Olo Inc

Greetings. Welcome to the OLO Inc. Q4 2021 earnings conference call. At this time, all participants are in a 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 zero and your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Stephanie Dawkins, Vice President of Investor Relations. You may begin.

Thank you. Good afternoon, everyone, and welcome to OLO's fourth quarter 2021 earnings conference call. Joining me today are Noah Glass, OLO's founder and CEO, and Peter Benavides, 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. These forward-looking statements include, but are not limited to, statements regarding our expectations of our business, future financial results, total addressable market and growth opportunity, and guidance and strategy. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those described in our forward-looking statements, and such risks are described in our earnings press release and our risk factors included in our SEC filings including our annual report on Form 10-K for the year ended December 31, 2021. You should not rely on our forward-looking statements as predictions of future events. We undertake no obligation of updating any forward-looking statements made during this call to reflect events or circumstances after today. Also during this call, we'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 of our website and is included as an exhibit in the form AK furnished to the SEC. Finally, in terms of our prepared remarks or in response to your questions, we may offer incremental metrics. Please be advised that this additional detail may be one time in nature, and we may or may not provide an update in the future on these metrics. I encourage you to visit our investor relations website at investors.olo.com to access our earnings release, investor presentation, periodic SEC reports, a webcast replay of today's call, or to learn more about OLO. With that, let me turn the call over to Noah.

Thank you, Stephanie. Hi, everyone. Thank you for spending time with us today. 2021 was a great year for OLO. We grew annual revenues by more than 50%, expanded ARPU by 16% to more than $2,000 per year, surpassed more than $20 billion in gross merchandise value for the year, successfully completed our IPO, and closed our first strategic acquisition. We ended the year with our platform connecting approximately 79,000 active restaurant locations and more than 500 restaurant brands to more than 200 technology partners and more than 85 million consumers who have ordered over the platform this past year. Last year, our flexible, open SaaS platform helped restaurants manage through the uncertainties of the lasting COVID-19 pandemic, including location closings and reopenings, staffing shortages, and the transition to increased reliance on digital transactions by enabling digital ordering, delivery, contactless handoff, QR codes, and virtual brands. In short, our technology enabled restaurants to adapt, to do more with less. In the fourth quarter, Lyft joined Olo's dispatch network as a local white-label delivery partner. Olo Dispatch is a national fulfillment network. enabling restaurants to offer, manage, and expand direct delivery through OLO's network of multiple delivery providers while optimizing price, timing, and service quality. The addition of drivers from the list network to OLO's dispatch network not only expands delivery coverage for our restaurant brands, but also drives competitive pricing for the benefit of consumers and brands alike. This, along with expanding our relationships with Uber Eats and Waiter, adding Grubhub, and reaffirming our relationship with DoorDash in 2021, further bolstered the OLO dispatch and Rails offerings, benefiting restaurant brands by broadening channel management and increasing driver supply, leading to increased operational efficiency for brands and a better consumer experience. The unique capabilities of our two-sided networks, and OLO's comprehensive relationships with marketplaces and delivery service providers helped drive module expansion and expanded platform usage within our customer base. One example of our ability to expand relationships within brands is Papa Murphy's. Papa Murphy's, the largest cake and bake pizza company, began their relationship with OLO through the OLO ordering module. This quarter, the brand expanded their relationship to include the OLO dispatch module, enabling pizza delivery via their own website and app. Papa Murphy's take and bake pizzas are made at the store and baked at home, and traditionally have required an individual to go to the store to pick up their pizza. Enabling delivery via dispatch allows Papa Murphy's to increase digital sales and compete directly with traditional pizza delivery companies. In the fourth quarter, restaurant brands also adopted our virtual brand module as virtual brands continued to flourish. Examples include Applebee's Cosmic Wings and virtual dining concepts adding Mario's Tortas and Polly D's Italian Subs, allowing restaurants to reach new customers and maximize their revenue per square foot. Additionally, in the fourth quarter, several brands added the OLO Network module to their technology stack. Notable brands included BJ's, Fuzzy's Taco Shop, Hacienda Colorado, Jack Stack Barbecue, Miller's Ale House, Tijuana Flats, and Uncle Julio's. OLO Network provides brands the ability to grow their direct digital business through affiliate partners, such as Google Food Ordering, while owning and maintaining direct consumer relationships. Restaurant brands recognize