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
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
—
Income (loss) before taxes
57
(31
)
(10
)
(209
)
Income tax expense
(1
)
—
(3
)
(1
)
Net income (loss)
$
56
$
(31
)
$
(13
)
$
(210
)
Earnings (loss) per share attributable to
common stockholders:
Basic
$
0.10
$
(0.06
)
$
(0.02
)
$
(0.40
)
Diluted
$
0.07
$
(0.09
)
$
(0.02
)
$
(0.40
)
Weighted-average shares used in computing
earnings (loss) per share:
Basic
563
535
556
530
Diluted
590
536
556
530
TOAST, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(unaudited)
(in millions, except per share
amounts)
September 30, 2024
December 31, 2023
Assets:
Current assets:
Cash and cash equivalents
$
761
$
605
Marketable securities
511
519
Accounts receivable, net
105
69
Inventories, net
106
118
Other current assets
319
259
Total current assets
1,802
1,570
Property and equipment, net
95
75
Operating lease right-of-use assets
31
36
Intangible assets, net
22
26
Goodwill
113
113
Restricted cash
56
55
Other non-current assets
108
83
Total non-current assets
425
388
Total assets
$
2,227
$
1,958
Liabilities and Stockholders’
Equity:
Current liabilities:
Accounts payable
$
30
$
32
Deferred revenue
62
39
Accrued expenses and other current
liabilities
656
592
Total current liabilities
748
663
Warrants to purchase common stock
27
64
Operating lease liabilities
27
33
Other long-term liabilities
5
4
Total liabilities
807
764
Commitments and Contingencies
Stockholders’ Equity:
Preferred stock- par value $0.000001; 100
shares authorized, no shares issued or outstanding
—
—
Common stock, $0.000001 par value:
Class A - 7,000 shares authorized; 468 and
429 shares issued and outstanding as of September 30, 2024 and
December 31, 2023, respectively
Class B - 700 shares authorized; 97 and
114 shares issued and outstanding as of September 30, 2024 and
December 31, 2023, respectively
—
—
Accumulated other comprehensive income
3
—
Additional paid-in capital
3,053
2,817
Accumulated deficit
(1,636
)
(1,623
)
Total stockholders’ equity
1,420
1,194
Total liabilities and stockholders’
equity
$
2,227
$
1,958
TOAST, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(unaudited) (in
millions)
Three Months Ended September
30,
Nine Months Ended September
30,
2024
2023
2024
2023
Cash flows from operating
activities:
Net income (loss)
$
56
$
(31
)
$
(13
)
$
(210
)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization
12
8
35
22
Stock-based compensation expense
60
71
193
206
Amortization of deferred contract
acquisition costs
21
16
59
44
Change in fair value of warrant
liability
1
(18
)
37
5
Credit loss expense
18
19
50
44
Stock-based charitable contribution
expense
5
10
5
10
Asset impairments
1
—
2
15
Gain on warrant extinguishment
(14
)
—
(14
)
—
Other non-cash items
(2
)
(2
)
(5
)
(14
)
Changes in operating assets and
liabilities:
Accounts receivable, net
(9
)
18
(54
)
(24
)
Other current assets
3
(4
)
(11
)
(7
)
Deferred contract acquisition costs
(32
)
(27
)
(95
)
(77
)
Inventories, net
4
9
12
13
Accounts payable
(3
)
(15
)
(1
)
(3
)
Accrued expenses and other current
liabilities
(8
)
(7
)
(7
)
17
Deferred revenue
(1
)
(1
)
23
6
Operating lease right-of-use assets and
operating lease liabilities, net
(1
)
(1
)
(1
)
—
Other assets and liabilities
(2
)
2
(2
)
(4
)
Net cash provided by operating
activities
109
47
213
43
Cash flows from investing
activities:
Cash paid for acquisition, net of cash
acquired
—
—
—
(9
)
Capital expenditures
(12
)
(10
)
(41
)
(31
)
Purchases of marketable securities
(76
)
(128
)
(353
)
(479
)
Proceeds from the sale of marketable
securities
27
10
80
23
Maturities of marketable securities
71
99
290
414
Other investing activities
—
(2
)
—
(3
)
Net cash provided by (used in) investing
activities
10
(31
)
(24
)
(85
)
Cash flows from financing
activities:
Change in customer funds obligations,
net
13
(4
)
40
27
Proceeds from issuance of common stock
29
16
84
31
Warrant repurchase
(61
)
—
(61
)
—
Repurchases of Class A common stock
(20
)
—
(56
)
—
Net cash provided by (used in) financing
activities
(39
)
12
7
58
Net increase in cash, cash equivalents,
cash held on behalf of customers and restricted cash
80
28
196
16
Effect of exchange rate changes on cash
and cash equivalents and restricted cash
—
—
1
(1
)
Cash, cash equivalents, cash held on
behalf of customers and restricted cash at beginning of period
864
622
747
635
Cash, cash equivalents, cash held on
behalf of customers and restricted cash at end of period
$
944
$
650
$
944
$
650
Reconciliation of cash, cash
