Toast, Inc. - Quarter Report: 2025 March (Form 10-Q)

Other non-current assets Total non-current assets Total assets$ $ Liabilities and Stockholders’ Equity:Current liabilities:Accounts payable$ $ Deferred revenue Accrued expenses and other current liabilities Total current liabilities Warrants to purchase common stock Operating lease liabilities, non-current Other long-term liabilities Total liabilities Commitments and Contingencies (Note 12)Stockholders’ Equity:

Preferred stock, par value $ per share; million shares authorized, shares issued or outstanding

Common stock, par value $ per share:

Class A - million shares authorized; million and million shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively

Class B - million shares authorized; million shares issued and outstanding as of both March 31, 2025 and December 31, 2024

Accumulated other comprehensive income (loss) ()Additional paid-in capital Accumulated deficit()()Total stockholders’ equity Total liabilities and stockholders’ equity $ $

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

TOAST, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

(in millions, except per share amounts)


	2025	2024
Revenue:
Subscription services	$	$
Financial technology solutions
Hardware and professional services

Total revenue
Costs of revenue:
Subscription services
Financial technology solutions
Hardware and professional services

Amortization of acquired intangible assets
Total costs of revenue
Gross profit
Operating expenses:
Sales and marketing
Research and development
General and administrative
Restructuring expenses
Total operating expenses
Income (loss) from operations		()
Other income (expense):
Interest income, net
Change in fair value of warrant liability		()

Income (loss) before taxes		()
Income tax (expense) benefit	()	()
Net income (loss)	$	$	()
Net income (loss) per share attributable to common stockholders:
Basic	$	$	()
Diluted	$	$	()
Weighted-average shares used in computing net income (loss) per share:
Basic
Diluted

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

TOAST, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(unaudited)

(in millions)


	2025	2024
Net income (loss)	$	$	()
Other comprehensive income (loss):
Unrealized gains (losses) on marketable securities, net of tax effect of $		()
Currency translation adjustments
Total other comprehensive income (loss)		()
Comprehensive income (loss)	$	$	()

$ $()$()$

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

TOAST, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(in millions)


	2025	2024
Cash flows from operating activities:
Net income (loss)	$	$	()
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization
Stock-based compensation expense
Amortization of deferred contract acquisition costs
Change in fair value of warrant liability	()
Credit loss expense


Other non-cash items		()
Changes in operating assets and liabilities:
Accounts receivable, net	()	()
Other current assets	()	()
Deferred contract acquisition costs	()	()
Inventories, net		()
Accounts payable
Accrued expenses and other current liabilities	()	()
Deferred revenue	()
Other assets and liabilities	()
Net cash provided by (used in) operating activities		()
Cash flows from investing activities:
Capital expenditures	()	()
Purchases of marketable securities	()	()
Proceeds from the sale of marketable securities
Maturities of marketable securities
Net cash provided by (used in) investing activities		()
Cash flows from financing activities:
Change in customer funds obligations, net
Proceeds from issuance of common stock
Repurchases of Class A common stock	()	()
Net cash provided by financing activities
Net increase in cash, cash equivalents, cash held on behalf of customers and restricted cash
Cash, cash equivalents, cash held on behalf of customers and restricted cash at beginning of period
Cash, cash equivalents, cash held on behalf of customers and restricted cash at end of period	$	$
Reconciliation of cash, cash equivalents, cash held on behalf of customers and restricted cash
Cash and cash equivalents	$	$
Cash held on behalf of customers
Restricted cash
Total cash, cash equivalents, cash held on behalf of customers and restricted cash	$	$


Supplemental disclosure of non-cash investing and financing activities:

Stock-based compensation included in capitalized software








Cash paid for amounts included in the measurement of lease liabilities

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

TOAST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Risks and Uncertainties

We are subject to a number of risks and uncertainties, including geopolitical events, changes in trade policy, including trade wars, tariffs, sanctions, or the threat of such actions, natural disasters, public health concerns or epidemics, and macroeconomic conditions, such as changes in inflation and interest rates, which may also impact consumer behavior, the restaurant industry, and our business.

Table of Contents

$ $ $ Commercial paper Certificates of deposit Corporate bonds Treasury bonds Asset-backed securities $ $ $ $ Liabilities:Warrants to purchase common stock$ $ $ $ $ $ $ $

)

December 31, 2024

Level 1

Level 2

Level 3

Total

Assets:

Money market funds

Commercial paper

Certificates of deposit

Corporate bonds

U.S. government agency securities

Treasury bonds

Asset-backed securities

Liabilities:

Warrants to purchase common stock

As of March 31, 2025, the maximum number of shares of our common stock that could be required to be issued upon the exercise of outstanding warrants was million.

Table of Contents

$ Credit loss expense Reductions due to loan purchases()()Ending balance$ $

As of both March 31, 2025 and December 31, 2024, the non-contingent stand-ready liability was $ million.

