Q1 2024 Olo Inc Earnings Call

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Operator: Greetings and welcome to Olo Inc.'s first quarter 2024 earnings conference call. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star then zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Gary Fuges, Senior Vice President of Investor Relations. Please go ahead, sir.

Speaker Change: Greetings and welcome to the old welcome to although Inc's first quarter 'twenty 'twenty four earnings conference call.

Speaker Change: At this time, all participants are in listen only mode.

Speaker Change: A question and answer session will follow the formal presentation.

Speaker Change: If anyone should require operator assistance during the conference. Please press Star then zero on your telephone keypad.

Speaker Change: As a reminder, this conference is being recorded.

Speaker Change: I would now like to turn the conference over to your host Gary Fujis Senior Vice President of Investor Relations. Please go ahead Sir.

Gary J. Fuges: Thank you. Good afternoon, and welcome to Olo's first quarter 2024 financial results conference call. Joining me today are Noah Glass, Olo's founder and CEO, and Peter Benevides, Olo's CFO. During this call, we will make forward-looking statements, including but not limited to statements regarding our expectations regarding our business, our industry, and future financial results. These statements reflect our beliefs and assumptions only as of today and are subject to a variety of risks and uncertainties that could cause actual results to differ materially.

Gary J. Fuges: Thank you good afternoon, and welcome to all of its first quarter 2024 financial results Conference call. Joining me today are no glass, although its founder and CEO Peter <unk> CFO.

Gary J. Fuges: During this call we will make forward looking statements, including but not limited to statements regarding our expectations of our business, our industry and future financial results.

Gary J. Fuges: Statements reflect our beliefs and assumptions only as of today and are subject to a variety of risks and uncertainties that could cause actual results to differ materially for a discussion of these material risks and uncertainties. Please refer to our Form 10-Q, which was filed today and our other SEC filings.

Gary J. Fuges: For a discussion of these material risks and uncertainties, please refer to our Form 10-Q, which was filed today, and our other SEC filings. Also, during this call, we'll present both GAAP and non-GAAP financial measures. Reconciliations to the most directly comparable GAAP financial measures are available in our earnings release, which is available on our investor relations page of our website. Finally, in terms of our prepared remarks or in response to your questions, we may offer additional metrics.

Gary J. Fuges: Also during this call 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 is available on our Investor Relations page of our website. 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.

Gary J. Fuges: Please be advised that this additional detail may be one-time in nature, and we may or may not provide an update in the future on these metrics. With that, I'll turn the call over to Noah. Thank you.

Speaker Change: Maybe onetime in nature, and we may or may not provide an update in the future on these metrics with that I'll turn the call over to Noah.

Noah Herbert Glass: Thank you, Gary. Hi everyone. Thank you for spending time with us today. Olo got off to a great start in Q1. We increased revenue 27% year-over-year and expanded non-GAAP operating margin to 8%. And we're raising our 2024 revenue and profitability guide. We announced new integrations with NCR Voyex and Q that move us closer to launching full-stack pay functionality later this year and will provide access to ingredient level and guest link data from non-digital transactions, where more than 80% of restaurant business is conducted today.

Noah: Gary Hi, everyone. Thank you for spending time with us today.

Noah: <unk> got off to a great start in Q1, we increased revenue, 27% year over year and expanded non-GAAP operating margin to 8% and we are raising our 2020 for revenue and profitability guidance.

Noah: We announced new integrations with NCR <unk> in Q that move us closer to launching full stack pay functionality later this year and will provide access to ingredient level and guest linked data from non digital transactions, where more than 80% of restaurant business is conducted today.

Noah Herbert Glass: With omni-channel guest data at scale and the AI and machine learning solutions to leverage it, we believe Olo is uniquely positioned to help brands deliver more personalized guest experiences that increase sales and grow guest lifetime value. I'll review our customer and innovation highlights and share more about our new POS integrations, and then Peter will discuss our Q1 performance and updated guidance.

Noah: With Omnichannel guest data at scale, and the AI and machine learning solutions to leverage it. We believe <unk> is uniquely positioned to help brands deliver more personalized guest experiences that increased sales and grow guest lifetime value.

Noah: I'll review, our customer and innovation highlights and share more about our new Pos integrations and then Peter will discuss our Q1 performance and updated guidance.

Noah Herbert Glass: We ended the quarter with approximately 81,000 active locations, adding approximately 1,000 new locations sequentially. First quarter ARPU of $816 increased 29% year over year, and net revenue retention was in excess of 120%. We continued to partner with enterprise and emerging enterprise brands, and we further strengthened our open platform through new features and ecosystem partners. In Enterprise, Quiznos deployed Ordering, Rails, Dispatch, Pay, and Engages, Sentiment, and Sync, a three-suite implementation. And we're super excited to announce today that Dutch Bros will deploy our Ordering and Pay modules to enable guests to order ahead through their app. It's a great example of digital moving into the drive-through channel.

Noah: We ended the quarter with approximately 81000 active locations, adding approximately 1000 net new locations sequentially.

Noah: First quarter <unk> of $816 increased 29% year over year and net revenue retention was in excess of 120%.

Noah: We continue to land and expand with enterprise and emerging enterprise brands and we further strengthened our open platform through new features and ecosystem partners.

Noah: In enterprise Quiznos deployed ordering rails dispatch PE and engages sentiments and sick.

Noah: Three suite implementation and we're super excited to announce today that Dutch Bros will deploy our ordering and pay modules to enable guests to order ahead through their app. It's a great example of digital moving into the drive through channel.

Noah Herbert Glass: And we're thrilled to help this fast-growing brand deliver on their core values of speed, quality, and service. Dutch Bros has completed a successful pilot, and we expect them to deploy Olo across their 850+ locations across 17 states throughout 2024. In emerging enterprise, we continue to land and expand. More than a dozen brands, like Moonbowls and Rockin' Ramen, have had multi-module implementation, while brands like Bluestone Lane and Mendocino Farms expanded into pay, and Panini Kebab Grill and Uncle Julio's expanded into engage. We spent time with more than 100 of our brands in March at our Beyond4 Customer Conference. This was a fantastic event, with record attendance overall and among senior-level decision-makers.

Noah: And we're thrilled to help this fast growing brand deliver on their core values of speed quality and service.

Noah: <unk> has completed a successful pilot and we expect them to deploy although across their 850 plus locations across 17 states throughout 2024.

Noah: And emerging enterprise, we continue to land and expand more than a dozen brands like Moon bowls, and Rockin Robin had multi module implementations.

Noah: Brands like Bluestone Lane at Mendocino farms expanded into PE, and Panini kebab grill and uncle Julio's expanded into engage.

Noah: We spent time with more than 100 of our brands in March at our beyond four customer conference. This was a fantastic event with record attendance overall and among senior level decision makers customers love our roadmap presentation.

Noah Herbert Glass: Customers loved our roadmap presentation, the hands-on demos of our three suites, and our announcement to integrate OloPay and Engage's guest data platform with Q. It was great validation that our products and strategy are responding to the brand. In Q1, we announced 13 major product enhancements in our spring release and further expanded our ecosystem partnership. I'll share a few highlights.

Noah: The hands on demos of our three suites, and our announcement to integrate overpay and engages guest data platform with Q.

Noah: It was great validation that our products and strategy are resonating with brands.

Noah: In Q1, we announced 13 major product enhancements in our spring release and further expanded our ecosystem partnerships I'll.

Noah: I will share a few highlights.

Noah Herbert Glass: Catering is an increasingly important channel for brands. It's rebounded significantly post-COVID, and it generates a high average order value. And it's a large TAM.

Noah: Catering is an increasingly important channel for brands, it's rebounded significantly post COVID-19 and it generates high average order values.

Noah Herbert Glass: Third-party research estimates that U.S. workplace and event catering is a $60 billion market. However, managing catering orders can be inefficient, often requiring manual order entry and customer cross-referencing with POS data. To address this opportunity, Olo launched its Catering Plus module in the fall. And this spring, we released a new production sheet feature that streamlines the preparation for large volume orders, improving staff efficiency and enabling brands to capture more high-value catering sales.

Noah: And it's a large Tam third party research estimates that U S workplace and event catering is a $60 billion market.

Noah: However, managing catering orders can be inefficient, often requiring manual order entry and customer cross referencing with Pos data.

Noah: To address this opportunity, although launched its catering plus module in the fall and this spring we released the new production sheet feature that streamlines the prep for large volume orders, improving staff efficiency and enabling brands to capture more high value catering sales.

Noah Herbert Glass: We're very excited about our early success here with brands expanding into Catering Plus in Q1. Since implementing Catering Plus, Salserita's Fresh Mexican Grill has increased catering same-store sales by 22% and has improved order accuracy and staff efficiency. With Catering Plus, we believe we can do for catering what we've done for mealtime ordering and delivery, integrate the channel into the brand's operations, and drive sales and efficiency. Like Rails and Dispatch, Catering Plus is a standalone module.

Noah: We are very excited about our early success here with brands expanding into catering plus in Q1.

