Q2 2022 Olo Inc Earnings Call
Is that 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 all of them.
With that let me turn the call over to Noah.
Thank you Stephanie hi, everyone. Thank you for spending time with us today.
Although delivered solid second quarter results, we generated $45 6 million in total revenue of 27% increase year over year as our platform supported continued growth in new brands increased module adoption within our existing customer base and increased transaction volume.
We increased average revenue per unit or <unk>, two $544, 12% year over year, and 5% sequentially as existing customers adopted additional modules, including early adoption of all okay.
We deployed roughly 3000, new locations to the platform with ending active locations, increasing 11% year over year flat sequentially to approximately 82000 more on that in a moment.
We're excited to have welcomed a number of leading brands. So the auto platform this quarter.
These brands span various hospitality service models from quick service to fine dining and virtual brands to convenience stores or C stores.
Most notably Freddy's frozen custard and steak burgers, a fast casual restaurant with hundreds of locations deployed OLED <unk> full stack of digital ordering solutions this quarter, including ordering dispatch rails network and Autopay Freddy's represents one of our newest and.
Our largest customers to adopt <unk>.
In addition to welcoming new brands to the platform. This quarter, we expanded relationships within our existing customer base, increasing adoption of products across several older product suites.
Brands, such as California, fish Grill, Cc's pizza and Duck Donuts expanded their usage of ordering solutions.
Twin peaks and water Burger expanded their usage of delivery enablement solutions.
Oh, Charlie's restaurant and bar and Sprinkles adopted guest engagement solutions and on the border and Smokey bones adopted front of house solutions.
As <unk> continues to innovate in order to help restaurants embraced their digital opportunity by offering more mission critical solutions, such as <unk> and guest engagement, we expect an increasing share of our revenues to be driven by upsells.
In the same way that customer expansion is an important growth driver for the company. We continue to be excited by the momentum of our on premise digital ordering solutions, which are supercharging, our restaurants in their pursuit to be 100% digital.
For example, last quarter I spoke of NAND does a fast casual restaurant utilizing serve as its exclusive dining ordering system as well as the benefits associated with this offering specifically increasing basket size higher staff tips and operational efficiencies.
Given these benefits this quarter the brand signed on to adopt our although pay solution combining our best in class solutions for both on premise digital ordering and payments.
These examples of adding new brands to the platform expanding within our existing customer base, including enabling on premise digital ordering and increasing revenue per order.
Our reflective of OLED executing toward our 100 X opportunity.
And while encouraged by the underlying trends in support of our 100 X opportunity we remain highly focused on helping our brands navigate through several macroeconomic challenges.
Currently the industry is facing major challenges brought on by the residual impacts of the COVID-19, pandemic, including structural labor challenges margin pressure due to inflationary economic conditions as well as supply chain challenges and resulting concerns related to a recessionary environment.
These industry dynamics have impacted our customers and prospects in two ways at the brand level. These challenges have resulted in elongated sales cycles as fewer brand resources have lengthened the decision making process.
And at the operator level. These challenges have resulted in an elongated deployment timelines as many operators are unable to deploy in a timely manner.
While we continue to actively work to help alleviate these issues at the brand and operator levels through product enhancements expanding our network of implementation partners and directly managing more of the deployment process. We anticipate both of these dynamics to continue through the balance of the year and therefore have factored in lower expectations for net new deployments.
And revenue in the second half of the year.
That said, it's our belief that over time restaurants will increasingly rely on technology to alleviate macroeconomic pressures improved profitability ease operational burdens and enabled digital hospitality to drive repeat business and increase revenues.
As this trend continues although is well positioned to help brands achieve their digital ambitions through our modular suite of order management delivery enablement guest engagement front of house and payment solutions <unk> can be a force multiplier and helping brands address macroeconomic challenges while re.
<unk> their digital goals in a cost effective and operationally lean manner.
Regarding recessionary dynamics I'd like to remind investors that unlike other retail categories food is non discretionary consumers tend to eat 20 to 25 times every week.
And in times like these consumers don't typically begin to cook instead, they trade down. This is a phenomenon that <unk> witnessed firsthand in 2008 and 2009 when consumers purchase food from lower ticket size restaurants with greater prevalence.
