Summary
Toast closed FY2022 with a fourth quarter that paired strong top-line growth with continued losses. Revenue for the quarter ended December 31, 2022 was $768 million, up 50% year over year. Gross profit rose to $158 million, up 116%, as gross margin expanded to 20.6%, a gain of 6.3 percentage points. The company still posted an operating loss of $99 million, though that loss narrowed from the prior-year quarter. Net loss was $100 million, a swing from net income in the prior-year quarter. For the full year, revenue reached $2.731 billion, up 60.2%, and gross profit was $511 million, up 62.7%. The full-year net loss was $275 million, narrower than in 2021, and diluted loss per share improved to $0.72 from a loss in the prior year.
Operational metrics show the scale of the platform. Fourth quarter Gross Payment Volume rose 49% to $25.5 billion, and full-year GPV increased 61% to $91.7 billion. Annualized recurring run-rate was $901 million at December 31, 2022, up 59% year over year. Toast added roughly 23,000 net new locations during 2022 and ended the year with approximately 79,000 locations, nearly 40% more than a year earlier. Net retention rate was 118% for 2022, compared with 135% in 2021. Remaining performance obligations were $480 million at quarter end, up 18.5%, while deferred revenue was $46 million, down 17.9%.
Profitability and cash generation remain uneven. Fourth quarter operating margin improved to negative 12.9%, a gain of 9.8 percentage points. For the full year, operating margin was negative 14.1%, down 0.7 percentage points from 2021. The full-year operating loss was $384 million, wider than the prior year. Operating cash flow was negative $19 million in the quarter, better than the prior-year quarter. For the full year, operating cash flow was negative $156 million, down from positive operating cash flow in 2021. Capital expenditures were $16 million for 2022, up from 2021. Free cash flow, a non-GAAP measure, was negative $29 million in the fourth quarter and negative $189 million for the full year, compared with negative $34 million and negative $17 million in the respective prior-year periods. Adjusted EBITDA, also non-GAAP, was negative $18 million in the quarter and negative $115 million for the full year, compared with negative $45 million and negative $42 million in the prior-year periods.
Guidance calls for growth in 2023. For the first quarter ending March 31, 2023, Toast guides to a revenue range and to adjusted EBITDA of negative $30 million to negative $20 million. For the full year ending December 31, 2023, the guidance covers a revenue range and adjusted EBITDA of negative $30 million to negative $10 million. Management flagged inflation and its potential impact on consumer spending, rising interest rates, supply chain issues, and the COVID-19 pandemic as risks. The 10-K also notes credit exposure tied to financial guarantees for Toast Capital loans. At December 31, 2022, Toast held $547 million in cash and cash equivalents, $474 million in marketable securities, and $28 million in restricted cash, with $330 million available under its revolving credit facility and no amount drawn. Contractual obligations include $231 million in purchase commitments, mostly due in 2023, and $112 million in operating lease commitments. Recent moves include the acquisition of Delphi Display Systems, an Order with Google integration, and $1.25 million in Toast.org grants.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2022 | Q3 FY2022 | QoQ | Q4 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $768.0M | $752.0M | +2.1% | $514.9M | +49.2% |
| Gross profit | $158.0M | $151.0M | +4.6% | $76.0M | +108.0% |
| Gross margin | 20.6% | 20.1% | +0.5 pp | 14.8% | +5.8 pp |
| Research & development | $79.0M | $74.0M | +6.8% | $50.0M | +57.9% |
| Sales & marketing | $87.0M | $84.0M | +3.6% | $59.5M | +46.2% |
| General & administrative | $91.0M | $78.0M | +16.7% | $83.9M | +8.5% |
| Total operating expenses | $257.0M | $236.0M | +8.9% | $193.4M | +32.9% |
| Operating income (loss) | -$99.0M | -$85.0M | -16.5% | -$117.5M | +15.7% |
| Operating margin | -12.9% | -11.3% | -1.6 pp | -22.8% | +9.9 pp |
| Net income (loss) | -$100.0M | -$98.0M | -2.0% | $147.0K | -68127.2% |
| Net margin | -13.0% | -13.0% | +0.0 pp | 0.0% | -13.0 pp |
| Diluted EPS | -$0.20 | -$0.19 | -$0.01 | $0.00 | -$0.20 |
Risks
Toast identified a material weakness in internal controls over financial reporting as of December 31, 2022 related to ineffective IT general controls in user access over certain systems supporting revenue processes. This could lead to material misstatements or failure to meet periodic reporting obligations.
Inflation, rising interest rates, global supply chain issues, and COVID-19 have impacted and may continue to impact consumer spending and restaurant industry demand. A deterioration could reduce restaurant locations or gross payment volume, hurting revenue and profits.
A majority of Toast customers are SMBs with one to ten restaurant locations, which have higher business failure rates and greater susceptibility to economic fluctuations. Adverse changes or business failures among SMB customers may have a greater impact on Toast than competitors less focused on SMBs.
Revenue grew 60% in FY2022, but Toast warns recent growth is not indicative of future performance. Net Retention Rate declined to 118% in FY2022 from 135% in FY2021, and GPV growth slowed to 61% in FY2022 from 124% in FY2021, indicating potential growth-rate deceleration.
Toast incurred net losses of $275 million in FY2022 and $487 million in FY2021, with an accumulated deficit of $1,377 million as of December 31, 2022. Operating cash flow was negative $156 million in FY2022 versus positive $2 million in FY2021, and costs are expected to increase.
Customers cannot subscribe to Toast's platform without also subscribing to payment services, and some potential customers may resist switching payment processors. Payment processing revenue and gross profit vary with payment volume, transaction mix, consumer spending, and economic conditions.
Toast Capital relies solely on one bank partner to originate working capital loans, and Toast is obligated to purchase defaulted or non-performing loans up to 15% of each quarterly loan cohort. If the bank partner terminates or customers default, the financial products business could be harmed.
Toast handles sensitive personal, payment, and payroll information and has experienced security incidents in the past. A breach or denial-of-service attack could lead to data loss, litigation, regulatory action, and reputational harm.
Toast's subscription contracts generally range from 12 to 36 months and customers are not obligated to renew. Retention may decline due to dissatisfaction, competition, pricing, or customer financial distress, particularly among restaurants.
Toast depends on senior management and key technical employees, and competition for qualified personnel is intense. Volatility in the Class A common stock price may reduce the perceived value of equity awards and impair retention.
Expanding financial technology services and international operations subject Toast to additional regulatory requirements, licensing, and compliance risks. Failure to comply could lead to sanctions, litigation, or discontinuation of certain offerings.
Toast has closed multiple acquisitions since 2019 and may pursue more. Integration may divert management attention, fail to achieve anticipated benefits, increase expenses, dilute stockholders, or expose Toast to unforeseen legal and regulatory liabilities.
SaaS KPIs
All quarters →Gross Payment Volume (GPV)
Total Locations
Annualized Recurring Run-Rate (ARR)
Summary, forecast, risks and KPIs are extracted from Toast, Inc.'s SEC filings for Q4 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.