Boston technology company Toast priced its initial public offering at $40 per share on Tuesday evening, above the expected range of $34 to $36, valuing the restaurant payments firm at about $20 billion.
It’s one of the biggest deals — and rebounds — in recent Boston tech history. Toast’s triumph follows an immense wave of restaurant shutdowns due to the COVID-19 pandemic, which prompted the company to cut half its staff in April 2020. After going public, Toast will now lead the pack of Boston’s financial-tech companies as they seek to digitize payments, speed up commerce, and reach more customers.
Toast sold 21.7 million shares and raised about $870 million, which it plans to use to improve its software and services for the restaurant industry and expand overseas. The company’s shares are expected to start trading Wednesday on the New York Stock Exchange under the symbol TOST, and will likely pop higher as ordinary investors shut out of the IPO sale clamber to get a piece of the action.
Toast’s valuation is the highest ever for a Massachusetts company going public via an IPO, exceeding the $10.7 billion market value of Internet company Genuity when it went public in 2000, according to data from Dealogic.
The deal also makes Toast cofounder Stephen Fredette a billionaire on paper, as he owns 33.2 million shares in the company worth $1.3 billion with the IPO, according to securities filings. Cofounder Jonathan Grimm holds 26.8 million shares worth $1.1 billion and Aman Narang holds 24.6 million shares worth $984 million, according to the filings.
Toast’s business was initially crushed by the COVID-19 pandemic, which led to the closure of thousands of its customer restaurants. But the company quickly was able to create a series of new products to help the industry shift to focus on takeout and delivery. Revenue in the first half of 2021 more than doubled to $704 million from the same period in 2020, though Toast’s net loss also widened to $235 million, from $125 million a year earlier.
Toast, which was incorporated in 2011, said its platform was used by about 48,000 restaurants as of June 30 and had processed more than $38 billion in gross payments over the previous 12 months. In June, it averaged over 5.5 million guest orders per day. Toast said it has more than 2,200 employees as of September.
The company raised money last year at a valuation of $4.9 billion from investors including Bessemer Venture Partners, TPG, TCV, Tiger Global Management, and Greenoaks Capital.
Goldman Sachs Group Inc., Morgan Stanley, and JPMorgan Chase & Co. led the initial public offering.