In fact, the on demand food dollar, which we define as total spend on food to be eaten away from home has consistently shifted to restaurants versus grocery even through recessions accounting for $1 $1 seven trillion in 2021.
Or 55% of total food expenditures.
All those customer base, consisting of enterprise brands, primarily within the limited service quick service and fast casual segments leaves <unk> in a favorable position as these types of restaurants have fared well during economic slowdowns.
As we look at the opportunity ahead I am excited to have new sales leadership to help <unk> realize this opportunity since our last call. We've welcomed Diego Panama as our Chief revenue Officer. As a reminder, 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, we look forward to Diego Amping up our go to market and deployment strategies that will drive long term durable growth.
As I mentioned earlier this quarter, we deployed roughly 3000, new locations to the platform with ending active locations, increasing 11% year over year flat sequentially to approximately 82000.
This quarter, our active location count was impacted by a change in our relationship with subway.
In February of 2020, we announced our relationship with subway in which approximately 15000 locations would utilize the rails module to integrate and manage third party marketplace orders.
Certain subway locations began directly integrating with marketplaces impacting our ending active location count by roughly 2500 locations in the second quarter, we expect subways direct marketplace integration to continue with the balance of their locations being removed from our total active location counts in the fourth quarter of this year or the <unk>.
First quarter of 2023.
This is not a trend we expect to experience broadly as Subway's global proprietary point of sale platform is an unusual circumstance in the industry and not representative of the broader long term opportunity with our current or prospective customers.
As brands continue to navigate through macro uncertainties. This quarter, we continued to implement product enhancements to better serve our customers, including launching several innovations in our first ever summer release event set.
Second quarter product advancements include first we launched border list overpay in pilot with three brands on July 5th.
As a reminder, borderlands capabilities allow guests to securely speed through an accelerated checkout at any participating restaurant within the <unk> network, whether through App website or on premise.
This is possible as borderlands autopay stores payment credentials at the platform and brand level, allowing seamless checkout, regardless of the restaurant a consumer transact with.
Borderlands will enable brands to capture data for guests without requiring guests to create a new account for every brand.
Early results are compelling with 76% of guests saving their credit card information for future purchases roughly two five times the average number of guests saving their cards on file.
We've also observed a meaningful increase in basket conversion rates, leading to increased revenues and transactions for restaurants, and OLED and we're on track to expand <unk> capabilities to more restaurant brands before the end of the year.
Second we furthered our commitment to being an open platform by growing our diverse technology partner network in two ways.
One by completing our first ordering integration with <unk> automation, a market leader in kitchen display systems or <unk>.
Tds integrations enable <unk> customers to see and optimize all orders whether on or off premise, providing a 360 degree view of all orders in production there.
This information will allow <unk> to provide brands with operational decision, making abilities by including capacity management features that quote and throttle orders based on the real time kitchen activity levels, ultimately, creating a more integrated technology solution for restaurants, and expanding our vertical offerings throughout the restaurant value.
<unk>.
Two three strategically partnering with two leading geo fencing platforms fly by from radius networks and radar. These.
These partnerships ensure guests receive food as fresh as possible minimizing pickup and drive thru wait times through the use of location aware technology augmenting <unk> digital ordering programs.
Although it is growing open ecosystem of more than 300 integrated technology and service partners that span the full digital tech stack from enterprise ready solutions to emerging technologies is essential to delivering a best in class experience powered by the <unk> platform. Our partnerships also create a flywheel.
And which adding a new customer to our restaurant network benefits all of our partners and adding a new technology partner to our partner network benefits all <unk> customers.
Third we continue to invest in enhancing the older platform by introducing new features that help our customers provide digital hospitality.
For example, we added a party seeded webhook, which amidst an event when a waitlist or reservation party is seeded from the <unk> host App.
This unlocks the ability to fire acute order to the kitchen when a guest arrives to be ceded unlocking a win win for guests and a restaurant with faster service and increase table turns.
I am proud that <unk> continues to implement product enhancements to better serve our customers and I'm glad the industry recognizes it.
Recently, we earned best feature set and best relationship from the Trust radius Best of Summer Awards, we're honored to support our restaurant brands and look forward to delivering on the high expectations base set for us.
