Olo (OLO) AI Stock Analysis

• Market Cap: $1.44B
• Dividend Yield: N/A
• Average Volume (3M): 1.61M
• Price to Earnings (P/E): 484.0
• Beta (1Y): 1.07
• Revenue Growth: 23.31%
• EPS Growth: N/A
• Country: US
• Employees: 617
• Sector: Technology
• Sector Strength: 84
• Industry: Software - Application
• EPS (TTM): 0.07
• Shares Outstanding: 117,844,666
• 10 Day Avg. Volume: 1,112,229
• 30 Day Avg. Volume: 1,612,792
• PEG Ratio: 3.30
• Price to Book (P/B): -13.43
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 772.77
• Enterprise Value/Market Cap: 0.68
• Enterprise Value/Revenue: 0.88
• Enterprise Value/Gross Profit: 5.97
• Enterprise Value/Ebitda: 46.15
• 1Y Price Target: $9.63
• Price Target Upside: 13.70% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 6

• Rating: 74 Outperform
• Price Target: $10.50 ▲(23.97%Upside)

Olo's stock is buoyed by strong financial performance with substantial revenue growth and a robust balance sheet. Technical analysis indicates bullish momentum, though caution is advised due to overbought conditions. The high P/E ratio underscores potential overvaluation risk. The positive earnings call reinforces confidence in Olo's strategic direction and market position, making it an attractive prospect despite valuation concerns.

Positive Factors

Customer Growth

Location growth accelerated, with 2,000 net locations adds in the quarter, ending at 88,000.

Earnings

Olo reported solid fourth-quarter results, and guidance for 2025 was better than expected, particularly on profit.

Strategic Partnerships

Olo announced a new partnership with FreedomPay, which should accelerate Olo Pay's integration with a wide range of payment systems.

Negative Factors

Net Revenue Retention

NRR stepped down by five-plus points sequentially, to 115% from 120% last quarter, although gross retention remained strong at over 98%.

Profit Margin

The company expects gross margin to decline year over year as Olo Pay becomes a larger part of the total revenue mix.

Solution Gaps

Olo still has some notable gaps in its solutions, especially in facilitating in-person commerce.

Olo Business Overview & Revenue Model

Company Description

Olo Inc. provides software-as-a-service platform for multi-location restaurants in the United States. The company's platform enables on-demand commerce operations, which cover digital ordering and delivery through online and mobile ordering modules. Its modules include Order Management, an on-demand digital commerce and channel management solutions that enables consumers to order directly from and pay restaurants via mobile, web, kiosk, voice, and other digital channels; and Delivery Enablement, a fulfillment network, as well as a network aggregator and channel management solution, which enables restaurants to offer, manage, and expand direct delivery, as well as allows restaurants to control and syndicate menu, pricing, location data, and availability, while directly integrating and optimizing orders from third-parties into the restaurants' point-of-sale and systems. The company also provides Customer Engagement solution, a suite of restaurant-centric marketing and sentiment solutions that enables restaurants to collect, analyze, and act on guest data; Front-of-House solution, which enables restaurants to streamline the queue orders from multiple sales channels; and Payment solution, a payment platform that offers fraud prevention that results in enhanced authorization rates for valid transactions. The company was formerly known as Mobo Systems, Inc. and changed its name to Olo Inc. in January 2020. Olo Inc. was incorporated in 2005 and is headquartered in New York, New York.

How the Company Makes Money

Olo primarily generates revenue through a subscription-based model, charging restaurants for access to its digital platform and services. The company's key revenue streams include subscription fees for its software-as-a-service (SaaS) offerings, transaction fees from orders processed through its platform, and service fees for additional features and integrations. Significant partnerships with major restaurant brands and delivery service providers also contribute to its earnings by expanding its user base and enhancing its service offerings.

Olo Financial Statement Overview

Summary

Olo demonstrates strong revenue growth and a solid balance sheet with minimal financial risk. While profitability is improving with a positive net income, the company faces challenges in converting net income into free cash flow, which is an area needing enhancement.