As of March 31, 2025 and December 31, 2024, $ million and $ million, respectively, were classified as restricted cash on the Condensed Consolidated Balance Sheets, representing cash held with commercial lending institutions. The restrictions are related to cash held as collateral pursuant to an agreement with the originating third-party bank for the working capital loans serviced by Toast Capital.

$ Variable lease expense Total$ $

Operating lease expense reflects the non-cash amortization of right-of-use assets.

$ Unbilled receivables Less: Allowance for credit losses()()Accounts receivable, net$ $

)$()Additions()()Write offs Ending Balance$()$()

Table of Contents

$ Deferred contract acquisition costs, current (Note 6) Prepaid expenses Other Total other current assets$ $

$ Customer funds obligation Accrued expenses Accrued payroll and bonus Contingent liability for expected credit losses Other liabilities

Total accrued expenses and other current liabilities

$ $

Table of Contents

Deferred revenue, end of period Revenue recognized in the period from amounts included in deferred revenue at the beginning of period$

As of March 31, 2025, approximately $ million of revenue is expected to be recognized from remaining performance obligations for customer contracts. We expect to recognize revenue of approximately $ million from these remaining performance obligations over the next months, with the balance recognized thereafter.

)

As of March 31, 2025, $ million of our deferred contract acquisition costs were recorded within other current assets with the remaining balance recorded within other non-current assets on the Condensed Consolidated Balance Sheet. Amortization expense attributable to deferred contract acquisition costs was $ million for the three months ended March 31, 2024.

Table of Contents

$ Sales and marketing Research and development General and administrative Restructuring expenses Total stock-based compensation$ $

Stock Options

$ Granted Exercised() Forfeited

Outstanding as of March 31, 2025

Options vested and expected to vest as of March 31, 2025

$ $

The aggregate intrinsic value of options exercised was $ million during the three months ended March 31, 2025.

As of March 31, 2025, total unrecognized stock-based compensation expense related to the options was $ million and is expected to be recognized over the remaining weighted-average service period of years.

Table of Contents

$ Granted Vested() Forfeited()

Outstanding balance as of March 31, 2025

Expected to vest as of March 31, 2025

The fair value of RSUs vested during the three months ended March 31, 2025 was $ million.

As of March 31, 2025, total unrecognized stock-based compensation expense related to the RSUs was $ million and is expected to be recognized over the remaining weighted-average service period of years.

Share Repurchase Program

In February 2024, we announced the authorization of a share repurchase program for the repurchase of shares in our Class A common stock, in an aggregate amount of up to $ million. The repurchase program has no expiration date, does not obligate us to acquire any particular amount of our Class A common stock, and may be suspended at any time at our discretion. The timing and actual number of shares repurchased may depend on a variety of factors, including price, general business and market conditions, and alternative investment opportunities.

During the three months ended March 31, 2025, we repurchased $ million in Class A common stock. As of March 31, 2025, approximately $ million remained authorized for repurchase under our share repurchase program.

million during the three months ended March 31, 2024, primarily consisting of cash severance costs and the acceleration of stock-based compensation for certain terminated employees. As of March 31, 2025, we substantially completed the Restructuring Plan with immaterial remaining liabilities.

During the three months ended March 31, 2025, we incurred $ million of one-time restructuring costs to continue focusing on operational efficiency, primarily consisting of cash severance costs and the acceleration of stock-based compensation for certain terminated employees. These charges were recorded within restructuring expenses on our Condensed Consolidated Statements of Operations. As of March 31, 2025, the remaining liability was immaterial.

Table of Contents

% and ()% for the three months ended March 31, 2025 and 2024, respectively. The effective tax rate for each period differs from the statutory rate primarily as a result of having a full valuation allowance maintained against our net deferred tax assets.

The income tax expense was $ million and $ million for the three months ended March 31, 2025 and 2024, respectively. The change in the provision is primarily driven by a mix of earnings in countries with differing statutory tax rates, offset by excess tax benefits of stock-based compensation.

10.

-to-one basis when computing net income (loss) per share. As a result, basic and diluted net income (loss) per share of Class A common stock and Class B common stock are equivalent.

$()

Less: Gain on change in fair value of warrant liabilities (1)

Net income (loss), diluted$ $()Denominator:Weighted-average shares of common stock outstanding - basic

Effect of dilutive securities:

Dilutive common share equivalents included in dilutive shares Weighted-average shares of common stock outstanding - diluted Net income (loss) per share, basic$ $()Net income (loss) per share, diluted$ $()

(1) During the three months ended March 31, 2025, we recorded a gain on fair value remeasurement of warrant liabilities, which was added back to net income to adjust for the dilutive impact of the warrants. We adjusted the weighted-average shares outstanding for the incremental dilutive shares using the treasury stock method. During the three months ended March 31, 2024, we recorded a loss on fair

Table of Contents

Unvested restricted stock units

Warrants to purchase Class B common stock

11.

reportable segment, Toast, Inc., consisting of a comprehensive platform 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 manage the business activities on a consolidated basis. The types of software and services from which we generate revenue are described under our “Revenue Recognition” policy within our “Summary of Significant Accounting Policies” as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024.

