Q1 2022 Olo Inc Earnings Call
Total addressable market and growth opportunity and guidance and strategy.
Forward looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those described in our forward looking statements and such risks are described in our earnings press release, and our risk factors, including in our SEC filings, including our annual report on Form 10-K for the year ended December 31 2021.
You should not rely on forward looking statements as predictions of future events. We undertake no obligation of updating any forward looking statements made during this call to reflect events or circumstances after today.
Also during this call we will present, both GAAP and non-GAAP financial measures.
Reconciliations to the most directly comparable GAAP financial measures are available in our earnings release, which we issued a short while ago.
This earnings release is available on the Investor Relations page of our web site and is included as an exhibit in the form 8-K furnished to the SEC.
Finally in terms of our prepared remarks or in response to your questions. We may offer incremental metrics. Please be advised that this additional detail may be onetime in nature, and we may or may not provide an update in the future on these metrics.
I encourage you to visit our Investor Relations website at investors thought although dot com to access our earnings release Investor presentation periodic SEC reports a webcast replay of today's call or to learn more about although with that let me turn the call over to Noah.
Thank you Stephanie hi, everyone. Thank you for spending time with us today.
In the first quarter <unk> revenue and profitability momentum continued we grew revenue 18% year over year as our platform supported continued growth in active locations coming onto the platform and transaction volumes.
Our ending active location count increased 19% year over year to approximately 82000, and we surpassed more than 600 restaurant brands utilizing our platform.
This quarter, we had success with the adoption of our customer engagements and front of house solutions, which expanded our platform offerings through the wisely acquisition.
Notably Bojangles' and El Pollo Loco, both <unk> deployed our marketing automation and customer data platform or CDP modules in them.
Matter of weeks, both brands will leverage the marketing automation module to provide personalized campaigns in order to increase their return on investment for marketing campaigns as well as leverage the CVP module, which creates a unified guest profiles, enabling brands to power business decisions and growth.
In addition to adding several new restaurant brands to the platform. This quarter, we added a new type of customer to the platform convenience stores or C stores multi unit C stores represents an emerging vertical for <unk> expanding OLED total addressable location count by an estimated 55000 locations.
And this quarter, we deployed our ordering module at Kwik trip and enterprise C store, enabling the brand to help its guests order ready to eat meals.
Also in the first quarter, we took meaningful strides towards enabling digital hospitality, which we define as harnessing the power of first party data to enable personalized and memorable guest experiences.
Although board member and legendary Restauranteur, Danny Meyer coaches his team members to deliver enlightened hospitality to guests and quote always be connecting dots to do so.
With all those customer data platform purpose built for the restaurant industry, we're helping to connect the dots at enterprise speed and scale, enabling digital hospitality with the ultimate ambition to make every guest feel like a regular.
First quarter product advancements include first we expanded product use cases using serve our white label branded ordering experience to enable on premise ordering <unk>.
Sandoz, a fast casual restaurant began utilizing serve as its exclusive diners ordering system, increasing its on premise digital orders per store by more than 600% in one year's time.
And as I mentioned earlier, we showcased the extensibility of our platform by deploying our ordering module at Kwik trip.
Both of these examples highlight our platform's ability to allow operators to focus on the guest experience and from a technological standpoint. These two examples highlight our platform's ability to quickly append additional elements and features to our existing products to expand our market opportunity.
Second we grew our technology partner network by more than 100 technology partners to more than 300 providers through our acquisition of Omnivore, which we closed on March 4th.
Although as open ecosystem, which connects to apps and technology that streamline operations improve efficiency enhance the guest experience and increase operator profitability now encompasses additional partners in on premise ordering kitchen display systems labor management and inventory management.
<unk>.
Third we added a new premium feature to our offerings introducing sink a simplified listing management product.
Which enables restaurants to provide up to date data that is automatically synced between <unk> and more than 50 digital publishers to ensure store information is consistent no matter where guests search.
<unk> ability to enable restaurants to be discoverable through local digital listings will drive increased direct orders and improve lifting return on investment.
Fourth we continued to invest in enhancing the <unk> platform, adding real time career tracking abilities as well as adding reminder, tools for operators to re enable digital ordering these enhancements provide restaurant operators with the ability to better manage their digital programs.
