Toast Announces Third Quarter 2024 Financial Results
Toast (NYSE: TOST), the all-in-one digital technology platform built for restaurants, today reported financial results for the third quarter ended September 30, 2024. “Toast delivered a strong thir...
Added approximately 7,000 net new Locations in third quarter 2024
Annualized recurring run-rate (ARR) as of September 30, 2024 grew 28% to $1.6 billion
Net income was $56 million and Adjusted EBITDA was $113 million in third quarter
BOSTON: Toast (NYSE: TOST), the all-in-one digital technology platform built for restaurants, today reported financial results for the third quarter ended September 30, 2024.
“Toast delivered a strong third quarter, adding approximately 7,000 net new locations, growing our recurring gross profit streams1 35%, and achieving Adjusted EBITDA of $113 million. We are well positioned to finish out the year strong and carry this momentum into 2025. Our differentiated vertical software platform is at the foundation of that success, and we continue to innovate to deliver more value to our customers: this fall we launched new products like Branded Mobile App and SMS Marketing alongside over a dozen feature updates,” said Toast CEO and Co-Founder Aman Narang. “Today we proudly serve nearly 127,000 locations, and we’re just getting started. With the disciplined investments we’re making to further differentiate our platform and expand into new verticals and geographies, our vision is to serve multiples of that number over time, delivering durable, efficient growth over the long term.”
Financial Highlights for the Third Quarter of 2024
- ARR as of September 30, 2024 was $1.6 billion, up 28% year over year.
- Gross Payment Volume (GPV) increased 24% year over year to $41.7 billion.
- Total Locations increased 28% year over year to nearly 127,000.
- GAAP subscription services and financial technology solutions gross profit was up 35% year over year to $365 million. Non-GAAP subscription services and financial technology solutions gross profit grew 35% year over year to $378 million.
- GAAP income from operations was $34 million in Q3 2024 compared to GAAP loss from operations of $(59) million in Q3 2023.
- GAAP net income was $56 million in Q3 2024 compared to GAAP net loss of $(31) million in Q3 2023. Adjusted EBITDA was $113 million in Q3 2024 compared to Adjusted EBITDA of $35 million in Q3 2023.
- Net cash provided by operating activities of $109 million and Free Cash Flow of $97 million in Q3 2024, compared to net cash provided by operating activities of $47 million and Free Cash Flow of $37 million, respectively, in Q3 2023.
Percentages may not tie due to rounding. 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.
Outlook2
For the fourth quarter ending December 31, 2024, Toast expects to report:
- Non-GAAP subscription services and financial technology solutions gross profit in the range of $370 million to $380 million (32-35% growth compared to Q4 2023)
- Adjusted EBITDA in the range of $90 million to $100 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 $1,395 million to $1,405 million (32-33% growth compared to 2023, up from 27-29% growth)
- Adjusted EBITDA in the range of $352 million to $362 million (up from $285 million to $305 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.
Recent Business Highlights
- Toast announced its Fall Product Release with new mobile features designed to help restaurants unlock new revenue streams, boost their brand presence, and deepen the connection with their guests. Highlights include a Branded Mobile App and SMS Marketing to drive diner engagement on mobile devices.
- Toast recently released the results of its third Voice of the Restaurant Industry Survey3, a poll of restaurant decision-makers which highlights the current state of the restaurant industry and how business owners are feeling about the future. Amongst the top findings, 28% of restaurant owners surveyed hope to open a new location over the next 12 months. Additionally, restaurant operators say they are very likely to implement AI in several ways over the next year, with approximately 40% of respondents selecting options including optimizing menu performance, making recommendations for guests, benchmarking their business performance against their peers, and optimizing pricing.
- Toast was named an honoree of the Inc. 2024 Power Partners Awards, a premier list of the best B2B providers for small- and medium-sized businesses. The annual list recognizes organizations across the country for awardees’ support of entrepreneurs across a number of facets of their business, and being instrumental to their growth.
