Toast sells shares for $ 40 on IPO, breaking expected range

Catering technology seller Toast priced its IPO on Tuesday at $ 40 a share, according to a person familiar with the matter who asked not to be named because the announcement is not yet public. The supply was above the expected range and values ​​the company at around $ 20 billion.

Toast expected to sell shares between $ 33 and $ 36 apiece, after raising the range from $ 30 to $ 33. The company will be listed on the New York Stock Exchange under the symbol “TOST”.

Toast’s IPO comes after a roller coaster ride during the pandemic in which revenues initially fell 80% as restaurants closed and cities across the country closed. The company cut half of its workforce in mid-2020 and has taken desperate measures to stay afloat.

But like other technology companies focused on the hotel industry such as Airbnb and TripActions, the rebound has been much faster than expected. Restaurants remained open and shifted their business to take-out, delivery, and mobile ordering, playing right into the sweet spot of Toast.

Toast initially provided a one-month software fee credit to its customers and provided free access to its technology that enabled takeout, online ordering, and gift card purchases.

In the third quarter of 2020, sales increased again compared to the previous year. In November, the company was experiencing such a recovery that it orchestrated a secondary stock sale so that current and former employees could sell up to 25% of their acquired stock at a price that valued Toast at $ 8 billion.

Before the Covid-19 pandemic, Toast thrived on selling technology to restaurants that helped them combine their payment systems with things like inventory management and multi-location controls for restaurants with more than one location. Investors valued the company at $ 5 billion in February 2020.

Toast now says it serves more than 48,000 restaurants at the end of June, up from 27,000 in 2019. Annual recurring revenue jumped 118% in the second quarter from a year earlier to $ 494 million. The bulk of Toast’s revenue comes from what the company calls FinTech solutions, which primarily consist of fees paid by customers for payment transactions. Less than 10% comes from subscriptions.