And we will continue to make advancements in our partner network platform and products for the benefit of our customers and to Rev up the engine of hospitality.
And finally as I typically do on earnings calls I'd like to provide a corporate update.
Although is committed to building a diverse and inclusive culture that promotes growth and equity for underrepresented groups, while supporting and celebrating all voices and perspectives.
In the spirit of transparency and commitment to this effort we've updated our <unk> website with gender and ethnicity metrics as of June 30, and we remain on track to have our team be comprised of 42% women and 18% underrepresented ethnicities by 2024.
We also furthered our commitment to equity by adopting a new equitable access to health care policy.
<unk> the human rights watch business statements on anti LGBTQ legislation to support our LGBTQ plus employee population.
And signing that don't ban of quality statements in response to the U S Supreme Court's <unk> decision.
I am personally honored to be deeply involved in these efforts along with my executive team as DDI is hugely important to our success as a company and as a pillar in the community.
To close we believe now more than ever that <unk> is a mission critical solution that will enable brands to be successful in spite of the current macro environment to do more with less.
Relieving labor challenges, increasing operational efficiencies and enabling every guest to feel like a regular.
We are encouraged by the underlying trends in our business in support of OLED 100 X revenue opportunity as we remain highly focused on helping our brands to thrive and gain share through the industry's digital transformation.
And with that I'd like to hand, it over to Peter to discuss more detailed results Peter.
Thanks, Noah and the second quarter, we grew revenues as we added new brands to the platform continued to increase module adoption within our existing customer base and increased transaction volume on the platform.
Total revenue in the second quarter was $45 6 million, an increase of 27% year over year.
Platform revenue in the second quarter was $44 5 million, an increase of 29% year over year.
In terms of key metrics, we ended the quarter with approximately 82000 active locations on the platform and a 11% increase year over year and flat sequentially.
We added roughly 3000, new locations to the platform. This quarter net new locations were impacted by a portion of <unk> locations coming off of the platform.
As mentioned earlier, we anticipate this trend to continue through the balance of the year, which I'll address in more detail in a moment.
<unk> for the second quarter was approximately $544, representing a 12% increase year over year, and a 5% increase sequentially.
Continued growth in <unk> was driven by further expansion within our existing customer base and to a lesser extent fewer subway locations on the platform whereby there relative to <unk> is less than other <unk> customers and.
And lastly, net revenue retention in the second quarter was approximately 106%.
And would have been 500 basis points higher excluding the impact of subway.
For the remainder of the financial metrics disclosed unless otherwise noted I will be referencing non-GAAP financial measures.
Gross profit for the second quarter was $34 million. This compares to $29 5 million a year ago.
The year over year increase in gross profit was driven by continued growth in revenue.
We offset by incremental costs associated with our current wisely and omnivore acquisitions increased compensation cost to support new locations coming onto the platform and to a lesser extent processing costs associated with <unk>.
Sales and marketing expense for the second quarter was $7 2 million or 16% of total revenue.
This compares to $3 $2 million and 9% a year ago.
As a reminder, this past quarter, we held our first in person user conference in two years beyond four which increased sales and marketing expenses for the period by approximately $1 million.
Research and development expense for the second quarter was $13 8 million or 30% of total revenue compared to $11 1 million a year ago or 31% of total revenue.
General and administrative expense for the second quarter was $11 1 million or 24% of total revenue.
This compares to $8 $8 million and 25% a year ago.
Operating income for the second quarter was $2 million compared to $6 $5 million a year ago.
Net income in the second quarter was $2 2 million.
Our <unk> per share based on approximately $181 9 million fully diluted weighted average shares outstanding.
Turning our attention to the balance sheet and cash flow statement our.
Our cash cash equivalents and short and long term investments totaled $464 7 million as of June 32022.
Regarding cash flows net cash provided by operating activities was flat in the quarter as compared to net cash provided by operating activities of $11 $3 million a year ago.
Free cash flow was negative $3 million as compared to positive $10 8 million a year ago.
We believe our strong balance sheet puts us in a good position to proactively capitalize on our 100 X opportunity, while continuing to be prudent capital allocators with rigorous operating discipline as we have in the past.