Proving operations as well as the guest experience.
All of these advancements in our product platform and network are for the benefit of our customers.
Although we will continue to innovate and invest in capabilities that provide our brands with the tools to provide digital hospitality to their guests. This is our north star and the thread that runs through all those expanding product suite.
And since the first quarter ended we had a great chance to share our digital hospitality vision with our customers.
A few short weeks ago, we hosted beyond for our annual customer conference, which returned in person this year.
Beyond for his name to reflect all those mission to serve our restaurant brands not just with him but beyond the four walls of the restaurant.
And beyond for all the whites and although customers explored our platform technologies in order to maximize the restaurants footprint and the on demand world and unlock digital hospitality.
At the conference our customers. We're excited about the ways. The expanded OLED platform can solve even more of their operational challenges expand their digital programs increased efficiency drive revenue and ultimately delight their guests.
Their enthusiasm during the conference further deepened my belief that digital leaders in the restaurants base will use one platform the.
The <unk> platform to understand and serve every guest that transact with them.
At the conference and in less than three months since launching general availability of our payment solution. We're heartened by our customers significant interest in OLED <unk>.
And data from existing and new customers demonstrates although pays benefits.
And our recently released testimonial wobbled real fast casual restaurants highlighted <unk> ability to reduce friction for their business and guests alike, mainly through PCI compliance decreasing credit card fraud, and allowing operators to view daily orders charge backs failure of payment.
And reconciliation, while also creating a seamless experience for their guests that enables credit card Apple pay Google pay and more payment options.
Adam <unk> director of Technology at Whopper Grill franchise Corp stated the benefit of streamlining the digital stack is a mets, allowing brands to focus on our guests and their experience.
Furthermore, during a standing room only beyond for OLED <unk> breakout session. One of the panelists stated that overpaid doesn't force its operators to choose between the guest experience while protecting their brand from fraud as traditional payment processors have.
Although pay is modern and industry specific approach to fraud prevention is vital and enables an elegance guest experience.
Another panelists said that fees from vendors in order to fight charge backs or fraudulent orders could be $35, an order, which could be doubled the check average for some orders.
<unk> fully integrated solution enables restaurants to fight charge backs.
Without additional vendor fees, while also increasing authorization rates and reducing friction for guests.
And excitement for borderlands overpaid capabilities was palpable as a reminder, borderlands payments capabilities, which we plan to introduce later this year will allow guests to securely speed through checkout at any participating restaurant within the <unk> network with a single tap quickly and <unk>.
Seamlessly connecting 80 to thousands of restaurant locations 600 brands and 85 million guests.
Unprompted, four panelists, who represented customers across various service models all indicated their intent to deploy autopay due to its unique ability to fight charge backs integrated advanced fraud prevention and future border lists capabilities.
We believe overpay as a differentiated payment solution that can deliver significant financial and operational benefits for restaurants, as well as a seamless and easier to use solution for their guests.
When when the kind of innovation, we love at OLED.
Border lists as was the case with dispatch and subsequently with rails is another example of the network effects, although can leverage for continued product innovation on behalf of our customers.
The common denominator across all networks, although enabled is data.
And our unique positioning means we can harness this data to build and provide solutions to our customers that others frankly cannot.
This is what gets us excited about the future and gives us confidence in our ability to provide our customers with a suite of solutions that enables digital hospitality at scale.
In return our customers are better equipped to interact with their guests and truly informed and differentiated ways. The end result is our customers enjoying the benefits of higher customer lifetime value. The net effect of getting digital hospitality right.
That said, we are committed to remaining true to our core tenants, while continuing to execute on our ambition to enable digital hospitality at scale.
These core tenants are open and integrated with more than 300 technology partners vertical and purpose built for restaurants focused on enabling digital hospitality innovative and relentlessly focused on providing adaptive tools to enable restaurants to expand there.
Digital programs increase efficiency drive revenue and delight their guests.
We observe in technology dependent industries. The platforms that are extensible secure and reliable are the platforms of choice and I believe now more than ever that restaurants must have a full stack offering in order to thrive and our digital world.
And although answers that call.
And finally as I typically do on earnings calls I'd like to provide two corporate updates.
First I am thrilled to welcome Diego, Panama to the executive team as Chief revenue Officer.
