Toast is Seeking a $16B Valuation at IPO

Restaurant tech company Toast is looking for a $16 billion valuation at IPO according to an updated prospectus given on Monday.

The company’s prospectus has given a pricing range that could value the company at more than $16 billion in its debut.

Toast raised funding at a $5 billion valuation before the COVID-19 pandemic, and then cut about 50% of its staff as shutdowns forced restaurants to close their doors.

The company’s IPO is expected next week.

Toast has said that it was serving more than 48,000 restaurant locations as of the end of June, up from 27,000 in 2019. Annual recurring revenue surged 118% in the second quarter from a year earlier to $494 million.

Most of Toast’s revenue comes from what the company calls financial technology solutions, consisting primarily of fees paid by customers for payment transactions. Less than 10% comes from subscriptions.

The company said it plans to sell shares at $30 to $33, raising more than $700 million at the top end of the range. That would value the company at $16.5 billion, based on its outstanding share count.

In the latest quarter, Toast’s gross margin was about 21%. After accounting for all its other costs, the company recorded a net loss of $135.5 million in the quarter.

Toast acknowledges in its prospectus that it “cannot accurately forecast the potential impact of additional outbreaks as government restrictions are relaxed, the impact of further shelter-in-
place or other government restrictions that are implemented in response to such outbreaks, or the impact on our customers’ ability to remain in business, each of which could continue to have an adverse impact on our business.”

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.