Toast, Inc 10-Q for FY2022 Q1

Toast, Inc. (TOST)

10-Q 2022-05-13 For: 2022-03-31

Added on April 10, 2026

About this 10-Q

Toast, Inc filed this 10-Q on May 13, 2022, covering the quarter ended March 31, 2022 (FY2022 Q1).

Headline figures

Quarter ended March 31, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $535M; up 89.7% from $282M a year earlier
Net loss: $23M; compared with a net loss of $99M a year earlier
Diluted EPS: -$0.20; compared with -$0.48 a year earlier

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Delaware		45-4168768
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

401 Park Drive,	Suite 801
Boston,	Massachusetts	02215
(Address of principal executive offices)		(Zip code)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A common stock, par value of $0.000001 per share	TOST	New York Stock Exchange


		Page
Part I. Financial Information		1
Item 1.	Financial Statements (unaudited)	1
	Consolidated Balance Sheets	1
	Consolidated Statements of Operations	2
	Consolidated Statements of Comprehensive Loss	3
	Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)	4
	Consolidated Statements of Cash Flows	5
	Notes to Consolidated Financial Statements	7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32
Item 4.	Controls and Procedures	33

Part II. Other Information		34
Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	34
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	81
Item 3.	Defaults Upon Senior Securities	81
Item 4.	Mine Safety Disclosures	82
Item 5.	Other Information	82
Item 6.	Exhibits	83
	Signatures	84


	March 31, 2022		December 31, 2021
Assets:
Current assets:
Cash and cash equivalents	$	757	$	809
Marketable securities	453		457
Accounts receivable, net	56		55
Inventories	44		42
Deferred costs, net	32		30
Prepaid expenses and other current assets	135		92
Total current assets	1,477		1,485
Property and equipment, net	42		41
Operating lease right-of-use assets	79		79
Intangible assets	15		16
Goodwill	74		74


Deferred costs, non-current	30		25
Other non-current assets	17		15
Total non-current assets	257		250
Total assets	$	1,734	$	1,735
Liabilities and Stockholders’ Equity:
Current liabilities:
Accounts payable	$	29	$	40
Operating lease liabilities	18		22
Deferred revenue	42		44
Accrued expenses and other current liabilities	315		246
Total current liabilities	404		352
Warrants to purchase common stock	84		181
Operating lease liabilities, non-current	77		77
Deferred revenue, non-current	8		12
Other long-term liabilities	18		22

Total liabilities	591		644
Commitments and Contingencies (Note 12)
Stockholders’ Equity:
Preferred stock- par value $0.000001; 100,000,000 shares authorized, no shares issued or outstanding	—		—
Class A common stock, $0.000001 par value- 7,000,000,000 shares authorized as of March 31, 2022 and December 31, 2021, 257,866,880 and 167,732,925 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively	—		—
Class B common stock, $0.000001 par value- 700,000,000 shares authorized as of March 31, 2022 and December 31, 2021, 252,558,185 and 339,437,440 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively	—		—
Additional paid-in capital	2,271		2,194
Accumulated deficit	(1,125)		(1,102)
Accumulated other comprehensive loss	(3)		(1)
Treasury stock, at cost— 225,000 shares outstanding at March 31, 2022 and December 31, 2021	—		—
Total stockholders’ equity	1,143		1,091
Total liabilities and stockholders’ equity	$	1,734	$	1,735


	Three Months Ended March 31,
	2022		2021
Revenue:
Subscription services	$	63	$	31
Financial technology solutions	438		227
Hardware	29		21
Professional services	5		3
Total revenue	535		282
Costs of revenue:
Subscription services	25		10
Financial technology solutions	347		172
Hardware	52		21
Professional services	21		9
Amortization of acquired technology and customer assets	1		1
Total costs of revenue	446		213
Gross profit	89		69
Operating expenses:
Sales and marketing	71		32
Research and development	62		23
General and administrative	57		19
Total operating expenses	190		74
Loss from operations	(101)		(5)
Other income (expense):

Interest income (expense), net	—		(6)
Change in fair value of warrant liabilities	79		(12)
Change in fair value of derivative liability	—		(76)
Other income (expense), net	(1)		—
Loss before provision for income taxes	(23)		(99)
Provision for income taxes	—		—
Net loss	$	(23)	$	(99)
Net loss per share attributable to common stockholders:
Basic	$	(0.05)	$	(0.48)
Diluted	$	(0.20)	$	(0.48)
Weighted average shares used in computing net loss per share:
Basic	505,378,195		205,352,706
Diluted	507,037,246		205,352,706


