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Description of Business and Basis of Presentation
12 Months Ended
Dec. 31, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Description of Business and Basis of Presentation Description of Business and Basis of Presentation
Toast ("we," or the “Company”), is a cloud-based all-in-one digital technology platform purpose-built for the entire restaurant community. Our platform provides a comprehensive suite of software as a service, or SaaS, products, financial technology solutions including integrated payment processing, restaurant-grade hardware, and a broad ecosystem of third-party partners. We serve as the restaurant operating system, connecting front of house and back of house operations across dine-in, takeout, and delivery channels.

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP, and the rules and regulations of the Securities and Exchange Commission, or SEC. The consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

As a result of our Initial Public Offering, or IPO, exemptions previously available to us as an Emerging Growth Company as defined in the Jumpstart Our Business Startups Act were no longer available as of December 31, 2021. Accordingly, we adopted Accounting Standards Update, or ASU, 2016-02, Leases, or ASC 842, and ASU 2016-13, 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, or ASC 326 retroactive to January 1, 2021. Our Consolidated Financial Statements for comparative periods have not been recast.

Additionally, we adopted ASU 2014-09, Revenue from Contracts with Customers, or ASC 606, on a modified retrospective basis effective January 1, 2020.

Risks and Uncertainties

We are subject to a number of risks common to emerging, technology-based companies, including a limited operating history; dependence on key individuals; rapid technological changes; competition from substitute products and larger companies; the successful development, marketing, and outsourced manufacturing of our products and services, as well as the impact of the novel coronavirus disease, or COVID-19, on the restaurant industry.

Initial Public Offering

On September 24, 2021, we completed our IPO where we sold 25,000,000 shares of our Class A common stock at the public offering price of $40.00 per share, which included the full exercise of the underwriters’ option to purchase an additional 3,260,869 shares. We received net proceeds of $944 after deducting underwriting discounts and commissions and other offering costs.

Immediately prior to the completion of our IPO, 253,832,025 shares of convertible preferred stock were automatically converted into an equal number of shares of Class B common stock, and 1,002,035 warrants to purchase shares of Series B and Series C convertible preferred stock were automatically exchanged or became exercisable for the same number of shares of Class B common stock.
In connection with and on the date of the IPO, we filed an amended and restated certificate of incorporation (the “Restated Certificate”) with the Secretary of State of the State of Delaware. The Restated Certificate amended and restated our certificate of incorporation in its entirety, and, among other things: (i) authorized 7,000,000,000 shares of Class A common stock; (ii) authorized 700,000,000 shares of Class B common stock; (iii) authorized 100,000,000 shares of undesignated preferred stock that may be issued from time to time by the Board of Directors, or the Board, in one or more series; and (iv) eliminated all references to the previously-existing series of preferred stock. Upon completion of our IPO, each share of issued and outstanding common stock automatically converted into one share of Class B common stock.

Each share of Class A common stock entitles the holder to one vote per share and each share of Class B common stock entitles the holder to ten votes per share on all matters submitted to a vote of stockholders. Holders of Class A common stock and Class B common stock are entitled to receive dividends, when and if declared by the Board. In addition, each share of Class B common stock will convert automatically into a share of Class A common stock on the earlier of (i) seven years from the date of the filing of the Restated Certificate, or (ii) the date the holders of at least two-thirds of our outstanding Class B common stock elect to convert the Class B common stock to Class A common stock.

Stock Split

On September 9, 2021, our Board and stockholders approved a 5-for-1 stock-split of our common stock and convertible preferred stock which became effective shortly thereafter. Accordingly, all shares of common stock and per share amounts, the conversion ratio of the then outstanding convertible preferred stock, the number of shares of common stock into which each outstanding option and warrant to purchase common stock is exercisable, the exercise prices of each option and warrant, as well as the number of shares of common stock that will be issued when each outstanding RSU vests have been proportionately adjusted on a 5-for-1 basis. All share and per share data shown in the accompanying consolidated financial statements and related notes have been retroactively revised to reflect the stock split.

Impact of COVID-19

Since early 2020, changes in consumers' behavior and government-imposed restrictions because of the COVID-19 pandemic have impacted restaurants in various ways, including limiting service to takeout orders for a period of time or reducing capacity to accommodate social distancing recommendations. The extent of the impact of the COVID-19 pandemic over the longer term remain uncertain and will depend largely on future developments that cannot be accurately predicted at this time, including the duration and the spread of the pandemic both globally and within the United States, the introduction and severity of new variants of the virus and their resistance to currently approved vaccines, as well as the potential negative impact these and other factors may have on the restaurant industry and our business.

We considered the potential effects of the COVID-19 pandemic on our consolidated financial statements and the carrying amounts of assets or liabilities as of December 31, 2021 and 2020. During the year ended December 31, 2021, we partially terminated the lease for one of our office facilities. The lease termination penalty of $3 is payable in monthly installments through 2029. We recognized a loss of $1 resulting from the lease termination and $1 of write offs on certain leasehold improvements and other property as a result of exiting the leased space.

During 2020, we terminated leases for two office facilities and recognized a liability of $17 for lease termination costs, resulting in a loss of $3. Lease termination costs of $10 were paid up front, with the remaining balance payable in monthly installments through 2026. A liability related to lease termination fees was $7 as of December 31, 2020. In addition, we recognized $16 of accelerated depreciation on certain leasehold improvements and other property and equipment as a result of exiting the leased space. Depreciation expense was accelerated prospectively for the year ended December 31, 2020 based on the new remaining useful life of the related assets.
Additionally, during 2020 we completed a significant reduction in workforce, pursuant to which we incurred severance costs of $10 and stock-based compensation expense of $3 in connection with the modification of previously issued employee stock option awards. In addition to the restructuring liabilities described above, we also engaged in efforts to reduce operating expenses and took other measures to reduce discretionary spending while conditions remained uncertain for the restaurant industry.

Reclassifications

Certain amounts in prior period financial statements have been reclassified to conform to the current period presentation. None of the reclassifications materially affected previously reported amounts.