equivalents, cash held on behalf of customers and restricted
cash
Cash and cash equivalents
$
761
$
514
$
761
$
514
Cash held on behalf of customers
127
87
127
87
Restricted cash
56
49
56
49
Total cash, cash equivalents, cash held on
behalf of customers and restricted cash
$
944
$
650
$
944
$
650
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
(expense), net, income taxes and certain other items that are not
considered to reflect our operating activities and performance
within the ordinary course of business, such as restructuring and
restructuring-related expenses, acquisition expenses, fair value
adjustments on warrant liabilities, gain on warrant extinguishment,
expenses related to early termination of leases (which includes
associated asset impairments) and stock-based charitable
contribution expense, as applicable.
- Non-GAAP Subscription Services and Financial Technology
Solutions Gross Profit is defined as subscription services gross
profit and financial technology solutions gross profit, adjusted to
exclude stock-based compensation expense and related payroll tax
expense, and depreciation and amortization expense.
- Non-GAAP Costs of Revenue are defined as costs of revenue
excluding stock-based compensation expense and related payroll tax
expense, and depreciation and amortization expense.
- Non-GAAP Gross Profit is defined as gross profit excluding
stock-based compensation expense and related payroll tax expense,
and depreciation and amortization expense.
- Non-GAAP Subscription Services Gross Profit is defined as
subscription services gross profit excluding stock-based
compensation expense and related payroll tax expense, and
depreciation and amortization expense.
- Non-GAAP Financial Technology Solutions Gross Profit is defined
as financial technology solutions gross profit excluding
stock-based compensation expense and related payroll tax expense,
and depreciation and amortization expense.
- Non-GAAP Hardware and Professional Services Gross Profit is
defined as hardware and professional services gross profit
excluding stock-based compensation expense and related payroll tax
expense, and depreciation and amortization expense.
- Non-GAAP Non-Payments Financial Technology Solutions Gross
Profit is defined as financial technology gross profit excluding
payments financial technology gross profit.
- Non-GAAP Sales and Marketing Expenses are defined as sales and
marketing expenses excluding stock-based compensation expense and
related payroll tax expense, and depreciation and amortization
expense.
- Non-GAAP Research and Development Expenses are defined as
research and development expenses excluding stock-based
compensation expense and related payroll tax expense, and
depreciation and amortization expense.
- Non-GAAP General and Administrative Expenses are defined as
general and administrative expenses excluding stock-based
compensation expense and related payroll tax expense, depreciation
and amortization expense, acquisition expenses, expenses related to
early termination of leases (which includes associated asset
impairments), and stock-based charitable contribution 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 (collectively
referred to as capital expenditures).
Adjusted EBITDA, Non-GAAP Subscription Services and Financial
Technology Solutions Gross Profit, Non-GAAP Costs of Revenue,
Non-GAAP Gross Profit, Non-GAAP Subscription Services Gross Profit,
Non-GAAP Financial Technology Gross Profit, Non-GAAP Hardware and
Professional Services Gross Profit, Non-GAAP Non-Payments Financial
Technology Solutions Gross Profit, Non-GAAP Sales 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 Operations and Consolidated
Statements of Cash Flows. Thus, our Adjusted EBITDA, Non-GAAP
Subscription Services and Financial Technology Solutions Gross
Profit, Non-GAAP Costs of Revenue, Non-GAAP Gross Profit, Non-GAAP
Subscription Services Gross Profit, Non-GAAP Financial Technology
Gross Profit, Non-GAAP Hardware and Professional Services Gross
Profit, Non-GAAP Non-Payments Financial Technology Solutions 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:
- Gross Payment Volume (“GPV”) is defined as the sum of total
dollars processed through the Toast payments platform across Toast
Processing Locations in a given period. GPV is a key measure of the
scale of Toast’s platform, which in turn drives our financial
performance. As Toast customers generate more sales and therefore
more GPV, Toast generally sees higher financial technology
solutions revenue.
