Toast, Inc.

Previous 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.

Current wording

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.

Previous wording

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. 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.

Current wording

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.

Previous 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.

Current wording

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.

Previous 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.

Current wording

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.

Previous 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.

Current wording

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.

Previous 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.

Current wording

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

Previous 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.

Current wording

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.

Previous wording

Research and development expenses remained approximately flat during the three and nine months September 30, 2024 as compared to the three and nine months ended September 30, 2023.

Current wording

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.

Previous 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.

Current wording

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.

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, 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.

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, 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

(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.

Current wording

(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.

Previous wording

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 for each of the periods presented.

Current wording

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.

Previous wording

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

Current wording

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

Previous 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.

Current 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.

Previous wording

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

Previous wording

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

Current wording

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

Previous wording

(2) Excludes $87 million of cash held on behalf of customers and $55 million of restricted cash.

Current wording

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

Previous 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.

Current wording

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.

Previous 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.

Current wording

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.

Previous wording

During 2021 we entered into a senior secured credit facility, or the 2021 Facility, which we subsequently amended on March 2, 2023, to replace LIBOR with 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. As of September 30, 2024 and December 31, 2023, total available funds under the 2021 Facility were $330 million and no amounts were drawn or outstanding. In addition, as of September 30, 2024 and December 31, 2023, there were $5 million in letters of credit outstanding.

Current wording

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.

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 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.

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 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.

Previous wording

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

Current wording

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”.