the importance of owning commission-free direct ordering channels, and the consumer relationship is imperative to avoid being disintermediated. Our acquisition of Wisely provides brands the tools to improve their digital engagement with consumers, which will enable them to measure and grow customer lifetime value, or CLV, and drive more orders onto the OLO platform. In the few months since acquiring Wisely, we've successfully integrated on a go-to-market basis their suite of solutions, including the host module, which streamlines reservations and table management, as well as the marketing, sentiment, and customer data platform, or CDP modules, which strengthens consumer engagement. Digital-first engagement is increasingly critical for restaurant brands as the industry continues to shift toward digital. In 2021, almost 9 billion restaurant orders, or 15.1% of total industry orders, took place digitally, according to the NPD Group. The OLO platform is at the center of this digital transformation, processing more than $20 billion in total gross merchandise value, or GNV, representing an increase in digital orders completed on the OLO platform of more than 35% year over year. Throughout 2021, it became clear to us that a restaurant's business should not be bifurcated between digital or non-digital or on-premise versus off-premise. It's one business, and it should operate with one thing in mind, the consumer. Every order, every transaction, and every interaction should be customer-centric. Our emboldened ambition is to help restaurant brands more effectively satisfy the consumer by connecting the consumer's on- and off-premise transactions through digital orders and data in order to empower a known consumer experience. We seek to touch, add value to, and derive revenue from every order, striving to move from 15% of the industry's orders being digital to 100%, of the industry's 55 billion orders being digital, a concept I call digital entirety. This will empower restaurant brands to best meet the needs of the on-demand consumer. As we enter 2022, we've never been more confident in our position and more excited about our opportunity ahead. We believe that we have a 100x growth opportunity in U.S. enterprise restaurants. representing a TAM of more than $15 billion within the U.S. enterprise segment. Currently, the OLO platform offers brands the following differentiated and mission-critical solutions, ordering, network, switchboard, kiosk, and virtual brand modules, which provide on-demand digital commerce and channel optimization solutions, dispatch and rails modules, which provide delivery enablement. optimized front-of-house operations needs through our host module, which streamlines reservations and table management, and customer engagement through our marketing automation, sentiment, and customer data platform, or CDP, modules. And today, we announced general availability of OLO Pay, which will create uniform brand experiences, improving the restaurant operator and consumer experience. Just as restaurants have fragmented point-of-sale systems, they also have fragmented payment processors. And these payment processors are horizontal solutions that are not purpose-built for restaurants, nor built for digital transactions. Historically, Ollo has served as the gateway into existing payment processors. And these processors have led to suboptimal experiences for the consumer, manifesting in an elevated level of fraud chargebacks and a lack of tools for brands to fight those chargebacks. OloPay's fully integrated vertical payment solution goes beyond core credit card processing functionality and will benefit both the operator and the consumer by offering advanced fraud prevention that results in improved authorization rates for valid transactions. by supporting and allowing credit cards on file to be used at any of a brand's participating locations for the consumer, enabling Apple Pay and Google Pay, and through simplifying the ordering interface for a faster checkout. All of these features will grow and protect restaurant brands' digital business through increased basket conversion. Our vision for Odopay extends beyond the existing capabilities. Our ambition is to bring a much better user experience and optimize basket conversion of a seamless payment solution to the restaurant industry through our OLO Pay solution in borderless form, which we plan to make available later this year. One example of this experience is Shop Pay, which is an accelerated checkout that lets customers save their payments and delivery information. This can save customers time when they check out, especially if they've already opted into Shop Pay elsewhere, providing security for all merchants offering Shop Pay and enabling them to offer an improved user experience manifested in a dramatically higher basket conversion rate of 1.72x, according to Shopify studies. We believe that removing the friction typically associated with online ordering, account creation, login, and checkout is beneficial for users and for restaurants, leading to higher basket conversion and more orders. With a network of 79,000 restaurants and 85 million consumers, OLO has achieved the critical mass to unlock Shop Pay-like capabilities in the form of our borderless OLO Pay offering. We have conviction that this two-sided payment network is a win for consumers, a win for restaurants, a win for OLO. Our historical success in bringing to market platform-level innovations like Dispatch and Rails by creating two-sided networks gives us both the experience and the