Toast, Inc. · NYSE:TOST
Toast — Q4 2023 Earnings Presentation
32 slides from Toast's earnings presentation, Feb 15, 2024
Slide 1: Fourth Quarter and Fiscal Year 2023 Financial Results
Fourth Quarter and Fiscal Year 2023 Financial Results 1
Slide 2: Disclaimer
Disclaimer This presentation includes certain “forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding the future results of operations, financial condition, business strategy, plans and objectives of management for futur
Slide 3: Our Mission
Our Mission To empower the restaurant © 2024 Toast, Inc. All Rights Reserved. community to delight their guests, do what they love, and thrive. 3
Slide 4: Investment Highlights
Investment Highlights Large and Growing TAM Purpose-built for restaurants, one of the largest vertical markets © 2024 Toast, Inc. All Rights Reserved. Differentiated Product Offering Cloud-based, all-in-one digital technology platform with integrated payment processing Proven Durable Growth Experien
Slide 5: Toast 2023 Highlights
Toast 2023 Highlights $1.2B $126B $3.9B ARR as of Q4-23 2023 GPV 2023 Revenue © 2024 Toast, Inc. All Rights Reserved. 35% YoY Growth 38% YoY Growth 42% YoY Growth ~106K 117% ~14 Month Total Locations Annual SaaS Annual Payback Period 34% YoY Growth Net Retention Rate1 in 2023 ARR: Annualized Recurri
Slide 6: The Restaurant Industry Is One Of The Largest Industries
860K Locations in the US1 The Restaurant 22M Industry Is One © 2024 Toast, Inc. All Rights Reserved. Locations Globally2 Of The Largest Industries In U.S. And $1T Annual U.S. Sales Globally (~4% of GDP)3 12M+ Employees in the US4 1 IBISWorld, 2021. 2 Euromonitor International Consumer Foodservice 20
Slide 7: Restaurants are Complex Businesses
Restaurants are Complex Businesses © 2024 Toast, Inc. All Rights Reserved. Integrated Payroll & HR Reporting & Waitlists Kitchen Point of Sale Websites Payments Analytics Operations Takeout Benefits Reservations Kiosk Marketing Financial Accounting Inventory & Loans Drive Thru Scheduling Table Manag
Slide 8: Better Together: We Benefit the Entire Restaurant Ecosystem
Better Together: We Benefit the Entire Restaurant Ecosystem Higher tips, better Improved service employee experience quality © 2024 Toast, Inc. All Rights Reserved. Happy Happy Employees Guests Improved wage Memorable & tailored & benefits access experiences Lower turnover, improved Restaurant Great
Slide 9: Introducing Updated Packaging to Simplify Upfront Sales Motion
Introducing Updated Packaging to Simplify Upfront Sales Motion Designed to increase value for customers ● Fewer decisions: streamlines sales process; transforms existing product © 2024 Toast, Inc. All Rights Reserved. catalog into product suites organized POS & Restaurant Digital Storefront Marketin
Slide 10: The Toast Platform: Powering Restaurants
The Toast Platform: Powering Restaurants Point of Sale & Financial Technology Digital Team Supply Chain & Marketing Restaurant Operations Solutions Storefront Management Accounting SOFTWARE HARDWARE ●Payment Processing ●Gift Cards ●Online Ordering ●Payroll & Team ●xtraCHEF Lite © 2024 Toast, Inc. Al
Slide 11: Enabling More Service Models for Customers to Grow Their Business
Enabling More Service Models for Customers to Grow Their Business SERVICE MODELS Table Service Counter Service Takeout / Delivery Curbside Hybrid Service1 © 2024 Toast, Inc. All Rights Reserved. ●Toast Tables ●Kiosk ●Online ordering ●Online ordering ●Order & Pay ●Order & Pay ●KDS ●Toast Takeout ●Toa
Slide 12: This Is Just The Beginning For Toast
This Is Just The Beginning For Toast Massive TAM 6% $110B+ © 2024 Toast, Inc. All Rights Reserved. Global TAM $55B US TAM $15B SAM1 $1.2B Q4 2023 ARR Sources: U.S. Bureau of Labor Statistics, IBISWorld, National Restaurant Association (2021 State of the Restaurant Industry), Freedonia Group. Note: G
Slide 13: Our Differentiated Go-To-Market Strategy
Our Differentiated Go-To-Market Strategy • Hyper-localized go-to-market motion Approx. 3/4th © 2024 Toast, Inc. All Rights Reserved. of new locations come through inbound channels • Focus on building strong customer communities Approx. 1/5 th • Improving sales productivity from increasing category p
Slide 14: Fourth Quarter Results
Fourth Quarter Results 14 © 2024 Toast, Inc. All Rights Reserved.
