1. Investment Snapshot
2. Thesis
3. Valuation & Price Target
4. Business & Product Moat
5. People & Governance
6. Market & Macro
7. Financial Quality
8. Risk Register
9. Prediction Market
10. 𝕏 Posts
Discussion
1. Investment Snapshot
2. Thesis
3. Valuation & Price Target
4. Business & Product Moat
5. People & Governance
6. Market & Macro
7. Financial Quality
8. Risk Register
9. Prediction Market
10. 𝕏 Posts
Discussion
1. Investment Snapshot
2. Valuation
Discussion
Symbol
TOST
Event Date
2021-09-22
Sector
Information Technology
Subsector
IT Services
Offer Range
$40.00-$40.00
Shares Offered
21.74M
508.98M
$17.5B
4.3%
Implied Upside vs Midpoint
Description
Our mission is to empower the restaurant community to delight their guests, do what they love, and thrive. Toast is a cloud-based, end-to-end technology platform purpose-built for the entire restaurant community. Our platform provides a comprehensive suite of software as a service, or SaaS, products, financial technology solutions including integrated payment processing, restaurant-grade hardware, and a broad ecosystem of third-party partners. We serve as the restaurant operating system, connecting front of house and back of house operations across dine-in, takeout, and delivery channels. As of June 30, 2021, approximately 48,000 restaurant locations across approximately 29,000 customers, processing over $38 billion of gross payment volume in the trailing 12 months, partnered with Toast to optimize operations, increase sales, engage guests, and maintain happy employees. The restaurant industry is one of the largest, most complex, and most competitive markets in the world, with an estimated 22 million restaurant locations globally generating greater than $2.6 trillion in annual sales in 2021(1). However, restaurants have lagged in technology adoption. Many restaurants still employ manual processes for critical tasks such as placing guest orders, coordinating kitchen operations, and managing employees. When technology is used, restaurants have historically relied on legacy systems and narrow point solutions that are not flexible, scalable, integrated, or built specifically for restaurants. These products often fail to meet evolving guest needs, which have continued to shift towards digital channels, and can be prohibitively expensive and complex for businesses with limited or no dedicated information technology staff. In addition, key data needed to optimize operations is often siloed, making it difficult to gain valuable insights. We started Toast to address these pain points for restaurants. Since our founding, we have translated our love for restaurants into a commitment to innovation and digital transformation for the industry. Our success as a business is tightly aligned to the success of our customers. Our field-based sales team fosters relationships and generates deep local insights in their communities. In addition, our ongoing customer success efforts focus on meeting restaurants’ evolving needs through a combination of tailored onboarding, customer support, and intuitive product design. By enabling these capabilities through a single, integrated platform, Toast improves experiences across the restaurant ecosystem: • Restaurant operators. We arm restaurants with a wide range of products and capabilities to address their specific needs regardless of size, location, or business model. As a result, restaurants using Toast often see higher sales and greater operational efficiency. • Guests. We are laser focused on helping our customers deliver memorable guest experiences at scale. Guests can place orders easily, safely, and accurately across web, mobile, and in-person channels for dine-in, takeout, or delivery. In addition, our platform empowers restaurants to utilize their guest data to deliver targeted and personalized experiences with loyalty programs and marketing solutions. In June 2021, we saw an average of over 5.5 million guest orders per day on our platform. • Employees. Our easy-to-learn and easy-to-use technology improves the experience of up to 500,000 daily active restaurant employees across Toast customers. Employees are core to delivering great hospitality, and it is critical for restaurants to engage and retain employees in an increasingly competitive labor market. Our products enable new employees to learn quickly through guided workflows, facilitate faster table turns and safer, streamlined operations, and provide greater transparency around, and timely access to, employees’ wages. The benefits to all stakeholders using the Toast platform create a powerful, virtuous cycle that amplifies our impact on restaurants. Guest satisfaction generates