- Total Revenue: $70.5 million, an increase of 28% year over year.
- Platform Revenue: $69.6 million, an increase of 27% year over year.
- Active Locations: 82,000, up approximately 1,000 sequentially.
- ARPU (Average Revenue Per User): $852, up 19% year over year and 4% sequentially.
- Net Revenue Retention: Above 120% for the third consecutive quarter.
- Gross Profit: $44.3 million, up 16% year over year.
- Gross Margin: Approximately 62.8%, up 40 basis points sequentially.
- Sales and Marketing Expense: $11.4 million or 16% of total revenue.
- Research and Development Expense: $13.7 million or 19% of total revenue.
- General and Administrative Expense: $11.6 million or 16% of total revenue.
- Operating Income: $7.6 million, up from $4.5 million a year ago.
- Operating Margin: Approximately 11%, an increase of approximately 260 basis points year over year.
- Net Income: $9.2 million or $0.05 per share.
- Cash, Cash Equivalents, and Investments: Approximately $387 million as of June 30, 2024.
- Net Cash Provided by Operating Activities: $18.1 million.
- Free Cash Flow: $14.2 million.
- Q3 2024 Revenue Guidance: $70.8 million to $71.3 million.
- Q3 2024 Non-GAAP Operating Income Guidance: $6 million to $6.4 million.
- Full-Year 2024 Revenue Guidance: $279.5 million to $280.5 million.
- Full-Year 2024 Non-GAAP Operating Income Guidance: $25.6 million to $26.4 million.
- Full-Year 2024 Olo Pay Revenue Guidance: Mid-$60 million range.
- Full-Year 2024 Gross Margin Guidance: Low 60% range.
Release Date: July 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue and non-GAAP operating income exceeded the high end of guidance ranges.
- Full-year 2024 revenue and profitability guidance raised due to Q2 outperformance.
- Added approximately 1,000 net new locations, ending the quarter with 82,000 active locations.
- Second-quarter ARPU increased 19% year over year, with net revenue retention above 120%.
- Strong performance in all three suites: Order, Pay, and Engage, with notable customer expansions.
Negative Points
- Gross margin would have declined approximately 50 basis points sequentially without one-time items.
- Revenue guidance reflects a shift in the Wingstop relationship, impacting future revenue.
- Full-year 2024 gross margin expected to be in the low 60% range, with a decline in the second half.
- Continued macro uncertainty and rising costs in the restaurant industry.
- Dependence on digital ordering growth and ARPU expansion for future revenue increases.
Q & A Highlights
Q: The Wingstop outperformance, was that due to better-than-expected performance from the new relationship or maybe a longer tail from the old? And can you dive into the one-time revenue benefits from other brands in Q2?
A: The Wingstop outperformance was related to them staying on longer than expected and exceeding our expectations during that time. The other one-time revenue benefit was due to the timing of revenue recognition for a newly contracted brand coming online. Even excluding these items, we exceeded the top end of our range for both revenue and operating income. - Peter Benevides, CFO
Q: Can you provide greater clarity on the timeline for the ramp of card-present transactions?
A: We are still on track for the timeline of rolling out card-present transactions in the back half of 2024, with incremental revenue expected in 2025. The success of Olo Pay card-not-present sets the stage for this, and early data from Honeygrow shows significant gross profit potential. - Noah Glass, CEO
Q: Can you parse out the ARPU growth, particularly from the Order and Engage suites, excluding payments?
A: The non-pay portion of ARPU growth has been similar to non-pay revenue growth year over year and quarter over quarter. We continue to ramp location count with a target of 5,000 net adds for the year, driven by both pay and non-pay growth. Catering+ has been a significant driver of ARPU growth within the Order suite. - Peter Benevides, CFO
Q: How should we think about cash flow in the back half of the year given the strong performance this quarter?
A: The strong cash flow performance this quarter was partly due to timing impacts. Over the course of the year, free cash flow tends to align closely with non-GAAP operating income (NGOI). - Peter Benevides, CFO
Q: What inning are we in regarding restaurants leveraging guest data to take action, as exemplified by Five Guys using the GDP?
A: We are in the very early innings. The case studies and reference stories we are creating, like Five Guys, show meaningful business results and drive profitable traffic. The industry is in need of traffic that doesn't require discounting, and our solutions are addressing this need. - Noah Glass, CEO
Q: Are enterprise restaurants becoming more sophisticated in using guest data to increase monetization?
A: Yes, the need to drive profitable traffic is very real across the industry. Restaurants are swimming in data, and our guest data platform helps collate this data to each guest, derive insights, and take action. The professional services component of Olo has been crucial in accelerating brands' ability to use this data effectively. - Noah Glass, CEO
Q: Can you comment on any updated observations regarding customers considering building out homegrown solutions versus investing in the Olo platform?
A: The larger trend is brands moving from homegrown solutions to the Olo platform. Our reliability at scale and security are significant value propositions. The recent CrowdStrike incident highlighted the advantages of our platform's reliability and security compared to homegrown solutions. - Noah Glass, CEO
Q: What are the key drivers to re-accelerate gross profit growth in 2025?
A: Key drivers include the adoption of Olo Pay card-present transactions, continued progress within the Order and Engage suites, and upselling high-margin products like Catering+. The Honeygrow example shows the potential for significant gross profit growth. - Peter Benevides, CFO
Q: Can you talk about the most exciting aspects of ARPU expansion and how it performed this quarter relative to expectations?
A: ARPU exceeded our expectations this quarter, driven by outperformance across all three product suites and the durability of digital ordering. The expansion of ARPU is being driven by Pay adoption and monetizing all transactions processed over the platform. - Peter Benevides, CFO
Q: How have customer preferences evolved across dine-in, takeout, drive-through, and delivery?
A: Drive-through remains the largest portion of transactions and is starting to see more digital penetration. Delivery remains resonant, accounting for 9% of total industry traffic, with 80% of that being digital. Pickup and on-premise ordering through kiosks and QR codes are also seeing increased digital adoption. - Noah Glass, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