Diego is a seasoned public company executive with a proven track record of successfully scaling SaaS companies, bringing deep and relevant domain knowledge as well as go to market experience on a global scale. He has worked at some of the most innovative tech companies, including live ramp and previously Microsoft on <unk>.
Digital transformation for enterprise scale customers.
Importantly, Diego has a great understanding of data applications and how enterprise brands can use data as a strategic lever in their business and integral part of our restaurant customer strategy as they look to increase digital hospitality for all of their guests by leveraging guest and operational data.
Diego will support all those relationships with its restaurant brands champion their success drive our sales and marketing initiatives and importantly drive over this next chapter of execution and growth as we realize our 100 X scale opportunity.
Diego will assume the role of Chief revenue officer at the beginning of July as our current chief customer Officer, Marty <unk> plans to retire.
He has been a key leader in OLED efforts toward digital entirety and in our growth throughout the industry on behalf of the entire leadership team I'd like to congratulate Marty on his retirement and thank him for his dedication and significant impact to <unk> and its customers throughout his tenure.
And second I am pleased to share an update in connection with our <unk> for good initiatives. As a reminder, we launched <unk> for good in 2021 and joined the pledge, 1% movement committing to donate 1% of our time equity and product to doing good as part of that we committed to donate.
81% of <unk> shares over 10 years to our independent donor advised fund managed by Tides Foundation.
Last year, we recommended tides foundation make grants to nine nonprofit organizations.
This quarter and our second round of grant recommendations, we advised tightest Foundation to grant $2 1 million in total from our donor advised fund to the following nine organizations American forests, Appalachian Trail Conservancy, Emma's torch, giving kitchen heart of dinner.
The LTE initiative or the let's empower employment initiatives, the Okra project partnership with Native Americans and World Central kitchen.
Grant recipients are nonprofits focused on diversity equity and inclusion ending childhood hunger and increasing access to food supporting the restaurant industry as a frontline workers and protecting natural resources and reducing waste and emissions.
We continue to be enthusiastic about our ability to use <unk> as a platform for social impact and positive change for our communities, we love to do well and do good in parallel.
And now I'd like to turn things over to Peter <unk>, Although CFO to share more details on the <unk> first quarter performance Peter.
Peter.
Thanks, Noah and the first quarter revenue grew on continued location in transaction volume growth demonstrating the mission critical nature of our solutions, which are helping to enable digital hospitality within the restaurant industry.
Total revenue in the first quarter was $42 8 million, an increase of 18% year over year.
Platform revenue in the first quarter was $41 $5 million, an increase of 19% year over year, driven by an increase in active locations coming onto the platform further multi product and multi partner adoption and the durability of digital ordering.
In terms of key metrics, we ended the quarter with approximately 82000 active locations on the platform, a 19% increase year over year, and a 4% increase sequentially as we deploy new brands such as Kwik trip Taco time, Okay works amongst others.
<unk> for the first quarter was approximately $516, representing a 2% decrease year over year, which I'll speak to a more detail in a moment and a 2% increase sequentially.
Net revenue retention in the first quarter was approximately 107%, which as expected was less than recent periods. The.
The year over year decline in <unk> and net revenue retention was primarily due to two factors.
First this past quarter, we continued to lap the residual impacts of financial stimulus and the last pre vaccination period of the COVID-19 pandemic during which time order volumes were elevated in second this past quarter, we lapped the final quarter operating under our prior door Dash agreement with the impact of these two.
Dynamics behind Us, we expect to see <unk> and net revenue retention accelerate in the ensuing quarters as customers continued to adopt additional product modules such as <unk> in our front of house and customer engagement solutions.
For the remainder of the financial metrics disclosed unless otherwise noted I will be referencing non-GAAP financial measures.
Gross profit for the first quarter was $32 4 million compared to $30 million in the prior year period, driven by the revenue growth previously mentioned, partially offset by higher platform and professional service and other compensation costs to support the growth in transactions and active locations coming onto the platform.
As well as the near term impacts due to our recent wisely and omnivore acquisitions.
Sales and marketing expense for the first quarter was $6 1 million or 14% of total revenue. This.
This compares to $3 4 million and 10% a year ago.