- 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, or MRR, is measured on
the final day of each month as the sum of (i) Toast’s monthly
billings of subscription services fees, which we refer to as the
subscription component of MRR, and (ii) Toast’s in-month adjusted
payments services fees, exclusive of estimated transaction-based
costs, which we refer to as the payments component of MRR. MRR does
not include fees derived from Toast Capital or related costs. MRR
is also not burdened by the impact of SaaS credits offered. The MRR
calculation includes all locations on the Toast platform and
locations on legacy solutions, which have a negligible impact on
ARR. 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
Toast’s 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.
Locations
We define a live location, or Location, as a unique location
that has used Toast Point of Sale to record transaction volumes
above a minimum threshold, and has not been marked as a churned
location as of the date of determination. A Location can use Toast
payment services, which we refer to as a Toast Processing Location,
or for select enterprise customers, not use Toast’s payment
services, which we refer to as a Non-Toast Processing Location.
Customers of legacy solutions provided by companies that we have
acquired, that do not use Toast Point of Sale, are not included in
our Location count.
Summary of Key Business
Metrics and Non-GAAP Results
(unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
(dollars in billions)
2024
2023
% Growth
2024
2023
% Growth
Gross Payment Volume (GPV)
$
41.7
$
33.7
24
%
$
116.9
$
92.5
26
%
As of September 30,
(dollars in millions)
2024
2023
% Growth
Payments Annualized Recurring Run-Rate
$
774
$
631
23
%
Subscription Annualized Recurring
Run-Rate
780
587
33
%
Total Annualized Recurring Run-Rate
(ARR)
$
1,554
$
1,218
28
%
Adjusted EBITDA
Three Months Ended September
30,
Nine Months Ended September
30,
(dollars in millions)
2024
2023
2024
2023
Net income (loss)
$
56
$
(31
)
$
(13
)
$
(210
)
Stock-based compensation expense and
related payroll tax
61
74
193
216
Depreciation and amortization
12
9
32
22
Interest income, net
(9
)
(10
)
(30
)
(27
)
Gain on warrant extinguishment
(14
)
—
(14
)
—
Change in fair value of warrant
liability
1
(18
)
37
5
Termination of leases
—
1
2
14
Stock-based charitable contribution
expense
5
10
5
10
Restructuring and restructuring-related
expenses(1)
—
—
46
—
Acquisition expenses
—
—
—
1
Income tax expense
1
—
3
1
Adjusted EBITDA
$
113
$
35
$
261
$
32
(1) Restructuring and
restructuring-related expenses for the nine months ended September
30, 2024 include $32 million of severance benefits, $12 million of
stock-based compensation expense, and $2 million of accelerated
depreciation related to facilities.