confidence that we can do the same with the launch of borderless OLO Pay. Restaurant brands are telling us they want to operate as one digital business. They are pulling us into payment and on-premise opportunities. And in order to accelerate the restaurant's ability to operate as one business, we must unlock on-premise solutions. That is why I'm excited to announce that OLO has signed a definitive agreement to acquire Omnivore. Omnivore powers restaurants to connect to apps and technologies that streamline operations, improve efficiency, enhance consumer experiences, and increase profitability by allowing restaurant technology partners to inject and extract data from multiple point-of-sales through one integration, unlocking the potential of restaurants' point-of-sales system through these technologies. Omnivore enables restaurant technology partners to focus on their core products rather than POS integrations. OLO plus Omnivore will allow our restaurant brands to, one, insert and extract back-of-house data through faster, easier two-way connections with technology partners via their developer-friendly POS API, further unifying disparate data and simplifying data review. Two, increase data extraction from the POS, enabling new and enhanced OLO capabilities, such as increased visibility into on-premise orders and improved OLO-powered capacity and throttling management. Three, access to features and capabilities to increase monetization of on-premise digital orders and on-premise digital card present transactions. And four, access to enhanced developer tools and increased access to key partners not already part of OLO's robust ecosystem. Ultimately, OLO plus Omnivore will allow our restaurant brands to immediately gain access to new on-premise capabilities, as well as an expanded technology partner network outside of core ordering, broadening OLO's platform capabilities. In addition, OLO's existing POS integrations will be updated with expanded functionality and be backed by a large combined team of top specialists in the industry. Omnivore is expected to increase our technology partnerships more than 50% to more than 300 partners, increasing our ability to unify and enhance the utility of disparate technologies across the restaurant industry and reaffirming our commitment to an open ecosystem of partners. I believe Olo to be the platform that restaurants will need in the future. Our all-encompassing platform will enable leading brands to better understand and serve every customer that transacts with them. leveraging the new currency for 2022, customer intelligence-enhanced, digital-first interactions. I'm extremely proud of our work in 2021, and I'm excited about the significant opportunity that lies ahead for Ollo, as our leading open SaaS platform supports restaurants and empowers the restaurant industry's digital transformation. Our emboldened ambition seeks to increase Ollo's opportunity by 100x through the following three growth opportunities. First, through focusing on the enterprise restaurant segment, we have a 4X opportunity to capture all 300,000 enterprise restaurant locations. Second, by striving to move from 15% of orders being digital to 100% of restaurant orders being digital, we have an opportunity to capture and process 6.25X more orders on our platform. as our technology will simplify restaurant capture of orders into one common digital channel, allowing brands to better understand and engage their consumers, increasing customer lifetime value. Third, the launch of OloPay enables Olo to generate 4x more revenue per order than we capture today by acting as the payment processor for our restaurants. Through higher conversion rates, improved authorization rates, and streamlined reporting, OLO Pay creates ROI-positive transactions for brands, reducing overhead and G&A costs. Altogether, 4x times 6.25x times 4x leads to a 100x opportunity and a TAM within these three core growth vectors of $16 billion. While this opportunity is large for OLO, more importantly, the efficiencies our platform will provide for leading brands are greater. And that is why I believe that leading brands will use one technology platform to understand and serve every consumer that transacts with them. Restaurants will need an open platform to own consumer relationships and leverage consumer data to prioritize channels that maximize profitability and access to the data that allows them to do one-to-one marketing. to manage orders through the front of house, and to use technology to be operationally efficient and inform every facet of their business with customer-centric data. Finally, as I typically do on earnings calls, I'll provide an update on our commitment to OLO for Good and Pledge 1%. This quarter, we continued our commitment to the Pledge 1% movement, in which OLO commits 1% of our time, product, and equity to OLO for Good initiatives. I'm excited to announce that this quarter, OLO launched its first nonprofit partner, Emma's Torch, a woman-founded restaurant which provides refugees, asylees, and survivors of human trafficking with culinary training, ESL classes, and interview preparation. As part of our product pledge, OLO is waiving fees for the fast casual restaurant's use of the OLO ordering and dispatch modules. We expect to add other nonprofit restaurants to the platform in order to use OLO as a platform for social impact and positive change for our communities. And now I'd like to turn things over to Peter Benavides, OLO's CFO, to share more details on OLO's fourth quarter performance. Peter.

