt extinguishment— — (49,783)— 
Other income (expense), net(39)104 42 325 
Loss before (provision for) benefit from income taxes(252,368)(62,481)(490,770)(187,086)
(Provision for) benefit from income taxes(129)(127)3,623 (69)
Net loss$(252,497)$(62,608)$(487,147)$(187,155)
Net loss per share attributable to common stockholders, basic and diluted$(1.05)$(0.31)$(2.22)$(0.94)
Weighted average shares used in computing net loss per share, basic and diluted239,358,805 200,579,529 219,746,454 199,245,332 
Net loss$(252,497)$(62,608)$(487,147)$(187,155)
Other comprehensive income (loss):
Foreign currency translation(69)(24)(183)
Comprehensive loss$(252,566)$(62,632)$(487,330)$(187,150)




TOAST, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands, except share and per share amounts)

September 30,
2021
December 31,
2020
Assets:
Current assets:
Cash and cash equivalents$1,301,619 $581,824 
Accounts receivable, net of allowance for doubtful accounts of $2,568 and $4,438, respectively, at September 30, 2021 and December 31, 202052,730 32,633 
Merchant cash advances and loans receivable, net of allowance for uncollectible loans of $3,668 and $4,454, respectively, at September 30, 2021 and December 31, 2020409 872 
Inventories38,665 19,330 
Costs capitalized to obtain revenue contracts, net23,931 16,794 
Prepaid expenses and other current assets79,561 21,611 
Total current assets1,496,915 673,064 
Property and equipment, net42,381 44,111 
Intangible assets17,188 6,835 
Goodwill74,738 35,887 
Restricted cash2,694 1,214 
Security deposits806 1,633 
Non-current costs capitalized to obtain revenue contracts, net18,755 12,612 
Other non-current assets3,776 600 
Total non-current assets160,338 102,892 
Total assets$1,657,253 $775,956 
Liabilities, Convertible Preferred Stock and Stockholders’ Equity (Deficit):
Current liabilities:
Accounts payable$33,696 $30,554 
Current portion of deferred revenue46,865 42,680 
Accrued expenses and other current liabilities206,218 63,172 
Total current liabilities286,779 136,406 
Long-term debt, net of discount— 171,709 
Derivative liabilities— 37,443 
Warrants to purchase preferred stock— 11,405 
Warrants to purchase common stock308,195 — 
Deferred revenue, net of current portion12,832 15,533 
Deferred rent, net of current portion16,106 18,536 
Other long-term liabilities23,867 7,007 
Total long-term liabilities361,000 261,633 
Total liabilities647,779 398,039 
Commitments and contingencies
Convertible preferred stock, $0.000001 par value—no shares authorized, issued or outstanding as of September 30, 2021; 257,245,680 authorized and 253,832,025 shares issued and outstanding at December 31, 2020; total liquidation value of $849,970 at December 31, 2020.— 848,893 
Stockholders’ Equity (Deficit):
Preferred stock- par value $0.000001; 100,000,000 shares authorized, no shares issued or outstanding— — 
Common stock, $0.000001 par value— no shares authorized, issued and outstanding as of September 30, 2021; 570,000,000 shares authorized, 219,755,430 shares issued and outstanding as of December 31, 2020— — 
Class A common stock, $0.000001 par value- 7,000,000,000 shares authorized, 25,000,000 shares issued and outstanding as of September 30, 2021; no shares authorized, issued and outstanding at December 31, 2020— — 
Class B common stock, $0.000001 par value- 700,000,000 shares authorized, 479,406,030 shares issued and outstanding as of September 30, 2021; no shares authorized, issued and outstanding at December 31, 2020— — 
Treasury stock, at cost— 225,000 shares outstanding at September 30, 2021 and December 31, 2020(665)(665)
Accumulated other comprehensive income45 228 
Additional paid-in capital2,113,107 145,327 
Accumulated deficit(1,103,013)(615,866)
Total stockholders’ equity (deficit)1,009,474 (470,976)
Total liabilities, convertible preferred stock and stockholders’ equity (deficit)$1,657,253 $775,956 




