8-K: Toast Reports Profitable 2024, Adds Record Locations and Forecasts Continued Growth

Toast announces its first profitable year in 2024, driven by a record number of new locations and strong growth in recurring revenue.

Summary

• Toast reported its Q4 and full year 2024 financial results, marking its first year of GAAP profitability.
• The company added a record 28,000 net new locations in 2024, ending the year with approximately 134,000 locations.
• Annualized Recurring Run-rate (ARR) increased by 34% to over $1.6 billion as of December 31, 2024.
• Fourth quarter net income was $33 million, and Adjusted EBITDA was $111 million.
• Full year 2024 net income was $19 million, and Adjusted EBITDA was $373 million.
• GPV for the full year 2024 increased 26% year over year to $159.1 billion.
• The company expects Non-GAAP subscription services and financial technology solutions gross profit in the range of $385 million to $395 million for Q1 2025.
• Adjusted EBITDA is expected to be in the range of $100 million to $110 million for Q1 2025.
• For the full year 2025, Toast expects Non-GAAP subscription services and financial technology solutions gross profit in the range of $1,745 million to $1,765 million.
• Adjusted EBITDA is expected to be in the range of $510 million to $530 million for the full year 2025.

Sentiment

Score: 9

Explanation: The document presents a highly positive outlook with strong financial results, significant growth metrics, and optimistic future guidance, indicating a strong and positive sentiment.

Positives

• Toast achieved its first year of GAAP profitability with a net income of $19 million.
• The company experienced substantial growth in ARR, reaching $1.6 billion, indicating strong recurring revenue.
• Adjusted EBITDA significantly increased to $373 million for the full year.
• Toast expanded its reach by adding a record 28,000 net new locations.
• GPV saw a healthy increase of 26% to $159.1 billion.
• Toast expanded partnership with Uber Technologies, Inc. (NYSE: UBER), giving restaurants increased choice, and their guests more food delivery options while helping restaurants reduce costs and expand their reach by leveraging Ubers extensive delivery network.
• Toast signed an agreement with Ascent Hospitality Management to implement Toast Enterprise Solutions at Perkins and Huddle House restaurants across an initial 500 locations, representing Toasts largest full service restaurant group to-date.

Negatives

• Hardware and professional services gross profit was negative for both the three months and year ended December 31, 2024 and 2023.

Risks

• The company's forward-looking statements are subject to risks and uncertainties, as detailed in their SEC filings.
• The inability to accurately forecast the occurrence and financial impact of adjusting items could materially impact future GAAP financial results.

Future Outlook

Toast anticipates continued growth in 2025, projecting Non-GAAP subscription services and financial technology solutions gross profit between $1,745 million and $1,765 million and Adjusted EBITDA between $510 million and $530 million.

Management Comments

• Toast had a strong close to 2024, capping off a transformational year where we added a record 28,000 net locations, grew our recurring gross profit streams 34%, delivered Adjusted EBITDA of $373 million, and achieved our first year of GAAP profitability, said Toast CEO and Co-Founder Aman Narang.
• Our record location adds show the momentum with our core customer base, and the positive signals across our newer customer groups: enterprise, international and food and beverage retail.
• In 2025, we'll accelerate our efforts across these new addressable markets and continue to further differentiate our platform.
• We're well on our way to our ultimate goal: serving many multiples of the 134,000 locations we do today, and delivering durable growth and strong profitability over the long term.

Industry Context

Toast's performance reflects the ongoing digital transformation in the restaurant industry, with increasing adoption of cloud-based platforms for point of sale, payments, and operations.

Comparison to Industry Standards

• Comparable companies in the restaurant technology space include Block (formerly Square) and Lightspeed Commerce.
• Toast's growth in ARR and location count suggests a competitive position in the market.
• The company's focus on integrated solutions and its expansion into enterprise and international markets align with industry trends.

Stakeholder Impact

• Shareholders will likely react positively to the company's profitability and growth.
• Employees may benefit from the company's success through stock-based compensation and potential job growth.
• Restaurants using Toast's platform can expect continued innovation and support.
• Suppliers and partners may see increased business opportunities as Toast expands its operations.

Next Steps

• Toast will host a live conference call on February 19, 2025, to discuss the results.
• The company will continue to focus on expanding its platform and targeting new markets in 2025.

Key Dates