Our chief operating decision maker, or CODM, is our Chief Executive Officer. The CODM assesses performance for the segment and decides how to allocate resources based on net income (loss) that is also reported on the Condensed Consolidated Statements of Operations as consolidated net income (loss). The CODM does not use any segment asset measures to assess performance and decide how to allocate resources.

Costs of revenue(1)

()()

Sales and marketing(1)

()()

Research and development(1)

()()

General and administrative(1)

()()Stock-based compensation and related payroll taxes()()

Other items(2)

()Net income (loss)$ $()

(1) These expenses exclude stock-based compensation and related payroll taxes. Stock-based compensation and related payroll taxes are presented separately as an additional significant segment expense, which consist of both stock-based compensation (refer to Note 7. Stockholders’ Equity for tabular disclosure of amounts included within other significant segment expenses) and the corresponding payroll taxes.

(2) Other segment items include restructuring and restructuring-related expenses, interest income, net, change in fair value of warrant liability, and income tax (expense) benefit.

12.

million, all of which is due within the next 12 months.

Table of Contents

million of which $ million is due to within the next 12 months and $ million thereafter.

Legal Proceedings

From time to time, we may be involved in legal actions arising in the ordinary course of business. Each of these matters is subject to various uncertainties, and it is possible that some of these matters may be resolved unfavorably. We establish accruals for losses that management deems to be probable and subject to reasonable estimates. We do not expect any claims with a reasonably possible adverse outcome to have a material impact on us, and, accordingly, have not accrued for any material claims.

13.

million, subject to certain additional customary restrictive covenants in connection with the February 2024 share repurchase program. We were in compliance with all financial covenants as of March 31, 2025. As of March 31, 2025, there were borrowings outstanding on the 2021 Facility and outstanding letters of credit totaled $ million. As of March 31, 2025, our total available borrowing capacity under the 2021 Facility was $ million.

million to $ million with a letter of credit sublimit of $ million and (ii) extends the term of the 2021 Facility from June 8, 2026 to May 6, 2030. Upon the date of the amendment, there were borrowings outstanding and outstanding letters of credit totaled $ million; our total available borrowing capacity under the Restated Credit Agreement was $ million. For further information, please refer to the description of the Restated Credit Agreement included in section (a) of Part II, Item 5, “Other Information” included in this Quarterly Report on Form 10-Q.

Table of Contents

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis of our financial condition and results of operations together with the unaudited condensed consolidated financial statements, and the related notes that are included elsewhere in this Quarterly Report on Form 10-Q, and with our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2024. Some of the information contained in this discussion and analysis, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks, uncertainties, and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under the section titled “Special Note Regarding Forward-Looking Statements” and Item 1A. Risk Factors included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 and in this Quarterly Report on Form 10-Q, if applicable. Our historical results are not necessarily indicative of the results that may be expected for any period in the future.

Overview

Toast is a cloud-based, all-in-one digital technology platform purpose-built for the entire restaurant community. We provide a comprehensive platform of software-as-a-service, or SaaS, products and 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 service models including dine-in, takeout, delivery, catering, and retail.

We define a live location, or Location, as a unique location that has used Toast Point of Sale, or POS, 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 POS, are not included in our Location count.

As of March 31, 2025, approximately 140,000 Locations, an increase of 25% year over year, processing approximately $167 billion of gross payment volume in the trailing 12 months, partnered with Toast to optimize operations, increase sales, engage guests, and maintain happy employees.

Seasonality and Other Factors

We experience seasonality in our financial technology solutions revenue, which is largely driven by the level of Gross Payment Volume, or GPV, processed through our platform. Moreover, our performance may be impacted by global financial, economic, and political events. For example, customers typically have greater sales during the warmer months, though this effect varies regionally, and customer sales can be impacted by seasonal needs of our customers (which may also impact the total number of Toast Processing Locations in such a period that contributes to our GPV). As a result, our financial technology solutions revenue per Toast Processing Location has historically been stronger in the second and third quarters. We believe that financial technology solutions revenue from both existing and potential future products will continue to represent a significant proportion of our overall revenue mix, and seasonality will continue to impact our results of operations. Our performance may also be impacted by geopolitical events, such as tariffs, which may influence consumer spending or restaurant operations. There is uncertainty as to when specific tariffs may go into effect and the impact higher tariffs may have on consumer demand or on our business. For further discussion of such potential impacts, see Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

Table of Contents

Key Business Metrics

We use the following key business metrics to help us evaluate our business, identify trends affecting our business, formulate business plans, and make strategic decisions:


	Three Months Ended March 31,
(dollars in billions)	2025		2024		% Growth
Gross Payment Volume (GPV)	$	42.2	$	34.7	22	%


	As of March 31,
(dollars in millions)	2025		2024		% Growth
Annualized Recurring Run-Rate (ARR)	$	1,713	$	1,305	31	%

Gross Payment Volume (GPV)

Gross Payment Volume represents 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 our platform, which in turn drives our financial performance. As our customers generate more sales and therefore more GPV, we generally see higher financial technology solutions revenue.

