Toast’s initial IPO price range was $ 30 to $ 33 per share, resulting in $ 825 million in funding. Toast was finally valued at $ 4.9 billion in early 2020 after raising $ 400 million. Thanks to improved revenue and a particularly successful second quarter, the company will significantly replace this rating mark.
- IPO: The company’s expected IPO price range is $ 30 to $ 33 per share, and toast is worth $ 14.98 billion at the low end and $ 16.48 billion at the top. Including shares from the underwriter’s options, Toast’s simple IPO valuation extends from $ 15.80 billion at the bottom to $ 16.59 billion at the top.
- Revenues: Software revenues are valuable thanks to their high margins and recurring structure. Toast’s financial-services revenues, by contrast, are largely transaction-based and sport lower gross margins. The company’s IPO price, then, could help the private markets more fairly price startups offering their own blend of software-and-fintech incomes.
- Calculation: Let’s dig into the company’s new IPO price range, calculate simple and fully diluted results, and see what we can learn from where Toast may price. Recall that the company has a mix of recurring software (SaaS) incomes as well as fintech revenue (payments, mostly). Its revenue mix is interesting, and how Toast prices could help us better understand how to value vertical SaaS startups that are pursuing a payments-and-SaaS business approach.
- Cloud-based: Toast provides a cloud-based technology platform built specifically for the restaurant industry, with a software-as-a-service business model. The software includes integrated payment processing with a “broad ecosystem of third-party partners”.
- Operating system: “We serve as the restaurant operating system, connecting front of house and back of house operations across dine-in, takeout, and delivery channels,” it said. According to IPO research and advisory firm IPO Boutique, the Toast IPO is set for a “highly liked explosive debut.”