Noah: Since implementing catering plus it's also read us fresh Mexican grill has increased catering same store sales by 22% and has improved order accuracy and staff efficiency.

Noah: With catering plus we believe we can do for catering what we've done for mealtime ordering and delivery integrate the channel into the brand's operations and drive sales and efficiencies.

Noah: Like rails, and dispatch catering plus as a standalone module.

Noah Herbert Glass: And it's generating interest from large brands not currently working with Olo, as well as restaurants within our own base. We look forward to sharing more this year as we focus on making Catering Plus a larger part of our business. We also announced Smart CrossSells, an AI-powered feature that surfaces personalized, dynamic item suggestions during the ordering and checkout process. By recommending items based on contextual data, such as order history, location menu, and cart contents, this new feature is improving guest engagement and average order value. In a recent Olo test, smart cross-cells accounted for 10% more basket value, on average, than static cross-cells. Smart Cross Elves is live today.

Noah: And it is generating interest from large brands not currently working with <unk> as well as restaurants within our base.

Noah: We look forward to sharing more of this year as we focus on making catering plus a larger part of our business.

Noah: We also announced smart cross sells and AI powered feature that surfaces personalized dynamic item suggestions during the ordering and checkout process by.

Noah Herbert Glass: By recommending items based on contextual data such as order history location menu and cart context. This new feature is improving guest engagement and average order value.

Noah: In a recent <unk> test smart cross sells accounted for 10% more basket value on average than static cross sells.

Noah Herbert Glass: And we see an opportunity to combine it with Borderless, which has doubled since year end and now exceeds 4 million guests, to flex the Olo network effect and power cross-sells across the Olo network to drive even more guest engagement and sales lists. In payments, we announced the general availability of card present functionality in self-service kiosks, which is another step toward bringing card present to market this year. Honeygro, a high-growth stir fry and salad concept, is a digital first brand that runs nearly all of its orders through Olo's platform.

Noah: Smart Cross sells is live today, and we see an opportunity to combine it with border list, which has doubled since year end and now exceeds 4 million guests to flex the auto network effect empower cross sells across the <unk> network to drive even more guest engagement and sales lift.

Noah: In PE, we announced the general availability of card present functionality and self service kiosks, which is another step towards bringing card present to market. This year.

Noah: Honey grow a high growth stir Fry and solid concepts is a digital first branch that runs nearly all of its orders through <unk> platform.

Noah Herbert Glass: They are also the first to adopt OloPay for both on and off premise transactions, which reduced chargeback costs by 83% and increased authorization rates for card not present transactions by over 7%. By running all their payments through OlaPay, we enabled HoneyGrow to improve their financial performance and their guest experience, and they are generating significantly higher ARPU than our platform average. ARPU expansion is a key growth lever, and we believe we can replicate our success with HoneyGrow throughout our base.

Noah: We're also the first to adopt <unk> for both on and off premise transactions, which reduced chargeback costs by 83%.

Noah: And increased authorization rates for card not present transactions by over 7%.

Noah: By running all their payments through overpay, we enabled hunting grow to improve their financial performance and our guest experience.

Noah: And they are generating significantly higher <unk> than our platform average.

Noah: <unk> expansion is a key growth lever and we believe we can replicate our success with honey grow throughout our base.

Noah Herbert Glass: And in Engage, we released new features to help brands assess ROI, manage contact lists, and analyze campaign effectiveness. We also enhanced the guest data platform's user interface to make it easier for brands to develop a comprehensive view of their guests across all channels and platforms in real time. These Engage enhancements give brands more power to convert their data into insights and actions that increase sales and guest lifetime value. In our ecosystem, which now exceeds 400 partners, we announced a number of new integrations, including Curbit for kitchen capacity, Order, and Delivery Man. Kia for voice ordering and Sparkfly for guest engagement.

Noah: And then engage we released new features to help brands assess ROI manage contact lists and analyzed campaign effectiveness.

Noah Herbert Glass: We also enhanced the guest data platform's user interface to make it easier for brands to develop a comprehensive view of their guests across all channels and platforms in real time.

Noah Herbert Glass: These engage enhancements give brands more power to convert their data into the insights and actions that increased sales and guest lifetime value.

Noah Herbert Glass: In our ecosystem, which now exceeds 400 partners, we announced a number of new integrations, including curb it for kitchen capacity order and delivery metrics.

Noah Herbert Glass: For voice ordering and spark fly for guest engagement we remain.

Noah Herbert Glass: We remain committed to providing an open platform that helps restaurants benefit from innovation provided by Olo and other best-of-breed technologies. Before I turn the call over to Peter, I want to discuss our new POS integration announcements with NCR, VOIX, and Q and why we believe these are so important to our strategy. By integrating OloPay into POS providers like NCR, VOIX, and Q, we will expand our payment processing and data footprint into non-digital transactions, where 84% of U.S. restaurant business occurs.

Noah Herbert Glass: <unk> committed to providing an open platform that helps restaurants benefit from innovation provided by <unk> and other best of breed technologies.

Noah Herbert Glass: Before I turn the call over to Peter I want to discuss our new Pos integration announcements with NCR voyage in Q and why we believe these are so important to our strategy.

Noah Herbert Glass: By integrating <unk> into Pos providers like NCR Boy next in queue, we will expand our payment processing and data footprint into non digital transactions were 84% of U S restaurant business occurs.

Noah Herbert Glass: Coupled with Engage integration capabilities, Olo will be positioned to touch 100% of restaurant transactions and offer brands a differentiated omni-channel guest data platform at scale. We believe that's an unlock for scaling pay and engaged revenue and a game changer for Olo's ability to help brands drive sales, grow guest lifetime value, and make every guest feel like a regular. Today, our open platform enables brands to aggregate guest data from Olo solutions and our ecosystem partners to better understand their guest lifetime value, personalize the guest experience, and drive sales and operating efficiency.

Noah Herbert Glass: Coupled with engage integration capabilities, although we'll be positioned to touch 100% of restaurant transactions and offer brands a differentiated omnichannel guest data platform at scale.

Noah Herbert Glass: We believe that's an unlock for scaling PE and engage revenue.

Noah Herbert Glass: And a game changer for <unk> ability to help brands drive sales grow guest lifetime value and make every guest feel like a regular.

Noah Herbert Glass: Today, our open platform enables brands to aggregate guest data from <unk> solutions, and our ecosystem partners to better understand their guests lifetime value personalize, the guest experience and drive sales and operating efficiencies.

Noah Herbert Glass: For example, Sunny's Bar-B-Q ingests data from multiple sources across its tech stack, including ordering, rails, and dispatch, into the engaged GDP to better understand guest lifetime value, order frequency, and average spend. Sonny's leveraged this data to drive 50% growth in marketing subscribers and learned that the top 15% of their guests account for half of their sales. First Watch uses Olo to unify their data and increase frequency with repeat customers. Engage enabled First Watch to deliver personalized, automated email campaigns that resulted in a 20% lift in spend by recipients over 30 days and $2.7 million in total spend in the campaign's first 90 days.

Noah Herbert Glass: For example, Sonny's Bbq ingest data from multiple sources across its tech stack, including ordering rails and dispatch into the engage GDP to better understand guest lifetime value order frequency and average spend.

Noah Herbert Glass: <unk> leverage this data to drive 50% growth in marketing subscribers and learned that the top 15% of their guests account for half of their sales.

Noah Herbert Glass: First what's uses although to unify their data and increase frequency with repeat customers.

Noah Herbert Glass: Engage enabled first watch to deliver personalized automated E mail campaigns that resulted in a 20% lift in spend by recipients over 30 days and $2 7 million and total spend and the campaigns first 90 days.

Peter J. Benevides: And as brands face the challenges of continued food cost inflation, minimum wage legislation, and a tight labor market, the benefits of data-driven personalization are becoming increasingly important to a brand's success. With greater data breadth, depth, and scale than alternatives, Olo will be in an even stronger position to help brands win. Our network of 700 brands, 85 million guests, and 400 ecosystem partners drives DataBreadth. Our APIs pull deeper levels of transaction data than alternative providers.

Noah Herbert Glass: And as brands face the challenges of continued food cost inflation minimum wage legislation and a tight labor market.

Peter J. Benevides: <unk> of data driven personalization are becoming increasingly important to our brands success.

Peter J. Benevides: With greater data breath.

Peter J. Benevides: And scale than alternatives, although will be in an even stronger position to help brands win.

Peter J. Benevides: Our network of 700 brands 85 million guests and 400 ecosystem partners drive data breath.

Peter J. Benevides: Our api's pull deeper levels of transaction data than alternative providers.

Peter J. Benevides: And our expanding POS integrations will provide a meaningful increase in data scale. This is why we believe Olo has a durable competitive advantage versus the traditional walled garden approach of POS providers. Data-driven personalization yields success for restaurants, and we believe Olo is set to become the clear leader in restaurant data. And therefore, best positioned to leverage AI and machine learning to drive insights and action that results in greater sales, desk lifetime value, and hospitality. I'll now turn the call over to Peter to review our Q1 results and guidance. Peter.

