Olo - Q2 2021

Transcript

Speaker 0

Good afternoon. My name is Sarah, and I will be your conference operator today. At this time, I would like to welcome everyone to Allo Second Quarter 2021 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. The after the speakers' remarks, there will be a question and answer session.

The end. I would like to turn the call over to Olo's Vice President of Investor Relations, Ms. Stephanie Doucous. Please go ahead.

Speaker 1

Thank you. Good afternoon, everyone, and welcome to the Olo's Q2 2021 earnings conference call. Joining me today are Noah Glass, Olo's Founder and CEO and Pierre Benedides, Olo's CFO. During our call today, some of our discussion and responses to your questions may contain forward looking statements, which represent our beliefs and assumptions only as of the date such statements are made. The These forward looking statements include, but are not limited to statements regarding our future performance and our market opportunity, including our expected financial results for the Q3 and fiscal year 2021.

Expectations regarding future operating expenses, impacts and expected results from changes in our relationship with our customers, our market opportunity and market trends, expectations regarding the impact of the COVID-nineteen pandemic and seasonality on our business and industry, predictions on consumer ordering volumes, the Our ability to sustain our profitability, customer adoption of products and expectations for capturing market share and our delivery of new products or product features. The We undertake no obligation of updating any forward looking statements made during this call to reflect events or circumstances after today. To the These statements are subject to risks, uncertainties and assumptions. Should any of these risks or uncertainties materialize or should any of these assumptions prove to the A discussion of the risks and uncertainties related to our business is contained in our quarterly report on Form 10 Q for the quarter ended March 31, 2021, SEC on May 12, 2021, and our quarterly report on Form 10 Q for the quarter ended June 30, 2021, call that will be filed with the SEC following this earnings call. And our remarks during today's discussion should be considered to incorporate this information by reference.

The 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 we issued a short while ago. This earnings release is available on the Investor Relations page SEC of our website and is included as an exhibit in the Form 8 ks furnished to the SEC. Finally, the In terms of our prepared remarks or in response to questions, we may offer incremental metrics to provide greater insights, the dynamics of our business or quarterly or annual results. Please be advised that this additional detail may be one time in nature the operator today.

I encourage you to visit our Investor Relations website the broadcast replay of today's call or to learn more about Olo. With that, let me turn the call over to Noah.

Speaker 2

Thank you, Stephanie, and officially and on the record, welcome to team Olo. Q2 was another strong quarter of profitable growth for Olo, the helping even more restaurant customers continue to drive digital sales, while many restaurant dining rooms reopened around the nation. The On our last earnings call, I discussed Olo's transactional SaaS business model and our new ambition to reach digital entirety the as the restaurant industry transforms to digital, touching, adding value to and deriving revenue from every restaurant transaction.

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The As the U.

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S. Economy and restaurant dining rooms began to reopen in Q2, restaurant digital sales proved durable, the Demonstrating that the restaurant industry's digital transformation is not just about delivery, but all ordering modes and across all service models. The delivery, drive through, table service and takeout. In fact, according to data from NPD Group, the There are more non delivery digital orders than delivery digital orders. Olo's platform is enabling restaurant brands to digitize every transaction, the Not Just Delivery Transactions.

During Q2, we celebrated more restaurant brands replatforming to Olo And we were proud to welcome Potbelly's Sandwich Works to the Olo platform. Potbelly migrated from a legacy tech stack the And like Papa Murphy's, Chili's, Maggiano's Little Italy, Outback Steakhouse, Carrabba's Italian Grill, Bonefish Grill and many others before it. The Potbelly replatforming to Olo again demonstrated that leading restaurant brands can no longer simply check the box and have just any digital ordering solution. The Rather, they need to best meet the needs of the on demand consumer by utilizing what we believe is the industry's most sophisticated on demand commerce platform, the benefiting from a broad and deep set of capabilities and an open partner ecosystem of over 100 best of breed restaurant technology partners. The Our launch with Potbelly furthers Olo's conviction that open SaaS wins over homegrown and closed proprietary software.

