Toast(TOST) - 2025 Q2 - Quarterly Report

Part I. Financial Information Item 1. Financial Statements The company's financial statements show significant revenue growth and a shift to profitability, with improved cash flow from operations Condensed Consolidated Balance Sheets Total assets grew to $2.77 billion, driven by increased cash, while stockholders' equity improved to $1.82 billion Balance Sheet Highlights (in millions) | Balance Sheet Item | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $1,194 | $903 | +$291 | | Total current assets | $2,317 | $1,975 | +$342 | | Total assets | $2,767 | $2,408 | +$359 | | Total current liabilities | $894 | $811 | +$83 | | Total liabilities | $949 | $863 | +$86 | | Total stockholders' equity | $1,818 | $1,545 | +$273 | Condensed Consolidated Statements of Operations The company reported a 25% year-over-year revenue increase for Q2 2025 and swung to a net income of $136 million for the six-month period Q2 2025 vs Q2 2024 Performance (in millions) | Metric | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Total Revenue | $1,550 | $1,242 | +25% | | Gross Profit | $392 | $286 | +37% | | Income from Operations | $80 | $5 | +1500% | | Net Income | $80 | $14 | +471% | | Diluted EPS | $0.13 | $0.02 | +550% | Six Months Ended June 30 Performance (in millions) | Metric | 2025 | 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Total Revenue | $2,887 | $2,318 | +25% | | Gross Profit | $738 | $537 | +37% | | Income (Loss) from Operations | $123 | $(49) | N/A | | Net Income (Loss) | $136 | $(69) | N/A | | Diluted EPS | $0.23 | $(0.13) | N/A | Condensed Consolidated Statements of Cash Flows Net cash from operating activities significantly increased to $302 million for the first six months of 2025 Cash Flow Summary - Six Months Ended June 30 (in millions) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $302 | $104 | | Net cash (used in) investing activities | $(16) | $(33) | | Net cash provided by financing activities | $51 | $47 | | Net increase in cash... | $340 | $117 | Notes to Condensed Consolidated Financial Statements Notes detail revenue obligations, a share repurchase program, stock-based compensation, and purchase commitments - As of June 30, 2025, the company has approximately $911 million of revenue expected to be recognized from remaining performance obligations, with $853 million expected in the next 24 months[58] - Total stock-based compensation expense was $120 million for the six months ended June 30, 2025, a decrease from $133 million in the prior year period[61] - Under its share repurchase program, the company repurchased $31 million in Class A common stock during the first six months of 2025, with approximately $163 million remaining authorized for repurchase[67] - As of June 30, 2025, the company has non-cancellable purchase obligations of $78 million to hardware suppliers and $146 million to cloud service providers and other vendors[82] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses strong growth in customer locations and key metrics like GPV and ARR, leading to improved non-GAAP profitability Key Business Metrics Key metrics like Gross Payment Volume (GPV) and Annualized Recurring Run-Rate (ARR) demonstrated robust double-digit year-over-year growth - As of June 30, 2025, Toast served approximately 148,000 locations, representing a 24% year-over-year increase[88] Key Metrics Performance | Metric | Q2 2025 | Q2 2024 | YoY Growth | | :--- | :--- | :--- | :--- | | Gross Payment Volume (GPV) | $49.9B | $40.5B | 23% | | Metric | As of June 30, 2025 | As of June 30, 2024 | YoY Growth | | Annualized Recurring Run-Rate (ARR) | $1,928M | $1,473M | 31% | Results of Operations Revenue growth of 25% in Q2 2025 was driven by subscription and financial technology solutions, outpacing cost increases - The increase in subscription services revenue was attributed to growth in locations and higher product adoption[98] - The increase in financial technology solutions revenue was attributed to the increase in locations on the platform[99] - Sales and marketing expenses for the six months ended June 30, 2025 increased by $52 million (23%) primarily due to higher employee-related costs and marketing expenses[102] Non-GAAP Financial Measures Non-GAAP metrics showed significant improvement, with Adjusted EBITDA more than doubling and Free Cash Flow increasing substantially Adjusted EBITDA Reconciliation (in millions) | | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net income (loss) | $136 | $(69) | | Adjusted EBITDA | $294 | $148 | Free Cash Flow Reconciliation (in millions) | | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $302 | $104 | | Capital expenditures | $(25) | $(29) | | Free cash flow | $277 | $75 | Liquidity and Capital Resources The company maintained a strong liquidity position of $2.05 billion and continued its share repurchase program - Total liquidity, including cash, marketable securities, and available credit, was $2.05 billion as of June 30, 2025[118] - In May 2025, the company amended its credit facility, increasing revolving commitments to $350 million and extending the term to 2030; no borrowings were outstanding as of June 30, 2025[124] - The total fully diluted share count as of June 30, 2025, was 630 million shares, including 581 million shares issued and outstanding[126] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's exposure to market and credit risk has not materially changed since its 2024 Annual Report - There have been no material changes in the company's exposure to market risks, including interest rates, foreign currency exchange rates, and credit risk, since the end of fiscal year 2024[128] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective with no material changes to internal controls - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[129] - No changes occurred during the quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[130] Part II. Other Information Item 1. Legal Proceedings The company is not party to any litigation expected to have a material adverse effect on its business - Toast is not currently involved in any legal proceedings that are expected to have a material adverse impact on the company[133] Item 1A. Risk Factors No material changes have occurred regarding the risk factors previously disclosed in the 2024 Annual Report - No material changes to the risk factors disclosed in the 2024 Form 10-K have occurred[134] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company details its Q2 2025 share repurchase activity under its publicly announced program Issuer Purchases of Equity Securities - Q2 2025 | Period | Total Shares Purchased (thousands) | Average Price Paid Per Share | | :--- | :--- | :--- | | April 2025 | 409 | $32.33 | | May 2025 | — | — | | June 2025 | — | — | | Total Q2 | 409 | $32.33 | - As of the end of Q2 2025, approximately $163 million remained available for future repurchases under the authorized share repurchase program[136]