Olo (US:OLO)2025-08-04 20:21PART I - FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Unaudited Q2 2025 financials show increased assets and revenue, decreased Q2 net income, and improved operating cash flow Condensed Consolidated Balance Sheets Total assets increased to $780.7 million by June 30, 2025, driven by cash, with stable liabilities and growing equity Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total current assets | $469,719 | $448,321 | | Cash and cash equivalents | $309,333 | $286,757 | | Total assets | $780,672 | $754,776 | | Total current liabilities | $60,862 | $59,594 | | Total liabilities | $71,681 | $71,553 | | Total stockholders' equity | $708,991 | $683,223 | Condensed Consolidated Statements of Operations Q2 2025 revenue grew 21.6% to $85.7 million, but net income decreased to $1.6 million due to higher costs Statement of Operations Summary (in thousands, except EPS) | Metric | Q2 2025 | Q2 2024 | YoY Change | H1 2025 | H1 2024 | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $85,724 | $70,504 | +21.6% | $166,404 | $137,015 | +21.5% | | Gross Profit | $43,930 | $39,905 | +10.1% | $88,244 | $77,113 | +14.4% | | (Loss) Income from Operations | ($2,704) | $977 | - | ($5,120) | ($6,183) | - | | Net Income | $1,580 | $5,729 | -72.4% | $3,386 | $3,373 | +0.4% | | Diluted EPS | $0.01 | $0.03 | -66.7% | $0.02 | $0.02 | 0.0% | Condensed Consolidated Statements of Cash Flows H1 2025 operating cash flow increased to $27.4 million, investing cash use decreased, and financing activities provided $2.9 million Cash Flow Summary for Six Months Ended June 30 (in thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $27,386 | $24,158 | | Net cash used in investing activities | ($7,684) | ($13,632) | | Net cash provided by (used in) financing activities | $2,874 | ($19,305) | | Net increase (decrease) in cash | $22,576 | ($8,779) | Notes to the Condensed Consolidated Financial Statements Notes detail the pending $2 billion Thoma Bravo acquisition, revenue recognition, a $100 million stock buyback program, and legal proceedings - On July 3, 2025, Olo entered into a Merger Agreement to be acquired by private equity firm Thoma Bravo in an all-cash transaction valued at approximately $2 billion, or $10.25 per share. The transaction is expected to close by the end of 202539116 - The Board of Directors authorized a $100 million Class A common stock repurchase program on April 30, 2024. As of June 30, 2025, no repurchases have been made under this program7375 - The company is involved in a Consolidated Derivative Action lawsuit alleging breaches of fiduciary duty by certain directors and officers related to statements about its business relationship with Subway. A motion to dismiss is pending98101 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the Thoma Bravo acquisition, Q2 2025 revenue growth, gross margin decline, and $428.5 million liquidity Key Performance Indicators and Business Strategy Q2 2025 KPIs show 89,000 active locations, $955 ARPU, 114% net revenue retention, and focus on payments Key Performance Indicators (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Average Revenue Per Unit | $955 | $852 | | Ending Active Locations | 89,000 | 82,000 | - Dollar-based net revenue retention was 114% for the quarter ended June 30, 2025, indicating strong customer retention and expansion of services within the existing customer base130136 - Strategic priorities include continued investment in the platform's functionality, particularly around payments (Olo Pay) and data analytics, to drive growth and deliver more value to customers142 Results of Operations Q2 2025 revenue grew 21.6% to $85.7 million, gross margin declined to 51.2%, and G&A expenses rose 86.0% Revenue Comparison for Three Months Ended June 30 (in thousands) | Revenue Type | 2025 | 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Platform | $84,146 | $69,600 | $14,546 | 20.9% | | Professional services and other | $1,578 | $904 | $674 | 74.6% | | Total Revenue | $85,724 | $70,504 | $15,220 | 21.6% | - Gross margin for Q2 2025 decreased to 51.2% from 56.6% in Q2 2024, driven by higher transaction processing costs associated with increased Olo Pay adoption and higher amortization of capitalized software167 - General and administrative expenses for Q2 2025 increased by 86.0% year-over-year, primarily due to professional services costs associated with the pending merger and the impact of a $9.0 million litigation-related insurance recovery recorded in Q2 2024169 Liquidity and Capital Resources Liquidity is $428.5 million as of June 30, 2025, with merger restrictions and no repurchases under the $100 million buyback program - Principal sources of liquidity as of June 30, 2025, were $428.5 million in cash, cash equivalents, and short- and long-term investments187 - The pending Merger Agreement restricts certain actions, including incurring capital expenditures above specified thresholds and repurchasing common stock, without consent from the acquirer, Parent186 Cash Flow Summary for Six Months Ended June 30 (in thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $27,386 | $24,158 | | Net cash used in investing activities | ($7,684) | ($13,632) | | Net cash provided by (used in) financing activities | $2,874 | ($19,305) | Non-GAAP Financial Measures Non-GAAP operating income for Q2 2025 was $13.1 million (15% margin), and free cash flow was $24.0 million Reconciliation of GAAP Operating (Loss) Income to Non-GAAP Operating Income (in thousands) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Operating (loss) income, GAAP | ($2,704) | $977 | | Adjustments | $15,794 | $6,637 | | Operating income, non-GAAP | $13,090 | $7,614 | Reconciliation of Net Cash from Operations to Non-GAAP Free Cash Flow (in thousands) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $26,838 | $18,131 | | Purchase of property and equipment | ($309) | ($299) | | Capitalized internal-use software | ($2,499) | ($3,682) | | Non-GAAP free cash flow | $24,030 | $14,150 | Item 3. Quantitative and Qualitative Disclosures About Market Risk Primary market risk is interest rate exposure on short-term investments, not expected to be material, with other risks insignificant - The primary market risk is interest rate risk related to the company's investment portfolio and credit facility. However, due to the short-term nature of investments, the impact of rate changes is not expected to be material212214 - Foreign currency exchange risk is not significant as revenue and costs are generally denominated in U.S. dollars215 Item 4. Controls and Procedures Management concluded disclosure controls and procedures were effective as of June 30, 2025, with no material changes - As of June 30, 2025, the CEO and CFO concluded that the company's disclosure controls and procedures were effective217 PART II - OTHER INFORMATION Item 1. Legal Proceedings Legal proceedings, detailed in Note 10, primarily involve a consolidated derivative lawsuit against certain directors and officers - For a description of legal proceedings, the report refers to Note 10 in the financial statements, which details the ongoing Consolidated Derivative Action222 Item 1A. Risk Factors Key risks include the pending Thoma Bravo acquisition, potential non-completion, business disruption, and adverse economic impacts - A significant risk is associated with the pending acquisition by Thoma Bravo. Potential adverse effects include business disruption, diversion of management attention, inability to retain key personnel, and restrictions on pursuing alternative business opportunities224225 - If the merger is not completed, the company could face a decline in its stock price, damaged business relationships, and may be required to pay a termination fee of $73.7 million under certain circumstances227 - The company's business is subject to industry risks from economic uncertainty, inflation, and reduced consumer spending in the restaurant sector, which could lead to elongated sales cycles and negatively impact revenue229230 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No unregistered equity sales occurred, and no repurchases were made under the $100 million 2024 Buyback Program - The company did not make any repurchases under its $100 million 2024 Buyback Program during the period234