Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Olo Inc (OLO, Financial) achieved its 2024 location growth target one quarter ahead of schedule, adding approximately 3,000 net new locations in Q3.
- The company reported a 24% year-over-year increase in total revenue, reaching $71.9 million for the third quarter.
- Olo Pay showed strong performance with projected gross processing volume reaching $2.5 billion, indicating significant growth potential.
- Net revenue retention remained above 120% for the fourth consecutive quarter, demonstrating strong customer loyalty and retention.
- Olo Inc (OLO) successfully expanded its product offerings, including the launch of Olo Pay card-present functionality and new partnerships, enhancing its market position.
Negative Points
- Gross margin for the third quarter was approximately 60.7%, down about 200 basis points sequentially, reflecting increased Olo Pay revenue mix.
- The departure of Chief Revenue Officer Diego Panama may lead to transitional challenges in the go-to-market strategy.
- ARPU was flat sequentially, impacted by the transition of Wingstop from three product modules to one and the addition of single module locations.
- The company announced a workforce reduction of approximately 9%, indicating potential operational challenges or restructuring needs.
- Olo Inc (OLO) faces macroeconomic uncertainties and rising costs in the restaurant industry, which could impact future growth and profitability.
Q & A Highlights
Q: How should we think about the growth trajectory of Olo Pay, especially with card-present and POS partnerships?
A: Noah Glass, Founder, CEO & Director, explained that Olo Pay has shown significant growth, with processing volume projected to reach $2.5 billion this year. The introduction of card-present payments expands the addressable market to $160 billion in GMV. Olo Pay's integration with POS systems like Qu and NCR Voyix is expected to drive further momentum into 2025.
Q: With Diego Panama departing, what are you looking for in the next CRO, and how will this affect the go-to-market strategy?
A: Noah Glass stated that the focus will be on finding a sales leader with industry experience and relationships, based in New York City. The aim is to enhance bookings and align sales with product innovation and commercialization. Interim sales leadership will report directly to him.
Q: How do you balance ARPU expansion with adding new locations, and what is the momentum for upsell and cross-sell?
A: Peter Benevides, CFO, noted that while ARPU growth is a priority, adding new locations remains important. The recent ARPU dynamics were influenced by Wingstop's module reduction and new single-module locations. Olo has significant potential to expand ARPU with 16 product modules available for upsell.
Q: What are the expectations for gross margins with the scaling of Olo Pay into 2025 and 2026?
A: Peter Benevides indicated that gross margin trends will depend on the pace of Olo Pay's growth, particularly card-present transactions. While margins may face pressure from revenue mix shifts, the focus is on accelerating gross profit growth in 2025.
Q: What is the trend in the pipeline for emerging enterprise versus enterprise segments?
A: Noah Glass highlighted strong wins in both segments, with emerging enterprises often adopting all three product suites. In contrast, enterprise clients typically start with a single module or suite, providing opportunities for future expansion.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
