TOST Q1 2023 Earnings

Call Details

• Call Title: Toast, Inc. Class A Q1 2023 Earnings Call
• Date: May 9, 2023 at 9:00 PM UTC
• Management Team:
  • Michael Senno (Senior Vice President of Finance and Strategy, Treasury and Investor Relations)
  • Chris Comparato (Chief Executive Officer)
  • Elena Gomez (Chief Financial Officer)
  • Aman Narang (Chief Operating Officer)

Call Summary

Financial Performance

• Total revenue grew 53% year-over-year to $819 million in Q1 2023 on a reported basis in prepared remarks using non-GAAP references for operating line items.
• ARR increased 55% year-over-year to $987 million as of the end of Q1 2023 and was highlighted as the core operational metric.
• GPV rose 50% year-over-year to $26.7 billion in Q1 2023, with average annualized GPV per processing location of approximately $1.4 million, up 11% year-over-year and flat sequentially.
• Total gross profit was reported as $189 million in Q1 2023, representing a total gross margin of 23% on the stated basis.
• Adjusted EBITDA improved to a negative $17 million in Q1 2023, or negative 2.1% margin, which the company described as an over 600 basis point year-over-year improvement versus the prior year loss of $45 million.
• Subscription services revenue grew about 70% year-over-year in Q1 2023, while first-quarter FinTech revenue grew 54% to $673 million with FinTech gross profit cited at $150 million.

Guidance

• Q2 2023 revenue guidance is $920 million to $950 million, with the midpoint implying 39% year-over-year growth.
• Q2 2023 adjusted EBITDA guidance is negative $10 million to $0, with the midpoint representing over 150 basis points of sequential margin improvement versus Q1.
• Full-year 2023 revenue guidance was increased by 4% at the midpoint to a range of $3.71 billion to $3.8 billion, with the midpoint implying 37% year-over-year growth.
• Updated full-year 2023 adjusted EBITDA guidance is negative $10 million to positive $10 million, with the midpoint implying breakeven for the year and profitability in the second half.
• The company expects free cash flow to turn positive as the year progresses, without providing quarterly FCF targets.
• Near-term net take rate was described as expected to be in the low 50 basis points range, versus 56 basis points reported in Q1 2023.