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Toast Announces Third Quarter 2021 Financial Results

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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, November 09, 2021--(BUSINESS WIRE)--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,

2021

2020

2021

2020

Revenue:

Subscription services

$

45,803

$

27,406

$

113,844

$

72,193

Financial technology solutions

404,224

188,195

983,699

450,265

Hardware

31,051

18,148

80,005

48,335

Professional services

5,301

3,008

12,579

9,806

Total revenue

486,379

236,757

1,190,127

580,599

Costs of revenue:

Subscription services

18,016

10,388

41,044

29,205

Financial technology solutions

327,235

145,945

779,111

358,402

Hardware

42,109

21,914

93,521

63,336

Professional services

14,585

9,282

35,276

33,655

Amortization of acquired technology and customer assets

1,180

908

3,147

2,695

Total costs of revenue

403,125

188,437

952,099

487,293

Gross profit

83,254

48,320

238,028

93,306

Operating expenses:

Sales and marketing

56,622

32,216

130,480

104,326

Research and development

39,700

34,274

112,978

78,658

General and administrative

40,633

20,481

105,095

73,558

Total operating expenses

136,955

86,971

348,553

256,542

Loss from operations

(53,701

)

(38,651

)

(110,525

)

(163,236

)

Other income (expense):

Interest income

8

137

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 diluted

239,358,805

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

)

5

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, 2020

52,730

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, 2020

409

872

Inventories

38,665

19,330

Costs capitalized to obtain revenue contracts, net

23,931

16,794

Prepaid expenses and other current assets

79,561

21,611

Total current assets

1,496,915

673,064

Property and equipment, net

42,381

44,111

Intangible assets

17,188

6,835

Goodwill

74,738

35,887

Restricted cash

2,694

1,214

Security deposits

806

1,633

Non-current costs capitalized to obtain revenue contracts, net

18,755

12,612

Other non-current assets

3,776

600

Total non-current assets

160,338

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 revenue

46,865

42,680

Accrued expenses and other current liabilities

206,218

63,172

Total current liabilities

286,779

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 stock

308,195

Deferred revenue, net of current portion

12,832

15,533

Deferred rent, net of current portion

16,106

18,536

Other long-term liabilities

23,867

7,007

Total long-term liabilities

361,000

261,633

Total liabilities

647,779

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 income

45

228

Additional paid-in capital

2,113,107

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,

2021

2020

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 amortization

15,617

9,498

Stock-based compensation

95,210

58,357

Amortization of costs capitalized to obtain revenue contracts

17,596

10,818

Change in fair value of derivative liability

103,281

18,208

Change in fair value of warrant liabilities

214,881

(60

)

Change in deferred income taxes

(3,920

)

Loss on debt extinguishment

49,783

Non-cash interest on convertible notes

11,771

6,404

Other

305

256

Changes in operating assets and liabilities:

Account receivable, net

(20,083

)

(8,425

)

Factor receivable, net

153

2,568

Merchant cash advances repaid

537

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 payable

8,207

(6,289

)

Accrued expenses and other current liabilities

106,306

8,276

Deferred revenue

1,484

(2,268

)

Other assets and liabilities

2,068

3,436

Net cash provided by (used in) operating activities

33,970

(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