On August 6, 2024, Toast Inc (TOST, Financial) released its 8-K filing for the second quarter of 2024, showcasing impressive financial results that surpassed analyst expectations. The company reported a GAAP operating income of $5 million and a net income of $14 million, marking a significant turnaround from the previous year's losses.
Company Overview
Toast Inc (TOST, Financial) is a U.S.-based restaurant technology company that provides point-of-sale, payment processing, and various software services to 112,000 restaurant locations across the United States as of March 2024. The firm generates revenue from software subscription fees, a percentage take rate from each financial transaction it processes, loan origination and servicing fees from its Toast Capital arm, and hardware installation and professional services. Toast intermediates every payment transaction on its platform, processing approximately $126 billion in gross platform volume in 2023. Its product offerings include point-of-sale systems, inventory and payroll management, delivery integration, e-commerce ordering, reservation management, and loyalty programs.
Performance and Challenges
Toast Inc (TOST, Financial) added approximately 8,000 net new locations in the second quarter of 2024, bringing the total to around 120,000 locations, a 29% increase year-over-year. The company's Annualized Recurring Run-Rate (ARR) grew by 29% to $1.5 billion as of June 30, 2024. Gross Payment Volume (GPV) also saw a 26% year-over-year increase, reaching $40.5 billion.
Despite these achievements, Toast faces challenges such as maintaining its growth momentum and managing operational costs. The company's ability to sustain profitability while expanding its market presence will be crucial for its long-term success.
Financial Achievements
Toast Inc (TOST, Financial) reported a GAAP operating income of $5 million in Q2 2024, compared to a GAAP operating loss of $(80) million in Q2 2023. The net income for the quarter was $14 million, a significant improvement from the net loss of $(98) million in the same period last year. Adjusted EBITDA was $92 million, up from $15 million in Q2 2023.
These financial achievements are particularly important for a software company like Toast, as they indicate the firm's ability to scale its operations efficiently while maintaining profitability.
Key Financial Metrics
| Metric | Q2 2024 | Q2 2023 | Growth |
|---|---|---|---|
| Revenue | $1,242 million | $978 million | 27% |
| Gross Profit | $286 million | $208 million | 37% |
| Net Income | $14 million | $(98) million | N/A |
| Adjusted EBITDA | $92 million | $15 million | 513% |
Income Statement Highlights
Toast Inc (TOST, Financial) reported total revenue of $1,242 million for Q2 2024, a 27% increase from $978 million in Q2 2023. The gross profit for the quarter was $286 million, up from $208 million in the same period last year. Operating expenses were $281 million, slightly down from $288 million in Q2 2023, leading to an operating income of $5 million.
Balance Sheet and Cash Flow
As of June 30, 2024, Toast Inc (TOST, Financial) had total assets of $2,155 million, up from $1,958 million as of December 31, 2023. The company's cash and cash equivalents stood at $691 million, an increase from $605 million at the end of 2023. Net cash provided by operating activities was $124 million in Q2 2024, compared to $50 million in Q2 2023.
Commentary
"Our team executed incredibly well in the second quarter and delivered strong results, including adding a record number of net locations and achieving GAAP profitability ahead of expectations. We are sustaining growth at scale while expanding margins by taking a disciplined approach to investing our resources against our most important priorities," said Toast CEO and Co-Founder Aman Narang.
Analysis
Toast Inc (TOST, Financial) has demonstrated robust financial performance in Q2 2024, exceeding analyst estimates and achieving profitability. The company's ability to add new locations and grow its ARR and GPV indicates strong market demand for its services. However, maintaining this growth trajectory while managing operational costs will be crucial for sustained success.
Overall, Toast Inc (TOST, Financial) has shown significant progress in its financial metrics, making it an attractive option for value investors looking for growth potential in the restaurant technology sector.
Explore the complete 8-K earnings release (here) from Toast Inc for further details.