Slide 15: Integrated Software and Payments Model
Integrated Software and Payments Model Recurring Financial Technology Subscription Services Solutions © 2024 Toast, Inc. All Rights Reserved. $ One-Time Hardware Professional Services 15
Slide 16: Rapid and Sustainable Growth
Rapid and Sustainable Growth Total Revenue ($M) Annualized Recurring Run- $1,032 $1,036 Rate (ARR) $978 Subscription Services Revenue © 2024 Toast, Inc. All Rights Reserved. $819 $769 Financial Technology Subscription ARR Solutions Gross Profit Recurring Financial Technology Solutions COGS $ Payment
Slide 17: ARR, our Core Operational Metric, Also Scaling Rapidly
ARR, our Core Operational Metric, Also Scaling Rapidly Annualized Recurring Run-Rate* (ARR)($M) $1,218 $1,218 $1,140 $987 © 2024 Toast, Inc. All Rights Reserved. $901 % Total YoY Growth: 59% 55% 45% 40% 35% 17 Note: Numbers may not tie due to rounding. See Appendix for definition of ARR. * ARR does
Slide 18: Total Locations Surpassed 100k
18 © 2024 Toast, Inc. All Rights Reserved. Total Locations Surpassed 100k
Slide 19: GPV and SaaS Product Attach
GPV and SaaS Product Attach Total GPV ($B) % of Locations Using 6+ Elective Products1 © 2024 Toast, Inc. All Rights Reserved. % YoY Growth: 49% 50% 38% 34% 32% 19 1 Analysis based on the adoption rate of SaaS modules offered on the Toast platform on top of Point of Sale and Payment Process ing, excl
Slide 20: Continued Gross Profit Expansion
Continued Gross Profit Expansion Total Non-GAAP Gross Profit ($M) © 2024 Toast, Inc. All Rights Reserved. Attractive gross Recurring margin from (Subscription + Fintech) recurring streams $0 One-Time (Hardware + Prof. Services) Total Non-GAAP $172 $189 $225 $244 $245 Gross Profit: % YoY Growth: 110%
Slide 21: Efficiently Scaling the Business & Driving Margin Expansion
Efficiently Scaling the Business & Driving Margin Expansion Quarterly Adjusted EBITDA Margin Annual Adjusted EBITDA Margin © 2024 Toast, Inc. All Rights Reserved. Adj. EBITDA ($M) $(18) $29 $(115) $61 21 Note: Numbers may not tie due to rounding. Please refer to the Appendix of this presentation and
Slide 22: Appendix
Appendix 22 © 2024 Toast, Inc. All Rights Reserved.