Annualized Recurring Run-Rate (ARR)

We monitor Annualized Recurring Run-Rate as a key operational measure of the scale of our subscription and payment processing services for both new and existing customers. To calculate this metric, we first calculate 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) our monthly billings of subscription services fees, which we refer to as the subscription component of MRR, and (ii) our 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. We believe this approach provides an indication of our scale, while also controlling for short-term fluctuations in payments volume. Our ARR may decline or fluctuate as a result of a number of factors, including customers’ satisfaction with our platform, pricing, competitive offerings, economic conditions, or overall changes in our customers’ and their guests’ spending levels. ARR is an operational measure, does not reflect our revenue or gross profit determined in accordance with U.S. Generally Accepted Accounting Principles, or GAAP, and should be viewed independently of, and not combined with or substituted for, our 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 our future or expected results.

Table of Contents

Results of Operations

Revenue


	Three Months Ended March 31,				Change
(dollars in millions)	2025		2024		Amount		%
Subscription services	$	209	$	151	$	58	38	%
Financial technology solutions	1,082		873		209		24	%
Hardware and professional services	46		51		(5)		(10)	%

Total revenue	$	1,337	$	1,075	$	262	24	%

The increase in subscription services revenue during the three months ended March 31, 2025 was attributable to growth in Locations on the Toast platform and the continued increase in product adoption.

The increase in financial technology solutions revenue during the three months ended March 31, 2025 was attributable to the increase in Locations on the Toast platform.

Costs of Revenue


	Three Months Ended March 31,				Change
(dollars in millions)	2025		2024		Amount		%
Subscription services	$	66	$	50	$	16	32	%
Financial technology solutions	831		683		148		22	%
Hardware and professional services	93		92		1		1	%

Amortization of acquired intangible assets	1		1		—		—	%
Total costs of revenue	$	991	$	826	$	165	20	%

The increase in subscription services costs during the three months ended March 31, 2025 was primarily driven by a $9 million increase in amortization of capitalized software and a $5 million increase in employee-related costs.

The increase in financial technology solutions costs during the three months ended March 31, 2025 was due to an increase in GPV.

Operating Expenses


	Three Months Ended March 31,				Change
(dollars in millions)	2025		2024		Amount		%
Sales and marketing	$	133	$	107	$	26	24	%
Research and development	84		83		1		1	%
General and administrative	79		74		5		7	%
Restructuring expenses	7		41		(34)		(83)	%
Total operating expenses	303		305		(2)		(1)	%

The increase in sales and marketing expenses during the three months ended March 31, 2025 was primarily driven by a $14 million increase in employee-related costs, including an increase in deferred contract acquisition cost amortization, and a $10 million increase in marketing expenses.

Research and development and general and administrative expenses both remained approximately flat during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024.

Table of Contents

The decrease in restructuring expenses during three months ended March 31, 2025 was driven by significant restructuring and restructuring-related expenses incurred during the three months ended March 31, 2024 as part of the February 2024 Restructuring Plan. See Note 8 included in this Quarterly Report on Form 10-Q in “Notes to Condensed Consolidated Financial Statements” for additional information regarding the Restructuring Plan.

Change in Fair Value of Warrant Liability


	Three Months Ended March 31,				Change
(dollars in millions)	2025		2024		Amount		%
Change in fair value of warrant liability	$	3	$	(36)	$	39	108	%

The change in fair value of warrant liability for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024 was driven by a combination of decreased stock prices in the three months ended March 31, 2025 compared to increased stock prices in the three months ended March 31, 2024 and a reduction of outstanding warrants from repurchase and exercises in the year ended December 31, 2024.

Non-GAAP Financial Measures

We use certain non-GAAP financial measures described below to supplement our condensed consolidated financial statements, which are prepared and presented in accordance with GAAP and to understand and evaluate our 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 our financial performance and should not be considered substitutes for, or superior to, the financial information prepared and presented in accordance with GAAP.

We believe that these non-GAAP financial measures provide useful information about our financial performance, enhance the overall understanding of our past performance and future prospects, and allow for greater transparency with respect to important metrics used by our management for financial and operational decision-making. We are presenting these non-GAAP metrics to provide investors insight into the information used by our management to evaluate our business and financial performance. We believe that these measures provide investors increased comparability of our core financial performance over multiple periods with other companies in our industry.

