Restaurant software company (NYSE:OLO) reported results ahead of analysts’ expectations in Q2 CY2024, with revenue up 27.6% year on year to $70.5 million. Guidance for next quarter’s revenue was also optimistic at $71.05 million at the midpoint, 2.9% above analysts’ estimates. It made a non-GAAP profit of $0.05 per share, improving from its profit of $0.04 per share in the same quarter last year.
Olo (OLO) Q2 CY2024 Highlights:
- Revenue: $70.5 million vs analyst estimates of $67.75 million (4.1% beat)
- Adjusted Operating Income: $7.61 million vs analyst estimates of $5.72 million (33.1% beat)
- EPS (non-GAAP): $0.05 vs analyst expectations of $0.05 (in line)
- Revenue Guidance for Q3 CY2024 is $71.05 million at the midpoint, above analyst estimates of $69.08 million
- The company lifted its revenue guidance for the full year from $275.5 million to $280 million at the midpoint, a 1.6% increase
- Gross Margin (GAAP): 56.6%, down from 62.4% in the same quarter last year
- Free Cash Flow of $14.15 million, up from $2.81 million in the previous quarter
- Net Revenue Retention Rate: 120%, in line with the previous quarter
- Billings: $70.02 million at quarter end, up 28.1% year on year
- Market Capitalization: $776.9 million
“In Q2, Team Olo delivered another strong quarter of financial and operational performance. We generated revenue and non-GAAP operating income that exceeded the high-end of their respective guidance ranges, added new enterprise and emerging enterprise brands and expanded with existing customers, and announced another POS integration partnership for Olo Pay and Engage that moves Olo closer to supporting full-stack payment processing and data aggregation across off- and on-premise transactions,” said Noah Glass, Olo’s Founder and CEO.
Founded by Noah Glass, who wanted to get a cup of coffee faster on his way to work, Olo (NYSE:OLO) provides restaurants and food retailers with software to manage food orders and delivery.
Hospitality & Restaurant Software
Enterprise resource planning (ERP) and customer relationship management (CRM) are two of the largest software categories dominated by the likes of Microsoft, Oracle, and Salesforce.com. Today, the secular trend of mass customization is driving vertical software that customizes ERP and CRM functions for specific industry requirements. Restaurants are a prime example where a set of customized software providers have sprung up in recent years to create unique operating systems that blend tax and accounting software, order management and delivery, along with supply chain management. Hotels and other hospitality providers are another example.
Sales Growth
As you can see below, Olo’s revenue growth has been solid over the last three years, growing from $35.9 million in Q2 2021 to $70.5 million this quarter.
This quarter, Olo’s quarterly revenue was once again up a very solid 27.6% year on year. On top of that, its revenue increased $3.99 million quarter on quarter, a solid improvement from the $3.51 million increase in Q1 CY2024. Thankfully, that’s a slight acceleration of growth.
Next quarter’s guidance suggests that Olo is expecting revenue to grow 22.9% year on year to $71.05 million, in line with the 22.3% year-on-year increase it recorded in the same quarter last year. Looking ahead, analysts covering the company were expecting sales to grow 14.7% over the next 12 months before the earnings results announcement.
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Key Takeaways from Olo’s Q2 Results
We enjoyed seeing Olo exceed analysts’ revenue, billings, and adjusted operating income expectations this quarter. We were also glad it lifted its revenue guidance for next quarter, which came in higher than Wall Street’s estimates. Overall, we think this was a strong quarter that should satisfy shareholders. The stock traded up 22.1% to $5.85 immediately following the results.