TOAST, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
Nine Months Ended September 30,
20212020
Cash flows from operating activities:
Net loss$(487,147)$(187,155)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization15,617 9,498 
Stock-based compensation95,210 58,357 
Amortization of costs capitalized to obtain revenue contracts17,596 10,818 
Change in fair value of derivative liability103,281 18,208 
Change in fair value of warrant liabilities214,881 (60)
Change in deferred income taxes(3,920)— 
Loss on debt extinguishment49,783 — 
Non-cash interest on convertible notes11,771 6,404 
Other305 256 
Changes in operating assets and liabilities:
Account receivable, net(20,083)(8,425)
Factor receivable, net153 2,568 
Merchant cash advances repaid537 8,233 
Prepaid expenses and other current assets(31,867)8,395 
Costs capitalized to obtain revenue contracts, net(30,876)(17,580)
Inventories(19,336)698 
Accounts payable8,207 (6,289)
Accrued expenses and other current liabilities106,306 8,276 
Deferred revenue1,484 (2,268)
Other assets and liabilities2,068 3,436 
Net cash provided by (used in) operating activities33,970 (86,630)
Cash flows from investing activities:
Cash paid for acquisition, net of cash acquired(26,142)— 
Capitalized software(5,712)(6,479)
Purchases of property and equipment(10,570)(35,385)
Other— 233 
Net cash used in investing activities(42,424)(41,631)
Cash flows from financing activities:
Proceeds from issuance of Class A common stock upon initial public offering, net of underwriter discounts950,360 — 
Payment of deferred offering costs(4,044)— 
Repayments of secured borrowings— (8,544)
Extinguishment of convertible notes(244,528)— 
Change in customer funds obligations, net26,002 6,138 
Proceeds from issuance of long-term debt— 194,850 
Proceeds from exercise of stock options17,727 1,158 
Proceeds from issuance of Series F preferred stock— 402,368 
Proceeds from exercise of restricted stock10,397 265 
Repurchase of restricted stock— (155)
Repurchase of common stock— (275)
Net cash provided by financing activities755,914 595,805 
Net increase in cash, cash equivalents, cash held on behalf of customers and restricted cash747,460 467,544 
Effect of exchange rate changes on cash and cash equivalents and restricted cash(183)
Cash, cash equivalents, cash held on behalf of customers and restricted cash at beginning of period593,676 159,389 
Cash, cash equivalents, cash held on behalf of customers and restricted cash at end of period$1,340,953 $626,938 



Reconciliation of cash, cash equivalents, cash held on behalf of customers and restricted cash
Cash and cash equivalents$1,301,619 $611,907 
Cash held on behalf of customers36,640 12,853 
Restricted cash2,694 2,178 
Total cash, cash equivalents, cash held on behalf of customers and restricted cash$1,340,953 $626,938 
Supplemental disclosures of cash flow information
Cash paid for interest$13,226 $— 
Non-cash items in investing and financing activities
Purchase of property and equipment included in accounts payable and accrued expenses$148 $8,868 
Contingent consideration included in purchase price1,876 — 
Deferred payments included in purchase price5,357 — 
Common stock issued in acquisition14,857 — 
Conversion of convertible preferred stock into Class B common stock upon initial public offering848,893 — 
Issuance of Class B common stock upon exercise of common stock warrants43,297 — 
Issuance of common stock warrants upon debt extinguishment125,111 — 
Deferred offering costs included in accounts payable and accrued expenses2,298 — 
Stock-based compensation included in capitalized software545 — 




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, interest expense, other income (expense) net, acquisition expenses, fair value adjustments on warrant and derivative liabilities, expenses related to COVID-19 pandemic initiatives resulting from a reduction of workforce in 2020 and early termination of leases, loss on debt extinguishment, and income taxes.

Non-GAAP Costs of Revenue are defined as costs of revenue excluding stock-based compensation expense.

Non-GAAP Gross Profit is defined as gross profit excluding stock-based compensation expense.

Non-GAAP Sales and Marketing Expenses are defined as sales and marketing expenses excluding stock-based compensation expense.

Non-GAAP Research and Development Expenses are defined as research and development expenses excluding stock-based compensation expense.

