Toast Inc

Previous wording

As of June 30, 2024, approximately 120,000 Locations, an increase of 29% year over year, processing approximately $143 billion of gross payment volume in the trailing 12 months, partnered with Toast to optimize operations, increase sales, engage guests, and maintain happy employees.

Current wording

As of September 30, 2024, approximately 127,000 Locations, an increase of 28% year over year, processing approximately $151 billion of gross payment volume in the trailing 12 months, partnered with Toast to optimize operations, increase sales, engage guests, and maintain happy employees.

Previous wording

The increase in subscription services revenue during the three and six months ended June 30, 2024 was attributable to growth in restaurant Locations on the Toast platform and the continued increase in product adoption.

Current wording

The increase in subscription services revenue during the three and nine months ended September 30, 2024 was attributable to growth in restaurant Locations on the Toast platform and the continued increase in product adoption.

Previous wording

The increase in financial technology solutions revenue during the three and six months ended June 30, 2024 was attributable to the increase in restaurant Locations on the Toast platform.

Current wording

The increase in financial technology solutions revenue during the three and nine months ended September 30, 2024 was attributable to the increase in restaurant Locations on the Toast platform.

Previous wording

The increase in subscription services costs during the three and six months ended June 30, 2024 was attributable to an increase in employee-related costs.

Current wording

The increase in subscription services costs during the three and nine months ended September 30, 2024 was primarily driven by increased employee-related costs.

Previous wording

The increase in financial technology solutions costs during the three and six months ended June 30, 2024 was due to an increase in GPV.

Current wording

The increase in financial technology solutions costs during the three and nine months ended September 30, 2024 was due to an increase in GPV.

Previous wording

The increase in sales and marketing expenses during the three and six months ended June 30, 2024 was attributable to an increase in employee-related costs.

Current wording

The increase in sales and marketing expenses during the three and nine months ended September 30, 2024 was primarily driven by increased employee-related costs.

Previous wording

The decrease in general and administrative expenses during the three and six months ended June 30, 2024 was attributable to a decrease in employee-related costs of $8 million and $12 million, respectively, and a decrease of $11 million in lease termination expenses during both the three and six months ended June 30, 2024.

Current wording

The decrease in general and administrative expenses during the three months ended September 30, 2024 was primarily driven by decreased employee-related costs. The decrease in general and administrative expenses during the nine months ended September 30, 2024 was attributable to a decrease in employee-related costs of $21 million and a decrease of $11 million in lease termination expenses.

Previous wording

Restructuring expenses included restructuring and restructuring-related expenses incurred as part of the February 2024 Restructuring Plan, substantially all of which relates to severance benefits of approximately $1 million and $32 million, respectively, during the three and six months ended June 30, 2024 and approximately $2 million and $12 million, respectively, of expense related to the acceleration of stock-based compensation for terminated employees during the three and six months ended June 30, 2024.

Current wording

Restructuring expenses included restructuring and restructuring-related expenses incurred as part of the February 2024 Restructuring Plan, or the Restructuring Plan, substantially all of which relates to severance benefits of approximately $32 million and approximately $12 million of expense related to the acceleration of stock-based compensation for terminated employees during the nine months ended September 30, 2024.

Previous wording

The change in fair value of warrant liability for the three and six months ended June 30, 2024 was attributable to an increase in the value of the common stock underlying the outstanding warrants at the end of period compared to the beginning of the period.

Current wording

The change in fair value of warrant liability for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023 was driven by a combination of increased stock prices and a reduction of outstanding warrants from the Warrant Repurchase. The change in fair value of the warrant liability for the nine months ended September 30, 2024 was primarily attributable to an increase in the value of the common stock underlying the outstanding warrants at the end of the period compared to the beginning of the period.

Previous wording

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 to 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.

Current wording

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.

Previous wording

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 (expense) 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, 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.

Current wording

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 (expense) 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.

Previous wording

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 which 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.

Current wording

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.

