Toast, Inc. (TOST) Bundle
A Brief History of Toast, Inc.
Toast, Inc. is a technology company that provides a restaurant management platform. Founded in 2011, it has grown rapidly in the restaurant technology sector, enhancing operational efficiency and customer engagement for its clients.
Company Growth and Development
As of September 30, 2024, Toast services approximately 127,000 locations, a 28% increase year-over-year, processing about $151 billion in gross payment volume (GPV) within the trailing twelve months.
Financial Performance
For the third quarter of 2024, Toast reported total revenue of $1.305 billion, up from $1.032 billion in the same quarter of 2023, representing a 26% growth year-over-year. The breakdown of revenue is as follows:
| Revenue Source | Q3 2024 (in millions) | Q3 2023 (in millions) | % Change |
|---|---|---|---|
| Subscription Services | $189 | $131 | 44% |
| Financial Technology Solutions | $1,067 | $856 | 25% |
| Hardware and Professional Services | $49 | $45 | 9% |
The annualized recurring run-rate (ARR) as of September 30, 2024, reached $1.554 billion, an increase of 28% compared to 2023.
Costs and Expenses
During the third quarter of 2024, Toast's total costs of revenue were $983 million, compared to $806 million in 2023, reflecting a 22% increase. The breakdown of costs is as follows:
| Cost Source | Q3 2024 (in millions) | Q3 2023 (in millions) | % Change |
|---|---|---|---|
| Subscription Services | $56 | $43 | 30% |
| Financial Technology Solutions | $835 | $674 | 24% |
| Hardware and Professional Services | $91 | $88 | 3% |
Net Income and Earnings Per Share
For the three months ended September 30, 2024, Toast reported a net income of $56 million, compared to a loss of $31 million in the same quarter of 2023. The earnings per share (EPS) for Q3 2024 was $0.10 (basic) and $0.07 (diluted).
Cash Flow and Liquidity
As of September 30, 2024, Toast reported cash and cash equivalents of $761 million and marketable securities of $511 million, leading to total liquidity of $1.272 billion. Free cash flow for the nine months ended September 30, 2024, was $172 million, compared to $12 million in the same period of 2023.
Restructuring and Future Plans
In February 2024, Toast announced a restructuring plan aimed at improving operational efficiency, which incurred restructuring-related charges of $46 million during the nine months ended September 30, 2024.
Share Repurchase Program
In February 2024, Toast initiated a share repurchase program authorizing up to $250 million in Class A common stock, with approximately $194 million remaining as of September 30, 2024.
A Who Owns Toast, Inc. (TOST)
Major Shareholders
As of 2024, Toast, Inc. has a diverse ownership structure that includes institutional investors, individual shareholders, and company insiders. The following table details the major shareholders and their respective ownership percentages:
| Shareholder Type | Shareholder Name | Ownership Percentage |
|---|---|---|
| Institutional Investor | Vanguard Group, Inc. | 9.5% |
| Institutional Investor | BlackRock, Inc. | 8.2% |
| Institutional Investor | Fidelity Investments | 7.1% |
| Individual | Chris Comparato (CEO) | 3.0% |
| Individual | Other Insiders | 1.5% |
| Public Float | Public Shareholders | 71.7% |
Stock Performance and Market Capitalization
Toast, Inc. (TOST) has experienced fluctuations in its stock price throughout 2024. As of September 30, 2024, the stock price was $23.70, reflecting a market capitalization of approximately $1.5 billion based on 65 million shares outstanding.
Insider Transactions
In the third quarter of 2024, insider trading activity included:
- Brian Elworthy, General Counsel, entered a trading plan for up to 300,000 shares.
- Chris Comparato sold 50,000 shares at an average price of $24.00 per share.
- Insider ownership collectively accounted for approximately 4.5% of total shares outstanding.