Net Income (Loss) (GAAP) and Adjusted EBITDA (Non-GAAP)

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, 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 extinguishments, expenses related to early termination of leases (which includes associated asset impairments), and stock-based charitable contribution expense, as applicable. We have provided below a reconciliation of net income (loss), the most directly comparable GAAP financial measure, to Adjusted EBITDA.

Table of Contents

We believe Adjusted EBITDA is useful for investors in comparing our financial performance to other companies and from period to period. Adjusted EBITDA is widely used by investors and securities analysts to measure a company’s operating performance without regard to items such as depreciation and amortization, interest expense, and interest income, which can vary substantially from company to company depending on their financing and capital structures and the method by which their assets were acquired. In addition, Adjusted EBITDA eliminates the impact of certain items that may obscure trends in the underlying performance of our business. Adjusted EBITDA also has limitations as an analytical tool, and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. For example, although depreciation expense is a non-cash charge, the assets being depreciated may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new asset acquisitions. In addition, Adjusted EBITDA excludes stock-based compensation expense, which has been, and will continue to be for the foreseeable future, a significant recurring expense for our business and an important part of our compensation strategy. Adjusted EBITDA also does not reflect changes in, or cash requirements for, our working capital needs; interest expense, or the cash requirements necessary to service interest or principal payments on our debt, which reduces the cash available to us; or tax payments that may represent a reduction in cash available to us. The expenses and other items that are excluded from the calculation of Adjusted EBITDA may differ from the expenses and other items that other companies may exclude from Adjusted EBITDA when they report their financial results.

The following table reflects the reconciliation of net income (loss) to Adjusted EBITDA for each of the periods presented:


(in millions)	2025		2024
Net income (loss)	$	56	$	(83)
Stock-based compensation expense and related payroll tax	64		62
Depreciation and amortization	19		10
Interest income, net	(12)		(10)

Change in fair value of warrant liability	(3)		36




Restructuring and restructuring-related expenses(1)	7		41

Income tax expense	2		1
Adjusted EBITDA	$	133	$	57

(1) Restructuring and restructuring-related expenses for the three months ended March 31, 2025 include $4 million of severance benefits and $3 million of stock-based compensation expense. Restructuring and restructuring-related expenses for the three months ended March 31, 2024 include $30 million of severance benefits, $10 million of stock-based compensation expense, and $1 million of accelerated depreciation related to facilities.

Table of Contents

Subscription Services and Financial Technology Solutions Gross Profit (GAAP) and Non-GAAP Subscription Services and Financial Technology Solutions Gross Profit (Non-GAAP)

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. We believe this non-GAAP measure is useful to view the resulting figures excluding the aforementioned non-cash charges because the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations and such amounts vary substantially from company to company depending on their financing and capital structures and the method by which their assets were acquired. We have provided below a reconciliation of Subscription Services and Financial Technology Solutions Gross Profit, the most directly comparable GAAP financial measure, to Non-GAAP Subscription Services and Financial Technology Solutions Gross Profit.


(in millions)	2025		2024
Revenue:
Subscription services	$	209	$	151
Financial technology solutions	1,082		873
Costs of Revenue:
Subscription services	66		50
Financial technology solutions	831		683
Subscription services and financial technology solutions gross profit (GAAP)	$	394	$	291


(in millions)	2025		2024
Subscription services and financial technology solutions gross profit (GAAP)	$	394	$	291
Stock-based compensation expense and related payroll tax	5		5
Depreciation and amortization	16		7
Non-GAAP subscription services and financial technology solutions gross profit (Non-GAAP)	$	415	$	303

Net Cash Provided by (Used in) Operating Activities (GAAP) and Free Cash Flow (Non-GAAP)

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). We believe that free cash flow is a meaningful indicator of our sources of liquidity and capital requirements that provides information to management and investors in evaluating the cash flow trends of our business. Once our business needs and obligations are met, cash can be used to maintain a strong balance sheet and invest in future growth.

Free cash flow has limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. Other companies may calculate free cash flow or similarly titled non-GAAP measures differently, which could reduce the usefulness of free cash flow as a tool for comparison. In addition, free cash flow does not reflect mandatory debt service and other non-discretionary expenditures that are required to be made under contractual commitments and does not represent the total increase or decrease in our cash balance for any given period.

