Summary
Toast reported first quarter 2022 revenue of $535 million, up 90% from the prior-year quarter. Gross profit rose 29% to $89 million. The company added more than 5,000 net new locations, a record for a first quarter, and total locations reached approximately 62,000, nearly 45% higher than a year earlier. Gross Payment Volume increased 98% to $17.8 billion. Annualized recurring run-rate as of March 31, 2022 was $637 million, up 66% year over year. Toast also announced Toast for Quick Service and Toast for Hotel Restaurants, and renewed its strategic partnership with US Foods. Those metrics show broad platform growth, but the income statement also shows heavy investment. Net loss was $23 million, and diluted net loss per share was $0.20. Both improved from the prior-year quarter, yet operating loss widened to $101 million.
Margins tell the pressure story. Gross margin was 16.6%, down 7.8 percentage points from the prior-year quarter. Operating margin was negative 18.9%, down 17.1 percentage points. The operating loss widened to $101 million even as revenue grew. That mix reflects rising costs and aggressive spending on sales, marketing, research and development, and general and administrative functions. The company continues to hire and invest to support new products and field sales. Management describes the restaurant industry as being in the early days of its shift to digital. The trade-off is clear: growth is strong, but profitability remains distant.
Cash generation was negative. Operating cash flow was negative $47 million, down from the prior-year quarter. Capital expenditures were $2 million, down from the prior-year quarter. Free cash flow, a non-GAAP measure, was negative $50 million compared with negative $13 million a year earlier. Adjusted EBITDA, also non-GAAP, was negative $45 million compared with positive $4 million in the prior-year quarter. Deferred revenue was $50 million, down 9.1% year over year. Remaining performance obligations stood at $397 million. The balance sheet remains liquid, with no amount drawn under the $330 million 2021 Facility as of March 31, 2022.
Guidance points to more growth and more losses. For the second quarter ending June 30, 2022, Toast expects revenue of $635 million to $665 million and Adjusted EBITDA of negative $60 million to negative $50 million. For the full year ending December 31, 2022, the company expects revenue of $2,500 million to $2,550 million, up from its prior outlook of $2,349 million to $2,409 million. Full-year Adjusted EBITDA guidance is negative $195 million to negative $175 million, up from negative $240 million to negative $200 million. The guidance is for the next quarter and the full fiscal year, respectively. The company continues to trade near-term profitability for growth.
Risks remain substantial. Toast cites the COVID-19 pandemic, including new variants and their resistance to current vaccines, as an ongoing source of uncertainty. It also lists risks around demand for its products, competition, its ability to attract and retain customers, and its investments in technology and infrastructure. Seasonality matters: financial technology solutions revenue has historically been stronger in the second and third quarters. The company has $285 million in purchase commitments, mostly due in 2022, and $120 million in operating lease commitments, of which $18 million is due in 2022. Those obligations sit against a business that is still unprofitable on a GAAP basis and burning cash. The quarter showed strong top-line momentum, but the widening operating loss and negative free cash flow are the counterweights.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2022 | Q4 FY2021 | QoQ | Q1 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $535.0M | $514.9M | +3.9% | — | — |
| Gross profit | $89.0M | $76.0M | +17.1% | — | — |
| Gross margin | 16.6% | 14.8% | +1.9 pp | — | — |
| Research & development | $62.0M | $50.0M | +23.9% | — | — |
| Sales & marketing | $71.0M | $59.5M | +19.3% | — | — |
| General & administrative | $57.0M | $83.9M | -32.1% | — | — |
| Total operating expenses | $190.0M | $193.4M | -1.8% | — | — |
| Operating income (loss) | -$101.0M | -$117.5M | +14.0% | — | — |
| Operating margin | -18.9% | -22.8% | +3.9 pp | — | — |
| Net income (loss) | -$23.0M | $147.0K | -15746.3% | — | — |
| Net margin | -4.3% | 0.0% | -4.3 pp | — | — |
| Diluted EPS | -$0.20 | $0.00 | -$0.20 | — | — |
Risks
Revenue and gross profit depend significantly on payment processing, and total revenue was $535 million in Q1 FY2022, up 89.7% from the prior-year quarter. Total gross margin declined to 16.6% from 24.5%, and a shift back toward card-present and credit card transactions from the higher-margin card-not-present and debit mix during COVID-19 could pressure margins.
A majority of Toast customers are small- and medium-sized businesses, which the filing says can be more difficult and costly to retain than enterprise customers and are more susceptible to rising inflation and economic fluctuations. Restaurant failures or financial distress among these customers could reduce retention and revenue.
Toast depends on third parties to manufacture hardware and supply components, especially semiconductor chips subject to a severe global shortage. Hardware costs increased in Q1 FY2022, partly due to higher freight and product costs, and inability to secure components could disrupt hardware sales and customer acquisition.
Unfavorable restaurant industry or global economic conditions, including rising inflation and COVID-19 disruptions, could reduce consumer spending, restaurant locations, and gross payment volume. The adverse impact may be particularly acute among SMBs, which comprise the majority of the customer base.
Toast Capital relies on a single bank partner and is obligated to purchase loans that are charged off, non-performing, or violate credit policy up to 15% of quarterly originations. If customers default or engage in fraud, or if the bank partner terminates the relationship, the financial products business could be materially harmed.
Toast previously identified material weaknesses in its financial statement close process and controls over unusual and infrequent transactions. Continued remediation failure could result in material misstatements, restatements, or failure to meet periodic reporting obligations.
Toast must recruit, retain, and develop qualified sales, engineering, and management personnel in a competitive labor market. Stock-based compensation expense increased substantially in Q1 FY2022, and equity value volatility may weaken retention incentives.
Toast is subject to unsettled U.S. and international laws covering financial technology, lending, payments, and privacy. New or changing licensing or compliance requirements could increase costs, limit financial solutions, or expose Toast to sanctions and litigation.
The restaurant technology market is intensely competitive, and Toast's expansion into enterprise and mid-market segments may require price concessions. Pricing changes or competitor offerings could reduce revenue, gross margin, and customer acquisition success.
Rapid growth strains Toast's finance, accounting, IT, and security infrastructure and requires hiring significant qualified personnel. Failure to manage growth could increase expenses more than expected and impede execution of the business plan.
SaaS KPIs
All quarters →Adjusted EBITDA
Free Cash Flow
Gross Payment Volume (GPV)
Total Locations
Net New Locations
Annualized Recurring Run-Rate (ARR)
Non-GAAP Gross Profit
Summary, forecast, risks and KPIs are extracted from Toast, Inc.'s SEC filings for Q1 FY2022 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 6, 2026.