The We also deployed new virtual brands, including Wingstop's launch of their virtual brand, 5 Stop, the a creative and successful solution for the chicken wing shortage that led to price inflation. The launch of 5 Stop demonstrates flexibility that the Olo platform provides to its customers, allowing restaurant brands to operate more nimbly, in this case, helping to solve business challenges the and bringing Wingstop closer to realizing its long term strategy. Another critical business challenge Olo is helping to solve the operator. The problem of driver availability for delivery service. Driver shortages are widespread and have led to reduced the subscriber availability and delivery delays for restaurants and consumers.

Olo dispatch, our delivery as a service solution provides a nationwide network the of more than 2 dozen delivery service providers or DSPs covering 97% of our customers' U. S. Store locations. Dispatch's the the A great example of customers realizing Dispatch's value was the Q2 launch of Jack in the Box the Dispatch only deployment, which will enhance their existing digital ordering for takeout program. This deployment with Jack in the Box the further demonstrates Olo's ability to land major enterprise brands with 1 product module to initiate the customer relationship.

The Just a subway launch with Olo rails. Jack in the Box is another major enterprise brand launching with Olo dispatch the and gaining familiarity with Olo's broader capabilities and overall platform security, stability and extensibility. The Jack in the Box is also an exciting example of our success in the quick service restaurant or QSR category. The As the largest component of the restaurant industry by both locations and transactions, QSR Brands represent a greenfield industry segment that we love the for its high average location count, industry transaction share and cornerstone commitment to convenience. The We've experienced early success in QSR with Checkers and Rally's, Culver's, Dairy Queen, Crystal and now Jack in the Box.

The And this segment continues to represent a promising growth opportunity for Olo. As I mentioned in our Q1 earnings call, the Many QSR brands have grown through franchising, resulting in disparate technologies used throughout their fleet and the kind of heterogeneous environment that Olo has made a the Specialty, integrating into multiple restaurant technologies to create a unified consumer experience. We remain committed to helping the QSR segment go digital to better meet the needs of the on demand consumer. As we discussed at length in our Q1 earnings call, the other side of Olo's 2 sided network is our partner ecosystem of over 100 restaurant technology partners. The This two sided network creates a flywheel in which adding a new customer to our restaurant network benefits all Olo partners the And adding a new technology partner to our partner network benefits all Olo customers.

This quarter, we continue to expand our ecosystem and are proud to have added Grubhub to our growing list of Olorales partners. Olorales enables restaurants to syndicate menu, the prices and content to digital ordering aggregators and allow such aggregators to send orders into the restaurant kitchen the without requiring manual intervention of transposing an order from a tablet to a point of sale terminal. The Brands such as Smoothie King have touted the benefits of the partnership in ensuring accurate menu information and reductions in order errors. The Olo's deployment of the Grubhub integration will continue in the coming quarters. This new partnership with Grubhub the means that Olo customers can now utilize Olo rails to operationalize and manage all major national digital ordering aggregators: the Caviar, DoorDash, Grubhub, Postmates, Seamless and Uber Eats, in addition to the regional and local aggregators that are meaningful to operators in specific geographies.

Oulu is fulfilling its promise to serve as a common carrier, the Ensuring a level playing field for all aggregator partners. We believe that Olo serving as a common carrier is in the best interest of our customers the operator and the restaurant industry. Just as we continue to expand our network of Ola rails partners, we're simultaneously investing in tools the operator to manage transactions across the growing number of integrated third party channels. In Q2, we deployed the Olorail's performance tool to help restaurants better assess, track and analyze digital performance and revenue across channels, ultimately helping corporate teams and operators to maximize digital sales revenues. Additionally, we completed development of the mobile app version of Serve, our white label branded ordering experience.

The brands are now able to offer feature parity with the serve web experience, which has boosted conversion rates through an improved user experience and faster order completion the Without the need for large custom mobile app budgets. As I mentioned last quarter, team Olo continued to work from home in Q2 the due to COVID-nineteen restrictions. In the second quarter, we provided our employees the flexibility to continue working from home the and reopened our New York City headquarters office on a voluntary basis. We are proud to have adopted an inclusive work policy the that recognizes that our employees need and deserve flexibility. Additionally, as a continuation of our focus on ESG, the as well as diversity, equity and inclusion.