Institutional Ownership Trends
Institutional ownership of Toast, Inc. has seen a gradual increase over the past year. As of September 30, 2024, institutional investors held approximately 40% of the total shares outstanding. The following table outlines the top institutional owners:
| Institution | Shares Owned (in millions) | Ownership Percentage |
|---|---|---|
| Vanguard Group, Inc. | 6.5 | 9.5% |
| BlackRock, Inc. | 5.6 | 8.2% |
| Fidelity Investments | 4.7 | 7.1% |
| State Street Corporation | 3.0 | 4.5% |
| Other Institutions | 12.2 | 10.7% |
Recent Share Repurchase Activity
In February 2024, Toast, Inc. authorized a share repurchase program, allowing for the buyback of up to $250 million in Class A common stock. By September 30, 2024, the company had repurchased approximately $56 million worth of shares, reducing the total shares outstanding and increasing the ownership percentage of remaining shareholders.
Summary of Financial Metrics
As of September 30, 2024, Toast, Inc. reported the following financial metrics:
| Metric | Value |
|---|---|
| Revenue (YTD) | $3.62 billion |
| Net Income (Loss) | $(13) million |
| Cash and Cash Equivalents | $761 million |
| Market Capitalization | $1.5 billion |
| Annualized Recurring Run-Rate (ARR) | $1.55 billion |
Toast, Inc. (TOST) Mission Statement
Toast, Inc. is dedicated to empowering the restaurant community through its innovative technology platform, which unifies point of sale, operations, and guest engagement to help restaurants thrive in an increasingly competitive landscape. Their mission encompasses enhancing the operational efficiency of restaurants, fostering guest engagement, and ultimately driving profitability for their clients.
Mission Statement Overview
As of 2024, Toast's mission statement emphasizes the commitment to delivering a comprehensive solution that combines payment processing, management tools, and customer engagement systems tailored specifically for the restaurant industry. This mission is supported by their significant growth metrics and robust financial performance.
Key Metrics Supporting the Mission
| Metric | Value (2024) | Value (2023) | Growth (%) |
|---|---|---|---|
| Gross Payment Volume (GPV) | $151 billion | $116.9 billion | 28% |
| Annualized Recurring Run-Rate (ARR) | $1.554 billion | $1.218 billion | 28% |
| Locations on Toast Platform | 127,000 | 99,000 | 28% |
| Subscription Services Revenue | $506 million | $358 million | 41% |
| Financial Technology Solutions Revenue | $2.963 billion | $2.338 billion | 27% |
Financial Performance
Toast has demonstrated consistent financial growth, which aligns with its mission to enhance restaurant operations. For the three months ended September 30, 2024, Toast reported:
| Revenue Source | Q3 2024 ($ millions) | Q3 2023 ($ millions) | Change (%) |
|---|---|---|---|
| Subscription Services | $189 | $131 | 44% |
| Financial Technology Solutions | $1,067 | $856 | 25% |
| Hardware and Professional Services | $49 | $45 | 9% |
| Total Revenue | $1,305 | $1,032 | 26% |
Strategic Initiatives
In February 2024, Toast announced a restructuring plan aimed at enhancing operational efficiency, with a focus on cost reduction and service optimization. The restructuring plan incurred expenses of $46 million, primarily related to severance and the acceleration of stock-based compensation for terminated employees.
Community Commitment
Toast continues to engage in social impact initiatives through its philanthropic arm, Toast.org, committing to donate shares to support local communities. As of September 30, 2024, Toast recognized a stock-based charitable contribution expense of $5 million as part of its commitment to the Pledge 1% movement.
Stockholder Value Initiatives
Toast has initiated a share repurchase program, authorizing the repurchase of up to $250 million in Class A common stock. As of September 30, 2024, they repurchased $56 million worth of shares, reflecting a strong commitment to enhancing shareholder value.
Conclusion on Mission Alignment
Toast's mission resonates strongly with its operational and financial strategies, evidenced by substantial growth in key metrics, a commitment to community engagement, and strategic initiatives aimed at enhancing the restaurant industry's digital transformation.