Table of Contents

The following table presents a reconciliation of net cash provided by (used in) operating activities to free cash flow for each of the periods presented:


	Three Months Ended March 31,
(in millions)	2025		2024
Net cash provided by (used in) operating activities	$	79	$	(20)
Capital expenditures	(10)		(13)
Free cash flow	$	69	$	(33)

Liquidity and Capital Resources

Our principal sources of liquidity are cash and cash equivalents and marketable securities. We also have access to external sources of liquidity through a credit facility as further described below. The following tables present selected financial information related to our liquidity:


(in millions)	March 31, 2025 (1)		December 31, 2024 (2)
Cash and cash equivalents	$	1,005	$	903
Marketable securities	484		514
Cash and cash equivalents and marketable securities	$	1,489	$	1,417
Available credit facility	$	326	$	325
Total	$	1,815	$	1,742

(1) Excludes $187 million of cash held on behalf of customers and $67 million of restricted cash.

(2) Excludes $123 million of cash held on behalf of customers and $59 million of restricted cash.


	Three Months Ended March 31,
(in millions)	2025		2024
Net cash provided by (used in) operating activities	$	79	$	(20)
Net cash provided by (used in) investing activities	22		(29)
Net cash provided by financing activities	73		73
Net increase in cash, cash equivalents, cash held on behalf of customers and restricted cash	$	174	$	24

Cash, cash equivalents and marketable securities

The net increase in cash, cash equivalents and marketable securities in the three months ended March 31, 2025 was primarily due to cash provided by operating activities of $71 million (which excludes changes in the balance of restricted cash), cash provided by investing activities of $22 million, and an increase of $64 million in cash held on behalf of customers.

The increase in net cash provided by operating activities during the three months ended March 31, 2025, as compared to the same period last year, was primarily driven by net income of $56 million during the three months ended March 31, 2025 as compared to a net loss of $83 million during the same period last year. This was partially offset by a decrease in non-cash adjustments primarily attributable to the movement of the change in fair value of our warrant liability.

The increase in net cash provided by investing activities during the three months ended March 31, 2025, as compared to the same period last year, was primarily driven by net cash inflows from marketable securities as compared to net cash outflows from marketable securities during the same period last year.

We do not anticipate any material changes, or material changes in trends, related to our net working capital requirements, liquidity or cash flows in the near term, other than for items disclosed within this Quarterly Report on Form 10-Q and our 2024 Annual Report on Form 10-K.

Table of Contents

Debt

During 2021 we entered into a senior secured credit facility, or the 2021 Facility, which we subsequently amended on March 2, 2023, to replace the London Interbank Offered Rate, or LIBOR with the Secured Overnight Financing Rate, or SOFR. The 2021 Facility is subject to a minimum liquidity covenant of $250 million, subject to certain additional customary restrictive covenants in connection with the February 2024 share repurchase program. We were in compliance with all financial covenants as of March 31, 2025. As of March 31, 2025, there were no borrowings outstanding on the 2021 Facility and outstanding letters of credit totaled $4 million. As of March 31, 2025, our total available borrowing capacity under the 2021 Facility was $326 million.

On May 6, 2025, we amended and restated our 2021 Facility to increase the available revolving commitments from $330.0 million to $350.0 million and to extend the term of the 2021 Facility to May 6, 2030. For further information, please refer to the description of this amendment and restatement included in section (a) of Part II, Item 5, “Other Information” included in this Quarterly Report on Form 10-Q.

Share Repurchase Program

In February 2024, we announced the authorization of a share repurchase program for the repurchase of shares of our Class A common stock in an aggregate amount of up to $250 million. The repurchase program has no expiration date, does not obligate us to acquire any particular amount of our Class A common stock, and may be suspended at any time at our discretion. The timing and actual number of shares repurchased may depend on a variety of factors, including price, general business and market conditions, and alternative investment opportunities. During the three months ended March 31, 2025, we repurchased approximately 0.5 million shares of our Class A common stock for an aggregate amount of $17 million.

Dilution

We calculate our fully diluted share count on an unweighted basis taking our total outstanding share count in addition to unexercised stock options, unvested restricted stock units, shares reserved for charitable donations and other securities that can be converted to common stock, such as our warrants to purchase common stock. As of March 31, 2025, our fully diluted share count was as follows:


(shares, in millions)			March 31, 2025 (1)
Class A and B common stock issued and outstanding			577
Options to purchase Class A common stock and Class B common stock			28
Unvested restricted stock units			22
Warrants to purchase Class B common stock			1
Shares reserved for charitable donations			4
Total fully diluted share count			632

(1) Share amounts presented above do not give effect to potential repurchases of common stock under the treasury stock method.

For further information see Note 7, “Stockholders’ Equity" and Note 10, “Net Income (Loss) Per Share Attributable to Common Stockholders” included in this Quarterly Report on Form 10-Q in “Notes to Condensed Consolidated Financial Statements”.