I'm also excited to share that we've published our diversity demographics on olo.com the as well as our DEI strategy and goals. Olo is committed to building a diverse and inclusive culture that promotes growth

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and equity for underrepresented groups

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as reflected by our transparency and continued work. Represented groups as reflected by our transparency and continued work on this front. I'm personally honored to be deeply involved in these efforts the along with my executive team as DEI is hugely important to our success as a company and as a pillar in the community. The As the restaurant industry deals with record setting consumer demand amidst limited labor supply, Olo is a force multiplier for restaurant operations, the Enabling restaurants to provide greater hospitality by automating low hospitality manual tasks by keying in orders, the tendering payment, managing tablets and correcting outdated menus. And at the brand level, Olo is also a force multiplier the When it comes to restaurant brand digital transformation.

As one executive of a major restaurant enterprise prospect recently articulated, the Our brand's digital ambitions are 10x our digital budget. If Olo can help accelerate our digital efforts, we're all in. The The restaurant industry is rebounding from a difficult year in 2020 and Olo is eager to continue playing our the U. S. Dollar part in helping Olo customers not just survive, but thrive as they disproportionately benefit from the restaurant industry's digital transformation.

The And now I'd like to turn things over to Peter Benevedis, Olo's CFO to share more details on Olo's Q2 performance.

Speaker 3

Peter? The Thanks, Noah. Today, I'll review our Q2 fiscal 2021 results in detail and provide guidance for the Q3 Investor Relations and Full Year Fiscal 2021. Before I start, for those of you new to the call today, welcome, And please take a moment to review last quarter's earnings call, where I briefly reviewed our financial model. With that, Let's take a look at our 2nd quarter results.

Total revenue for the 2nd quarter was 35,900,000 the up 48% year over year. Platform revenue in the 2nd quarter was $34,500,000 Up 53% year over year, primarily due to an increase in active locations coming onto the platform as well as increased transaction volumes, Helping drive growth in average revenue per unit or ARPU. Growth in active locations and transaction volumes reflect the continued digital transformation occurring within the restaurant industry. Increases in multi product adoption the In evolving use cases of the Olo platform such as tableside ordering, virtual brands and kiosks the further highlight Olo's opportunity and ability to digitize all industry transactions. That said, I I would remind everyone that this time last year, many locations were emerging from temporary closures in March and began reopening in April as shelter in place restrictions ease.

Therefore, this quarter's performance slightly benefited from lower ordering activity in the earlier part of the Q2 of last year. The In terms of key metrics, we ended the quarter with approximately 74,000 active locations on the platform, a 30% increase year over year the 7% increase sequentially. As Noah mentioned, this quarter's notable deployments included Potbelly Sandwich Works and Jack in the Box. The Average revenue per unit or ARPU was approximately $4.86 for the 2nd quarter. This reflects a 13% increase year over year In a 7% decline sequentially.

Fluctuations in ARPU from quarter to quarter can be expected due to the number of modules and brand initially deploys with as the As well as changes in transaction volumes. For example, this quarter we observed a greater number of single module deployments such as Jack in the Box the utilizing our dispatch module and a continuation of Subway utilizing our rails module. Single module deployments inherently generate less ARPU than multi module deployments, but present a great opportunity to land and expand within a customer the with additional products and services, a historically successful go to market motion for Olo. Additionally, as anticipated, average orders location per day as compared to the prior quarter decreased slightly due to seasonality, increased vaccinations and the return to in person dining the in the absence of ongoing fiscal stimulus. That said, on a full year basis, we anticipate continued momentum in ARPU as seasonality is normalized the growth in multiproduct adoption and multipartner usage continues.

Lastly, net revenue retention remained strong the in excess of 120 percent for the quarter, the result of continuing to satisfy and retain our customers, growth in transaction volumes and continued expansion of our partnership ecosystem. For the remainder of the financial metrics disclosed, unless otherwise noted, I will be referencing non GAAP financial measures. The Gross profit for the 2nd quarter was $29,500,000 representing a gross margin of 82%, in line with gross margins a year ago. The Platform gross margin for the 2nd quarter was 85%. This compares to platform gross margin of 87% a year ago.

