10-Q: Olo Inc. Reports Q1 2025 Results: Revenue Up 21.3% Driven by Olo Pay Growth

Olo Inc. announces a 21.3% increase in total revenue for Q1 2025, driven by growth in its platform and professional services.

Summary

• Olo Inc. reported its financial results for the first quarter of 2025.
• Total revenue increased by 21.3% to $80.68 million, compared to $66.51 million in Q1 2024.
• Platform revenue grew by 20.5% to $79.23 million, driven by Olo Pay volume and higher Order revenue.
• Professional services and other revenue increased by 94.2% to $1.449 million.
• The company reported a net income of $1.806 million, compared to a net loss of $2.356 million in the same period last year.
• Average revenue per unit increased to $911 from $816 year-over-year.
• Active locations increased to approximately 88,000 as of March 31, 2025, from approximately 81,000 as of March 31, 2024.
• Dollar-based net revenue retention was 111% for the three months ended March 31, 2025.

Sentiment

Score: 8

Explanation: The document presents a positive outlook with strong revenue growth and a return to profitability. The company's strategic investments and market positioning contribute to a favorable sentiment.

Positives

• Significant revenue growth of 21.3% year-over-year.
• Return to profitability with a net income of $1.806 million.
• Strong growth in professional services revenue, indicating successful platform implementations.
• Increase in average revenue per unit, reflecting effective upselling and cross-selling.
• Continued expansion of active locations, demonstrating market penetration.
• High dollar-based net revenue retention of 111%, indicating customer loyalty and expansion.

Negatives

• Gross margin decreased to 54.9% from 55.9% due to the increased percentage of revenue from Olo Pay, which has lower margins.
• Interest income decreased due to lower interest rates.

Risks

• Unfavorable conditions in the restaurant industry or global economy could impact customer spending and transaction volumes.
• Reliance on restaurant, food, and delivery industries makes the company vulnerable to downturns in these sectors.
• Increased pace of consolidation in the restaurant industry may reduce overall spending on the platform.
• The company may be required to make payments to DSPs prior to receiving payment from restaurant customers, which could reduce the amount of cash and cash equivalents.

Future Outlook

The company intends to continue investing in expanding the functionality of its current platform and broadening its capabilities to address new market opportunities, particularly around payments, data analytics, and on-premise dining. They also plan to expand their ecosystem of third-party partners and explore opportunities in international markets and other commerce verticals.

Industry Context

Olo operates in the competitive restaurant technology sector, where digital ordering and delivery solutions are increasingly important. The company's focus on an open SaaS platform and integration with various third-party services positions it well to meet the complex needs of restaurant brands. The growth in Olo Pay volume reflects the increasing adoption of integrated payment solutions in the restaurant industry.

Comparison to Industry Standards

• Comparing Olo's net revenue retention of 111% to industry peers like Toast (which has reported similar metrics in the past) suggests strong customer loyalty and expansion.
• Olo's focus on enterprise-grade solutions differentiates it from smaller players in the restaurant technology space, such as Chowly or Ordermark, which primarily focus on order aggregation.
• The company's active location count of 88,000 is comparable to enterprise-focused competitors like PAR Technology (Brink POS) or NCR, but Olo's SaaS model provides greater flexibility and integration capabilities.
• Olo's growth in Olo Pay mirrors the broader industry trend of restaurants adopting integrated payment solutions, similar to what companies like Square and Adyen offer in other sectors.

Management Changes

Legal Proceedings

• A class action lawsuit was filed in the United States District Court for the Southern District of New York asserting claims under the federal securities laws against us and certain of our executive officers (the Securities Class Action).
• On January 16, 2024, the parties reached an agreement to settle the Securities Class Action, and lead plaintiff filed an unopposed motion for preliminary approval of the proposed class action settlement.
• On March 18, 2025, the Court entered a class distribution order governing the final distribution of the settlement funds.
• On May 4, 2023, Cashondra Floyd, an alleged Olo stockholder, derivatively and on behalf of us as a nominal defendant, filed a complaint in the U.S. District Court for the Southern District of New York captioned Floyd v. Glass, et al.
• On May 25, 2023, the plaintiff voluntary dismissed her complaint and refiled in the Court of the Chancery of the State of Delaware (C.A. No. 2023-0560-KSJM) (the Floyd Derivative Complaint).
• On November 16, 2023, Alexander A. Balleh and Neil Ahearne, alleged Olo stockholders, derivatively and on behalf of us as a nominal defendant, filed a complaint in the Court of the Chancery of the State of Delaware captioned Balleh v. Glass, et al. (C.A. No. 2023-1165-KSJM) (the Balleh Derivative Complaint) against certain of our directors and officers also based on substantially similar allegations as in the Securities Class Action.
• On January 11, 2024, J. Brandon Giuda and Katrina Giuda, alleged Olo stockholders, derivatively and on behalf of us as a nominal defendant, filed a complaint in the Court of the Chancery of the State of Delaware captioned Giuda v. Glass, et al. (C.A. No. 2024-0025-KSJM) (the Giuda Derivative Complaint) against certain of our directors and officers also based on substantially similar allegations as in the Securities Class Action.
• On November 13, 2024, the Court consolidated the Floyd Derivative Complaint, the Balleh Derivative Complaint, and the Giuda Derivative Complaint into a single action (the Consolidated Derivative Action).
• On December 2, 2024, plaintiffs in the Consolidated Derivative Action designated an operative complaint (the Consolidated Derivative Complaint) against certain of our directors and officers (the Derivative Defendants).
• On January 16, 2025, the Derivative Defendants filed a motion to dismiss the Consolidated Derivative Complaint.
• Plaintiffs filed an opposition to the motion to dismiss on March 3, 2025, and the Derivative Defendants filed a reply in further support of the motion to dismiss on April 1, 2025.
• The Court has set a hearing date on the motion to dismiss for September 16, 2025.

Stakeholder Impact

• Shareholders: Positive results may lead to increased investor confidence.
• Employees: Appointment of a new Chief Sales Officer and potential for growth may improve morale.
• Customers: Continued investment in platform functionality and ecosystem expansion may enhance service offerings.
• Suppliers: Increased revenue may lead to stronger partnerships and potential for increased business.

Next Steps

• Continue to drive new customer growth by leveraging brand and experience within the industry and expanding sales and marketing efforts.
• Continue to work with existing brand customers in implementing their digital strategies, which we expect will promote continued growth.
• Continue to invest in architectural improvements so that our system can scale in tandem with our continued growth.
• Expand current ecosystem of third-party partners to better support customers.

Key Dates

Keywords

Olo Pay, revenue, platform, active locations, net revenue retention, SaaS, restaurants, digital ordering, Q1 2025, financial results