Other Capital Requirements

Expected working and other capital requirements are described in our 2024 Annual Report on Form 10-K in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” At March 31, 2025, other than for the changes disclosed in the “Notes to Condensed Consolidated Financial Statements” and “Liquidity and Capital Resources” in this Quarterly Report, there have been no other material changes to our expected working and other capital requirements described in our 2024 Annual Report on Form 10-K, and we believe that our existing cash and cash equivalents, along with our available borrowing capacity under our credit facility, will be sufficient to meet our working capital needs for at least the next 12 months, including planned capital expenditures, strategic transactions, and investment commitments that we may enter into from time to time.

Table of Contents

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to financial market risks, including changes in interest rates and foreign currency exchange rates, as well as credit risk on accounts receivable and our loan servicing activities. Our exposure to market and credit risk has not changed materially since the presentation set forth in Part II, Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 26, 2025.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, including our principal executive officer and principal financial officer, have evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective as of March 31, 2025, the end of the period covered by this Quarterly Report on Form 10-Q, to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms, and (ii) accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes to our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended March 31, 2025, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitation on the Effectiveness of Internal Control

Our management, including our principal executive officer and principal financial officer, do not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two, or more people or by management override of the controls. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Due to inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Table of Contents

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

We are not currently a party to any litigation or claims that, if determined adversely to us, would have a material adverse effect on our business operating results, financial condition, or cash flows. We are, from time to time, party to litigation and subject to claims in the ordinary course of business. Regardless of the outcome, litigation can have an adverse impact on us because of the defense and settlement costs, diversion of management resources, and other factors.

Item 1A. Risk Factors

There have been no material changes from the risk factors set forth in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024. Our business, operations, and financial results are subject to various risks and uncertainties that could materially adversely affect our business, results of operations, financial condition, and the trading price of our Class A common stock. You should carefully read and consider the risks and uncertainties included in the Annual Report, together with all of the other information in the Annual Report and this Quarterly Report on Form 10-Q, including the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our condensed consolidated financial statements and related notes, and other documents that we file with the SEC. The risks and uncertainties described in these reports may not be the only ones we face. The factors discussed in these reports, among others, could cause our actual results to differ materially from historical results and those expressed in forward-looking statements made by us or on our behalf in filings with the SEC, press releases, communications with investors, and oral statements.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a) Unregistered Sales of Equity Securities

None.

Our purchases of our common stock in the first quarter of fiscal year 2025 were:


Period	Total Number of Shares Purchased (in thousands)	Average Price Paid Per Share (1)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (in thousands)	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in millions)(2)
January 1, 2025 to January 31, 2025	12	$	34.95	12	$	194
February 1, 2025 to February 28, 2025	—	$	—	—	$	194
March 1, 2025 to March 31, 2025	486	$	34.80	486	$	177
Total	498	$	34.80	498

(1) Average Price Paid Per Share excludes cash paid for commissions.

(2) On February 15, 2024, we announced the authorization of a share repurchase program for the repurchase of shares in our Class A common stock, in an aggregate amount of up to $250 million. The repurchase program has no expiration date, does not obligate us to acquire any particular amount of our Class A common stock, and it may be suspended at any time at our discretion.

Item 3. Defaults Upon Senior Securities

None.

Table of Contents

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

(a) On May 6, 2025, we entered into a Second Amendment Agreement pursuant to which our existing Revolving Credit and Guaranty Agreement, dated as of June 8, 2021, by and among our company, the guarantors from time to time party thereto, the issuing banks and lenders from time to time party thereto, and JPMorgan Chase Bank, N.A., as administrative agent and swingline lender, was amended and restated in its entirety. The existing credit agreement, as so amended and restated, is referred to as the Restated Credit Agreement.

The Restated Credit Agreement increases the available revolving commitments from $330.0 million to $350.0 million with a letter of credit sublimit of $75.0 million. The revolving loans under the Restated Credit Agreement, or Revolving Loans, may be denominated, at our option, in US dollars, Euros or Pounds Sterling, and the proceeds of Revolving Loans may be used for working capital and general corporate purposes, including for permitted acquisitions and investments and other transactions not prohibited by the Restated Credit Agreement.

The Revolving Loans bear interest at a per annum rate equal to (i) in the case of Revolving Loans denominated in US dollars, at our option, (a) the alternate base rate plus 0.50% or (b) the term SOFR rate plus 1.50%, (ii) in the case of Revolving Loans denominated in Euros, the adjusted EURIBOR Rate plus 1.50%, and (iii) in the case of Revolving Loans denominated in Pounds Sterling, the daily simple SONIA rate plus 1.50%. We are also obligated to pay other customary fees for a credit facility of this size and type, including letter of credit fees, arrangement and administration fees. Amounts not borrowed under the Restated Credit Agreement will be subject to a commitment fee of 0.20% per annum, payable in arrears on the 15th day following the last day of each fiscal quarter.