The The year over year decline in platform gross margin was driven by an increase in headcount and associated compensation costs to support the rapid growth in active locations added to the platform. Sales and marketing expense for the Q2 was 3,200,000 or 9% of total revenue. This compares to $1,700,000 7% a year ago. On a dollar basis, Increases in sales and marketing spend were driven by continued expansion of our sales organization, including compensation costs and technology spend. As stated on last quarter's call, while we have a highly efficient one to many sales model in which we sell at the enterprise restaurant brand level and the and secure all locations within that brand to long term exclusive contracts.

We anticipate investments in sales and marketing to increase on a dollar basis the and as a percent of revenue in the short term as we continue to invest in our ability to sell new products and increase the visibility of our brand to new and existing customers. The Research and development expense for the Q2 was $11,400,000 or 32% of total revenue. This compares to $7,300,000 30 percent a year ago. We continue to invest in initiatives that align with the core tenants of enterprise customer needs, the integration of innovation, scalability, extensibility and security. This primary strategic focus for Olo ensures we are providing our customers with a flexible and differentiated offering.

We anticipate investments in this area to increase on a dollar basis and as a percent of revenue in the short term the as we continue to invest in innovative solutions and platform capabilities that address the evolving needs of our customers and align with Olo's open SaaS framework. The General and administrative expense for the Q2 was $9,100,000 or 25 percent of total revenue. This compares to 4,200,000 the earnings call. On a dollar basis, the increase was the result of additional headcount and costs associated with operating as a public company. We expect that our general and administrative expenses will continue to grow on a dollar basis, while decline as a percentage of revenue as we continue to scale our operations over the operator today.

Operating income for the 2nd quarter was $5,900,000 compared to $7,000,000 a year ago. We believe our continued ability to deliver strong profitability reflects the power associated with our high leverage Asia Pacific region. That said, we remain committed to investing in growth to address the massive market opportunity ahead of us. The And while we anticipate remaining profitable as we grow, we do expect some near term decreases in profitability the operator as we scale to further address our market opportunity. Net income for the Q2 was $5,800,000 or the $0.03 per share based on approximately $183,600,000 fully diluted weighted average shares outstanding.

The Turning our attention to the balance sheet and cash flow statement. Our cash and cash equivalents balance was $575,200,000 as of June 30, 2021. Regarding cash flows, operating cash flow for the 2nd quarter was $11,300,000 compared to negative $4,400,000 a year ago. Free cash flow was $10,800,000 compared to negative $4,700,000 a year ago. I'll wrap up by providing our guidance for the Q3 and full year the Q3.

For the Q3, we expect revenue in the range of $36,000,000 to 36,500,000 the and non GAAP operating income in the range of $3,400,000 to $3,800,000 For the fiscal year 20 21, we expect revenue in the range of $144,700,000 to $145,700,000 the non GAAP operating income in the range of $18,800,000 to $19,600,000 I would highlight a few things to keep in mind about our outlook. The We remain incredibly excited about the continued momentum in underlying trends of our business. We believe that Olo is very well positioned to the execute on our vision to touch, add value to and derive revenue from every restaurant transaction. And we're encouraged by the innovative ways customers are utilizing our platform and how that aligns with this vision. At the same time, we're continuing to remain prudent in our approach to forecasting, Given the environment in which we're in, whereby uncertainty exists with respect to the COVID-nineteen pandemic and the impact that may have on digital ordering.

To the To summarize, we are extremely proud of our financial performance this quarter, which we believe reflects our continued ability to execute on our vision and the opportunity ahead. With that, I'll turn things back over to the operator to begin Q and A.

Speaker 0

To Your first question comes from the line of Sterling Auty from JPMorgan. Your line is open.

Speaker 4

The Yes, thanks. Hi, guys. So wanted to start with a question around the deal with Grub. I know you don't want to usually talk about specific customers, but is there any way for investors to kind of think about the opportunity there the vis a vis the relationship that you have with DASH.

Speaker 2

Sterling, this is Noah. The I'll take that one. So I think historically what we've seen as we've had restaurant brands that are using the One aggregator partner and then add a second and a third is that it drives incremental traffic to those restaurant locations. The And so we're excited for the restaurant brands that we're working with through Ola rails to now see Grubhub the As an additional aggregator partner and to the extent that they're interested in engaging with Grubhub to initiate and manage that relationship to the OdaRail's platform. And we think that there's an opportunity for restaurants to drive more the transactions through Grubhub, in addition to what they're already doing through direct channels and through indirect channels.