Previous wording

(1)Restructuring and restructuring-related expenses for the three and six months ended June 30, 2024 include $1 million and $32 million, respectively, of severance benefits, $2 million and $12 million, respectively, of stock-based compensation expense, and $1 million and $2 million, respectively, of accelerated depreciation related to facilities.

Current wording

(1)Restructuring and restructuring-related expenses for the nine months ended September 30, 2024 include $32 million of severance benefits, $12 million of stock-based compensation expense, and $2 million of accelerated depreciation related to facilities.

Previous wording

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

Current wording

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

Previous wording

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.

Current wording

Free cash flow is defined as net cash provided by 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.

Previous wording

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:

Current wording

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

Previous wording

(1) Excludes $115 million of cash held on behalf of customers and $58 million of restricted cash.

Current wording

(1) Excludes $127 million of cash held on behalf of customers and $56 million of restricted cash.

Previous wording

The net increase in cash, cash equivalents and marketable securities was primarily due to cash provided by operating activities of $101 million (which excludes changes in the balance of restricted cash) and proceeds of $55 million generated from the issuance of common stock. This was partially offset by $36 million in cash outflows related to share repurchases and $29 million in cash outflows related to capital expenditures. Cash generated from operating activities was impacted by our net loss of $(69) million, which includes restructuring and restructuring-related expenses of $46 million and a use of cash for working capital, primarily driven by higher deferred contract acquisition costs, resulting, in part, from continued growth in Locations.

Current wording

The net increase in cash, cash equivalents and marketable securities in the nine months ended September 30, 2024 was primarily due to cash provided by operating activities of $212 million (which excludes changes in the balance of restricted cash) and proceeds of $84 million generated from the issuance of common stock. This was partially offset by $61 million in cash outflows related to the Warrant Repurchase, $56 million in cash outflows related to share repurchases and $41 million in cash outflows related to capital expenditures. Cash generated from operating activities during the nine months ended September 30, 2024 was impacted by our net loss of $(13) million, which includes restructuring and restructuring-related expenses of $46 million and a use of cash for working capital, primarily driven by higher deferred contract acquisition costs, resulting, in part, from continued growth in Locations.

Previous wording

During the six months ended June 30, 2024, the change in net cash provided by (used in) operating activities as compared the six months ended June 30, 2023, was driven by a lower net loss and an increase in non-cash adjustments, which was attributable to amortization of deferred contract acquisition costs and the loss recognized on the change in fair value of our warrant liability, driven by an increase in our stock price. This was partially offset by cash severance charges paid in connection with the February 2024 Restructuring Plan and a higher use of cash for working capital. The decrease in net cash used in investing activities during the six months ended June 30, 2024 was driven by a decrease in cash outflows related to our marketable securities, partially offset by an increase in cash outflows related to capital expenditures. While net cash provided by financing activities during the six months ended June 30, 2024 remained materially consistent, there was an increase in cash inflows from the proceeds from the issuance of common stock, offset by cash outflows related to share repurchases.

Current wording

The increase in net cash provided by operating activities during the nine months ended September 30, 2024, as compared to the same period last year, was primarily driven by a lower net loss and an increase in non-cash adjustments, which was primarily attributable to increased fair value remeasurement loss of our warrant liability and increased amortization of deferred contract acquisition costs. This increase was partially offset by cash severance charges paid in connection with the Restructuring Plan and a higher use of cash for working capital. The decrease in net cash used in investing activities during the nine months ended September 30, 2024, 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, partially offset by an increase in capital expenditures. The decrease in net cash provided by financing activities during the nine months ended September 30, 2024, as compared to the same period last year, was primarily driven by cash outflows related to the Warrant Repurchase and share repurchases, partially offset by an increase in cash inflows from the proceeds from the issuance of common stock.

Previous wording

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 it 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 six months ended June 30, 2024, we repurchased 1 million shares of our Class A common stock for an aggregate amount of $36 million.

Current wording

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 nine months ended September 30, 2024, we repurchased approximately 2 million shares of our Class A common stock for an aggregate amount of $56 million.