loyalty to restaurants, driving repeat sales, word-of-mouth referrals, and larger checks and tips. This promotes employee satisfaction, helping reduce turnover and motivating employees to continue to raise the bar on the guest experience. In addition, our integrated software and payments platform consolidates data on restaurant sales and operations, which enables our reporting and analytics as well as financial technology solutions, such as working capital loans, to further support our customers’ success. We believe we are in the early stages of capturing our addressable market opportunity. Although we are a leading platform serving the restaurant industry(2), as of June 30, 2021, the locations on our platform represented only about 6% of the approximately 860,000 restaurant locations in the United States(3). Similarly, our Annualized Recurring Run-Rate, or ARR, as of June 30, 2021 was only about 3% of our near-term serviceable market opportunity of approximately $15 billion. We see a significant opportunity to increase sales to both new and existing customers, further expand the usage of our platform outside the United States, and address the diverse needs of new and existing restaurant industry stakeholders. We have grown rapidly since our founding. As of June 30, 2021, we had 47,942 locations on our platform, increasing from 33,129 and 19,891 locations as of June 30, 2020 and 2019, respectively. Our gross payment volume, or GPV, grew 17% year-over-year from $21.8 billion in the year ended December 31, 2019 to $25.4 billion in the year ended December 31, 2020, and grew 125% period-over-period from $10.4 billion in the six months ended June 30, 2020 to $23.4 billion in the six months ended June 30, 2021. We generate revenue through four main revenue streams: subscription services, financial technology solutions, hardware, and professional services. Our revenue grew 24% year-over-year from $665 million in the year ended December 31, 2019 to $823 million in the year ended December 31, 2020 and 105% period-over-period from $344 million in the six months ended June 30, 2020 to $704 million in the six months ended June 30, 2021. Our ARR grew 77% year-over-year from $184 million as of December 31, 2019 to $326 million as of December 31, 2020 and 118% period-over-period from $227 million as of June 30, 2020 to $494 million as of June 30, 2021. During the years ended December 31, 2019 and 2020, we incurred net losses of $209 million and $248 million, respectively, and generated Adjusted EBITDA of $(172) million and $(94) million, respectively. During the six months ended June 30, 2020 and 2021, we incurred net losses of $125 million and $235 million, respectively, and generated Adjusted EBITDA of $(86) million and $14 million, respectively. These results are driven by our distinctive team of over 2,200 Toasters who are passionate about our customers and driven with purpose. Approximately two-thirds of Toasters have worked in the restaurant industry previously, enabling us to embrace a hospitality mindset and deeply understand our customers’ challenges. Our founder-led, mission-driven management team and talented employee base are committed to empowering those that power our industry and serve our local communities. (1) Euromonitor International Limited. (2) Toast is a leading platform serving the restaurant industry based on industry survey reports, such as G2’s Grid Reports for Fall 2020, Winter 2021, and Spring 2021. (3) IBISWorld. Estimated 2021 U.S. restaurant locations includes single location full-service restaurants, fast food restaurants, chain restaurants, coffee shops, bars & nightclubs, and caterers, and excludes food service contractors and street vendors. --- We were incorporated under the laws of Delaware in December 2011 under the name Opti Systems, Inc. We changed our name to Toast, Inc. in May 2012. Our principal executive offices are located at 401 Park Drive, Boston, Massachusetts 02215 and our telephone number is (617) 297-1005. Our website address is www.toasttab.com.
Toast, Inc. annual income statement and balance sheet, FY 2022 to FY 2025, as reported in SEC filings.
| Metric | FY 2022 | FY 2023 | FY 2024 | FY 2025 |
|---|---|---|---|---|
| Revenue | $2.7B | $3.9B | $5.0B | $6.2B |
| Gross profit | $511M | $834M | $1.2B | $1.6B |
| Operating income | ($384M) | ($287M) | $16.0M | $292M |
| Net income | ($275M) | ($246M) | $19.0M | $342M |
| Metric | FY 2022 | FY 2023 | FY 2024 | FY 2025 |
|---|---|---|---|---|
| Total assets | $1.8B | — | $2.4B | $3.1B |
| Total liabilities | $663M | — | $863M | $1.0B |
| Total equity | $1.1B | $1.2B | $1.5B | $2.1B |
| Cash & equivalents | $547M | $605M | $903M | $1.4B |