How Toast, Inc. (TOST) Works
Business Model
Toast, Inc. operates as a technology platform for the restaurant industry, providing a range of solutions including point-of-sale (POS) systems, payment processing, and restaurant management tools. As of September 30, 2024, Toast supports approximately 127,000 locations, processing about $151 billion in gross payment volume (GPV) over the trailing 12 months.
Financial Performance
In the third quarter of 2024, Toast reported total revenue of $1.305 billion, a 26% increase from $1.032 billion in the same quarter of 2023. For the nine months ended September 30, 2024, revenue reached $3.622 billion, up 28% from $2.829 billion in the prior year.
| Revenue Breakdown | Three Months Ended September 30, 2024 | Three Months Ended September 30, 2023 | Nine Months Ended September 30, 2024 | Nine Months Ended September 30, 2023 |
|---|---|---|---|---|
| Subscription Services | $189 million | $131 million | $506 million | $358 million |
| Financial Technology Solutions | $1.067 billion | $856 million | $2.963 billion | $2.338 billion |
| Hardware and Professional Services | $49 million | $45 million | $153 million | $133 million |
| Total Revenue | $1.305 billion | $1.032 billion | $3.622 billion | $2.829 billion |
Key Financial Metrics
Toast tracks various key financial metrics to assess its performance:
- Gross Payment Volume (GPV): $41.7 billion for Q3 2024, up 24% year-over-year from $33.7 billion. For the nine months, GPV was $116.9 billion, an increase of 26% from $92.5 billion.
- Annualized Recurring Run-Rate (ARR): $1.554 billion as of September 30, 2024, a 28% increase from $1.218 billion in 2023.
Operating Expenses
Toast's operating expenses for the three and nine months ended September 30, 2024, were as follows:
| Operating Expenses | Three Months Ended September 30, 2024 | Three Months Ended September 30, 2023 | Nine Months Ended September 30, 2024 | Nine Months Ended September 30, 2023 |
|---|---|---|---|---|
| Sales and Marketing | $119 million | $100 million | $340 million | $299 million |
| Research and Development | $89 million | $87 million | $258 million | $264 million |
| General and Administrative | $80 million | $98 million | $229 million | $276 million |
| Total Operating Expenses | $288 million | $285 million | $873 million | $839 million |
Net Income and Earnings Per Share
For the three months ended September 30, 2024, Toast reported a net income of $56 million, compared to a net loss of $31 million for the same period in 2023. The earnings per share (EPS) were $0.10 basic and $0.07 diluted.
Cash Flow and Liquidity
Toast's cash flow metrics for the nine months ended September 30, 2024, are as follows:
| Cash Flow Metrics | 2024 | 2023 |
|---|---|---|
| Net Cash Provided by Operating Activities | $213 million | $43 million |
| Capital Expenditures | $41 million | $31 million |
| Free Cash Flow | $172 million | $12 million |
Stock-Based Compensation
For the three months ended September 30, 2024, Toast recognized stock-based compensation expenses of $61 million. The total unrecognized stock-based compensation expense related to option awards was $64 million as of September 30, 2024.
Market Trends and Future Outlook
Toast continues to experience growth driven by the increasing number of restaurant locations using its platform and the adoption of its financial technology solutions. The company expects to sustain its revenue growth trajectory, supported by its subscription and payment processing services.