Year over year increases were driven by further expansion of relevant teams to continue to drive revenue growth by securing new and expanding existing relationships as well as increasing our partnership ecosystem.
Research and development expense for the first quarter was $12 8 million or 30% of total revenue. This compares to $11 million and 30% a year ago.
General and administrative expense for the first quarter was $11 8 million or 28% of total revenue. This compares to $9 5 million and 26% a year ago as expected increases were primarily due to increased costs associated with operating as a public company.
Going forward as we lap the initial increase in costs associated with operating as a public company, we expect G&A to decrease as a percentage of total revenue.
Operating income for the first quarter was $1 $7 million compared to $6 million a year ago.
Net income in the first quarter was $1 $7 million or <unk> <unk> per share based on approximately $183 3 million fully diluted weighted average shares outstanding.
Turning our attention to the balance sheet and cash flow statement, our cash cash equivalents and marketable securities balance was $463 $7 million as of March 31 2022.
Guarding cash flows net cash used in operating activities was $900000 compared to net cash provided by operating activities of $4 $2 million a year ago.
Free cash flow was negative $3 4 million compared to $4 million a year ago.
I'll wrap up by providing our guidance for the second quarter and full year 2022.
For the second quarter, we expect revenue in the range of $45 5 million and $46 million and non-GAAP operating income in the range of 600000 to $1 million.
For the fiscal year 2022, we now expect revenue in the range of $195 million and $197 million and non-GAAP operating income in the range of $7 6 million and $9 2 million.
In terms of guidance for the year. There are a few things to highlight first we remain incredibly excited about the market opportunity ahead.
Now that we have lapped the residual impacts of the COVID-19 pandemic, we anticipate a reacceleration of revenue growth is implied in our second quarter and full year guidance. Additionally, while we are encouraged by the overall excitement from our customers regarding the commercial availability of <unk>, we have not factored any meaningful revenue contribution.
Into our guidance.
Next the second quarter will be the first quarter in which we feel the full impact of the omnivore acquisition, which closed on March 4th.
Also in the second quarter as Noah mentioned in April we hosted our beyond four conference.
<unk> related to the conference were approximately $1 million as a result, following the second quarter, we anticipate expanding operating profit and achieving the full year profitability outlined in our guidance to.
To summarize we continue to deliver revenue growth and profitability as we take meaningful strides towards enabling digital hospitality.
Our position is strong as we have a long runway for growth through adding more locations cross selling our robust and comprehensive product suite and through expanded use cases of the platform.
Now I'd like to turn it over to the operator to begin the Q&A session operator.
Thank you we will now begin the question and answer session to join the question queue. You May Press Star then one on your telephone keypad Youll hear Tony acknowledging your request.
Youre using a speakerphone please pick up your handset before pressing any keys to withdraw your question. Please press Star then two.
Pause for a moment as callers join the queue.
Our first question comes from Stephen Sheldon of William Blair. Please go ahead.
Hey, Thanks for taking my questions.
It sounds like you had some nice customer wins for wisely. So curious if you can share what kind of level of interest you've seen in your existing customer base could potentially add wisely modules.
And I guess, you've talked I think before about 10 million potential $10 million revenue contribution. There I think you talked about for 2022, you talked about that last quarter are you still given what youre seeing now are you still on track to meet that or.
Things are going better than maybe you'd originally expected there.
Hey, Stephen This is Noah I'll take the first part of that question and then hand it over to Peter.
So I wanted to pick up really on the piece that you wrote this morning about digital engagement I think that it sort.
Sort of sets the table for <unk>.
Where we are in terms of brands and their ambitions to drive toward 100% digital.
Yes.
Kind of where wisely fits into that as a way of taking the data that flows from those interactions with guests and they're using it to better engage with consumers, we think of as unlocking digital hospitality ultimately having every guest feel like irregular based on the brand's ability to use the data gathered about that.
Guests to better serve and personalize their experience.
So I mean amazing when we see brands that are already up I think you noted in your piece Wingstop now at 62, 3% digital suite create 66% digital but these brands have the ambition of being 100% digital.
Part of that Youre seeing.
A broad interest in how do we use tools to really get great at digital marketing to learn from all of this information that we're gathering and drive customer lifetime value of our guests and also go and acquire more guests that look like our best guests and that's really what the wisely.