Peter J. Benevides: And our expanding Pos integrations will provide a meaningful increase in data scale.

Peter: This is why we believe although has a durable competitive advantage versus the traditional walled garden approach of Pos providers.

Peter: Data driven personalization yields success for restaurants, and we believe OLED is set to become the clear leader in restaurants data and therefore best positioned to leverage AI and machine learning to drive insights and action that results in greater sales desk lifetime value and hospitality.

Peter J. Benevides: I'll now turn the call over to Peter to review, our Q1 results and guidance Peter.

Peter J. Benevides: Thanks, Noah. Today, I'll review our first quarter results as well as provide guidance for the second quarter and the full year 2024. In the first quarter, total revenue was $66.5 million, an increase of 27% year over year. Platform revenue in the first quarter was $65.8 million, an increase of 28% year over year. Revenue from all three suites, Order, Pay, and Engage, outperformed our expectations. Active locations were 81,000, up approximately 1,000 sequentially. Note that the vast majority of Dutch Borough's locations are yet to be deployed, so they are not included in the Q1 active location count.

Peter: Thanks, Noah today I'll review, our first quarter results as well as provide guidance for the second quarter and the full year 2024.

Peter J. Benevides: In the first quarter total revenue was $66 $5 million.

Peter J. Benevides: An increase of 27% year over year.

Peter J. Benevides: Platform revenue in the first quarter with $65 8 million, an increase of 28% year over year revs.

Peter J. Benevides: Revenue from all three suites order paint and engage outperformed our expectation.

Peter J. Benevides: Active locations were 81000 up approximately 1000 sequentially.

Peter J. Benevides: Note that the vast majority of Dutch Bruce locations are yet to be deployed. So they are not included in the Q1 active location count.

Peter J. Benevides: We expect location count to ramp throughout the year, and we continue to expect to add approximately 5,000 net new locations this year. ARPU for the first quarter was approximately $816, up 29% year-over-year and 4% sequentially. Year-over-year increases in ARPU were driven by increased order volumes and modules per location, in particular OLOPEG, and Net Revenue Retention was above 120%. This was the second consecutive quarter where NRR was at or

Peter J. Benevides: We expect location count to ramp throughout the year and we continue to expect to add approximately 5000 net new locations. This year.

Peter J. Benevides: <unk> for the first quarter was approximately $816 up 29% year over year and 4% sequentially.

Peter J. Benevides: Year over year increases in <unk> were driven by increased order volume and modules per location in particular, okay.

Peter J. Benevides: And net revenue retention was above 120%.

Peter J. Benevides: Second consecutive quarter, where NR was at or above 120%.

Peter J. Benevides: For the remainder of the Q1 financial metrics exclude unless otherwise noted I will be referencing non-GAAP financial measures.

Peter J. Benevides: For the remainder of the Q1 financial metrics disclosed, unless otherwise noted, I will be referencing non-GAAP financial measures. Gross profit for the first quarter was $41.5 million. This compares to $37.2 million a year ago. The year-over-year growth in gross profit was driven by continued revenue growth partially offset by the increasing revenue mix of Olopay. Sales and marketing expense for the first quarter was $12.7 million, or 19% of total revenue.

Peter J. Benevides: Gross profit for the first quarter was $41 $5 million.

Peter J. Benevides: This compares to $37 $2 million a year ago.

Peter J. Benevides: Year over year growth in gross profit was driven by continued revenue growth, partially offset by the increasing revenue mix although okay.

Peter J. Benevides: Sales and marketing expense for the first quarter was $12 7 million or 19% of total revenue.

Peter J. Benevides: This compares to $9.9 million and 19% a year ago. Research and development expense for the first quarter was $13.9 million, or 21% of total revenue. This compares to $15.7 million or 30% of total revenue a year ago. General and administrative expense for the first quarter was $9.3 million, or 14% of total revenue.

Peter J. Benevides: This compares to $9 9 million and 19% a year ago.

Peter J. Benevides: Research and development expense for the first quarter with $13 9 million or 21% of total revenue with.

Peter J. Benevides: This compares to $15 7 million or 30% of total revenue a year ago.

Peter J. Benevides: General and administrative expense for the first quarter with $9 3 million or 14% of total revenue. This.

Peter J. Benevides: This compares to $10.4 million and 20% a year ago. Operating income for the first quarter was $5.6 million, which compares to $1.2 million a year ago.

Peter J. Benevides: This compares to $10 $4 million in 20% a year ago.

Peter J. Benevides: Operating income for the first quarter with $5 6 million. This compares to $1 2 million a year ago.

Peter J. Benevides: Operating margin was approximately 8% in Q1, and the year-over-year improvement reflects the combination of our focus on managing costs as well as growth in revenue. Sequentially, the decline in profitability from Q4 2023 reflects seasonality around factors such as tax resets and benefit expense increases associated with the new calendar year, as well as costs associated with hosting our annual customer conference beyond four days in March. Net income in the first quarter was $7.8 million, or $0.05 per share based on approximately 172.7 million fully diluted weighted average shares outstanding.

Peter J. Benevides: Operating margin was approximately 8% in Q1 and the year over year improvement reflects the combination of our focus on managing costs as well as growth in revenue.

Peter J. Benevides: Sequentially the decline in profitability from Q4 2023.

Peter J. Benevides: Seasonality around factors, such as tax reset and benefit expense increases associated with the new calendar year as well as costs associated with hosting our annual customer conference beyond four in March.

Peter J. Benevides: Net income in the first quarter was $7 $8 million were <unk> <unk> per share based on approximately $172 7 million fully diluted weighted average shares outstanding.

Peter J. Benevides: Turning our attention to the balance sheet and cash flow statement, our cash and cash equivalents in short and long term investments totaled approximately $377 million as of March 31st, 2024. Pursuant to our current share repurchase program, in the first quarter, we repurchased 2.8 million shares for a total of approximately $15 million. Since the introduction of our share repurchase program, we have repurchased 14.3 million shares for approximately $93.1 million. We had approximately $6.9 million remaining on the authorization as of the end of the quarter and have since completed the program.

Peter J. Benevides: Turning our attention to the balance sheet and cash flow statement.

Peter J. Benevides: Our cash cash equivalents and short and long term investments totaled approximately $377 million as of March 31 2024.

Peter J. Benevides: Pursuant to our current share repurchase program in the first quarter, we repurchased two 8 million shares for a total of approximately $15 million.

Peter J. Benevides: Since the introduction of our share repurchase program, we have repurchased $14 3 million shares for approximately $93 $1 million, we had approximately $6 $9 million remaining on the authorization as of the end of the quarter and have since completed the program in <unk>.

Peter J. Benevides: And today, we announced that our board has authorized a new $100 million share repurchase program. Net cash provided by operating activities was $6 million in the quarter, compared to $7.2 million in the quarter a year ago. Free cash flow was $2.8 million, compared to $3.9 million a year ago.

Peter J. Benevides: Today, we announced that our board has authorized a new $100 million share repurchase program.

Peter J. Benevides: Net cash provided by operating activities was $6 million in the quarter compared to $7 $2 million in the quarter a year ago.

Peter J. Benevides: Free cash flow was $2 8 million compared to $3 $9 million a year ago.

Peter J. Benevides: I'll wrap up by providing our guidance for the second quarter and full year 2024. For the second quarter of 2024, we expect revenue in the range of $67.5 million and $68 million and non-GAAP operating income in the range of $5.5 million and $5.9 million. For the fiscal year 2024, we are raising revenue and non-GAAP operating income guidance. We now expect revenue in the range of $274.5 million and $276.5 million, and non-GAAP operating income in the range of $23 million and $24.5 million. A few things to keep in mind as you consider our outlet for the year.

Peter J. Benevides: I'll wrap up by providing our guidance for the second quarter and full year 2024 for.

Peter J. Benevides: For the second quarter of 2024, we expect revenue in the range of $67 5 million and $68 million and non-GAAP operating income in the range of $5 5 million and $5 9 million.

Peter J. Benevides: For the fiscal year 2024, we are raising revenue and non-GAAP operating income guidance. We now expect revenue in the range of $274 $5 million and $276 5 million.

Peter J. Benevides: non-GAAP operating income in the range of $23 million and $24 $5 million.

Peter J. Benevides: A few things to keep in mind as you consider our outlook for the year.

Peter J. Benevides: We got off to a solid start to the year, as reflected in our raised full-year guidance. That said, we continue to take a prudent approach to our full-year outlook. We expect trends in the restaurant industry will remain similar to what we saw in 2023.

Peter J. Benevides: We got off to a solid start to the year as reflected in our raised full year guidance.

Peter J. Benevides: Third we continue to take a prudent approach to our full year outlook, we expect trends in the restaurant industry will remain similar to what we saw in 2023.

Peter J. Benevides: Consistent growth in digital ordering, a continued need to improve efficiency to offset rising costs, and macro uncertainty. Revenue Guidance continues to assume a two-thirds, one-third split between incremental revenue from existing projects currently in deployment and new projects signed and deployed in-year, which will be driven primarily by ARPU expansion at OloPay scales, and we have further success in selling multiple modules in our Order and Engage suite. In terms of gross margin, we now expect the sequential decline will be less pronounced.