I'll wrap up by providing our guidance for the third quarter and full year 2022.
For the third quarter, we expect revenue in the range of $46 5 million and $47 million and non-GAAP operating income in the range of $1 $8 million and $2 2 million.
For the fiscal year 2022, we now expect revenue in the range of $183 million and $184 million and non-GAAP operating income in the range of $7 $6 million in $8 $4 million.
In terms of guidance for the year there are a few things to highlight.
First as previously mentioned macroeconomic challenges at the brand and operator level have resulted in a long dated deployment and sales cycles impacting revenue in the back half of the year.
While the pipeline remains robust and we continue to actively work to help alleviate these issues. We anticipate both of these dynamics to continue through the balance of the year and therefore have factored in lower expectations for new deployment in the back half of the year.
Second we are encouraged by the continued enthusiasm early adoption and performance metrics of <unk> <unk>.
Given this momentum we have now factored a few million dollars of revenue into our assumptions for the year.
Third consumer demand for digital ordering continues to prove durable.
Data from NPD demonstrated that roughly 15% of restaurant transactions in the second quarter were digital levels consistent with the past three quarters. This.
This data supports the fact that the increase in digital transactions in recent years as a secular trend.
While we expect the digital transactions to continue to grow over the long term, we remain prudent in our approach to forecasting digital transaction volumes in the near term.
Fourth as mentioned earlier, we expect the balance of subway locations to directly integrate with marketplaces in the fourth quarter.
While this will likely impact our ending active location counts in the fourth quarter of this year or the first quarter of 2023, it did not impact the third quarter or full year guide.
Said another way based on our understanding of <unk> longer term business plans. We believe the relationship could evolve sometime this year with a wide range of outcomes and took a conservative approach to our relationship with subway and our prior guidance.
And lastly, we continue to focus on capitalizing on the large opportunity ahead of us while maintaining profitability, which is reflected in our updated guidance strong discipline and capital efficiency, our intrinsic to Ola over our history, we have demonstrated our ability to generate profit while meeting increased demand and.
Adding new and innovative products to our customers cost effectively we expect that this year will be no exception and with that I'd like to now turn it back over to the operator to begin Q&A.
Operator.
Thank you we will now be conducting a question and answer session.
I would like to ask a question. Please press star one on your telephone keypad.
Confirmation tone will indicate your line is no more questions in queue. You May press star two if you'd like to remove your question from the queue for participants using speaker equipment that may be necessary to pick up your handset before pressing the star keys one.
Moment, please while we poll for questions.
Thank you. Our first question is from Terry Tillman with <unk> Securities. Please proceed with your question.
Yeah. Good afternoon. Thanks for taking my questions I have two questions. The first one is a two parter, though.
No in terms of the elongated sales cycles is the sporadic or is it across the emerging and large brands as well and what are they saying or they've got to wait a couple of quarters. Because this could have implications in the next year. So just a little bit more on that and then Peter had mentioned.
Something at the end of his prepared remarks about subway I was kind of confused this midpoint reduction.
That doesn't include any subway I, just need to understand that better than I had a follow up on old okay.
Sure. Jerry this is Noah I'll jump in on elongated sales and deployment cycles. I think this is a temporary matter something that restaurants are dealing with at the brand level and at the operator level at the brand level, that's really reflected in elongated sales cycles of selling into different constituents.
Within the restaurant headquarters.
Somewhere in the operation somewhat in technology someone in marketing for the different product suites.
Having a lot of things on their plate at the moment in the environment. We're operating in where you have very high inflation and have wholesale food prices.
Labor concerns et cetera. So I think that is something that is transitory from the brand level at the operator level.
That's really manifesting in the elongated deployment cycles, where it just takes longer for us to have the restaurant operator is doing what they need to do to get live and up and running on the platform. So as we mentioned, we're taking a number of steps on that we're doing things to the platform to make it easier for operators to do deployments on their own.
We're also working with more third party resources around deployment implementation firms.
More taking on more ourselves to speed up deployment cycles, but that's how it's manifesting in sales and deployment.
Got it got it and then.