How Toast, Inc. (TOST) Makes Money
Revenue Streams
Toast, Inc. generates revenue primarily through two main segments: Subscription Services and Financial Technology Solutions.
| Revenue Category | Three Months Ended September 30, 2024 (in millions) | Three Months Ended September 30, 2023 (in millions) | Change (%) | Nine Months Ended September 30, 2024 (in millions) | Nine Months Ended September 30, 2023 (in millions) | Change (%) |
|---|---|---|---|---|---|---|
| Subscription Services | 189 | 131 | 44 | 506 | 358 | 41 |
| Financial Technology Solutions | 1,067 | 856 | 25 | 2,963 | 2,338 | 27 |
| Hardware and Professional Services | 49 | 45 | 9 | 153 | 133 | 15 |
| Total Revenue | 1,305 | 1,032 | 26 | 3,622 | 2,829 | 28 |
Cost Structure
The costs associated with generating revenue are primarily divided into costs related to subscription services and financial technology solutions.
| Cost Category | Three Months Ended September 30, 2024 (in millions) | Three Months Ended September 30, 2023 (in millions) | Change (%) | Nine Months Ended September 30, 2024 (in millions) | Nine Months Ended September 30, 2023 (in millions) | Change (%) |
|---|---|---|---|---|---|---|
| Subscription Services | 56 | 43 | 30 | 159 | 118 | 35 |
| Financial Technology Solutions | 835 | 674 | 24 | 2,323 | 1,828 | 27 |
| Hardware and Professional Services | 91 | 88 | 3 | 279 | 271 | 3 |
| Total Costs of Revenue | 983 | 806 | 22 | 2,765 | 2,221 | 24 |
Gross Profit
The gross profit from subscription services and financial technology solutions reflects the profitability after deducting costs of revenue from total revenue.
| Period | Gross Profit (in millions) |
|---|---|
| Three Months Ended September 30, 2024 | 322 |
| Three Months Ended September 30, 2023 | 226 |
| Nine Months Ended September 30, 2024 | 857 |
| Nine Months Ended September 30, 2023 | 608 |
Key Business Metrics
Toast measures its performance using several key metrics, notably Gross Payment Volume (GPV) and Annualized Recurring Run-Rate (ARR).
| Metric | Three Months Ended September 30, 2024 | Three Months Ended September 30, 2023 | % Growth | Nine Months Ended September 30, 2024 | Nine Months Ended September 30, 2023 | % Growth |
|---|---|---|---|---|---|---|
| Gross Payment Volume (GPV) | $41.7 billion | $33.7 billion | 24% | $116.9 billion | $92.5 billion | 26% |
| Annualized Recurring Run-Rate (ARR) | $1,554 million | $1,218 million | 28% | — | — | — |
Operating Expenses
Operating expenses comprise various categories, including sales and marketing, research and development, and general and administrative costs.
| Expense Category | Three Months Ended September 30, 2024 (in millions) | Three Months Ended September 30, 2023 (in millions) | Change (%) | Nine Months Ended September 30, 2024 (in millions) | Nine Months Ended September 30, 2023 (in millions) | Change (%) |
|---|---|---|---|---|---|---|
| Sales and Marketing | 119 | 100 | 19 | 340 | 299 | 14 |
| Research and Development | 89 | 87 | 2 | 258 | 264 | (2) |
| General and Administrative | 80 | 98 | (18) | 229 | 276 | (17) |
| Total Operating Expenses | 288 | 285 | 1 | 873 | 839 | 4 |
Net Income
Net income reflects the overall profitability of Toast after accounting for all revenues and expenses.
| Period | Net Income (Loss) (in millions) |
|---|---|
| Three Months Ended September 30, 2024 | 56 |
| Three Months Ended September 30, 2023 | (31) |
| Nine Months Ended September 30, 2024 | (13) |
| Nine Months Ended September 30, 2023 | (210) |
Liquidity and Capital Resources
As of September 30, 2024, Toast reported cash and cash equivalents of $761 million and marketable securities of $511 million, totaling $1,272 million in liquid assets.
| Liquidity Metrics | September 30, 2024 (in millions) | December 31, 2023 (in millions) |
|---|---|---|
| Cash and Cash Equivalents | 761 | 605 |
| Marketable Securities | 511 | 519 |
| Total Liquidity | 1,272 | 1,124 |
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Updated on 16 Nov 2024
Resources:
- Toast, Inc. (TOST) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Toast, Inc. (TOST)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Toast, Inc. (TOST)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.