Non-GAAP General and Administrative Expenses are defined as general and administrative expenses excluding stock-based compensation 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 comprehensive loss 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:

a.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.

a.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. MRR does not include fees derived from Toast Capital or related costs. 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 its 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.

Three Months Ended September 30,Nine Months Ended September 30,
(dollars in billions)20212020% Growth20212020% Growth
Gross Payment Volume (GPV)$16.5 $7.4 123 %$39.9 $17.8 124 %
As of September 30,
(dollars in millions)20212020% Growth
Annualized Recurring Run-Rate$543.8 $308.1 77 %



Toast, Inc.
Reconciliation from Non-GAAP to GAAP Results
(unaudited) (in thousands)

Adjusted EBITDAThree Months Ended September 30,Nine Months Ended September 30,
(dollars in thousands)2021202020212020
Net loss$(252,497)$(62,608)$(487,147)$(187,155)
Stock-based compensation expense and related payroll tax36,372 36,201 97,359 58,357 
Depreciation and amortization6,673 3,118 15,617 9,498 
Interest income(8)(137)(61)(819)
Interest expense247 5,661 12,403 6,846 
Other (income) expense, net39 (104)(42)(325)
Acquisition expenses— — 1,113 — 
Change in fair value of warrant liability198,389 202 214,881 (60)
Change in fair value of derivative liability— 18,208 103,281 18,208 
Reduction of workforce— 154 — 10,127 
Termination of leases922 (1,092)922 (1,092)
Loss on debt extinguishment— — 49,783 — 
Provision for (benefit from) income taxes129 127 (3,623)69 
Adjusted EBITDA$(9,734)$(270)$4,486 $(86,346)


Non-GAAP Costs of RevenueThree Months Ended September 30,Nine Months Ended September 30,
(dollars in thousands)2021202020212020
Costs of Revenue$403,125 $188,437 $952,099 $487,293 
Stock-based compensation expense5,270 2,250 6,523 3,169 
Non-GAAP Costs of Revenue$397,855 $186,187 $945,576 $484,124 

Non-GAAP Gross ProfitThree Months Ended September 30,Nine Months Ended September 30,
(dollars in thousands)2021202020212020
Gross profit$83,254 $48,320 $238,028 $93,306 
Stock-based compensation expense5,270 2,250 6,523 3,169 
Non-GAAP gross profit$88,524 $50,570 $244,551 $96,475 




Non-GAAP Sales & Marketing ExpensesThree Months Ended September 30,Nine Months Ended September 30,
(dollars in thousands)2021202020212020
Sales and marketing expenses$56,622 $32,216 $130,480 $104,326 
Stock-based compensation expense10,337 7,445 13,276 9,094 
Non-GAAP sales and marketing expenses$46,285 $24,771 $117,204 $95,232 

Non-GAAP Research and Development ExpensesThree Months Ended September 30,Nine Months Ended September 30,
(dollars in thousands)2021202020212020
Research and development expenses$39,700 $34,274 $112,978 $78,658 
Stock-based compensation expense8,627 17,422 35,138 19,622 
Non-GAAP research and development expenses$31,073 $16,852 $77,840 $59,036 

Non-GAAP General & Administrative ExpensesThree Months Ended September 30,Nine Months Ended September 30,
(dollars in thousands)2021202020212020
General and administrative expenses$40,633 $20,481 $105,095 $73,558 
Stock-based compensation expense12,118 9,084 42,284 26,472 
Non-GAAP general and administrative expenses$28,515 $11,397 $62,811 $47,086 

Free Cash FlowThree Months Ended September 30,Nine Months Ended September 30,
(dollars in thousands)2021202020212020
Net cash provided by (used in) operating activities$(17,248)$11,189 $33,970 $(86,630)
Purchases of property and equipment(2,250)(8,811)(10,570)(35,385)
Capitalized software(1,625)(1,977)(5,712)(6,479)
Free Cash Flow$(21,123)$401 $17,688 $(128,494)


TOST-FIN
Contacts
Media: media@toasttab.com
Investors: IR@toasttab.com

Source: Toast