Peter J. Benevides: Insisting growth in digital ordering the continued need to improve efficiency to offset rising costs and macro uncertainty.

Peter J. Benevides: Revenue guidance continues to assume a two thirds one third split between incremental revenue from existing projects currently in deployment and new projects signed and deployed in year, which will be driven primarily by <unk> expansion as <unk> scales and we have further success in selling multiple module.

Peter J. Benevides: In our order and engaged suites.

Peter J. Benevides: In terms of gross margin, we now expect a sequential decline will be less pronounced.

Peter J. Benevides: Specifically, we expect Q2 gross margin to decrease approximately 100 to 150 basis points from Q1's gross margin, and for this range of decline to occur from Q2 to Q3 and from Q3 to Q4. The change from our initial expectation of 150 to 200 basis points is due to a shift of certain costs from cost of revenue to operating expenses, as well as from better cost optimization within the platform. In terms of non-GAAP operating income, we expect to generate operating leverage in the second half of the year compared to the first half, directly consistent with prior year trends.

Peter J. Benevides: Specifically, we expect Q2 gross margin to decrease approximately 100 to 150 basis points from Q1's gross margin reported this range of decline to occur from Q2 to Q3 and from Q3 to Q4.

Peter J. Benevides: The change from our initial expectation of 150 to 200 basis points is due to a shift of certain costs from cost of revenue and operating expenses as well as from better cost optimization within the platform.

Peter J. Benevides: In terms of non-GAAP operating income, we expect to generate operating leverage in the second half of the year compared to the first half directionally consistent with prior year trends.

Peter J. Benevides: Finally, as a reminder, the quarterly pacing of operating expenses will be slightly different in the first half of 2024 versus prior years. As we stated on our last call, this year's annual compensation increases begin hitting in Q2. Historically, annual comp increases began in Q1.

Peter J. Benevides: Finally, as a reminder, the quarterly pacing of operating expenses will be slightly different than the first half of 2024 versus prior years as we stated on our last call. This year's annual compensation increases begin hitting in Q2, historically annual comp increases began in Q1.

Operator: To wrap up, we got off to a strong start this year. We are making good progress across our key strategic priorities and believe we are well-positioned to deliver on our updated financial targets for the year. We remain at the early stages of the digitization of the restaurant industry and believe Olo's portfolio of solutions helps brands solve many of their most pressing operational challenges. Furthermore, our open platform approach is allowing us to significantly increase the scale of our data asset and do more to help brands increase their sales and improve their operations. With that, I'd now like to turn it over to the operator to begin the Q&A session. Operator?

Peter J. Benevides: To wrap up we got off to a strong start this year, we are making good progress across our key strategic priorities and believe we are well positioned to deliver on our updated financial targets for the year. We remain at the early stages of the Digitization of the restaurant industry and believe <unk> portfolio of solutions.

Operator: Helps brands solve many of their most pressing operational challenges.

Operator: Further our open platform approach is allowing us to significantly increase the scale of our data asset and do more to help brands increase their sales and to improve their operation.

Speaker Change: With that I'd now like to turn it over to the operator to begin the Q&A session operator.

Operator: Thank you, sir. Ladies and gentlemen, at this time, we will be conducting a question and answer session. If you would like to ask a question, please press star and then 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press the star key and then 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. Again, if you would like to ask a question today, please press star and then 1. The first question we have comes from Terry Tillman of Tres Securities. Please go ahead.

Speaker Change: Thank you Sir.

Speaker Change: Ladies and gentlemen at this time, we will be conducting a question and answer session.

Terrell Frederick Tillman: I would like to ask a question. Please press star and then one on your telephone keypad.

Operator: <unk> tone will indicate your line is in the question queue.

Terrell Frederick Tillman: You May press Star and then two if you would like to move your question from the queue.

Terrell Frederick Tillman: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Operator: Again, if you would like to ask a question today. Please press star and then one.

Operator: First question, we have comes from Terry Tillman with <unk> Securities. Please go ahead.

Terrell Frederick Tillman: Yeah, hey, good afternoon, gentlemen. Can you hear me okay?

Terrell Frederick Tillman: Yes, hi, good afternoon, gentlemen, can you hear me okay.

Gary J. Fuges: Loud and clear, Terry. Thanks. It's wonderful.

Terrell Frederick Tillman: Well I wasn't clear Terry thanks.

Noah Herbert Glass: wonderful. So, congrats on some of these wins, like Dutch Bros. and some of the other transactions.

Terrell Frederick Tillman: Wonderful.

Terrell Frederick Tillman: Congrats on some of these wins like Dutch frozen and some of the other transaction.

Terrell Frederick Tillman: First of all, I've got two questions. The first one's a multi-parter. The second one, it might also be a multi-parter.

Terrell Frederick Tillman: First of all I have.

Terrell Frederick Tillman: I've got two questions. The first one is a multi part or the second one it might also be a multi partner so bear with me, but in terms of you've got a couple of Pos relationships now integrating it all will pay I would love just some qualitative perspective on what are you hearing from your large customer base as now thats starting to unlock and then secondly.

Terrell Frederick Tillman: So, bear with me. But in terms of you've got a couple of POS relationships now integrating into OWO Pay, I would love just some qualitative perspective on what are you hearing from your large customer base as now that's starting to unlock? And then, secondly, Peter, you had talked about, if I'm not mistaken, about a doubling of OLO Pay for the year to $60 million. Does that still hold true, or does that change? Thank you. And then I had a follow-up appointment. Gary, I'll get started on the qualitative part.

Speaker Change: Thank Peter you had talked about if I'm not mistaken about a doubling of the low pay for the year to $60 million does that still hold true or does that change. Thank you and then I had a follow up.

Noah Herbert Glass: Gary, I'll get started on the qualitative part. This is Noah.

Terrell Frederick Tillman: Barry I'll get started on the qualitative part this is Noah.

Noah Herbert Glass: So it's been fun to work on these POS partnerships that go beyond the traditional way that we integrate with the three dozen point of sale providers that we integrate with just order injection but now include both Olo Pay and also Olo Engage. So we're able to process those on-premise transactions happening inside of the restaurant or through the drive-through and have all of the data from those transactions, the 84% of transactions that take place in non-digital channels but in on-premise channels, flowing into the guest data plot.

Terrell Frederick Tillman: So it's been fun to work on these Pos partnerships that go beyond the traditional way that we integrate to the three dozen point of sale providers that we integrate two with just the order injection, but to now include both although pay and also <unk> engage so we're able to process those.

Noah Herbert Glass: On premise transactions happening inside of our restaurants or through the drive thru.

Noah Herbert Glass: And have all of the data from those transactions, the 84% of transactions that take place and non digital channels, but in.

Noah Herbert Glass: On premise channels.

Noah Herbert Glass: Flowing into the guest data platform, it's been even more fun to see the reaction from customers, who many of whom described this kind of capability of being able to see 100% of transactions and tie every transaction back to a guest as something of a whole.

Noah Herbert Glass: It's been even more fun to see the reaction from customers, many of whom describe this kind of capability of being able to see 100% of transactions and tie every transaction back to a guest as something of a holy grail that they've been waiting for this industry to get. So being able to unlock that Holy Grail, because it changes marketing and guest engagement differently and enables them to really understand guest lifetime value, not just for the 16% of digital transactions So we've seen that reaction, as you posted about these relationships with Q initially, which we announced at our Beyond4 customer conference about six weeks ago, and then more recently with NCR Voyex. We've seen these reactions on social media.

Noah Herbert Glass: Grail, but they've been waiting for this industry to get to to being able to unlock that Holy Grail because it trance.

Noah Herbert Glass: About marketing and guest engagement differently and enables them to really understand guest lifetime value not just for the 16% of digital transactions, but for all 100%. There has been a really really encouraging. So we've seen that reaction as we posted about these relationships with key initially, which we announced at our beer.

Noah Herbert Glass: And for customer conference about six weeks back and then more recently with NCR vortex. We've seen these reactions in social media and then we've also had direct conversations with the executives at the restaurant brands that are today palm and customers of <unk> and these point of sale platforms. They are really.

Noah Herbert Glass: Then we've also had direct conversations with the executives at the restaurant brands that are today common customers of Olo and these point-of-sale platforms. They are really excited about the future for both pay and for Engage and the unlock that this represents. And beyond that, it's been really fun to see what prospects are saying and thinking about these capabilities as they're evaluating POS partners and seeing this as a real competitive advantage for the POS partners that are working with Olo beyond just order injection but across all three of our products. So we have these two announced, and we obviously are seeking to do this across our point of sale partner relationship.

Noah Herbert Glass: Excited about the future for both pay and for engage and the unlock of this represents and beyond that it's been really fun to see what prospects are saying and thinking about these capabilities as they are evaluating pass partners and seeing this as a real competitive advantage for the POS partners that are working with <unk> beyond just oil.

Noah Herbert Glass: Injection, but across all three of our products suites. So we have these two announced and we obviously are seeking to do this across our point of sale partner relations.

