Shares of restaurant technology company Olo (OLO 5.55%) went up on Wednesday after the company reported financial results for the fourth quarter of 2024. As of 12:40 p.m. ET, Olo stock was up about 6%, but it had been up nearly 12% earlier in the day.Olo finishes a record year and sets the tone for 2025There are 86,000 restaurant locations that use Olo's technology -- it started as online ordering, but it offers a variety of services today to meet the needs of restaurant companies. And 2024 was a good year ...

Olo Inc. (NYSE:OLO) Q4 2024 Results Conference Call February 25, 2025 5:00 PM ET Company Participants Gary Fuges - Senior Vice President of Investor Relations Noah Glass - Founder and Chief Executive Officer Peter Benevides - Chief Financial Officer Conference Call Participants Connor Passarella - Truist Securities Mike Richards - RBC Capital Markets Clarke Jefferies - Piper Sandler Eric Martinuzzi - Lake Street Stephen Sheldon - William Blair Operator Greetings, and welcome to the Olo Fourth Quarter 2024 E ...

Group 1 - Olo Inc. reported $76.07 million in revenue for Q4 2024, a year-over-year increase of 20.8% [1] - The EPS for the same period was $0.06, compared to $0.05 a year ago, with a consensus EPS estimate of $0.07, resulting in an EPS surprise of -14.29% [1] - The reported revenue exceeded the Zacks Consensus Estimate of $72.87 million by 4.39% [1] Group 2 - Key metrics indicate that Olo's ARPU was $878, surpassing the average estimate of $841.98 [4] - The number of Ending Active Locations remained at 86,000, matching the average estimate [4] - Revenue from the Platform segment was $75.19 million, a 21.4% year-over-year increase, exceeding the average estimate of $72.03 million [4] Group 3 - Revenue from Professional Services and other was $0.88 million, slightly above the average estimate of $0.84 million, but represented a -17% change year-over-year [4] - Non-GAAP gross profit from Services was $0.26 million, significantly higher than the average estimate of $0.13 million [4] - Non-GAAP gross profit from the Platform was $44.98 million, exceeding the average estimate of $43.33 million [4] Group 4 - Olo's shares have returned -8.8% over the past month, compared to the Zacks S&P 500 composite's -1.8% change [3] - The stock currently holds a Zacks Rank 2 (Buy), suggesting potential outperformance in the near term [3]