What we now think of as our marketing automation and customer data platform components of that suite represents and have seen a lot of interest from especially at our beyond four conference a few weeks ago and we just saw.
Huge excitement from our customer base now over 600 brands and really unlocking digital hospitality to understanding that as the banner under which all those solutions lift.
Got it yes.
In the base.
[laughter] Yeah go ahead.
Yes, sorry, sorry, Stephen Yes, just picking up from where no left off there that is correct in terms of our revenue target for the year, we're still maintaining that $4 million goal and we are obviously really encouraged and enthused with the progress that we've made to date and some of the quick wins that we mentioned on the call but that.
Is still in line with our full year targeted revenue.
Thank you.
And then just wanted to ask you guys have a lot of initiatives underway I just wanted to ask about your talent strategy and what trends you've seen in being able to.
Attracting talent and retaining existing talent in this environment. If you think about this year and maybe over the next couple are well staffed at this point to push forward. The initiatives you have in place.
Hey, Stephen This is Noah again I'll jump in there, yes, I mean, we're feeling really good about our talent currently on the team and our talent pipeline and our ability to fill.
The roles of needs that we have as an organization with a lot of ambition and a lot of dish.
Different capabilities that are all driving forward one of the things that I'm, particularly excited about is the talent that we have brought into the company.
Current roles as general managers of various business units and so we have four general managers, who are operating are payments and that's responsible for overpay.
The wisely team customer engagements in front of house is another business unit.
And then we have GFS or focused on rails and network and syndication partnerships and then also our direct ordering business and all of those things.
Our areas, where as we talked about new initiatives and things that we're excited about on the product front. We mentioned an initiative from each of those groups and it's exciting that we have great leaders almost like many Ceos, who are leading those initiatives and have incredible product design and engineering teams underneath them in a unified and <unk>.
To market to really meet the needs of our customers broadly speaking.
Yeah.
Great to hear and nice results.
Thank you.
Our next question comes from Terry Tillman of choice Security. Please go ahead.
Yes, thanks for taking my questions, Hey, Noah Peter and Stephanie.
First question I had is.
Was actually impressed with just where we've moved I think just over the course of the quarter from 500 brands to 600 brands hopefully I've got that right, but if indeed, you you've seen that kind of incremental brands being added to the platform I'd love to kind of double click into the typical new customers youre seeing or brands coming onto the platform as their buying behavior changing because.
The kind of the inflationary environment, we're in or are they are they buying multiple products are starting with one.
This expansion in customer brands kind of manifest itself in revenue either this year or next year. So that ended up being like for parts that I could repeat if I have to.
And then I had a follow up for Peter.
Alright, well. Thank you for the multipart question I'll see if I can touch all of those areas. This is Noah.
Yes. So I think we were over 500 brands as we discussed our customer base last quarter. We're now over 600 brands, we talked a little bit last quarter about expanding some of our focus on what we define as the emerging enterprise segment of the market. Those are through our definition brands that have between five and 90.
Nine locations and then reclassify enterprise as 100 or more locations. So a lot of expansion of new restaurant brands that are starting their relationship with OLED from that emerging enterprise segment.
I think broadly speaking.
What has become clear certainly through Covid I would argue before Covid and certainly now is that that digital ordering platform digital commerce.
And kind of digital marketing tools marketing automation CDP. These are not nice to haves. These are must have capabilities for every brand out there and so we're seeing brands really engaging with although to stand up their digital platform forging those direct relation.
That ships with guests and then seeing that although itself is growing and changing we now have 12 different software modules and we can really help a brand go from.
Zero to 100% digital utilizing all the capabilities that we have to offer so I think Peter can get into how brands have over time and started their relationship with more of our software modules. We ourselves have grown the total number of software modules dramatically both organically and through acquisitions.
<unk>.
But it's exciting for us to see all of the new brands and all of the opportunity for those brands to really go further faster in their digital transformation by utilizing more of the old platform.
Yep Yep got it. Thank you that was a solid response to my multi part question. So I'll give you I'll give you and I. Thank you.
Peter just a follow up question is on gross margin I mean, it sounds like there is.