Peter J. Benevides: Apologies, Gary here. I think we may have lost Noah. Just give us a second. While Noah connects, I can jump in there, Terry, and your question about the estimates for pay this year. You're right. We are still estimating a doubling of the business to over $60 million in revenue for the year. Again, that will just include the card not present portion of the business, with card present being a revenue contributor in 2025.

Speaker Change: Apologies Gary here I think we May have lost Noah just give us a second.

Speaker Change: Yeah, well connects I can jump in there Terry and your question around the.

Peter J. Benevides: The estimates for prepay this year, so you're right. We are still estimating a doubling of the business to over $60 million of revenue for the year end.

Peter J. Benevides: Again that will just include the card not present portion of the business with card present.

Peter J. Benevides: Being a revenue contributor in 2025.

Peter J. Benevides: That's great. Thanks for that. And I know, Gary, I don't know if we've had any, thank you for that, Peter. Gary, did Noah rejoin?

Speaker Change: That's great. Thanks for that and I know Gary I don't know if we've had thank you. Thank you for that Peter Gary did Noah rejoined.

Gary J. Fuges: I believe, Terry, he's dialing back in, so apologies for that.

Gary: I believe Terry he's dialing back in so apologize for that.

Terrell Frederick Tillman: Okay, well, maybe what I'll do is, in the spirit of letting other folks get in here, maybe I could just ask you Peter then, and then I'll just jump back in the queue. Is it related to free cash flow for the year? Just any updated thoughts there on how you're thinking about free cash flow for the year?

Speaker Change: Okay, well, maybe what I'll do is just for the spirit of a lot of those.

Speaker Change: Folks getting here, maybe I could just ask you. Peter then and then I'll just jump back in the queue.

Peter: As it relates to free cash flow for the year, just any updated thoughts there.

Peter: How youre thinking about free cash flow for the year. Thank you.

Peter J. Benevides: Yeah, so I'm sure you noticed this quarter we generated free cash flow, which is about half of what we brought in from an operating income perspective. With the difference there being really cap software driven, I would expect, you know, holding aside any one-time items that we're not foreseeing currently for that dynamic to continue through the balance of the year and be free cash flow positive for the year.

Terrell Frederick Tillman: Yes.

Peter: I'm sure you noticed this quarter, we generated free cash flow, which is about half of what we brought in from an operating income perspective.

Peter J. Benevides: With the difference there being really cap software driven I would expect holding aside.

Peter J. Benevides: Any any onetime items that were not foreseeing currently for that dynamic to continue through the balance of the year and being free cash flow positive for the year.

Operator: All right, thank you all. Operator, next question please. Apologies. We seem to be having continued difficulties here. Just hang with us for one second.

Speaker Change: Alright, thank you.

Speaker Change: Operator next question please.

Operator: Apologies, we seem to be having continued difficulties here. Just hang with us here for one second. All right, folks. We're still here, and we're working on getting the QA. I see people in the Q&A, and we're working on getting you through, so please be patient. Thank you.

Speaker Change: Apologies, we seem to be having a continued difficulties here.

Speaker Change: <unk> just hang loose here one second.

Operator: Alright folks were working through this year, we're still here and we're working on getting the QA C folks in the Q&A in and we're working on getting it through so please be patient. Thank you.

Operator: Max on Lake Street, can you hear me? Yeah, I can. Sorry, it just said you were not talking to the woman. They were talking to me. Yeah, that's all right. I'm taking over here, Max. I'm trying to do this remotely, so we've got your line live.

Operator: Max at Lake Street can you hear me.

Speaker Change: Yeah, Ken sorry, and just said you were great I wasn't sure if they were talking to me Yeah Thats right.

Speaker Change: Taken over here Max I try and do is from early so we've got your line lives. So alright got Peter and I are so far away.

Speaker Change: Okay, all right sounds good so if we just go to the queue and NCR voyage.

Operator: <unk> partnership I guess, what I'm wondering here.

Speaker Change: Is this arrangement dependent on the launch of card present or are we see card not present revenue from them today.

Noah Herbert Glass: Um, well, we currently have the integrations, Max, this is Noah, for order injection, and Olo can be the digital ordering provider with card not present processing. The idea of this relationship is really tied to the launch of card present processing, where the transaction is happening, the order is being taken on the POS, the payment is being done POS adjacent, connected to the point-of-sale, and then we're receiving the data from that order, not just the transaction data of the total amount that you typically get from a payment transaction, but we're actually getting ticket data.

Operator: Well. So we currently have the integrations Mac. This is Noah for order injection and OLED can be the digital ordering provider with.

Noah Herbert Glass: Card not present processing. The idea of this relationship is really tied to the launch of card present processing, where the transaction is happening orders being taken on the Pos the payment is being done Pos adjacent.

Noah Herbert Glass: Take it to the point of sale and then they're receiving the data from that order not just the transaction data of the total amount that you typically get from a payment transaction, we're actually getting ticket data. So we're able to see item level data ingredient level data what was modified adjusted subs.

Noah Herbert Glass: So we're able to see item-level data, ingredient-level data, what was modified, adjusted, substituted, or added to an item, and that's getting pulled back into the Olo Engaged guest data platform. And all of that is tied back to a guest profile. That's what I mean when I say being able to accommodate 100% of transactions for 100% of guests. And we're really seeing a level of depth in those transactions, a granularity that is typically associated with digital transactions.

Noah Herbert Glass: But you did added to an item and thats getting pulled back into the although engage guests data platform.

Noah Herbert Glass: And all of that is tied back to a guest profile. So that's what I mean, when I say being able to seed 100% of transactions for 100% of guests and we're really seeing a level of depth of those transactions a granularity that is typically associated with digital transactions, we were able to see all of that customized.

Noah Herbert Glass: Nation detail down to the ingredient level, but we're now able to do that.

Noah Herbert Glass: We're able to see all of that customization detail down to the ingredient level. We're now able to do that. We're now able to do that for on-premise transactions through these two different point of sale platforms, and our ambition is to replicate that kind of arrangement across all of the point of sale partners that we work with in serving enterprise restaurant brand guest data needs. Alright, and then, I guess, on top of that, I mean, is there a possibility for a similar arrangement?

Noah Herbert Glass: We're now able to do that rather for on premise transactions through these two different point of sale platform SKU and NCR works and our ambition is to replicate that kind of arrangement across all of the point of sale partners that we work with in <unk>.

Noah Herbert Glass: Serving enterprise restaurant brand guest data needs.

Speaker Change: Yes already.

Noah Herbert Glass: And then I guess on top of that I mean is there a possibility for a similar arrangement with my girls.

Noah Herbert Glass: Yeah, we don't take any of the POS partners that we currently work with today off the table. We're sequencing this based on a variety of factors. And we're excited to work with Q as a challenger point of sale that is relatively new to the scene and gaining share, and with NCR as our longest-term POS partner and the largest POS partner that we have the most number of restaurant brands and locations with today, and everything in between.

Speaker Change: Yeah, we don't take any of the POS partners that we currently work with today off the table. We're sequencing. This based on a variety of factors and we're excited to work with cue as a challenger point of sale that is kind of relatively new on the scene and gaining share and with NCR as.

Noah Herbert Glass: Our longest term Pos partner and the largest P. O S partner that we have the most number of restaurant brands and locations with today and everything in between.

Speaker Change: Alrighty, Hey, great quarter, guys. Thanks for taking my questions.

Speaker Change: Thank you.

Operator: Our next question is from Stephen Sheldon with William Blair.

Noah Herbert Glass: Our next question from Stephen Sheldon with William Blair.

Matthew John Swanson: Hey, Noah and Peter, you have Matt Filek on for Steven. Thank you for the questions. I wanted to start with a macro level question, just curious about what trends you are seeing in consumer spending and engagement and how you feel about the overall health of the consumer heading into the second half of the year.

Speaker Change: Hey, Noah Peter you have that filer on for Stephen. Thank you for the questions wanted to start with a macro level question. Just curious on what trends you are seeing in consumer spending and engagement and how you feel about the overall health of the consumer heading into the second half of the year.

Noah Herbert Glass: Well, great question, and certainly one that's been in focus as we've listened to restaurants reporting earnings. I would say there is certainly the same sort of sentiment with consumers about a trade down into lower-cost restaurant offerings. You've heard restaurant brands talk about losing some of the lower-income consumers. And what we really see at this moment in the industry is that restaurants are dealing with two different forces. One is labor pressure and the higher cost of labor.

Speaker Change: Well great question and certainly one that's been our focus as we've listened to restaurants reporting earnings I would say there is certainly the same sort of sentiment with consumers of a trade down into lower expensive restaurant offerings you.

Noah Herbert Glass: <unk> heard restaurant brands talk about losing some of the lower income consumers and what we really see at this moment in the industry is that restaurants are.

Noah Herbert Glass: Dealing with two different forces one is labor pressure the higher cost of labor. Some of that is based on regulations as in California, or the difficulty of getting enough labor inside the restaurants and traffic declining in part of traffic declining years some of that price sensitivity I think also some of it is due.

