Toast (TOST) risk factors, 2025 10-K

Risks Related to Our Business and Business Development

1. 01If we fail to manage our growth effectively and efficiently, we may be unable to execute our business plan, maintain high levels of service and customer satisfaction, or adequately address competitive challenges
2. 02If we do not attract new customers, retain existing customers, and increase our customers’ use of our platform, our business will suffer
3. 03We may not be able to sustain our recent revenue growth in future periods
4. 04We have a limited operating history in an evolving industry at our current scale, which makes it difficult to evaluate our future prospects and may increase the risk that we will not be successful
5. 05Our platform includes our payment services, and our ability to attract new customers and retain existing customers depends in part on our ability to offer payment processing services with the desired functionality at an attractive price
6. 06Our operating results depend in significant part on our payment processing services, and the revenue and gross profit we derive from our payment processing activity in a particular period can vary due to a variety of factors
7. 07A majority of our customers are SMBs, which can be more difficult and costly to retain than enterprise customers and are subject to increased impacts of economic fluctuations, which may adversely affect our business and operations
8. 08We rely in part on revenue from subscription contracts, and because we recognize revenue from subscription contracts over the term of the relevant subscription period, downturns or upturns in sales are not immediately reflected in full in our results of operations
9. 09Our future revenue will depend in part on our ability to expand the financial technology services we offer to our customers and increase adoption of those services
10. 10We do not have sufficient history with our subscription or pricing models to accurately predict optimal pricing strategies necessary to attract new customers and retain existing customers
11. 11We are subject to risks associated with certain financial products we offer and our handling of customer funds, including counterparty risk with key partners, the ability of our customers to pay their obligations, and the risk of fraud
12. 12Any failure to offer high-quality customer support may adversely affect our relationships with our customers and could adversely affect our business, financial condition, and results of operations
13. 13The long-term potential of our business may be adversely affected if we are unable to expand our business successfully into international markets
14. 14Our business functions at the intersection of rapidly changing technological, social, economic, and regulatory environments that require a wide range of expertise and intellectual capital. Our success depends on the continued service of our management team and qualified personnel
15. 15From time to time, we are subject to various legal proceedings that could adversely affect our business, financial condition, or results of operations
16. 16We have closed multiple acquisitions and may acquire or invest in other companies or technologies in the future, which could divert management’s attention, fail to meet our expectations, result in additional dilution to our stockholders, increase expenses, disrupt our operations, or harm our operating results
17. 17In addition, we have previously acquired and may in the future pursue acquisitions of companies with extensive operations outside the United States. These types of acquisitions often involve additional or increased risks compared to acquisitions of operations within the United States

Risks Related to Our Technology and Privacy

1. 18We are responsible for transmitting a high volume of sensitive and personal information through our platform and our success depends upon the security of this platform. Any actual or perceived breach of our system that would result in disclosure of such information could materially impact our business
2. 19Interruptions or performance problems associated with our technology and infrastructure may adversely affect our business and operating results
3. 20Our success depends upon our ability to continually enhance the performance, reliability, and features of our platform
4. 21Defects, errors, or vulnerabilities in our applications, backend systems, hardware, or other technology systems and those of third-party technology providers could harm our reputation and brand and adversely impact our business, financial condition, and results of operations
5. 22We use artificial intelligence in our platform and product offerings. Issues relating to the use of artificial intelligence and machine learning could adversely affect our results of operations

Risks Related to Our Financial Condition and Capital Requirements

1. 23If we are unable to achieve adequate revenue growth while our expenses increase, we may not consistently maintain or increase profitability in the future
2. 24Unfavorable conditions in the restaurant industry or the global economy could limit our ability to grow our business and materially impact our financial performance
3. 25Our revolving credit facility provides our lenders with a first-priority lien against substantially all of our assets, and contains financial covenants and other restrictions on our actions that may limit our operational flexibility or otherwise adversely affect our results of operations
4. 26Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited
5. 27We experience elements of seasonal fluctuations in our financial results, which could cause our stock price to fluctuate
6. 28Our failure or perceived failure to achieve our environmental, social, and governance, or ESG, goals or maintain ESG practices that meet evolving stakeholder expectations could adversely affect us

Risks Related to Competition, Sales, and Marketing

1. 29The markets in which we participate are intensely competitive, and if we do not compete effectively, our operating results could be adversely affected
2. 30Potential changes in competitive landscape, including disintermediation from other participants in the payments chain, could harm our business
3. 31We expend significant resources pursuing sales opportunities, and if we fail to close sales after expending significant time and resources to do so, our business, financial condition, and results of operations could be adversely affected

Risks Related to Our Partners and Other Third Parties

1. 32If we fail to comply with the applicable requirements of payment networks, they could seek to fine us, suspend us, or terminate our registrations. If our customers incur fines or penalties that we cannot collect from them, we may have to bear the cost of such fines or penalties
2. 33The Payment Network Rules, including rules related to the assessment of interchange and other fees, may be influenced by our competitors. Increases in Payment Network fees or new regulations could negatively affect our earnings
3. 34We rely on customers on our platform for many aspects of our business, and any failure by them to maintain their service levels or any changes to their operating costs could adversely affect our business
4. 35We primarily rely on Amazon Web Services to deliver our services to customers on our platform, and any disruption of or interference with our use of Amazon Web Services could adversely affect our business, financial condition, and results of operations
5. 36We depend on the interoperability of our platform across third-party applications and services that we do not control
6. 37Our partnerships with third parties are an important source of new business for us, and, if those third parties were to reduce their referral of customers to us, our ability to increase our revenue would be adversely affected
7. 38Proposals to change the statutes affecting working capital loans facilitated through the Toast Capital platform may periodically be introduced in Congress and state legislatures. If enacted, those proposals could affect Toast Capital’s operating environment in substantial and unpredictable ways
8. 39Changes in tax law may adversely affect our financial position and results
9. 40Government regulation of the Internet, mobile devices, and e-commerce is evolving, and unfavorable changes could substantially adversely affect our business, financial condition, and results of operations

Risks Related to Our Intellectual Property

1. 41If we fail to adequately protect our intellectual property rights, our competitive position could be impaired and we may lose valuable assets or revenue and become subject to costly litigation to protect our rights
2. 42We have been, and may in the future be, subject to intellectual property rights claims by third parties, which are extremely costly to defend, could require us to pay significant damages and could limit our ability to use certain technologies
3. 43Our platform makes use of open-source software components, and a failure to comply with the terms of the underlying open-source software licenses could negatively affect our ability to sell our products and subject us to possible litigation

Risks Related to Our Class A Common Stock

1. 44The trading price of our Class A common stock may be volatile, and you could lose all or part of your investment
2. 45We cannot predict the effect our dual-class structure may have on the market price of our Class A common stock
3. 46Future sales, or the perception of future sales, by us or our existing stockholders in the public market could cause the market price for our Class A common stock to decline
4. 47You may incur dilution as a result of future equity issuances
5. 48Certain provisions in our charter documents and Delaware law could make an acquisition of our company more difficult, limit attempts by our stockholders to replace or remove members of our Board or current management and may adversely affect our stock price
6. 49We do not intend to pay dividends for the foreseeable future
7. 50Our third amended and restated bylaws designate certain specified courts as the sole and exclusive forums for certain disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees
8. 51We incur significant costs as a result of operating as a public company
9. 52Our senior management team has limited experience managing a public company, and regulatory compliance obligations may divert its attention from the day-to-day management of our business