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to



	Convertible Preferred Preferred Stock			Common Stock			Treasury Stock			Additional Paid-in Capital		Accumulated Deficit		Total Stockholders' Deficit
	Shares	Amount		Shares	Amount		Shares	Amount
Balances at December 31, 2020	253,832,025	$	849	219,755,430	$	—	225,000	$	—	$	145	$	(616)	$	(471)
Cumulative adjustment due to adoption of ASC 842 and ASC 326	—	—		—	—		—	—		—		1		1
Exercise of common stock options	—	—		1,957,980	—					2		—		2
Stock-based compensation	—	—			—		—	—		5		—		5
Net loss	—	—		—	—		—	—		—		(99)		(99)
Balances at March 31, 2021	253,832,025	$	849	221,713,410	$	—	225,000	$	—	$	152	$	(714)	$	(562)



	Class A and Class B Common Stock			Treasury Stock	Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss			Total Stockholders' Equity
	Shares	Amount				Shares					Amount
Balances at December 31, 2021	507,170,365	$	—		225,000		$	—	$	2,194		$	(1,102)	$	(1)	$	1,091
Repurchase of common stock	(30,475)	—			—		—		—			—		—		—
Issuance of common stock upon net exercise of common stock warrants	371,573	—			—		—		18			—		—		18
Exercise of common stock options	2,750,691	—			—		—		4			—		—		4
Issuance of common stock upon vesting of restricted stock units	125,732	—			—		—		—			—		—		—
Stock-based compensation expense	—	—			—		—		53			—		—		53
Vesting of restricted stock	—	—			—		—		1			—		—		1
Issuance of common stock for contingent consideration payment	37,179	—			—		—		1			—		—		1

Unrealized loss on marketable securities	—	—			—		—		—			—		(2)		(2)
Net loss	—	—			—		—		—			(23)		—		(23)
Balances at March 31, 2022	510,425,065	$	—		225,000		$	—	$	2,271		$	(1,125)	$	(3)	$	1,143


Supplemental disclosure of non-cash investing and financing activities:
Purchase of property and equipment included in accounts payable and accrued expenses	$	2	$	—
Issuance of Class B common stock upon exercise of common stock warrants	18		—

Issuance of Class B common stock for payment of contingent consideration	1		—


	Fair Value Measurement at March 31, 2022 Using
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds	$	709	$	—	$	—	$	709
Commercial paper	—		135		—		135
Certificates of deposit	—		21		—		21
Corporate bonds	—		190		—		190
Treasury securities	—		69		—		69
Asset-backed securities	—		38		—		38
	$	709	$	453	$	—	$	1,162
Liabilities:
Warrants to purchase common stock	$	—	$	—	$	84	$	84
Contingent consideration	—		—		3		3
	$	—	$	—	$	87	$	87


	Fair Value Measurement at December 31, 2021 Using
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds	$	50	$	—	$	—	$	50
Commercial paper	—		134		—		134
Certificates of deposit	—		14		—		14
Corporate bonds	—		193		—		193
Treasury securities	—		67		—		67
Asset-backed securities	—		49		—		49
	$	50	$	457	$	—	$	507
Liabilities:
Warrants to purchase common stock	$	—	$	—	$	181	$	181
Contingent consideration	—		—		5		5
	$	—	$	—	$	186	$	186


(in millions, except per share amounts)	Three Months Ended March 31, 2022
Risk-free interest rate	2.4		%
Contractual term (in years)	5.19
Expected volatility	54.0		%
Expected dividend yield	—		%
Exercise price per share	$	17.15


	Common Stock Warrant Liability		Contingent Consideration Liability
Balance as of December 31, 2021	$	181	$	5


Change in fair value	(79)		2
Settlement	(18)		(4)

Balance as of March 31, 2022	$	84	$	3


	Preferred Stock Warrant Liability (1)		Derivative Liability (1)
Balance as of December 31, 2020	$	11	$	37

Change in fair value and other adjustments	12		76
Balance as of March 31, 2021	$	23	$	113


	March 31, 2022		December 31, 2021
Finished goods	$	44	$	41
Components of finished goods	—		1
Capitalized overhead	3		2
Reserve for excess and obsolete inventory	(3)		(2)
	$	44	$	42


(in millions, except share and per share amounts)	Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value (1)

