Toast (TOST) Q2 2024 earnings summary

Executive summary

• Achieved record 8,000 net new locations in Q2, reaching 120,000 total, up 29% year-over-year, with strong product adoption and expansion into new verticals and international markets.

• Recurring gross profit streams and ARR both grew 29% year-over-year, with SaaS ARR up 35% and ARR reaching $1.5 billion.

• Adjusted EBITDA reached $92 million (27% margin on recurring gross profit), a significant improvement from $15 million in Q2 2023.

• Achieved GAAP profitability ahead of expectations, with $5 million operating income and $14 million net income in Q2 2024.

• Strong performance driven by core U.S. SMB/mid-market segment, with growing contributions from international, enterprise, and retail.

Financial highlights

• Q2 2024 revenue was $1.24 billion, up 27% year-over-year, with total fintech and subscription gross profit at $344 million, up 29% year-over-year.

• GPV reached $40.5 billion, up 26% year-over-year; payments ARR grew 24%, fintech gross profit up 23%.

• Free cash flow was $108 million in Q2, supported by strong EBITDA and working capital benefits.

• GAAP operating income was $5 million, and net income was $14 million, marking the first quarter of GAAP profitability.

• Cash and cash equivalents plus marketable securities totaled $1.22 billion as of June 30, 2024.

Outlook and guidance

• Q3 2024 guidance: subscription and fintech gross profit expected to grow 23%-27% year-over-year; adjusted EBITDA projected at $70-$80 million.

• Full-year 2024 outlook raised: 27%-29% growth in fintech and subscription gross profit, $285-$305 million in adjusted EBITDA, and breakeven GAAP profitability for the remainder of the year.

• Guidance incorporates continued investment in key growth areas and reflects stable but dynamic macro conditions.

• Management expects continued growth in locations and product adoption, with seasonality expected to benefit Q3 results.

• No material changes anticipated in net working capital requirements or liquidity trends in the near term.