Conference Call Information
Toast will host a live conference call at 5:00 p.m. Eastern Time on Thursday, November 7, 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.
| ____________________________________ |
1 Toast considers Non-GAAP subscription services and financial technology solutions gross profit to be its recurring gross profit streams. |
2 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. |
3 To help better understand the restaurant industry, Toast conducted a blind survey of 755 restaurant decision-makers operating 16 or fewer locations in the United States, including both Toast customers and non-Toast restaurants, from May 17, 2024 to June 2, 2024. Respondents include a mix of both full-service and quick-service restaurants. Respondents were not made aware that Toast was fielding the study. Panel providers granted incentives to restaurant respondents for participation. Using a standard margin of error calculation, at a confidence interval of 95%, the margin of error on average is +/- 4%. |
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 2024; statements about future operating results; the expectations of demand for Toast’s products and growth of its business; statements about new products and offerings and the benefits thereof; the growth rates in the markets in which Toast competes; Toast’s investments in technology and infrastructure; Toast’s ability to deliver innovative solutions; Toast’s ability to attract and retain customers and the commitments from its 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, 2023, Toast’s Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2024 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 per share amounts) | |||||||||||||||
| Three Months Ended September 30, |
| Nine Months Ended September 30, | ||||||||||||
|
| 2024 |
|
|
| 2023 |
|
|
| 2024 |
|
|
| 2023 |
|
Revenue: |
|
|
|
|
|
|
| ||||||||
Subscription services | $ | 189 |
|
| $ | 131 |
|
| $ | 506 |
|
| $ | 358 |
|
Financial technology solutions |
| 1,067 |
|
|
| 856 |
|
|
| 2,963 |
|
|
| 2,338 |
|
Hardware and professional services |
| 49 |
|
|
| 45 |
|
|
| 153 |
|
|
| 133 |
|
Total revenue |
| 1,305 |
|
|
| 1,032 |
|
|
| 3,622 |
|
|
| 2,829 |
|
Costs of revenue: |
|
|
|
|
|
|
| ||||||||
Subscription services |
| 56 |
|
|
| 43 |
|
|
| 159 |
|
|
| 118 |
|
Financial technology solutions |
| 835 |
|
|
| 674 |
|
|
| 2,323 |
|
|
| 1,828 |
|
Hardware and professional services |
| 91 |
|
|
| 88 |
|
|
| 279 |
|
|
| 271 |
|
Amortization of acquired intangible assets |
| 1 |
|
|
| 1 |
|
|
| 4 |
|
|
| 4 |
|
Total costs of revenue |
| 983 |
|
|
| 806 |
|
|
| 2,765 |
|
|
| 2,221 |
|
Gross profit |
| 322 |
|
|
| 226 |
|
|
| 857 |
|
|
| 608 |
|
Operating expenses: |
|
|
|
|
|
|
| ||||||||
Sales and marketing |
| 119 |
|
|
| 100 |
|
|
| 340 |
|
|
| 299 |
|
Research and development |
| 89 |
|
|
| 87 |
|
|
| 258 |
|
|
| 264 |
|
General and administrative |
| 80 |
|
|
| 98 |
|
|
| 229 |
|
|
| 276 |
|
Restructuring expenses |
| — |
|
|
| — |
|
|
| 46 |
|
|
| — |
|
Total operating expenses |
| 288 |
|
|
| 285 |
|
|
| 873 |
|
|
| 839 |
|
Income (loss) from operations |
| 34 |
|
|
| (59 | ) |
|
| (16 | ) |
|
| (231 | ) |
Other income (expense): |
|
|
|
|
|
|
| ||||||||
Interest income, net |
| 9 |
|
|
| 10 |
|
|
| 30 |
|
|
| 27 |
|
Change in fair value of warrant liability |
| (1 | ) |
|
| 18 |
|
|
| (37 | ) |
|
| (5 | ) |
Other income (expense), net |
| 15 |
|
|
| — |
|
|
| 13 |
|
|
|
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