Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Capital Markets

<p><a href="https://www.smartkarma.com/entities/toast-inc" target="_blank" data-smartkarma-citation="entities:34261:1" rel="noopener">Toast (TOST US)</a> increased its IPO price range to<a href="https://finance.yahoo.com/news/restaurant-software-provider-toast-raises-144113955.html" target="_blank" rel="noopener"> $34 to $36</a> per share on 20 September, up from $30 to $33 per share previously. The company plans to offer 21.74 million class A shares through its IPO. At the high end of the revised up IPO price ($36 per share), Toast Inc would raise $783 million.</p><div class="content-highlight">
<p>Our base case valuation of Toast Inc is implied market cap of US$24.9 billion or US$45.5 per share, which is 26% higher than the high end of the IPO price range (US$36). Given the decent upside, we have a POSITIVE view of this IPO. </p>
<p>Our valuation of Toast Inc is based on an EV/S multiple of 10.1x using our estimated sales of $2.4 billion in 2022. The EV/S multiple of 10.1x is based on a 10% discount to the average multiple of the comps in 2022.</p>
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Toast (TOST US) increased its IPO price range to $34 to $36 per share on 20 September, up from $30 to $33 per share previously. The company plans to offer 21.74 million class A shares through its IPO. At the high end of the revised up IPO price ($36 per share), Toast Inc would raise $783 million.
Our base case valuation of Toast Inc is implied market cap of US$24.9 billion or US$45.5 per share, which is 26% higher than the high end of the IPO price range (US$36). Given the decent upside, we have a POSITIVE view of this IPO. 
Our valuation of Toast Inc is based on an EV/S multiple of 10.1x using our estimated sales of $2.4 billion in 2022. The EV/S multiple of 10.1x is based on a 10% discount to the average multiple of the comps in 2022.


<p><a href="https://www.marketwatch.com/story/toast-sets-ipo-terms-to-be-valued-at-up-to-165-billion-2021-09-13" target="_blank" rel="noopener">Toast Inc</a> is expected to complete its IPO in the US next week. The IPO price range is between $30 and $33 a share. The company is offering 21.74 million Class A shares in this IPO. At the high end of the IPO price range, the company would be raising $717.4 million. The lead underwriters of the IPO include Goldman Sachs, Morgan Stanley and J.P. Morgan.  At the high end of the IPO price range, the company's market cap would be $16.6 billion.</p>
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<p><strong>Toast is the market leader of providing a one-stop shop of SaaS platform for the restaurant industry in the US. The company has experienced excellent growth in sales and a sharp improvement in its operating margins in the past year. </strong></p>
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<p>Toast Inc generated sales of $823.1 million (up 23.8% YoY), gross profit of $140.4 million (up 125.2% YoY), and operating loss of $220.2 million in 2020. <strong>Its sales growth accelerated sharply in 1H 2021. It had sales of $703.8 million (up 104.7% YoY), gross profit of $154.8 million (244.1% YoY), and operating loss of $56.8 million in 1H 2021.</strong></p>

Toast Inc is expected to complete its IPO in the US next week. The IPO price range is between $30 and $33 a share. The company is offering 21.74 million Class A shares in this IPO. At the high end of the IPO price range, the company would be raising $717.4 million. The lead underwriters of the IPO include Goldman Sachs, Morgan Stanley and J.P. Morgan.  At the high end of the IPO price range, the company's market cap would be $16.6 billion.

Toast is the market leader of providing a one-stop shop of SaaS platform for the restaurant industry in the US. The company has experienced excellent growth in sales and a sharp improvement in its operating margins in the past year. 

Toast Inc generated sales of $823.1 million (up 23.8% YoY), gross profit of $140.4 million (up 125.2% YoY), and operating loss of $220.2 million in 2020. Its sales growth accelerated sharply in 1H 2021. It had sales of $703.8 million (up 104.7% YoY), gross profit of $154.8 million (244.1% YoY), and operating loss of $56.8 million in 1H 2021.

United States

Toast, Inc. operates as a cloud-based restaurant software company. The Company designs and develops sale and management software system that helps restaurants to improve operations, increase sales, and create a better guest experience. Toast serves customers worldwide.

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Toast (TOST US)

Toast Inc Valuation Analysis

Our base case valuation of Toast Inc is implied market cap of US$24.9 billion or US$45.5 per share, which is 26% higher than the high end of the...

Douglas Kim

Toast Inc IPO Preview

Toast Inc is the market leader of providing a one-stop shop of SaaS platform for the restaurant industry in the US. Toast Inc plans to complete its...

Douglas Kim

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