5 Takeaways from Toast’s S-1 Filing

Welcome back to the season of initial public offerings.

We won’t call it a hot liquidity summer, but the public-offering cycle has returned after a brief hiatus in August. Warby Parker, Toast, and Freshworks all filed last week. We’ve already looked into Warby. We’re going through the details of the last two premieres this week, starting with Toast. Why is Toast important to us? It’s a start-up in the field of technology. It’s a unicorn, of course. According to Crunchbase records, it raised more than $900 million when it was still private. In addition, the corporation is a major player in the Boston startup ecosystem.

In addition, the software-and-payments firm combines subscription revenue, transaction fees, hardware revenue, and lending revenue. Its business is complicated in a good manner, and it could help us grasp what occurs when software businesses add financial features to their original apps. It’s an intriguing corporation, one that was hit hard by the COVID-19 outbreak at first. Let’s take a look at the company’s overall financial performance, see how COVID impacted the company’s operations, see how its revenue mix has changed over time, and talk about how essential fintech earnings are to the company and how much it’s worth. This is going to be a lot of fun.

Soon, we’ll go deeper into how the company earns revenue. For the time being, just remember that the company has a variety of income streams, each with its own gross-margin profile. So, in the following, we’re not just talking about high-margin software income. From Toast’s S-1 filing, this is its top-line performance for 2019, 2020, and the first half of both 2020 and 2021:

We can tell right away that the company increased from 2019 to 2020, albeit at a slow pace. We can notice significantly more rapid growth from the corporation recently if we look at the two columns on the far right. In terms of year-over-year growth, Toast increased by 24% in 2020 and 105 percent in the first half of 2021.

When you consider how COVID-19 impacted the food industry, even small growth at the company in 2020 feels like a win; despite massive market volatility, Toast expanded admirably.

And Toast’s H1 2021 statistics show that the product work it did during the global pandemic paid off, as the company’s revenue growth accelerated by a factor of four in the previous two quarters, compared to the total pace of sales expansion in 2020.

The information above also helps us understand why Toast is now going public. The company’s present picture is one of accelerated growth resulting in substantial top-line accretion after pushing through 2020. Toast appears to be more than capable. And when you have numbers to brag about, there’s no better moment to go public.