And this relationship really came together because of our restaurant customers, our common restaurant customers saying to both Grubhub and Olo, the We're excited about working with both companies in an integrated fashion, and that's what we've brought to market with this announcement today. The We already have a customer in Smoothie King that has been in the pilot test of the The engagement between Grubhub and Olo through Olo rails, and they're noting, as you heard in the prepared remarks, the both have a reduction in errors in orders flowing into the restaurant and an ease of use in syndicating their menu content and pricing content to Grubhub as they do with other aggregator partners already utilizing Ola rails.

Speaker 4

That makes sense. And then one follow-up would be, to the During the IPO roadshow, there's plenty of investor questions around your eventual ambitions to move down market the In addition to what you do with the Enterprise Brands already, does this signify the first move in that strategy?

Speaker 0

The

Speaker 2

I wouldn't necessarily read this as a signal of our intent to change our strategy. There are plenty of restaurant brands that are in our defined universe of what we currently think of as our addressable market, the Enterprise Restaurant Brands and what we define as emerging enterprise restaurant brands that also want to engage with Grubhub. The So again, as a reminder, emerging enterprise brands we think of as the restaurant brands that are between 5 100 restaurant locations, the Many of them the great enterprise brands of tomorrow, those are the kinds of restaurant brands that we want to start working with early in their life cycle. The Those are the brands that have the ambition of scale and they're looking to put Olo in place early in their life cycle as a way of preparing for that growth. The We don't, as you know, Sterling, focus on the true mom and pop independent restaurants that are out there.

That is not our sweet spot. The We do want to find those restaurant brands that have an ambition of scale. And I think there are plenty of those and plenty of enterprise that work the with both Olo and have a desire to if they don't already work with Grubhub.

Speaker 4

Makes sense. Thank you.

Speaker 0

The. Your next question comes from the line of Brent Bracelin from Piper Sandler. Your line is open.

Speaker 5

Well, thank you and Good afternoon. Noah, I was

Speaker 2

the Operator, I'm sorry, I think that we've lost branch or at least I have.

Speaker 0

Your next question comes from the line of Matt Hedberg from RBC Capital Markets. Your line is open.

Speaker 4

Hey, guys. Good Congrats on the results. Noah, I wanted to start with you. The number of locations you've had now for the first half of the year was effectively what we thought you'd have for the full year, effectively the 10,000 or low double digits in terms of 10,000. I guess a couple point question.

One, I know in Q1 you talked about some early go lives. The Was there any early bird lives for Q2? And second, how should we think about active location growth? I know you don't guide to it, But is there a way that we should sort of think through what seems like an accelerated trend here of location ads?

Speaker 3

The Hey, Matt, you have Peter here. I can take that one. So couple of dynamics to point out through our first half of the year performance with to the Active location. So, on a full year basis, as we enter the year, our internal plans were to the target, the mid teen 1000s in terms of net new additions to the platform. We've obviously the ahead of that and now have our sights set on the mid-1000s for net additions on the year.

And what has happened is the deployments that we had originally planned for the second half of the year, some of those have now accelerated to the first half of the year and strength in bookings is now replacing those units in the back half of the year. The The other interesting dynamic and we called this out in our prepared remarks is the the trend in single module deployments and we called out Jack in the Box as the example there. I think what's exciting is we view that as an opportunity or a way in which we can service the QSR segment, which is a great growth opportunity for Olo. The But also what that presents is an opportunity for additional upsells. And as history has shown, we've done a great job of the Landing a brand with an initial product and then expanding that relationship over time through additional product modules and use cases.

So the We're really excited about the trend that's developing.

Speaker 4

That's really good to hear. I guess, the second question, obviously, this was really the first post COVID comp. But now with the rise of the Delta variant, and obviously, the You see a lot of real time data. Are you seeing anything now that would suggest that that might be better the For you say your delivery or pickups than it would have otherwise been. Just sort of curious on kind of how data seems like real time from that perspective?

Speaker 3

The Yes. So I can take that one, Matt. This is Peter again. Yes, I mean, what we're learning and we mentioned this earlier is that Digital ordering has proved durable and you saw that play out in our outperformance on the quarter. The You know, that said, you know, we're seeing information in real time here.

You know, there continues to be a meaningful level of uncertainty, you know, given the the levels of vaccination rates around the country and the impact of existing and potential the So it's something that we continue to monitor. It's something that we take into consideration when the thinking about our forecast and setting guidance. But again, this is something that's happening in real time that we're keeping an eye on.

Speaker 4

The Thanks a lot guys.

Speaker 0

Your next question comes from the line of Brent Bracelin from Piper Sandler. Your line is open.

Speaker 5

Thank you and good afternoon. Can you hear me this time?

Speaker 2

The Loud and clear, Brent. Thank you.

Speaker 5

Yes, great. Hey, listen. Thanks for this. Just a couple of questions here from me. Noah, the Relative to just broader restaurant digitization trends, I started to encounter myself online ordering inside of the restaurant, not just online ordering remotely.

Do you see an opportunity for Allo to extend its digital reach inside of the restaurant? Does the Doo Serve app address external and internal needs. Love to hear your kind of industry thoughts on online ordering inside the restaurant and how that opportunity

Speaker 2

Thanks, Brent. So when we look at the industry data and the data source that we look at most the NPD and their results for Q2. We're fascinated by the trends that we see across different service models. The And I think one of the things that the media likes to talk about is delivery and the scale of delivery and how delivery is growing. The And delivery is growing quickly, but delivery is just 8% of the overall transactions in the industry or was at least in Q2, the Meaning the 92% is non delivery.

And when we look at digital, what we see is that of the total, digital delivery is just 6 the Whereas digital overall is 17%. So the other 11% is coming from the non delivery digital and the breakdown of that is 10% of total is takeout. And now for the first time, we're seeing 1% on premise. And that's a big move in an industry that does 60,000,000,000 transactions in a typical year to see 1% moving to digital on premise. The We've seen that within Olo in kiosk ordering.

That's something that we've seen for a number of years of a consumer ordering from a kiosk running on top of the Ola platform inside the four walls of the restaurant. And then as I mentioned on the Q1 call, QR code ordering at brands like Bluestone Lane cafe where a consumer can scan a QR code on the table, utilize the same front end experience of the web app or mobile app to the To place the order tagged to the table where they're sitting and have a runner or a server run the order out to them, the This all factors into what we have described as our new ambition of getting to digital in transaction, the Add value to every transaction and derive revenue from every transaction. And we're seeing those behaviors by consumers and also, of course, by operators the offering those new modes of ordering, coming out of 2020, but remaining offerings that are made available in 2021. And that's the part of what gives us the conviction that digital is durable across industry segments.

Speaker 5

Super helpful framing there. I guess my last question here for the Peter, it looks like ending locations had a nice healthy increase sequentially, but platform revenue was still down. Was that the Well, entirely tied to just lower volumes on the ordering side. Are there other factors, I. E.

Pricing that also contributed to a sequential decline there in the

Speaker 0

the

Speaker 5

Did you get that question?

Speaker 0

The

Speaker 2

Sorry, Brent, I think we may have lost Peter.

Speaker 0

The

Speaker 2

If you wouldn't mind if we can move on and come back to that question, that would be great.

Speaker 0

Your next question comes from the line of Brad Reback Dave from Stifel. Your line is open. You may ask your question.

Speaker 5

Great. Now in the last couple

Speaker 4

of quarters, you've obviously talked more about replatforming. The Has it gotten easier in the sales cycle since the IPO?

Speaker 2

The Well, I think that our ambition of the IPO was really to make a statement to our customers and to the industry the that Olo is going to be around for the long term as an open platform for on demand commerce. And I think the Seeing Olo make that statement and then have a successful event in the IPO and come out on the other side with more resources Certainly given Restaurant Brands conviction that they don't have to worry in the way that they do about the Companies that are private and venture backed that may get acquired or that might run out of funding, the They know that Olo is going to be around for the long term. And certainly, that has helped us in engaging with our customers and talking the long term roadmaps and it's helped us with prospects. And I think it's given some prospects and some restaurant brands that have built in house to the We are constantly evaluating, does it make sense to continue to operate their on demand commerce in house? Additional confidence that they can move over to the the platform to Olo, receive all the benefits of working with a scaled enterprise grade SaaS platform, and the Do so at a lower cost of ownership overall.

So I think on the sales cycle side, the It's certainly been something that has been noted by the industry and it's enabled us to have conversations with major restaurant enterprises, groups like Jack in the Box that we mentioned, having confidence that Olo is going to be a great platform and a the services they can then offer up to their end consumers knowing that we'll be around for the long term.

Speaker 5

That's great. Thanks very much.

Speaker 2

Thank you.

Speaker 0

Your next question comes from the line of Terry Tillman from Truist. Your line is open. The Thank

Speaker 4

you. Congratulations from me as well. I don't know if we have Peter back. I was going to hit him with a financial question, but I can abstain and ask you one Noah first, the Maybe Noah, what I'll ask is on the go to market side, you are talking about increasing investments.

Speaker 5

The What I'm curious about is where are some

Speaker 4

of those incremental investments? I mean, you probably already have a good enterprise sales team. They know where to hunt. But is it more in that area? Is it adjacent markets that kind of have a feel like restaurants or Maybe anything on the partnership side.

Just would love to know a little bit about where you're going to put some of these incremental go to market investments. And then I have a follow-up.

Speaker 2

The Sure, Terry. I can start out there. Unless Peter, is that you back on? The Okay. Terry, I'll start out.

So I think one big area of investment for us the And so we focus on some of the new product capabilities that we've talked about being early the Things like our Olopay platform, that's an area of investment for the company as we go through beta and piloting with a handful of brands the Q1 of 2019. And then other additional product capabilities like catering is something that we the We are excited about for future quarters and something that we're investing in to bring to life additional catering capabilities. The Pre pandemic, this is something that our customers were very excited about, and they remain very excited about it as they think about reopening. The This represented 8% to 10% of industry sales quarter to quarter. And so that's an area that we are the interested in and developing capabilities in.

We've also invested in our sales force the on the emerging enterprise component of the market to sell more into those enterprises as I define them that have 5 to 100 locations

Speaker 0

the U.

Speaker 2

S. And represent the great enterprises of tomorrow. And we're excited about multi product adoption in that segment the and high utilization by consumers of those restaurants leading to a greater ARPU the opportunity for us in that segment until we're investing behind that.

Speaker 4

That's great to hear on the low pay As well as catering, particularly catering as we have more reopenings post this now new variant. But Maybe the follow-up then, I'll just focus on, you know, it's good to see the just kind of iterating existing technology. The So I guess the new mobile serve technology, what I'm curious about is because there is a lot of technical debt, a lot of investments these big brands have made in their mobile app ordering. The Is this potentially a way you can get in the door initially as a wedge to just start with rebuilding their app as opposed to just their website? Just anything more you can help us on kind the The new innovation on the mobile side.

Thank you.

Speaker 2

I think really the idea for the serve app the is to bring feature parity into the mobile app, the white label mobile app experience that we have through mobile web and that we have through web. I wouldn't characterize it as a wedge where we would only do a brand's mobile app and not the web. But the idea is to the Make onboarding even easier for brands to kind of build once on top of the Olo platform and then have it across the All these different ordering modes, mobile app, mobile web and web. And of course, as we add, as we typically do incremental features and capabilities, the Having that feature parity across ordering modes through a brand's direct ordering channel. So this, the As we mentioned in the prepared remarks is an experience that already on the mobile web, we've seen reduce the transaction time by 5 seconds.

The And we count seconds, we count clicks at Ola. If we can improve the ordering experience for the end user, that results in better the conversion more transactions that benefits the consumer, obviously, it benefits the operator, but it also benefits Olo with our transactional

Speaker 0

S model.

Speaker 4

That's great. Thank you for taking my questions.

Speaker 2

Sorry, I believe that we have Peter back on now as well, Terry. So if you do have a the question for him and if we can return back to Brent's question, I think Peter is back.

Speaker 4

Well, thank you. That's a bonus. I feel bad. I guess I'm getting 3 in and hopefully Brent can get back in. But yes, I was just going to ask Peter and then answer to another question.

Did I hear it right that mid teens 1000s would be the potential new incremental active sites in the back half of the year? Thank you.

Speaker 3

The Yes, not incremental. That is the full year target. So again, roughly 9,000 to date through the first half of the year and now the targeting the mid-2000s on a full year basis.

Speaker 4

Got it. Thanks.

Speaker 2

The And Brent, can we invite you to re ask the question that you'd asked before?

Speaker 0

The operator. I can see that the line of Mr. Brent disconnected.

Speaker 1

The Hi, it's Stephanie Daugas with Olo Investor Relations. So just to recap different question. He was asking about how ending locations showed a healthy increase, but revenue remained pretty Q3 quarter over quarter. So Peter, if you could just talk to that dynamic and explain if that was related to the Multi location ads or possible change in rates or anything like that? Thank you.

Speaker 3

The Yes, absolutely. So the platform revenue decline quarter over quarter was in line with our expectations and really with the combination of a few factors, the net impact of reopening, so increased vaccination the the that occurred in the Q1 of the year and were a warranty dynamic the That was a factor in the Q2. And then, some seasonality impacts, which the we typically experience in the second and third quarters of the year. The And as I mentioned earlier, the deployments that had come on this quarter, half of those deployments were single module deployments where ARPU and the revenue impact from those deployments are inherently lower than multi module the Deployments book present a great opportunity for future upsell and monetization. And the Of the remaining deployments that did come on in the quarter, half of those were deployments that the the Q2, but we'll do so in the coming quarters.

Speaker 0

Our last question comes from the line of Stephen Sheldon from William Blair. Your line is open. The

Speaker 6

Hey, guys. Thanks for taking my questions. Wanted to follow-up on the mobile app rollout and wanted to ask the How this will drive incremental monetization opportunities for Hello? Will that help mainly from the perspective of driving more transaction volumes or is there also a separate add on subscription beyond the core ordering module? Would appreciate just any detail there on monetization.

Speaker 2

The Hey, Stephen, this is Noah. So no, there's no additional charge specifically for the The mobile app work, this is an additional front end that is part of the Olo platform. Although there may be a savings to the brand versus what they would to the to build a mobile app on top of the Olo API. If they were to do that in house or they do that through a 3rd party mobile app developer, the Where we see it as an opportunity for, Olo and incremental revenue is in the improving the consumer experience of placing the order, cutting down on the time to place the order such that basket rate conversion increases, the transaction volume increases. And as I mentioned earlier, that's good for the consumer, good for the brand, but also good for Olo With our transactional SaaS model in the form of additional transactions and transactional revenue.

Speaker 6

The Got it. Makes sense.

Speaker 4

And then it sounds like you're seeing a

Speaker 6

lot more traction with concepts and it sounds like specifically QSRs that are signing up for a single module like Jack in the Box.

Speaker 4

The I think, Peter, you might

Speaker 6

have hit on it a little bit. Just how much opportunity do

Speaker 4

you see to

Speaker 6

upsell QSR customers like this to the to all of your modules down the road, even if they signed up, just for the immediate benefit of a specific module. Do you have many QSR Customers that are using all three modules, any detail there?

Speaker 3

Yes. So the In terms of specific QSR customers that are using multiple modules, I think we mentioned on the last call, Boomin' Brands that have Cut over from a legacy platform or replatformed onto the Olo platform and they've actually subscribed to more than one module to the as part of that program. I guess from a high level, we absolutely think that over time we can the sell through additional product modules to single module brands. And as history has shown, we've done that very successfully, the Selling both dispatch and rails to customers that we had initially had our initial the entry being ordering and then shortly following up with dispatch and rail. So we certainly see that as an opportunity ahead.

And it's great to plant that initial flag with whether it's dispatch only or rails or ordering the and then use that as an opportunity to build that relationship and ultimately sell through additional products.

Speaker 6

The Great. Thank you. Congrats on the results.

Speaker 0

There are no further questions at this time. I would now like to turn the conference back Mr. Noah Glass for closing remarks.

Speaker 2

Okay. Well, thanks to all of you participating or listening today. The And I want to express my gratitude to team Olo one more time. Thank you, team, for the incredible effort and solid performance of Q2. The I'm consistently inspired by this mighty team, Ola, the shared values that we live through our work in our unrelenting quest of continuous improvement.

As I always say, we have miles to go before we sleep, and I'm deeply honored to be on this journey with all of you. Until next time, be safe.

Speaker 0

The operator. This concludes today's conference call. Thank you for participating. You may now disconnect.