Noah Herbert Glass: Some of that is based on regulations such as in California, the difficulty of getting enough labor inside the restaurants, and declining traffic. And part of the decline is some of that price sensitivity. I think some of it is driven by food costs and inflation in food costs leading to restaurants taking prices. And that's always a trade-off when restaurants take prices and charge higher prices for traffic. So a big thing that we're focused on at Olo is addressing those two challenges that restaurants are facing.

Noah Herbert Glass: Driven by.

Noah Herbert Glass: Food costs, and the inflation entry costs, leading to restaurants, taking price and that's always a tradeoff when restaurants take price and charge higher prices for traffic.

Noah Herbert Glass: A big thing that we're focused on in Ohio is addressing those two challenges that restaurants are facing the first around labor, helping them to do more with less and that is something that although has always been all about in every solution that we brought to market, helping the restaurant be more efficient in their use of labor putting more of.

Noah Herbert Glass: The first is around labor, helping them to do more with less. And that is something that Olo has always been all about in every solution that we've brought to market. Helping the restaurant be more efficient in its use of labor, putting more of the ordering and payment in the hands of the guests so that the restaurant can focus on really delivering on high-quality hospitality interactions with the guests and be more efficient from the labor standpoint.

Noah Herbert Glass: The ordering and payment in the hands of the guests to the restaurant can focus on really delivering on high hospitality interactions with the guests and be more efficient from a labor standpoint on the other fronts.

Noah Herbert Glass: And on the other hand, really helping restaurants know their guests better, understanding all of the different touch points with the guests and being able to personalize their marketing to the guests, increase conversion, and have guests increase their guest lifetime value without necessarily requiring a restaurant to resort to things like discounting or offers to drive guests back in. So these two value propositions of, you know, helping you do more with less and better know your guests to drive traffic are really relevant to restaurants, given those challenges that they're experiencing with consumers at this moment.

Noah Herbert Glass: Really helping restaurants know their guests to better understanding all of the different touch points with the guest and being able to personalize their marketing to the guests increase conversion and have guests increasing their guests lifetime value without necessarily requiring restaurants to resort to things like discounting or offers.

Noah Herbert Glass: A drive guests back in so these two.

Speaker Change: Our value propositions of <unk>.

Noah Herbert Glass: Helping you do more with less and better know your guests to drive traffic are really resonates with restaurants have given those challenges they are experiencing with consumers at this moment.

Noah Herbert Glass: That's helpful, Noah. Thank you for that. And then can you just talk some more about the recently announced Smart Cross-Sales product, particularly what early customer feedback has been like? And do you think that could be a driver of ARPU growth over the longer term?

Speaker Change: Got it that's helpful and I want to thank you for that and then can you just talk some more about their recently announced smart cross sells product, particularly what early customer feedback has been like and do you think that's something that could be a driver to ARPA growth over the longer term.

Noah Herbert Glass: Yeah, Smart Cross Sells is one that we are really proud of. I mentioned there were 13 different capabilities that we announced in our spring release. Smart Cross Sells is one that is really, really fun because it uses that ordering and checkout experience and all of the data that we're able to see to utilize the context of what is in the cart and what we've seen in terms of product affinity from one product to other products that go nicely with that product in a really data-driven way rather than just saying, do you want fries with that or do you want a drink with that, as we're all And The results really speak for themselves.

Speaker Change: Yes, Smart cross sells is one that we are really proud of I mentioned, there were 13 different capabilities that we announced in our spring release Smart Cross sells is one that is really really fun because it is using that ordering and check out experience and all of the data that we're able to seek to utilize the context of <unk>.

Noah Herbert Glass: We've seen a 10% lift in basket size when using smart cross-sells versus using the sort of traditional upsell, and all of this is automated. This does not require that somebody be manually doing upkeep to do that affinity mapping of one product to another product. It's very similar to the way that services like Netflix or Spotify use collaborative filtering to use AI, to use machine learning, to use the data that we see to have the best offering put in front of the customer at the right moment. I'm very proud to announce, and this was not in the prepared remarks, but we now have over 10,000 locations already adopting Smart Cross cells. And we're very excited that it also means no manual upkeep.

Noah Herbert Glass: What is in the court and what we've seen in terms of product affinity from one product to other products that go nicely with that product in a really data driven way to make a as the name suggests smart cross sell rather than just saying do you want fries with that or do you want a drink with that is we're all used to hearing and the results really speak for themselves.

Noah Herbert Glass: We've seen a 10% lift in.

Noah Herbert Glass: In basket size, when using smart cross sells versus using the term traditional upsell and all of this is automated this does not require that somebody is manually doing up teams to do that affinity mapping of one product to another product that's very similar to the way that services like Netflix or Spotify user.

Noah Herbert Glass: A filtering to use AI use machine learning to use the data that we see you have the best offering put in front of the customer at the right moment I'm very proud to announcements was not in the prepared remarks, but we now have over 10000 locations already adopting smart cross sells and we're very excited that it also.

Noah Herbert Glass: Means no manual upkeep. This will continue to get smarter and smarter and we hinted a little bit at how this can get smarter from here. So understanding who that guest is what they've ordered and their order history is one way that we're focused on making smart cross sell even smarter.

Noah Herbert Glass: This will continue to get smarter and smarter, and we hinted a little bit at how this could get smarter from here. So understanding who that guest is, what they've ordered in their order history is one way that we're focused on making Smart Crosssell even smarter. And then also pulling in the data that we can see about the guest from across the Olo platform, really flexing the Olo network through our borderless identity to understand who that guest is and what they've done in other ordering scenarios at other brands to make the Smart Crosssell even smarter for that specific guest with So we're excited about continuing on that personalization journey, using data, using AI, using machine learning. And certainly, we believe that there is a revenue opportunity there and, therefore, an ARPU opportunity there over time. I got it.

Noah Herbert Glass: And then also pulling in the data that we can see about the guests from across the older platform really flexing the although network through our border with identity to understand that cuda guest is and what they've done in other ordering scenario that other brands to make the smart cross sell even smarter for that specific gas with a network in Bordeaux.

Noah Herbert Glass: It's already 4 million strong.

Noah Herbert Glass: We're excited about continuing on that personalization journey using data using AI using machine learning and certainly we believe that there is.

Noah Herbert Glass: Our revenue opportunity there and therefore, an <unk> opportunity there over time.

Matthew John Swanson: Got it. Thanks for that. Add color. That's helpful. Appreciate the time. Nice quarter, guys.

Speaker Change: Got it thanks for that added color. That's helpful. I appreciate the time and nice quarter guys.

Speaker Change: Thank you.

Operator: Once again, if you'd like to ask a question, please press star 1. Our next question is from Clarke Jeffries with Piper Sandler.

Matthew John Swanson: Once again, if you'd like to ask a question. Please press star one. Our next question is from Clarke Jeffries with Piper Sandler.

Clarke Jeffries: Hello, thank you for taking the question, Noah, Peter, good to be speaking with you. Noah, I wanted to ask, you know, coming away from beyond 2024, I think it was very interesting to see the progress one year in the sort of mindshare of the marketing product and the sort of the help on the marketing side that you've built with the Engage suite. I was just curious about your takeaways on the appetite balance between Engage and pay as you look this year.

Clarke Jeffries: Hello, Thank you for taking the question no appear.

Clarke Jeffries: Good to be speaking with you.

Clarke Jeffries: Does Engage seem like a product that might bump up on the priority list or the demand list looking at 2024? And when you think about Smart Cross Sell as an accelerant to that, you know, could that be a factor? And the final part of that question is just could you remind us how many customer profiles you have? powered by borderless data today, and then one follow-up.

Clarke Jeffries: No I I wanted to ask you know.

Clarke Jeffries: Coming away from from beyond 2024.

Clarke Jeffries: I think it was it was very interesting to see the progress one year in the sort of <unk>.

Clarke Jeffries: <unk> share of the marketing product.

Clarke Jeffries: In the survey that help on the marketing side that you've built with engage suite.

Clarke Jeffries: I was just curious about your takeaways on the appetite balance between engage in and pay as you look at this year. It does engage seem like a product that might.

Clarke Jeffries: Bump up in the priority list or the demand lift looking at 2024.

Clarke Jeffries: And when you think about smart cross sell as an accelerant to that.

Clarke Jeffries: Could that be a factor in the final part of that question was just could you remind us how many.

Clarke Jeffries: Customer profile do you have.

Clarke Jeffries: Powered by the border with data today.

Clarke Jeffries: And then one follow up.

Noah Herbert Glass: Dorothy and Clarke, well, first, thank you for attending and thank you to all of you in the analyst community who joined us at Beyond4. I think it was hard to come away from that event not feeling like Olo customers are really leaning into their relationship with Olo, looking for new capabilities from Olo, and really viewing Olo as their digital concierge that's going to help them on their digital journey as they become more and more digitally mature.

Speaker Change: Sure thing Clark well first thank you for attending and thank you to all of you in the analyst community, who rejoined us at beyond four I think it was hard to come away from that event not feeling like <unk>.