Slide 23: Defining Key Terms
Defining Key Terms Gross Payment Volume (GPV) • Sum of total dollars processed through the Toast payments platform across Toast Processing Locations in a given period Annualized Recurring Run-Rate (ARR) • Sum of twelve times the subscription component of MRR and four times the trailing-three-month c
Slide 24: Defining Key Terms
Defining Key Terms Net Retention Rate (NRR) • Divide MRR for the Base Customers cohort in the same month of the subsequent year, or the Comparison Month, by MRR in the Base Month to derive a monthly NRR. MRR in the Comparison Month includes the impact of any churn or contraction of the Base Customer
Slide 25: Quarterly Gross Profit GAAP to Non-GAAP Reconciliation
Quarterly Gross Profit GAAP to Non-GAAP Reconciliation $M 3 Months Ended Dec-2022 Mar-2023 Jun-2023 Sep-2023 Dec-2023 Gross Profit $158 $174 $208 $226 $226 © 2024 Toast, Inc. All Rights Reserved. Stock-based compensation expense and related payroll tax 10 11 11 12 12 Depreciation and amortization 4
Slide 26: Quarterly GAAP Gross Profit to Non-GAAP Gross Profit by Revenue Stream
Quarterly GAAP Gross Profit to Non-GAAP Gross Profit by Revenue Stream $M 3 Months Ended Dec-2022 Mar-2023 Jun-2023 Sep-2023 Dec-2023 Subscription services gross profit $63 $71 $82 $88 $94 Subscription services stock-based compensation expense & related payroll 4 5 4 5 5 © 2024 Toast, Inc. All Right
Slide 27: Quarterly GAAP Gross Profit to Non-GAAP Gross Profit by Revenue Stream
Quarterly GAAP Gross Profit to Non-GAAP Gross Profit by Revenue Stream $M 3 Months Ended Dec-2022 Mar-2023 Jun-2023 Sep-2023 Dec-2023 Hardware and professional services gross profit $(41) $(46) $(50) $(43) $(43) © 2024 Toast, Inc. All Rights Reserved. Hardware and professional services & other stock
Slide 28: Quarterly Adj. EBITDA GAAP to Non-GAAP Reconciliation
Quarterly Adj. EBITDA GAAP to Non-GAAP Reconciliation $M 3 Months Ended Dec-2022 Mar-2023 Jun-2023 Sep-2023 Dec-2023 Net loss $(99) $(81) $(98) $(31) $(36) Stock-based compensation expense and related payroll tax 62 68 74 74 72 © 2024 Toast, Inc. All Rights Reserved. Depreciation and amortization 6
Slide 29: Quarterly Free Cash Flow GAAP to Non-GAAP Reconciliation
Quarterly Free Cash Flow GAAP to Non-GAAP Reconciliation $M 3 Months Ended Dec-2022 Mar-2023 Jun-2023 Sep-2023 Dec-2023 Net cash provided by (used in) operating activities $(19) $(55) $50 $47 $92 © 2024 Toast, Inc. All Rights Reserved. Capital expenditures (10) (10) (11) (10) (11) Free cash flow $(2
Slide 30: Quarterly Non-Payments Financial Technology Solutions Gross Profit Reconciliation
Quarterly Non-Payments Financial Technology Solutions Gross Profit GAAP to Non-GAAP Reconciliation $M 3 Months Ended Dec-2022 Mar-2023 Jun-2023 Sep-2023 Dec-2023 © 2024 Toast, Inc. All Rights Reserved. Financial technology solutions revenue $640 $673 $808 $856 $851 Less: Financial technology solutio
Slide 31: Quarterly Operating Expenses GAAP to Non-GAAP Reconciliation
Quarterly Operating Expenses GAAP to Non-GAAP Reconciliation $M 3 Months Ended Dec-2022 Mar-2023 Jun-2023 Sep-2023 Dec-2023 Sales and marketing expenses $87 $99 $100 $100 $102 Stock-based compensation expense and related payroll tax 13 15 15 16 15 © 2024 Toast, Inc. All Rights Reserved. Depreciation
Slide 32: Quarterly Operating Expenses GAAP to Non-GAAP Reconciliation
Quarterly Operating Expenses GAAP to Non-GAAP Reconciliation $M 3 Months Ended Dec-2022 Mar-2023 Jun-2023 Sep-2023 Dec-2023 General and administrative expenses $91 $82 $96 $98 $86 Stock-based compensation expense and related payroll tax 19 20 22 22 20 © 2024 Toast, Inc. All Rights Reserved. Deprecia