Yes go ahead, sorry, Peter Yeah. The second part of your question there in terms of subway and implications on the guide. So when we entered the year. There was indication that subway made plan to directly integrated with marketplaces, but at that point in time, the timeline was unclear.
So like all data points and assumptions that feed the model, we took that information we factored in the possibility that some way may integrate directly by.
During two things one reducing their transaction volumes throughout the year and in turn reducing a portion of their revenue contribution throughout the year. So as that has begun to happen the guidance for both the third quarter and the full year are aligned.
Okay. Just a final question and then I'll turn it over is on the glass half full side here, a low PE sounds like an exciting opportunity border list came out with summer related that's great. What are you seeing in terms of the aspirational goal of Forex kind of RP lift and how do you see this attach rate kind of playing out in that.
$2 million or so building into next year. Thanks.
Yes sure.
Well I'll take that one so yeah border list. We were excited to talk about border was for the first time.
February .
Thought that it would happen at some point this year it was great to be able to get it out in pilot with three pilot.
On July 5th and have now over a month or so.
We're really encouraged by what we're seeing primarily around how many of the guests using board of lists are creating accounts and are saving cards on file and mentioned in the prepared remarks that number is 76%.
Guests, who are ordering through border lists are saving the file and saving a credit card on that account and that is two five times with a typical checkout looks like in a non board with scenario.
With statistically significant numbers I mean, this is a material number of accounts that have been created so that's very exciting. There is nothing that is required for us to see that forex lift in revenue per transaction that is just the very nature of OLED, serving as both the order processor and the payment processor when we are.
The payment processor in the form of OLED pay so that's playing out exactly as we knew that it was and its really exciting to see brands adopting all the pay and adopt lyft and seeing the week before the guest experience and for <unk>.
More transactions actually manifesting through higher basket conversion rates and customer saving accounts on file in cards on file to speed through checkout. The next time around so highly encouraged by what we're seeing from those three pilot.
Florida list, although pay brands and excited to have more brands come on to the board of list four months through the end of the year.
Great. Thank you.
Thank you. Our next question comes from Matt Hedberg with RBC capital markets. Please proceed with your question.
Great guys. Thanks for taking my question so follow up on subway. So it sounds like just to be clear. When you started the year you assumed less subway contributions and it seems like that is playing out. So I just maybe wanted to confirm that but then I guess, the two follow ups to that or.
Can you help us think about I know you said subway carries lower <unk> than your corporate average, but just just sort of any sort of rough.
How much lower it is then your base and second how do you how do you weigh the possibility of subway, leaving I think Noel you said you don't think Thats, maybe likely if I think I heard you say that correctly, but maybe just understand sort of the risks and the opportunities with subway.
Yes. So this is Peter I can take the first couple questions there, Matt so in terms of.
How we factored.
Into the year as we enter the year and sort of the relative argued contribution and so.
On a full year basis subway.
<unk> contributed about a few million dollars of revenue on a full year basis than what we had done entering the year is really start to tail that off in the second quarter through the balance of the year.
Really as a as a hedge to.
Some of the indications that we entered as we as we entered the year now in terms of their RP contribution it is.
I would say, it's about a third of kind of the platform average on a quarterly basis and the reason why it is lower than.
Then the platform averages because they are a single module customer they subscribe only to the rails module and as we disclosed at the end of last year on average customers subscribe to $2 seven modules per locations of <unk>, who tends to be much higher on on multi module.
Locations, but that's sort of the thinking that went into planning the year and what that means from an RP contribution.
And Matt I'll jump in on the second part so what I said in the prepared remarks was not that I didn't think that subway would taper off as Peter just described but rather that we didn't think that this was representative of a large.
So we continue to have a really great respect for the subway team and vice versa and to help with the subway team and really every restaurant brand that is representative of top 20 enterprise restaurant brands. This is a moment in time in these macroeconomic conditions were.
Every dollar in our restaurants.
It is being scrutinized and the wisdom of a SaaS platform that can enable a brand to repurpose itself.
<unk> two <unk>.
A higher purpose that really differentiated us and us although as a SaaS platform underneath.
<unk> is making a lot of sense to restaurant brands. We're hearing them say, yes, we can do.