Noah Herbert Glass: And certainly one of the things that we really wanted to focus on was the way in which the solution suite plays off of one another. We think about this data flywheel that order and pay together drive a ton of data, and that data enriches our ability to know the guest, our ability to help the brand know the guest, and then to engage them, they speak with them, and how they personalize the experience. And Smart Cross Sell is just a great example of that.

Noah Herbert Glass: Although our customers are really leaning into the relationship with Ono looking for new capabilities from Ono and really viewing although as their digital considerably area, that's going to help them on their digital journey.

Noah Herbert Glass: As they become more and more digitally mature and certainly one of the things that we really wanted to focus on was the way in which the solution suites.

Noah Herbert Glass: Play off of one another we think about this data flywheel that order and pay together drive a ton of data and that data enriches our ability to know the guests and our ability to help the brand no. The guests and then to engage they speak with them and how they personalize the experience and smart cross sell is just a grew.

Noah Herbert Glass: Example of that.

Noah Herbert Glass: In terms of what brands are focused on, I think that what we see is that we talk about Olo pay engage in that sequence, and that's very intentional. That's how we think brands are sequencing their efforts, that order and pay are the great feeders of data, and then there's all this data to use for engagement. Certainly, a lot of restaurant customers who were there at Beyond 4 were really eager to hear about what we're doing with engage. And I think Borderless was almost a cherry on top.

Noah Herbert Glass: In terms of what brands are focused on I think that what we see is we talk about OLED pay engage in that sequence and that's very intentional. That's how we think brands are sequencing their efforts that order and pay or the Greek feeders of data and then there's all this data to use for engagement.

Noah Herbert Glass: <unk>.

Noah Herbert Glass: Certainly a lot of restaurant customers, who where they're at beyond four we're really eager to hear about what we're doing with engage.

Noah Herbert Glass: Borderless was almost a cherry on top on border list.

Noah Herbert Glass: On Borderless, What was it, 180 days ago, we announced that we had reached a million guests on Borderless. Then 90 days ago, in our last call, we were up to 2 million guest accounts on Borderless. And then today we've announced we're at 4 million guest accounts on Bordelaise.

Noah Herbert Glass: Or was it a 180 days ago, we announced that we had reached a million guests on board with us than 90 days ago on our last call. We are up to 2 million guest accounts on board with us.

Noah Herbert Glass: And today, we've announced we're at 4 million guest accounts on borderlands. So you can really see that exponential growth of restaurant of guests who have.

Noah Herbert Glass: So you can really see that exponential growth of restaurant guests who have OLo-level profiles that they can then use across multiple brands. And that's what we mean when we talk about this network effect, Olo sitting in between restaurant brands and restaurant guests and being able to leverage the data that we can see about the guests across multiple brands for an even more personalized experience that leads to higher conversion, higher frequency, and greater guest lifetime value.

Noah Herbert Glass: Although level profiles that they can then use across multiple brands and that's what we mean when we talk about this network effect, although sitting in between restaurant brand and restaurant guests and being able to leverage the data that we can see about the guest across multiple brands for an even more personalized experience that leads to.

Noah Herbert Glass: Higher conversion higher frequency, a greater guest lifetime value I think all of these things are really a direct hit for restaurant brands and what they're thinking about given the environment that they're operating in and also given kind of what they're able to do now with digital ordering and payments throwing off so much data and.

Noah Herbert Glass: So I think all of these things are really a direct hit for restaurant brands and what they're thinking about given the environment that they're operating in, and also given kind of what they're able to do now with digital ordering and payments, throwing off so much data and giving them the opportunity to leverage that data as a great co-product of the digitization of their business to really offer hospitality in a new way in a digital realm and make every guest feel like a regular.

Noah Herbert Glass: Giving them the opportunity to leverage that data is a great co product of the digitization of their business.

Noah Herbert Glass: Really offer hospitality.

Noah Herbert Glass: In a new way in a digital realm and make every guest feel like irregular.

Noah Herbert Glass: Great, perfect. And then I had one follow-up, just in relation to the point of sale partnerships. You know, very encouraging to hear those vendors be brought up proactively before the announcement was even made about, you know, a flagship point of sale partner. I just wanted to be clear about, you know, when you think about going to market with these partnerships, where would you rank the partnerships where they could be an additional distribution channel?

Speaker Change: Great Perfect and then I had one follow up just in relation to the point of sale partnerships.

Noah Herbert Glass: Very encouraging to hear those.

Noah Herbert Glass: Vendors be brought up proactively before the announcement was even said about.

Noah Herbert Glass: Our flagship point of sale partner.

Noah Herbert Glass: I just wanted to be clear about when you think about go to market with these partnerships.

Noah Herbert Glass: Where would you rank order the partnerships, where they could be an additional distribution channel where youll be.

Noah Herbert Glass: Will you be proactively pulled into a new customer relationship and in situations where there'll be a preferred partner? And this is about, you know, technical integrations and compatibility within the ecosystem. Just kind of clarity around where you're thinking about point of sale partners in that regard would be helpful. Thank you.

Noah Herbert Glass: Proactively pulled into a new customer relationship and in situations, where there'll be a preferred partner.

Noah Herbert Glass: And this is about technical integration, then and compatibility within the ecosystem just kind of clarity around where are you thinking about point of sale partners in that regard would be helpful. Thank you.

Noah Herbert Glass: Yeah, I think it's a great question. We like to be an open platform, as you've heard us talk about from the very beginning. And that has really been our ethos. And we don't want to prioritize one partner over another.

Speaker Change: Yeah, I think it's a great question, we like to be an open platform as you've heard us talk about from the very beginning and that has really been our ethos and we don't want to prioritize one partner over another it has been great to be able to walk into our customers and say.

Noah Herbert Glass: There are all of the partners that we work with and you can look them up in our grade although connect partner Directory, our website and you can see exactly what we're doing with each how many other brands and how many other medications are working with them what they have to say about it and how long that relationship has been in place.

Noah Herbert Glass: It has been great to be able to walk into our customers and say, here are all the partners that we work with, and you can look them up in our great Olo Connect partner directory on our website. And you can see exactly what we're doing with each, how many other brands and how many other locations are working with them, what they have to say about it, and how long that relationship has been in place.

Noah Herbert Glass: Obviously more walking into a restaurant brand and we have a capability like what we now have with Q and MTR boy eggs, we think that puts them as P. O S providers.

Noah Herbert Glass: Obviously, when we're walking into a restaurant brand, and we have a capability like what we now have with Q and MTR Voya, we think that puts them as POS providers at a competitive advantage to be able to say, we can be a POS partner who works with Olo for order, for pay, for engage, and really helps you to have this Holy Grail kind of capability where you can get every transaction tied back to Our hope is that we can do that with every point of sale provider that we work with over time.

Noah Herbert Glass: At a competitive advantage to be able to say, we can be a P. O S partner, who works with all over order for pay for engage and really helps you too.

Noah Herbert Glass: This Holy Grail kind of capability, where you can get every transaction tied back to our guests, whether it's off premise or on premise digital or non digital.

Noah Herbert Glass: Our hope is that we can do that with every point of sale provider that we work with over time and I think it's incumbent upon the POS providers do you embrace that open philosophy as Q and NCR Blake's have done and do that for.

Noah Herbert Glass: And I think it's incumbent upon the POS providers to embrace that open philosophy as Q and NCR Blayhooks have done and do that for real innovation to flourish for our common customers and for the industry as a whole.

Noah Herbert Glass: Really innovation to flourish for our common customers and for the industry as a whole.

Noah Herbert Glass: Really appreciate it.

Speaker Change: Thank you.

Operator: Thank you. The next question is from Gabriela Borges with Goldman Sachs.

Noah Herbert Glass: Our next question is from Gabriela Borges with Goldman Sachs.

Kevin Kumara: Hi, this is Kevin Kumara on behalf of Gary.

Noah Herbert Glass: Hi, This is Kevin Kumar on for Gabrielle and thanks for taking the question.

Gabriela Borges: Now can you give a update on the ramp of the professional services team how is that coming along and anything you can say I guess on the the impact it's having on customers from a time to value perspective.

Noah Herbert Glass: Sure thing. Well, it's something that was another really hot topic at Beyond4. We talked a little bit on our last call about professional services and how we saw a need for Olo to do more. And I would put it under that same heading of helping restaurant brands do more with less. A lot of restaurant brands don't necessarily have somebody in-house who is a digital marketing guru and knows how to use all the data that they now have access to or use all the tools that they now have access to through the Olo Engage platform.

Kevin Kumar: Sure thing well, it's something that was another really hot topic at beyond four we talked about it a little bit on our last call about professional services and how we saw a need for although to do more and I would put it under the same heading of helping a restaurant brands to do more with less a lot of restaurant brands don't.

Noah Herbert Glass: Have somebody necessarily in house, who is a digital marketing Guru and knows how to use all of the data that they now have access to or use all the tools that they now have access to through the <unk> engage platform. So we see a great opportunity and I mentioned this with.