Outstanding as of December 31, 2021	58,917,018	$	4.53	7.65	$	1,778
Granted	4,257,768	17.76
Exercised	2,750,691	1.50
Forfeited	771,776	14.51
Outstanding, vested, and expected to vest as of March 31, 2022	59,652,319	$	5.49	7.60	$	972



Options exercisable as of March 31, 2022	55,332,801	$	4.51	7.42	$	955


	RSU	Weighted Average Grant Date Fair Value
Unvested balance as of December 31, 2021	15,384,809	$	29.71
Granted	9,034,290	19.88
Vested	125,732	18.12
Forfeited	421,325	31.35
Unvested balance as of March 31, 2022	23,872,042	$	26.02


	March 31, 2022
	Amortized Cost		Gross Unrealized Losses		Fair Value
Commercial paper	$	135	$	—	$	135
Certificates of deposit	21		—		21
Corporate bonds	192		(2)		190
Treasury securities	70		(1)		69
Asset-backed securities	38		—		38
Total	$	456	$	(3)	$	453


	March 31, 2022
Due within 1 year	$	346
Due after 1 year through 5 years	107


Total marketable securities	$	453


	March 31, 2022		December 31, 2021
Accounts receivable	$	27	$	20
Unbilled receivables	33		39
Less: Allowance for credit losses	(4)		(4)
Accounts receivable, net	$	56	$	55


	March 31, 2022		December 31, 2021
Cash held on behalf of customers	$	62	$	34
Prepaid software subscriptions	11		11
Prepaid expenses	5		8

Loan servicing receivable	8		5
Prepaid insurance	4		6
Deposits for inventory purchases	32		21
Other current assets	13		7
	$	135	$	92


	March 31, 2022		December 31, 2021
Accrued transaction-based costs	$	140	$	120
Accrued payroll and bonus	19		24
Customer funds obligation	62		34
Accrued expenses	53		21
Accrued commissions	9		19




Other liabilities	32		28
	$	315	$	246


	March 31, 2022	December 31, 2021

Options to purchase Class A common stock and Class B common stock	59,652,319	58,917,018
Restricted stock units	23,872,042	15,384,809

Warrants to purchase Class B common stock	6,902,633	7,961,455
Shares available for future grant under the Stock Plans	67,175,666	53,916,105
Shares reserved for charitable donations	4,922,001	4,922,001
Shares available for issuance under 2021 Employee Stock Purchase Plan	16,709,893	11,638,189
	179,234,554	152,739,577


	March 31, 2022		December 31, 2021
United States	$	111	$	119
Ireland	10		1

	$	121	$	120


	Three Months Ended March 31,
(dollars in billions)	2022		2021		% Growth
Gross Payment Volume (GPV)(1)	$	17.8	$	9.0	98	%


	As of March 31,
(dollars in millions)	2022		2021		% Growth
Annualized Recurring Run-Rate (ARR)	$	637	$	384	66	%


	Three Months Ended March 31,				Change
(dollars in millions)	2022		2021		Amount		%
Subscription services	$	63	$	31	$	32	103	%
Financial technology solutions	438		227		211		93	%
Hardware	29		21		8		38	%
Professional services	5		3		2		67	%
Total revenue	$	535	$	282	$	253	90	%


	Three Months Ended March 31,
(in millions)	2022		2021
Adjusted EBITDA	$	(45)	$	4


(Shares in ones)	Total Number of Shares Purchased (1)	Weighted Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs

January 1 through January 31, 2022	19,605	$	4.54	—	—
February 1 through February 28, 2022	10,870	1.62		—	—
March 1 through March 31, 2022	—	—		—	—
Total	30,475	$	3.50	—	—


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.


	TOAST, INC.
	(Registrant)

May 13, 2022	By:	/s/ Christopher P. Comparato
		Christopher P. Comparato
		Chief Executive Officer (Principal Executive Officer)

May 13, 2022	By:	/s/ Elena Gomez
		Elena Gomez
		Chief Financial Officer (Principal Financial Officer)

May 13, 2022	By:	/s/ Michael Matlock
		Michael Matlock
		Chief Accounting Officer


Date: May 13, 2022						/s/ Christopher P. Comparato
						Christopher P. Comparato
						Chief Executive Officer
						(Principal Executive Officer)


Date: May 13, 2022	By:	/s/ Christopher P. Comparato
	Name:	Christopher P. Comparato
	Title:	Chief Executive Officer
		(Principal Executive Officer)