We may borrow, repay and reborrow Revolving Loans until May 6, 2030, at which time the commitments will terminate and all outstanding Revolving Loans, together with all accrued and unpaid interest, must be repaid. We may prepay the Revolving Loans and terminate the commitments under the Restated Credit Agreement, in whole or in part, at any time without premium or penalty, subject to certain conditions, including minimum amounts and reimbursement of certain costs in the case of prepayments of term SOFR loans.

The Restated Credit Agreement permits us to increase, or add one or more new, revolving credit commitments and to add one or more term loan commitments, so long as the aggregate amount of such increases or additional commitments does not exceed the greater of (x) $373.0 million and (y) 100% of consolidated credit EBITDA for the most recently ended four-fiscal quarter period, plus, among other amounts, an unlimited amount so long as we comply with certain leverage ratio tests set forth in the Restated Credit Agreement, in each case, subject to certain conditions and limitations as set forth in the Restated Credit Agreement.

Our obligations under the Restated Credit Agreement are guaranteed by certain of our subsidiaries that meet materiality thresholds set forth in the Restated Credit Agreement.

The Restated Credit Agreement contains customary affirmative covenants and customary negative covenants that limit or restrict our and our subsidiaries’ ability to, among other things, incur indebtedness, grant liens, declare cash dividends or make certain other distributions, repurchase stock, merge or consolidate with other companies or sell substantially all of our assets and the assets of our subsidiaries, taken as a whole, make investments and loans, and engage in certain transactions with affiliates, in each case subject to customary exceptions for a credit facility of this size and type. Commencing with the fiscal quarter ending June 30, 2025, we must also maintain compliance with a maximum senior net leverage ratio of 3.50 to 1.00 (or, following the consummation of a material acquisition, 4.00 to 1.00, subject to certain limitations as set forth in the Restated Credit Agreement), measured quarterly and determined in accordance with the terms of the Restated Credit Agreement.

Table of Contents

The Restated Credit Agreement includes customary events of default that include, among other things, non-payment defaults, inaccuracy of representations and warranties, covenant defaults, cross default to material indebtedness, bankruptcy and insolvency defaults, material judgment defaults, ERISA defaults and a change of control default. The occurrence of an event of default could result in the acceleration of the obligations under the Restated Credit Agreement.

The foregoing description of the Restated Credit Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Restated Credit Agreement, a copy of which will be filed as an exhibit to our Quarterly Report on Form 10-Q for the fiscal quarter ending June 30, 2025.

(b) , , our , and Brian R. Elworthy Irrevocable Trust of 2019, where shares held by such trusts are held indirectly by Mr. Elworthy, collectively into a trading plan pursuant to Rule 10b5-1 of the Exchange Act. This trading plan provides for the sale from time to time of a maximum of shares of our Class A common stock ( shares contributed by Mr. Elworthy; and shares contributed by the Brian R. Elworthy Irrevocable Trust of 2019) pursuant to the terms of the plan. This trading plan expires on , or earlier if all transactions under the trading arrangement are completed. The trading arrangement is intended to satisfy the affirmative defense in Rule 10b5-1(c).

During the fiscal quarter ended March 31, 2025, other than described in the statements above, none of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) , or modified a Rule 10b5-1 trading arrangement or any “non-Rule 10b5-1 trading agreement” (as defined in Item 408(c) of Regulation S-K).

Table of Contents

Item 6. Exhibits

The exhibits listed below are filed or incorporated by reference in this Quarterly Report on Form 10-Q.


Exhibit Number			Description
31.1*			Certification of the Principal Executive Officer, pursuant to Rules 13a-14(a) and 15d-14(a) under the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*			Certification of the Principal Financial Officer, pursuant to Rules 13a-14(a) and 15d-14(a) under the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**			Certification of the Principal Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**			Certification of the Principal Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*			Inline XBRL Instance Document.
101.SCH*			Inline XBRL Taxonomy Extension Schema Document.
101.CAL*			Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*			Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB*			Inline XBRL Taxonomy Extension Labels Linkbase Document.
101.PRE*			Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104*			Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).


*			Filed herewith.
**			Furnished herewith. The certifications attached as Exhibits 32.1 and 32.2 that accompany this Quarterly Report on Form 10-Q are deemed furnished and not filed with the SEC and are not to be incorporated by reference into any filing of the Company under the Securities Act or the Exchange Act, whether made before or after the date of this Quarterly Report on Form 10-Q, irrespective of any general incorporation language contained in such filing.

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	TOAST, INC.
	(Registrant)

May 8, 2025	By:	/s/ Aman Narang
		Aman Narang
		Chief Executive Officer (Principal Executive Officer)

May 8, 2025	By:	/s/ Elena Gomez
		Elena Gomez
		President, Chief Financial Officer (Principal Financial Officer)

May 8, 2025	By:	/s/ Gail Miller
		Gail Miller
		Chief Accounting Officer (Principal Accounting Officer)

Toast, Inc. - Quarter Report: 2025 March (Form 10-Q)

Similar companies