Income Statement

Olo shows a positive trend in revenue growth with a significant increase in Total Revenue from $228.3M in 2023 to $299.1M in TTM. The Gross Profit Margin remains robust at 54.7% (TTM). However, profitability remains a concern as evidenced by negative EBIT and low Net Profit Margin at 1.09% (TTM). Despite these challenges, the company has managed to turn a positive net income in the latest period, indicating potential for improved profitability.

Balance Sheet

Olo maintains a solid financial position with a high equity ratio of 90.9% (TTM), reflecting strong shareholder equity relative to total assets. The Debt-to-Equity Ratio is low at 0.02, indicating minimal leverage and financial risk. However, the Return on Equity is modest at 0.47% (TTM), suggesting room for improvement in efficiently utilizing equity to generate profits.

Cash Flow

The company has demonstrated a positive Free Cash Flow growth, with Free Cash Flow improving from $38.8M in 2024 to $22.3M in TTM, albeit a decrease but remaining positive. The Operating Cash Flow to Net Income ratio is strong at 10.48 (TTM), highlighting effective cash conversion from operations. However, the Free Cash Flow to Net Income Ratio stands at a lower 6.82, indicating some challenges in translating profits into free cash flow.

Breakdown
TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
299.11M	284.94M	228.29M	185.40M	149.37M	98.42M
	Gross Profit
163.53M	156.42M	138.97M	127.89M	118.54M	79.76M
	EBIT
-21.78M	-19.14M	-75.08M	-51.66M	-27.98M	16.09M
	EBITDA
19.90M	14.61M	-47.56M	-41.05M	-45.21M	4.08M
	Net Income Common Stockholders
3.27M	-897.00K	-58.29M	-45.97M	-42.27M	3.06M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
358.47M	360.74M	362.55M	448.77M	514.45M	75.76M
	Total Assets
764.58M	754.78M	742.82M	775.56M	755.88M	134.42M
	Total Debt
13.26M	13.98M	18.86M	20.05M	0.00	0.00
	Net Debt
-274.23M	-272.77M	-259.36M	-330.03M	-514.45M	-75.76M
	Total Liabilities
69.31M	71.55M	91.35M	77.95M	54.13M	186.91M
	Stockholders Equity
695.27M	683.22M	651.47M	697.62M	701.75M	-52.48M
Cash Flow		Free Cash Flow
22.28M	38.80M	-19.67M	-6.65M	14.41M	19.50M
	Operating Cash Flow
34.21M	39.69M	-6.57M	2.34M	16.25M	20.77M
	Investing Cash Flow
-6.00M	-16.87M	-19.49M	-158.48M	-77.07M	-1.27M
	Financing Cash Flow
196.00K	-14.28M	-45.80M	-8.23M	499.51M	45.33M

Olo Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 8.47
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For OLO, the sentiment is Positive. The current price of 8.47 is below the 20-day moving average (MA) of 8.75, above the 50-day MA of 7.76, and above the 200-day MA of 6.70, indicating a neutral trend. The MACD of 0.16 indicates Positive momentum. The RSI at 49.96 is Neutral, neither overbought nor oversold. The STOCH value of 13.73 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for OLO.

Olo Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
KARO	75 Outperform	$1.42B	28.10	30.85%	9.43%	10.07%	31.38%
OLO	74 Outperform	$1.44B	484.00	0.49%	―	23.31%	―
VTEX	71 Outperform	$1.21B	77.50	6.26%	―	7.71%	―
ML	69 Neutral	$972.40M	114.79	3.34%	―	28.92%	―
SPT	66 Neutral	$1.20B	―	-36.95%	―	17.79%	16.49%
Sector *	62 Neutral	$11.96B	10.09	-7.50%	3.10%	7.33%	-8.11%
BLND	57 Neutral	$824.69M	―	-93.00%	―	-0.40%	63.36%

Olo Corporate Events

Olo Announces Departure of Chief Revenue Officer

On November 1, 2024, Olo Inc. and its Chief Revenue Officer, Mr. Diego Panama, agreed on his departure from the company effective December 31, 2024. Mr. Panama will provide advisory services until March 31, 2025, for which he will receive monthly fees, a prorated bonus, and other benefits. His stock awards will continue to vest through this advisory period, and he will receive severance payments starting April 1, 2025.