Toast (TOST) Q2 2024 earnings summary

Executive summary

• Achieved record 8,000 net new locations in Q2 2024, reaching 120,000 total, up 29% year-over-year, and drove revenue to $1.24 billion, a 27% increase.

• Annualized recurring run-rate (ARR) grew 29% year-over-year to $1.5 billion, with SaaS ARR up 35%.

• Adjusted EBITDA reached $92 million (27% margin on recurring gross profit streams), up from $15 million in Q2 2023, and GAAP profitability was achieved ahead of expectations with $5 million operating income and $14 million net income.

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

• Launched an AI innovation hub and received multiple workplace awards in Q2 2024.

Financial highlights

• Total fintech and subscription gross profit was $344 million, up 29% year-over-year; GAAP gross profit was $330 million, up 27%.

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

• Free cash flow was $108 million in Q2 2024, with net cash from operations at $124 million; free cash flow for H1 2024 was $75 million.

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

• Basic EPS for Q2 2024 was $0.03, compared to $(0.19) in Q2 2023.

Outlook and guidance

• Q3 2024 non-GAAP subscription and fintech gross profit expected between $345–$355 million (23–27% growth); adjusted EBITDA expected between $70–$80 million.

• Full-year 2024 non-GAAP subscription and fintech gross profit expected between $1,340–$1,360 million (27–29% growth); adjusted EBITDA expected between $285–$305 million (22% margin at midpoint).

• Expect to be around breakeven on a GAAP basis 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.