You've added a couple of technology stocks from the acquisitions, so maybe theres a duplicate of costs or how do we think about gross margins. The rest of the year would they be more at this level or could you see them actually starting to improve a bit. Thank you.
Yeah. Thanks, Terry Great question, So I guess from a high level the trends that youre seeing are in line with with our expectations I think what Youre seeing is some increased investment in the core business to better align with the growth that we've experienced over the past 12 months to 18 months in terms of number of locations.
<unk> coming onto the platform and growth in transaction volumes and as you mentioned Youre also seeing the impact of a full quarter of the Wi Fi acquisition and a one month period of the omnivore acquisition both of those with lower gross margin profiles than the NOL I think longer term holding of <unk>.
<unk>, we do expect to see some.
Some improvement in gross margins as we continue to integrate the wisely omnivore acquisitions and.
And begin to leverage all those economies of scale.
Sounds good thank you.
Our next question comes from Matt Hedberg of RBC capital markets. Please go ahead.
Hey, this is a nice job for Matt Hedberg, Thanks for taking my questions.
You mentioned, some tea products doing IPO you have now.
All of these swap hot asset class <unk> product suite.
Can you come a long way could you expand on the momentum you are seeing with that product adoption and how products to life and eventually <unk> peak and help make the platform stickier and then maybe if you could talk about the level of penetration in your customer base. Thanks.
Yes, so I think I could this is Peter here, So I think I could probably bundle those two questions into one answer so we disclosed last quarter that on.
On average location subscribed to $2 seven modules per location and as you noted there we have upwards of a dozen products spread across five product suite. So when you think about the opportunity to expand within our customer base. There is there's clearly a lot of opportunity there.
And obviously future growth in digital order volumes will help to increase both revenue and <unk> over time as well.
In terms of attach rates, specifically, the core <unk> platform and the wisely suite of business. It's still early in terms of seeing the.
Full suite attach rate from the onset of the relationship where we're seeing a lot of momentum and early success is through that upsell motion. So.
Leveraging those trusted relationships that we've developed with the brands over the years and helping educate them on.
Really the added value of having a marketing automation suite and CDP suite in conjunction with their digital ordering platform, that's where we're seeing a lot of early success.
Got it and then.
Oh, okay.
Although it's still early maybe can you talk about the adoption trends of <unk> in the quarter and then when we might start to see more meaningful contribution to the bottom all open.
Thanks.
Yes, it's Peter here again, I can take that one so.
In terms of adoption trends.
Still a little early so we announced the commercial availability of <unk> last quarter and as Noah mentioned in his prepared remarks.
We had a great customer conference. This past month, where overpay was was a central focus of the narrative of that conference and coming out of the conference. We've seen a lot of momentum and a lot of excitement around <unk> and the pipeline is building that said I still think we're maybe a quarter or.
Early in terms of being able to go a level deeper on what we think the revenue opportunity will be this year and long term, but we're really encouraged with how the pipeline is developing today.
Alright, thank you.
Our next question comes from Brent bracelet of Piper Sandler. Please go ahead.
Hi, This is Clarke Jeffries on for Brent first question is the feedback from on a low play sounds very encouraging, especially because it seems that it is not being judged as just an attractive integrated option for new or existing customers, but a payment solution judged by its own merits to be very attractive.
I was wondering if you could share maybe some additional detail on how youre able to do some of those outcomes for customers, reducing charge pack piece compared to the incumbents. Whether this is a an architectural advantage or a vertical focus advantage. If you could dive into that that would be much appreciated.
Well Kartik. This is Noah thanks for the question. So I think key to understanding <unk> advantage over the incumbent payment solutions is understanding that OLED pay is really have bundled into the commerce platform itself and so that means that on the front end of <unk>.
Tumor experience overpaid bundled into their checkout experience and we can implement.
One cap checkout for.
Eliminating friction from the checkout experience the guest doesn't have to remember their email address and password that they've used they don't have to reenter credit card details that makes for a better front end experience that leads to a higher basket conversion rate. It also embeds within the commerce platform on the backend on the <unk>.
Operator experience and so today, if you think about the status quo for digital ordering and payment within digital ordering and digital ordering platform <unk> is acting as a gateway into whatever credit card processor. The brand is using for card present transactions at the restaurant.
Rand.