Company Performance - Olo Inc. reported quarterly earnings of $0.06 per share, missing the Zacks Consensus Estimate of $0.07 per share, but showing an increase from $0.05 per share a year ago, resulting in an earnings surprise of -14.29% [1] - The company posted revenues of $76.07 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 4.39%, compared to year-ago revenues of $63 million [2] - Over the last four quarters, Olo has surpassed consensus revenue estimates four times, but has only exceeded consensus EPS estimates once [2] Stock Outlook - Olo shares have declined approximately 13.2% since the beginning of the year, contrasting with the S&P 500's gain of 1.7% [3] - The company's earnings outlook is crucial for investors, with current consensus EPS estimates at $0.07 for the coming quarter and $0.28 for the current fiscal year, with revenues expected to be $76.92 million and $327.8 million respectively [4][7] - The estimate revisions trend for Olo is currently favorable, leading to a Zacks Rank 2 (Buy) for the stock, indicating expected outperformance in the near future [6] Industry Context - The Internet - Software industry, to which Olo belongs, is currently ranked in the top 28% of over 250 Zacks industries, suggesting a positive outlook for stocks within this sector [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Revenue Generation and Growth - The company primarily generates subscription revenue from its Order platform and Engage solutions, with transaction revenue from Olo Pay modules and fees charged to aggregators, channel partners, and other service providers[103]. - The company anticipates a decline in revenue growth rate over time as market penetration increases, which may lead to a greater dependency on retaining revenue from existing customers[106]. - Approximately 15% of the company's revenue for the year ended December 31, 2024, was generated from its ten largest restaurant customers[133]. - For the years ended December 31, 2024, 2023, and 2022, revenue from the largest digital ordering aggregator, DoorDash, accounted for 8.1%, 10.5%, and 11.1% of total revenue, respectively[167]. - Total revenue for the year ended December 31, 2024, was $284.938 million, an increase of 24.8% compared to $228.289 million in 2023[411]. - Platform revenue reached $281.554 million in 2024, up from $225.179 million in 2023, reflecting a growth of 25%[411]. Financial Performance and Losses - The company incurred net losses of $0.9 million, $58.3 million, and $46.0 million for the years ended December 31, 2024, 2023, and 2022 respectively, with an accumulated deficit of $216.7 million as of December 31, 2024[139]. - The net loss attributable to common stockholders for 2024 was $897 thousand, significantly improved from a loss of $58.287 million in 2023[411]. - The company reported a comprehensive loss of $853 thousand for the year ended December 31, 2024, compared to a comprehensive loss of $58.049 million in 2023[413]. - The net loss for the year ended December 31, 2023, was $897 thousand, compared to a net loss of $58,287 thousand for the year ended December 31, 2022[416]. Operational Risks and Challenges - The company faces operational risks related to customer retention, transaction volume, and competition in the SaaS market, which could adversely affect revenue[105]. - The company has made acquisitions, including Wisely Inc. and Omnivore Technologies, which may create operational difficulties and affect financial results[112]. - The company experiences significant seasonal fluctuations in financial results, impacting revenue based on customer behavior patterns and seasonal trends[121]. - The company faces long and unpredictable sales cycles, particularly in the restaurant market segment, which can strain resources and impact growth[124]. - The company has experienced significant costs and long sales cycles when selling to customers, requiring extensive education and support before deployment[125]. - The company may lose customers or see a decline in their usage of the platform, which could materially affect its business and financial condition[128]. Strategic Initiatives and Future Plans - The company plans to expand its customer base internationally and into small-to-medium business sectors, which may present different challenges compared to larger restaurant brands[118]. - The company intends to increase headcount to support growth, but there is no assurance that revenue will continue to grow in line with this expansion[110]. - The company expects to make significant expenditures to expand its business in the future, which may continue to result in losses in the short term[139]. - The company anticipates increased expenditures that may hinder short-term profitability and expects substantial investments to support future growth[140]. Compliance and Regulatory Risks - The company has identified a material weakness in internal controls over financial reporting, which was remediated as of December 31, 2023, but future weaknesses may arise[142]. - The effective tax rate may increase due to various factors, including the Inflation Reduction Act of 2022, which imposes a 15% corporate alternative minimum tax for companies with modified GAAP net income exceeding $1 billion[146]. - The company may incur additional indebtedness in the future, which could be subject to higher interest rates and restrictive covenants[145]. - The company must comply with SEC rules regarding internal controls, and any failure to maintain these controls could impact investor confidence and stock value[154]. Market and Economic Conditions - Economic uncertainty and capital market disruptions, including high inflation and geopolitical instability, may negatively impact the company's liquidity and access to capital[158]. - The company is heavily reliant on the restaurant, food, and delivery industries, and any downturn in these sectors could significantly impact its results[228]. - Rising costs in food, labor, rent, energy, and occupancy could adversely affect the financial results of restaurant customers, impacting their profitability and order volumes[231]. - Various uncontrollable factors, including government regulations and inflation, may affect the total cost of digital food orders, potentially harming the company's business and financial condition[232]. Security and Technology Risks - Cyber incidents pose a significant risk to the company, with potential impacts including data breaches and service interruptions that could harm reputation and financial results[173]. - The company faces heightened exposure to security breaches due to its platform being accessible through hundreds of customers' white label domains and mobile applications[174]. - A material security breach could result in significant liability to customers and harm the company's ability to operate[175]. - The reliance on machine learning systems may introduce complexities and errors that could adversely affect business operations[184]. Stock and Capital Management - The company has authorized a stock buyback program, which may increase stock price volatility and reduce cash reserves available for other corporate purposes[242]. - The market price of the company's Class A common stock may be highly volatile due to various factors, including economic conditions and investor sentiment[249]. - The company may not continue to provide public guidance on expected operating and financial results, which could lead to further stock price declines if actual results do not meet expectations[248]. - The dual-class structure may lead to a lower or more volatile market price for Class A common stock, potentially affecting inclusion in major indices like the S&P Composite 1500[252]. Human Resources and Workforce Management - The company announced workforce reductions impacting approximately 11% in June 2023 and 9% in September 2024 as part of its restructuring plans[219]. - The company is experiencing difficulty in hiring qualified personnel, particularly in competitive markets, which may lead to higher labor costs[225]. - The company has invested heavily in customer service and support, which is critical for onboarding new customers and retaining existing ones[200]. Research and Development - Research and development expenses will increase as the company introduces new modules to enhance platform functionality[140]. - Research and development expenses for 2024 were $68.483 million, a decrease from $73.914 million in 2023[411].

