Toast (TOST) Q4 2023 earnings summary

Executive summary

• FY23 revenue reached $3.9B, up 42% YoY; Q4 revenue was $1.036B, up 35% YoY.

• Q4 ARR was $1.218B, up 35% YoY; locations reached 106K, and FY23 GPV was $126.1B, up 38%.

• FY23 Adjusted EBITDA was $61M versus a $115M loss in 2022; Q4 Adjusted EBITDA was $29M versus a loss of $18M.

• Q4 net loss narrowed to $36M from $99M in Q4 2022.

Financial highlights

• Q4 gross profit was $226M, up 43% YoY; non-GAAP gross profit was $245M, up 42%.

• FY23 gross profit rose 63% to $834M; non-GAAP gross profit increased 61% to $903M.

• Q4 operating cash flow was $92M and free cash flow was $81M, versus uses of $19M and $29M in Q4 2022.

• FY23 operating cash flow was $135M and free cash flow was $93M, versus uses of $156M and $189M in 2022.

• FY23 net loss narrowed to $246M from $275M in 2022.

Outlook and guidance

• Q1 2024 non-GAAP subscription services and Financial Technology Solutions gross profit guidance is $275M-$285M, implying 20%-24% YoY growth; Adjusted EBITDA guidance is $15M-$25M.

• FY24 non-GAAP subscription services and Financial Technology Solutions gross profit guidance is $1.30B-$1.32B, implying 23%-25% growth; Adjusted EBITDA guidance is $200M-$220M.

• Anticipates GAAP operating income profitability by H1 2025.

• Forward-looking non-GAAP guidance cannot be reconciled to GAAP without unreasonable effort, due to uncertainty in items including warrant fair-value changes and stock-based compensation.