Non-GAAP Subscription Services and
Financial Technology Solutions Gross Profit (Non-GAAP)
Three Months Ended September
30,
Nine Months Ended September
30,
(dollars in millions)
2024
2023
2024
2023
Gross profit (GAAP):
Subscription services
$
133
$
88
$
347
$
240
Financial technology solutions
232
182
640
510
Adjustments:
Stock-based compensation expense and
related payroll tax
5
5
16
15
Depreciation and amortization
8
5
22
11
Non-GAAP subscription services and
financial technology solutions gross profit (Non-GAAP)
$
378
$
280
$
1,025
$
776
Non-GAAP Costs of Revenue
Three Months Ended September
30,
Nine Months Ended September
30,
(dollars in millions)
2024
2023
2024
2023
Costs of revenue
$
983
$
806
$
2,765
$
2,221
Stock-based compensation expense and
related payroll tax
(11
)
(12
)
(33
)
(34
)
Depreciation and amortization
(9
)
(6
)
(27
)
(16
)
Non-GAAP costs of revenue
$
963
$
788
$
2,705
$
2,171
Non-GAAP Gross Profit
Three Months Ended September
30,
Nine Months Ended September
30,
(dollars in millions)
2024
2023
2024
2023
Gross profit
$
322
$
226
$
857
$
608
Stock-based compensation expense and
related payroll tax
11
12
33
34
Depreciation and amortization
9
6
27
16
Non-GAAP gross profit
$
342
$
244
$
917
$
658
Non-GAAP Subscription Services Gross
Profit
Three Months Ended September
30,
Nine Months Ended September
30,
(dollars in millions)
2024
2023
2024
2023
Subscription services gross profit
$
133
$
88
$
347
$
240
Stock-based compensation expense and
related payroll tax
5
5
16
15
Depreciation and amortization
8
5
22
11
Non-GAAP subscription services gross
profit
$
146
$
98
$
385
$
266
Non-GAAP Financial Technology Solutions
Gross Profit
Three Months Ended September
30,
Nine Months Ended September
30,
(dollars in millions)
2024
2023
2024
2023
Financial technology solutions gross
profit
$
232
$
182
$
640
$
510
Stock-based compensation expense and
related payroll tax
—
—
—
—
Depreciation and amortization
—
—
—
—
Non-GAAP financial technology solutions
gross profit
$
232
$
182
$
640
$
510
Non-GAAP Hardware and Professional
Services Gross Profit
Three Months Ended September
30,
Nine Months Ended September
30,
(dollars in millions)
2024
2023
2024
2023
Hardware and professional services gross
profit
$
(42
)
$
(43
)
$
(126
)
$
(138
)
Stock-based compensation expense and
related payroll tax
6
6
17
19
Depreciation and amortization
—
1
1
2
Non-GAAP hardware and professional
services gross profit
$
(36
)
$
(36
)
$
(108
)
$
(117
)
Non-GAAP Non-Payments Financial
Technology Solutions Gross Profit
Three Months Ended September
30,
Nine Months Ended September
30,
(dollars in millions)
2024
2023
2024
2023
Financial technology solutions gross
profit
$
232
$
182
$
640
$
510
Payments financial technology solutions
gross profit
(189
)
(148
)
(529
)
(418
)
Non-GAAP non-payments financial technology
solutions gross profit
$
43
$
34
$
111
$
92
Non-GAAP Sales and Marketing
Expenses
Three Months Ended September
30,
Nine Months Ended September
30,
(dollars in millions)
2024
2023
2024
2023
Sales and marketing expenses
$
119
$
100
$
340
$
299
Stock-based compensation expense and
related payroll tax
(13
)
(16
)
(43
)
(47
)
Depreciation and amortization
(1
)
(1
)
(2
)
(2
)
Non-GAAP sales and marketing expenses
$
105
$
83
$
295
$
250
Non-GAAP Research and Development
Expenses
Three Months Ended September
30,
Nine Months Ended September
30,
(dollars in millions)
2024
2023
2024
2023
Research and development expenses
$
89
$
87
$
258
$
264
Stock-based compensation expense and
related payroll tax
(22
)
(24
)
(66
)
(72
)
Depreciation and amortization
(1
)
(1
)
(2
)
(2
)
Non-GAAP research and development
expenses
$
66
$
62
$
190
$
190
Non-GAAP General and Administrative
Expenses
Three Months Ended September
30,
Nine Months Ended September
30,
(dollars in millions)
2024
2023
2024
2023
General and administrative expenses
$
80
$
98
$
229
$
276
Stock-based compensation expense and
related payroll tax
(15
)
(22
)
(51
)
(64
)
Depreciation and amortization
(1
)
(1
)
(1
)
(2
)
Termination of leases
—
(1
)
(2
)
(14
)
Stock-based charitable contribution
expense
(5
)
(10
)
(5
)
(10
)
Acquisition expenses
—
—
—
(1
)
Non-GAAP general and administrative
expenses
$
59
$
64
$
170
$
185
Free Cash Flow
Three Months Ended September
30,
Nine Months Ended September
30,
(dollars in millions)
2024
2023
2024
2023
Net cash provided by operating
activities
$
109
$
47
$
213
$
43
Capital expenditures
(12
)
(10
)
(41
)
(31
)
Free cash flow
$
97
$
37
$
172
$
12
Sums may not equal totals due to rounding.
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