What we have in our mission with the same digital budget by utilizing components would be although platform. That's a great thing for us. So I think that's why we feel there's a great opportunity for us with the top 20 restaurant brands that are out there.
We feel like those are conversations that we'll continue to have and will continue beating the drum about why we believe and why we think commonly.
People are waking up to the philosophy that SaaS is superior to software.
Got it thanks, a lot super helpful. Thanks, guys.
Okay.
Okay.
Thank you. Our next question comes from Brent <unk> with Piper Sandler. Please proceed with your question.
Thanks for taking the question and good afternoon here and at one for for Noah in a couple of follow ups for Peter NOAA, obviously, the loss of subway here relative to the Q ISR space feels like a little bit of a step back and I was hoping if you could just weigh on.
The <unk> opportunity give us a kind of current state of affairs. What's the next largest <unk> brand that you have beyond subway and how are you generally looking at that market opportunity kind of going forward I'd love to get to our current viewpoint on <unk>. Thanks.
Yes, so Brent that's a great question.
I think.
If there are <unk> fast food, except or.
In some way is sort of a fast casual concept. They don't typically have drive thru operations that tends to be kind of a hallmark of <unk> brands.
This work by an in built Sandwich, and then pay at the end of the transaction, so a little bit different than the way that most <unk> brands work, but I think that your point more broadly as we're thinking about these large enterprise restaurant brand.
The needs are and how our solution kind of map to those needs. So I think we look at well first the answer that I just gave around.
Why we believe that our SaaS.
SaaS is superior to homegrown software and that all restaurant brands that are the size can benefit from the platform that we've built and also from the innovations that we've built with 82000 restaurants on the platform, which is more than any individual restaurants has.
In there in our portfolio.
But also to the drive thru operation, which is so important for <unk>.
Product innovations that I mentioned around <unk>.
And our plug in with fly by by radio networks in radar.
Truly speed up that handoff at drive thru I think that's a really compelling new.
Benefit of our of our solution for the U S. Our operators if I look across our portfolio. We have a lot of <unk> brands that we've welcomed just since our IPO. If you look at <unk>.
<unk> junior at Hardee's or CK E. If you look at Kolberg, if you look at.
What a burger I mean these are traditional <unk> operators and I think that's a big area of opportunity for us and is it really ripe area for us to go and penetrate in the coming quarters.
Helpful color there and then just as a follow up Peter for you I think you talked about 3000 net adds in the quarter 25.
Grid sub.
Subway locations.
That obviously suggests there might be other restaurant churn. So just just trying to understand did you see other restaurants churn beyond subway in the quarter or was that just kind of rounding.
That's just rounding.
Okay. That's helpful. And then I know you talked about.
Subway.
Being a few million dollars just wanted to dive into the guidance second half.
The reduction is about $12 million little over $12 million for the second half.
And how much of that is would you attribute to kind of Derisking subway here versus.
Other macro factors logging sales cycles, just trying to.
Understand.
A few million dollars contribute here, some subway and a $12 million.
Guide down.
Yes, so sorry, if I was.
Hello.
Using on that so in terms of subway nothing attributed to the evolving relationship with subway again that was something we.
Had an indication of as we entered the year factored that into the model on a subway has.
Started to roll off the platform that is aligned with what the underlying conservatism that we baked into the year as we set guidance back in February .
In terms of.
The two dynamics that are that are impacting the full year guide. It really is a healthy mix of both between elongated sales cycles and deployment is taking longer than we anticipated when we walked into the year in terms of sales cycles. There is really two underlying dynamics driving driving our year to date performance.
So first for deals that we've signed many of the large deals happened really late into the second quarter, which means based on our standard deployment timeline revenue won't be recognized on those deals until sometime in 2023, and then for deals that did not close in the quarter. Those conversations are ongoing and have been on.
Ongoing longer than our typical sales site cycle. So those two are pushing into 2023.
As for deployment, we walked into the year with a sufficient pipeline of activity to deploy what the time to deploy projects really across across all modules have elongated for the primary reasons that we talked about on our prepared remarks constraints at the brand and operator level and just to go a level deeper deeper there we have.
<unk>.
Several brands, which in total represent.