Financial Performance - Fourth quarter revenue increased 21% year-over-year to $76.1 million[7] - Gross profit for the fourth quarter was $40.3 million, representing 53% of total revenue[7] - Non-GAAP operating income for the fourth quarter was $11.5 million, or 15% of total revenue, compared to $6.8 million, or 11% of total revenue, a year ago[7] - Total revenue for Q4 2024 was $76.07 million, a 20.8% increase from $63.00 million in Q4 2023[35] - Platform revenue reached $75.19 million in Q4 2024, up 21.0% from $61.94 million in Q4 2023[35] - Gross profit for the year ended December 31, 2024, was $156.42 million, compared to $138.97 million in 2023, reflecting a 12.5% increase[35] - Operating income, non-GAAP, for the year ended December 31, 2024, was $32,944, compared to $18,260 in 2023, an increase of 80%[41] - Fully diluted net income per share, non-GAAP, was $0.06 in Q4 2024, up from $0.05 in Q4 2023, indicating a 20% increase[43] Cost Management - Operating expenses decreased to $44.74 million in Q4 2024 from $56.97 million in Q4 2023, a reduction of 21.4%[35] - Research and development expenses for the year were $68.48 million, down from $73.91 million in 2023, indicating a focus on cost management[35] - General and administrative expenses, GAAP, decreased to $14,993 in Q4 2024 from $28,112 in Q4 2023, a reduction of 47%[41] - Research and development expenses, GAAP, were $17,357 in Q4 2024, slightly up from $17,108 in Q4 2023, indicating a 1% increase[41] - Sales and marketing expenses, non-GAAP, were $10,071 in Q4 2024, compared to $9,736 in Q4 2023, reflecting a 3% increase[41] Cash Flow and Assets - Cash and cash equivalents increased to $286.76 million as of December 31, 2024, compared to $278.22 million at the end of 2023[33] - Total assets grew to $754.78 million in 2024, up from $742.82 million in 2023[33] - The company reported a net cash provided by operating activities of $39.69 million for the year ended December 31, 2024, compared to a net cash used of $6.57 million in 2023[37] - Net cash provided by operating activities for the year ended December 31, 2024, was $39,688, a significant recovery from a cash used of $(6,568) in 2023[45] - Non-GAAP free cash flow for Q4 2024 was $6,846, up from $2,734 in Q4 2023, marking a 150% increase[45] Growth Metrics - Average revenue per unit (ARPU) increased 12% year-over-year to approximately $878[7] - Dollar-based net revenue retention (NRR) was approximately 115%[7] - Ending active locations increased 8% year-over-year to approximately 86,000 as of December 31, 2024[7] - Gross merchandise volume (GMV) was approximately $29 billion for the year ended December 31, 2024[7] Future Outlook - For Q1 2025, revenue is expected to be in the range of $77.2 million to $77.7 million[10] - For the full year 2025, revenue is expected to be in the range of $333.0 million to $336.0 million[10] - The company plans to continue expanding its market opportunities and enhancing its product offerings despite macroeconomic uncertainties[30] Partnerships and Integrations - A partnership with FreedomPay was announced to integrate Olo Pay card-present functionality into FreedomPay's gateway terminals[8]

Core Insights - Curbit has partnered with Equator Coffees to enhance its digital ordering system through AI-powered kitchen capacity management, aiming to improve operational efficiency and customer satisfaction [1][4]. Company Overview - Equator Coffees, established in 1995, is known for its commitment to quality, sustainability, and social responsibility, operating eleven retail locations and a strong online presence [2][8]. - Curbit is an AI-driven solution focused on real-time kitchen capacity management, optimizing operations and guest experiences through dynamic order throttling and real-time updates [7]. Partnership Details - The collaboration integrates Curbit's capabilities with Olo's online ordering solution, allowing Equator Coffees to provide accurate order readiness estimates and real-time updates to customers [3][5]. - This partnership is expected to streamline Equator Coffees' digital ordering process, enhancing customer experience and reducing inefficiencies in kitchen operations [4][5]. Operational Impact - The integration allows for dynamic updates to order times based on real-time kitchen capacity, ensuring minimal wait times and improved guest experiences [3][5]. - Curbit's strategic partnership with Olo has been crucial in delivering this integrated solution, recognized as a Gold Partner in Olo's Connect program [4].

Core Viewpoint - Olo Inc. (OLO) has received a Zacks Rank 2 (Buy) upgrade, indicating a positive outlook driven by rising earnings estimates, which significantly influence stock prices [1][3]. Earnings Estimates and Stock Price Movement - The Zacks rating system is based on changes in earnings estimates, which are strongly correlated with near-term stock price movements [4][6]. - Institutional investors utilize earnings estimates to determine the fair value of stocks, leading to buying or selling actions that affect stock prices [4]. Recent Performance and Projections - For the fiscal year ending December 2024, Olo is projected to earn $0.23 per share, reflecting a 53.3% increase from the previous year [8]. - Over the past three months, the Zacks Consensus Estimate for Olo has risen by 88.2%, indicating a significant upward revision in earnings expectations [8]. Zacks Rating System - The Zacks Rank system categorizes stocks into five groups based on earnings estimates, with a strong historical performance, particularly for Zacks Rank 1 stocks, which have averaged a +25% annual return since 1988 [7]. - Olo's upgrade to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, suggesting potential for market-beating returns in the near term [10].

More merchants can now leverage Grubhub's delivery network on a per order basis CHICAGO and NEW YORK, Jan. 16, 2025 /PRNewswire/ -- Grubhub, a leading U.S. food ordering and delivery marketplace, and Olo (NYSE:OLO), a leading restaurant technology provider, have expanded their partnership to integrate Grubhub with Olo Dispatch. With Dispatch, restaurants can outsource delivery for orders generated through their own website and apps leveraging a network of third-party delivery service providers, now includin ...

Core Viewpoint - Olo Inc. has demonstrated exceptional stock performance, with shares increasing over 86.7% in the past six months, significantly outperforming its sector and competitors [1][2]. Financial Performance - In Q3 2024, Olo's total revenues rose 24% year-over-year to $71.9 million, with platform revenues also increasing by 24% to $71 million [3]. - For Q4 2024, Olo anticipates net revenues between $72.5 million and $73 million, with full-year revenues expected to be in the range of $281.4 million to $281.9 million [12]. - The consensus estimate for Q4 2024 revenues is $72.87 million, reflecting a year-over-year decline of 15.67% [12]. - The Zacks Consensus Estimate for 2024 revenues is $281.71 million, indicating a year-over-year growth of 23.40% [13]. Customer Growth and Retention - Olo has expanded its active locations to approximately 85,000, marking a 10% year-over-year increase, and has added around 3,000 net new locations sequentially [5]. - The average revenue per unit (ARPU) grew 15% year-over-year to $850, indicating strong monetization of its customer base [6]. - Olo's dollar-based net revenue retention has remained above 120% for four consecutive quarters, showcasing robust customer retention [6]. Market Metrics - Gross merchandise volume (GMV) exceeded $26 billion for the year ended December 31, 2023, while gross payment volume (GPV) reached $1 billion during the same period [7]. Product Innovations - Olo has introduced several product innovations in 2024, including card-present payment processing for Olo Pay and enhancements to its Catering+ and Borderless passwordless guest checkout solutions [9][10]. - The company has strengthened its partnership with ezCater to automate catering menu management, improving operational efficiency for restaurants [10]. Strategic Positioning - Olo's open SaaS platform is tailored to meet the unique needs of restaurants, supporting the industry's digital transformation through its core product suites: Order, Pay, and Engage [8]. - The company has achieved significant growth in the enterprise segment with multi-suite deployments, including notable clients like Papa Gino's and Pizza Inn [11]. Earnings Outlook - The consensus estimate for Q4 2024 earnings is 7 cents per share, reflecting a 40% increase from the previous year [13]. - The consensus mark for earnings in 2024 is pegged at 23 cents per share, indicating a year-over-year growth of 53.33% [13]. Investment Sentiment - Olo currently holds a Zacks Rank 1 (Strong Buy), suggesting a favorable investment outlook [14].