Noah Herbert Glass: So we see a great opportunity, and I mentioned this with announcing California Pizza Kitchen and Five Guys last quarter coming on to Olo Engage, that they can leverage Olo professional services to operationalize and optimize a program. And they can also use this on an ongoing basis to kind of be that digital consigliere, almost like a fractional chief digital officer for the brand, and really help to optimize the programs over time. That's true, and I mentioned it in Olo Engage. It's also true of me.

Noah Herbert Glass: Announcing California Pizza kitchen, and five guys last quarter coming on to Ola engage but they can leverage although professional services to operationalize and optimize a program and they can also use us on an ongoing basis to kind of be that digital can safely aerie almost like a fractional.

Noah Herbert Glass: Our chief Digital officer for the brand and really help too.

Noah Herbert Glass: No.

Noah Herbert Glass: Optimize the programs over time, that's true and I mentioned it for OTO engage it's also true of.

Noah Herbert Glass: It's also true of pay and how we sort of set up the program and get brands up and running beyond just implementation, but make sure that we're fine-tuning the program as it goes. I would say this is a bit anecdotal, not as quantified as you may wish, but at the BEYOND4 conference, we had stickers that were out at check-in when people were registering, and I remember well that the yellow stickers were the ones that indicated it was an Olo restaurant customer who wanted to hear about the professional services offering. We had other stickers for the different product suites. We had stickers for Catering Plus, et cetera. The yellow stickers ran out very quickly.

Noah Herbert Glass: Although ordering it's also true of pay and how we sort of set up the program and get brands up and running beyond just implementation, but make sure that we're fine tuning the program as it goes.

Noah Herbert Glass: I would I would say this is a bit anecdotal not as quantified that you may wish but from the beyond four conference. We had stickers that were out at check in when people were registering and I remember well that the yellow stickers.

Noah Herbert Glass: We're the ones that indicated that it was a a and although restaurant customer who wanted to hear about the professional services offering we.

Noah Herbert Glass: We had other stickers for the different product suites, we had sneakers for catering plus et cetera. The yellow stickers ran out very quickly a lot of restaurant brands want or to play this role of professional services or excited about building that muscle as we look today, it's a very small portion of our overall revenue mix, but again, we think.

Noah Herbert Glass: A lot of restaurant brands want Ola to play this role of professional services. We're excited about building that muscle. As we look today, it's a very small portion of our overall revenue mix. But again, we think that professional services is an important part of our revenue story going forward and a huge unlock for software revenue. In addition to just being another revenue stream, it will help our customers get to value faster and use more of Ola's capabilities as they become more digitally mature faster.

Noah Herbert Glass: Professional services is an important part of our revenue story going forward at a huge unlock for software revenue. In addition to just being another revenue stream that will help our customers.

Noah Herbert Glass: Get to value faster and use more of those capabilities as they get more digitally mature faster.

Noah Herbert Glass: Thank you and congrats on the color.

Speaker Change: Thank you.

Operator: Operator, we'll take one more question, please.

Speaker Change: Operator, we'll take one more question please.

Operator: Our next question is a follow-up from Terry Tillman with Truett.

Noah Herbert Glass: Our next question is a follow up from Terry Tillman with tourists.

Terrell Frederick Tillman: Oh, thanks. I hope I didn't cause you to hang up there earlier, Noah. I'm glad you're back.

Speaker Change: Oh, Thanks, I hope I didn't cause you to hang up their earlier, Noah I'm glad you're back.

Noah Herbert Glass: Just a follow-up is, I think you answered a good question from somebody else earlier asking about the, you know, the other products and including Engage, but I think you talked about the sequential order, the way it really, the cadence could work as Olo Pay and then Olo Engage. What I'm curious about is, because now you have these POS relationships with Olo Pay, I just want to know about the go-to-market Are you set up to go sell and engage more aggressively?

Operator: Yes.

Terrell Frederick Tillman: My follow up is are you.

Terrell Frederick Tillman: And it's a good question from somebody else earlier, asking about the you know.

Noah Herbert Glass: The other products and including engaged but I think you talked about the sequential order the way. It really is the cadence to work as an opaque and then Hello engaged but I'm curious about is because now you have these P. L. P. O S relationships with all Okay. I just want to know about the go to market are you set up to go sell engage more aggressively like is it a dedicated sales force or is your whole sales team trained.

Noah Herbert Glass: Like, is it a dedicated sales force, or is your whole sales team trained? It's more kind of in the how the sausage gets made in terms of how you're going to monetize this to go to market. Thank you.

Noah Herbert Glass: It's more kind of in the in the how the sausage is made in terms of how you're going to monetize this to go to market. Thank you.

Noah Herbert Glass: Yeah, Terry, it's a great question. Sorry about the difficulties earlier with the call.

Speaker Change: Yeah, Terry it's a great question, sorry about the difficulty is earlier with that with the call Center.

Noah Herbert Glass: So the way that we go-to-market, I've had an awesome time over the past couple of weeks really witnessing this firsthand, being out with our team, talking to customers, talking to prospects, and seeing the magic of the way that go-to-market works today with a more nuanced structure really working. And I would describe it as we have, in many cases, a long-standing trusted relationship with a restaurant brand at the C- And they typically know us from being their ordering platform for over several years.

Terry: So the way that that go to market I've had an awesome time over the past couple of weeks really witnessing this firsthand being out with our team talking to customers talking to prospects and seeing the magic of the way that go to market works today with a more nuanced structure.

Noah Herbert Glass: And when we have these new capabilities, whether it's a new solution suite like pay, like engage, or whether it's something like catering, which is a module catering plus within the order suite, we have the ability to have that relationship, hear about what they're looking to do, and then bring in our great sales engineering team to do a demo in real time, showcase studies of other brands and what they're doing using some new module that the brand has And that one-two punch of a long-standing relationship that's kind of broad in nature and that deep and specific knowledge of that sales engineer is really an awesome model. And credit to Diego Panama, our Chief Revenue Officer, who came in and reshaped our team in that way. But that model is really working.

Noah Herbert Glass: Really working and I would describe it as we have.

Noah Herbert Glass: In many cases, a long standing trusted relationship with a restaurant brand at the C suite level and they know us typically from being their ordering platform over several years and when we have these new capabilities, whether it's a new solution suite like PE like engage whether it's something like catering.

Noah Herbert Glass: Which is a module catering plus within the order suite, we have the ability to have that relationship here about what they're looking to do and then bring in our great sales engineering team to do a demo in real time showcase studies of other brands and what they're doing using some new module.

Noah Herbert Glass: The brand has expressed interest in and that one two punch of the longstanding relationship that is kind of broad in nature and that deepened specific knowledge of that sales engineer was really an awesome model and credit to Diego, Panama, Our Chief revenue officer, who came in and reshaped.

Noah Herbert Glass: Our team in that way, but that model is really working it's helping us to educate our restaurant customers and prospects about the new capabilities that we offer it is helping our salespeople have understand broadly all of the things that <unk> can do but also note in their back pocket. They have a team of experts who can go deep on those things do those live demos.

Noah Herbert Glass: It's helping us to educate our restaurant customers and prospects about the new capabilities that we offer. It's helping our salespeople understand broadly all the things that OO can do, but also know that in their back pocket, they have a team of experts who can go deep on those things, do those live demos, and answer any questions that brands have. And I think that's really showing up in success for our go-to-market team in these new product modules and in these new solution suites.

Noah Herbert Glass: Answer any questions that brands have.

Noah Herbert Glass: And I think that's really showing up in success for our go to market team.

Noah Herbert Glass: In these new product modules and these new solution suites.

Speaker Change: Thanks, No that's helpful.

Noah Herbert Glass: Okay.

Speaker Change: Thank you.

Noah Herbert Glass: Ladies and gentlemen, we have reached the end of the question and answer session I would like to turn the floor back to Noah glass for closing remarks.

Speaker Change: Okay, well, thank you for joining us today and bearing with us through some of the technical difficulties. We started off 2024 with strong Q1 financial results raised full year guidance and expanded partnerships to help brands leverage 100% of their transactions and drive guest lifetime value through our open platform we built.

Terrell Frederick Tillman: Thanks Noah, that's helpful.

Operator: Ladies and gentlemen, we have reached the end of the question and answer session. I would like to turn the floor back to Noah Glass for closing remarks.

Noah Herbert Glass: Okay, well, thank you for joining us today and bearing with us through some of the technical difficulties. We started off 2024 with strong Q1 financial results, raised full-year guidance, and expanded partnerships to help brands leverage 100% of their transactions and drive guest lifetime value. Through our open platform, we believe we are uniquely positioned to capitalize on the increasing demand for guest personalization. Olo is accelerating the future of hospitality, and we're laser-focused on executing on the opportunity in front of us.

Noah Herbert Glass: <unk>, we are uniquely positioned to capitalize on the increasing demand for guest personalization, although is accelerating the future of hospitality and we're laser focused on executing on the opportunity in front of us.

Operator: Thank you. This concludes today's conference. You may disconnect your lines at this time.

Speaker Change: Have a great evening.

Operator: Thank you. This concludes today's conference you may disconnect your lines at this time.

Operator: [music].