Several thousands of locations that are partially deployed so they are at some stage of the deployment process and it is our practice that we don't announce brand deployments until we've reached a critical mass until we've nearly deployed the entire entire franchisee network. That's when we typically announce the deployment we have a number of brands again that.
That are in the deployment process and making progress, but the progress has been.
Slower than we anticipated and much slower than we've historically.
Done, which is which is what's creating.
Some of that impact in the back half of the year.
Great I appreciate all the color. Thank you.
Thank you. Our next question comes from Stephen Sheldon with William Blair. Please proceed with your question.
Hey, Tim This is Pat Mcinally on for Steven This evening so.
Side from the moving pieces with subway it seems like NR took a nice step up this quarter can you just talk a bit more about the dynamics at play there and how we might expect that to trend for the remainder of the year.
Yes. So this is consistent with what I believe we talked about on the last call, which is we anticipated MLR to improve throughout the year as multi module adoption increased and transaction volumes increased throughout the year and that's really what is sort of under.
Your line that that improvement in <unk>.
I think we'll continue to see some modest improvement as we go throughout the year and I think into 2023.
Presumably as <unk> pay becomes a larger portion of the mix that will help to grow NRI over time, but again, what youre seeing there is consistent with what.
We anticipated as we entered the quarter.
Got it okay. Thanks, and then can can you just give us an update on how the cross sell of wisely has been since you plug that in.
And what the what the reception has been like there.
Yes. This is Noah.
This has been a really successful cross sell motion. We're excited about how brands are seeing the next logical step in getting great at being around guest engagement and specifically, having a first rate guest data platform, where they can really measure guest lifetime value.
Of all of their guests.
So we announced a couple of the new brands to come on to the guests and suite. We also announce all of the brands that are coming on to the hosts suite, which is managing table wait and wait lists and reservation I.
I think across the board, we're really pleased with the fit that we're seeing between.
But wisely brought to our solution set and what our restaurant customers are looking for it they are seeking to really engage with their guests in a direct manner and increase the hospitality. They can offer and so doing increased guest lifetime value.
That's helpful. Thanks, that's all for me.
Thank you as a reminder, if you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question Kipp.
Our next question comes from Brad Reback with Stifel. Please proceed with your question.
Great. Thanks, very much Peter can you give us a sense on active locations are active ending locations for <unk> in the year just to try to level set.
So we're all on the same page.
Yes, so what's implied in the guide Brad is adding an incremental 2000 locations per quarter between now and the balance of the year.
As we noted on the call, we anticipate subway to fully roll off in the fourth quarter and into the first quarter of next year now the nuance there is with respect to subway or in general.
We count a location active in the quarter, if they've had an order in the quarter.
So to the extent subway starts to roll off in Q4.
But generates an order at some point in the quarter, we will count those active locations and then in the first quarters, where you'll see the full impact of subway rolling off the platform.
Okay. So thats 2000, net not gross right.
That is 2000 net that's correct.
Okay, that's great.
Richard gears I don't know for you or for Noah given that subway has sort of been an ongoing thing for you guys for a couple of quarters here are there any other large brands out there that are having similar discussions or where you feel there is the risk that they may terminate thanks.
Hey, Brad this is Noah so we truly believe that subway is.
And we believe that because subway has this global proprietary point of sale and digital ordering platform. All built in house, it's consistent around the globe and they were only using although for the rails module. So they are in a unique position.
Do you have.
Leverage with marketplaces to have that direct integration.
With them.
That puts them in a very biased.
Brand.
Typically we have restaurant brand customers at the end of last year on two seven product modules of <unk>.
And the more product modules that they are all the more mission critical we believe we are in the more value that we're generating so.
You should think of as an anomaly in this case and not just in our restaurants customer population really in the restaurant industry itself.
Got it thanks very much.
Yeah.
As a reminder, if you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue.
There are no further questions at this time I would like to turn the floor back over to Noah glass for any closing comments.
Okay, well. Thank you all for joining US again today, we're honored to mission critical form for a growing roster of customers and.
The engine of hospitality.
Restaurants make every guest feel like a regular.
Q T Mo for your hard work and execution miles to go before we sleep.
Thank you. This concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation.