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IPO Update: Olo Seeks $306 Million IPO

Mar. 08, 2021 8:00 PM ETOlo Inc. (OLO)3 Comments

Summary

  • Olo has filed proposed terms for a $306 million IPO.
  • The firm sells integrated ordering, delivery and customer relationship management software to restaurants in North America.
  • OLO has grown impressively across major financial metrics, aided by the pandemic's effects on consumer behavior, but the IPO appears expensive.
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Quick Take

Olo (NYSE:OLO) has filed to raise $306 million from the sale of its Class A common stock in an IPO, according to an amended registration statement.

The company provides an integrated restaurant ordering, delivery and customer relationship management software solution to restaurants.

OLO has grown impressively during the pandemic but I have concerns about the durability of that growth as well as an excessive valuation at IPO, so I'll watch the IPO from the sidelines.

Interested investors may wish to watch list the stock for a potentially lower entry point post-IPO.

Company and Technology

New York-based Olo was founded to develop an integrated SaaS software solution for restaurant operations use cases.

Management is headed by founder and Chief Executive Officer Noah Glass, who was previously International Expansion Manager for Endeavor Global.

Below is a brief overview video of the firm's ordering platform:

Source: Olo

The company’s primary offerings include:

  • Digital ordering

  • Dispatch and delivery

  • Channel management

Olo has received at least $111 million from investors including The Raine Group, RRE Ventures, Tiger Global, Raqtinda Investments, Battery Ventures, Staley Capital and Wellington Management.

Customer/User Acquisition

The firm pursues relationships with major restaurant brands to provide its SaaS solutions as the exclusive direct digital ordering provider.

The company's platform handles almost 2 million orders per day and integrates more than 100 restaurant technologies into its systems, such as "POS systems, aggregators, DSPs, payment processors, user experience or UX, and user interface, or UI, providers, and loyalty programs."

Sales and marketing expenses as a percentage of total revenue have been decreasing as revenues have increased, as the figures below indicate:

Sales and Marketing

Expenses vs. Revenue

Period

Percentage

2020

22.6%

2019

24.0%

Source: Company registration statement

The Sales and Marketing efficiency rate, defined as how many dollars

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This article was written by

Donovan Jones profile picture
19.75K Followers

Donovan Jones is a research specialist with 15 years of experience identifying opportunities for IPOs and software companies.

He also leads the investing group

IPO Edge

which offers: actionable information on growth stocks through first look S-1 filings, previews on upcoming IPOs, an IPO calendar for tracking what’s on the horizon, a database of U.S. IPOs, and a guide to IPO investing to walk you through the entire IPO lifecycle - from filing to listing to quiet period and lockup expiration dates.

Learn more

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Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (3)

T
Just bought into this today. Lets see where it goes!
D
One of the more attractive SaaS offerings to hit the market since SNOW
IAMHEDGED profile picture
That EV/S multiple, is backwards looking correct? What's your C21/C22 growth assumptions on revs?
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