And that means that the brand is or the operator is really managing the transaction in two places and when there is a refund or when there is a charge back they have to administer that in two different systems their credit card platform and that dashboard and the OLED dashboard that goes away with overpay.
With <unk>, they can manage refunds they could manage charge backs that can manage all things payments within the OLED dashboard. So it becomes a single platform to manage the digital ordering business and we think that has great advantages for helping operators simplify operations.
And then also through the network effect of the <unk> platform and our partnership with stripe.
And the scrape radar.
<unk> product in particular.
And Oulu shield, which is our.
Our own proprietary fraud prevention solution, we have the ability to fight fraud against across all of the restaurant transactions that we can see with an <unk> and that strength can see across their network. So that's part of the advantage of OPEC.
To be clear that <unk> is not just credit card transactions. It is also Apple pay it is also Google pay it does not therefore in competition with Apple pay we are in competition with Google pay and also it doesn't require that the brand has to completely rip and replace whatever processor or processors their operators are used.
<unk> inside of the restaurant, it's purely about the digital ordering experience, making that seamless experience for the consumer and also simplifying things on the operator side.
I appreciate it it sounds like it's building on the integration benefits of even something like the marketing automation platform, helping the operators have a simpler stack.
A follow up question about the expansion into convenience stores seems like a meaningful expansion in terms of.
<unk> 5000 potential locations.
Wondering if you could just maybe dig into how the friction points are different for those businesses compared to normal enterprise restaurant brands. How they operate are they owned and operated by similar franchisees partners and are they sort of.
Businesses that could adopt all of the modules available from a law.
So I think with C stores, the only module I can think that does not make sense for C stores that we offer is probably our reservations platform. It may make sense at some point, but I don't I don't really see that I think everything else that we offer from digital ordering delivery marketing automation et cetera.
These have resonance for anyone who is doing takeout and delivery of made to order food and Thats, specifically, how we're working with C store operators is.
On that prepared food to the extent that a restaurant.
And our C store look similar at set they're taking orders theyre preparing those orders custom made fresh just in time, and then handing off that order to a guest who is coming in or to a courier who's coming in to collect the order on the guests behalf from a go to market perspective, very similar go to market motion.
Where we're selling into the brand and just like with enterprise restaurants, we always sell to the brand and then were adopted across the entire.
Location base, whether those are corporate owned or franchise owned.
I guess, some different point of sale integrations in B C.
C store point of sale space, we're no stranger to that we've done well over two dozen perhaps well over three dozen point of sale integrations.
And we do have many point of sales that are instead of <unk> integrating to them now integrating into <unk>.
So I think with that exception are very familiar setting for us just the new opportunity of what we estimate to be 55000 additional locations in our Tam looking at the U S Enterprise C store segment.
I appreciate the color. Thank you very much.
Sure.
Once again, if you have a question. Please press Star then one are.
Our next question comes from Brad Burke of Stifel. Please go ahead.
Great. Thanks, very much can we go back to the gross margin question that period brought up if I look at revenue it grew to $8 million sequentially, but gross profit dollars actually went down $200000. So there was a negative <unk> <unk>.
Incremental gross margin what exactly happened in the quarter.
Hey, Brad so so Peter.
So really two things happened this past quarter, we had.
The full quarter impact of the wisely acquisition as well as one month impact from Omnivore, and then the ability to catch up on some investments in the core business to support.
Active location growth in transaction volume growth that's occurred.
For the past 12 months to 18 months with respect to the core business one thing that I do want to call out is.
We had investments earmarked for later on in the year in terms of net head count adds.
Through the Omnivore acquisition, we were able to.
Take some of those folks that we.
<unk> through the Actavis.
Acquisition and have them take some of the roles that we had earmarked for the back half of the year. So part of what Youre seeing there is really an acceleration of some of those expenses that we have already had planned in the year.
We were able to capture those earlier in the year.
Okay. Thanks very much.
This concludes the question and answer session I would like to turn the conference back over to Noah glass for any closing remarks.
Okay, well. Thank you all for joining US again today as I Hope you can hear from the content of our prepared remarks, and this Q&A session. We're proud of all those past where confidence and our presence and we're really excited for our future I want to say thank you team for your hard work and execution.
We have miles to go before we sleep.
This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.
Okay.