Thanks, Noah. The fourth quarter was a great close to our first fiscal year as a public company. As order volumes grew in multi-product adoption increase, OLO continued to drive momentum and beat expectations in the fourth quarter, demonstrating the mission critical nature of our solutions, which are enabling the digital transformation within the restaurant industry. Total revenue in the fourth quarter was $40 million, an increase of 31% year over year. Platform revenue in the fourth quarter was $38.9 million, an increase of 33% year-over-year due to an increase in active locations coming onto the platform, further multi-product and multi-partner adoption, and the durability of digital ordering. In terms of key metrics, we ended the quarter with approximately 79,000 active locations on the platform, a 23% increase year-over-year, and a 4% increase sequentially as we deployed new brands such as Insomnia Cookies, Ruby Tuesday, Sbarro, Sizzler, and Wetzel's Pretzels. ARPU for the fourth quarter was approximately $504, representing an increase of 7% year-over-year and an increase of 4% sequentially. This quarter's key drivers of ARPU included continued strength in order volumes as well as module expansion within our existing customers. Related to module expansion, This past quarter's customers continued to add modules such as Network, Virtual Brands, Dispatch, and Rails to their OLO Suite. Specific to Dispatch and Rails, major partnership launches throughout 2021, such as Grubhub, Lyft, and Uber Eats, helped further increase adoption and transaction volumes from our delivery enablement solutions. For the year, ARPU with more than $2,000 representing a 16% year-over-year increase. Additionally, as of year-end, on average, brands utilized 2.7 modules per location. And as Noah outlined earlier, we see a lot of momentum ahead in ARPU as customers continue to expand their adoption of multiple modules. Lastly, net revenue retention remains strong, in excess of 120% for the quarter. For the remainder of the financial metrics disclosed, unless otherwise noted, I will be referencing non-GAAP financial measures. Gross profit for the fourth quarter was $32.6 million, representing a gross margin of 82 percent. This compares to gross margin of 84 percent a year ago. As expected, the year-over-year decrease in gross margin was driven by an increase in headcount and associated compensation costs to support the continued growth of active locations added to the platform. Platform gross margin for the fourth quarter was 84%. This compares to platform gross margin of 87% a year ago. Sales and marketing expense for the fourth quarter was $4.6 million, or 11% of total revenue. This compares to $2.3 million and 8% a year ago. As expected, Increases in sales and marketing spend were driven by continued expansion of our sales, marketing, and business development teams in an effort to continue to add more locations to the platform, increase upsell and retention efforts, and expand our partnership ecosystem. Research and development expense for the fourth quarter was $12.9 million, or 32% of total revenue. This compares to $9.6 million and 32% a year ago. General and administrative expense for the fourth quarter was $10.9 million or 27% of total revenue. This compares to $6.1 million in 20% a year ago. As expected, increases were primarily due to increased costs associated with operating as a public company. Operating income for the fourth quarter was $4.3 million as compared to $7.6 million a year ago. Net income in the fourth quarter was $4.2 million, or two cents per share, based on approximately 185.5 million fully diluted weighted average shares outstanding. Turning our attention to the balance sheet and cash flow statement, our cash, cash equivalents, and marketable securities balance was $514.4 million as of December 31st, 2021. This total reflects the $75.2 million of net cash paid in conjunction with the acquisition of Wisely, which closed on November 4th. Regarding our full year cash flows, operating cash flow was $16.3 million compared to $20.8 million a year ago. Free cash flow was $14.4 million compared to $19.5 million a year ago. I'll wrap up by providing our guidance for the first quarter and full year 2022. For the first quarter, we expect revenue in the range of $41.5 million to $42 million and non-GAAP operating income in the range of $600,000 to $1 million. For the fiscal year 2022, we expect revenue in the range of $194 million to $196 million and non-GAAP operating income in the range of $7.4 million to $9 million. In terms of our guidance for the year, we remain prudent in our approach to forecasting given evolving industry dynamics. Specifically, anticipated factors that may impact our forecast include the residual impacts from COVID-19 and transitory impacts due to continued industry labor challenges. That said, we believe COVID-19 related challenges will be lapped beginning in the second quarter of this year and that revenue growth rate and net revenue retention will begin to re-accelerate. Throughout 2022, we believe the main drivers of revenue growth will be ARPU expansion as well as increasing the number of active locations on the platform. Related to ARPU, we expect year-over-year growth to be around 10% as order volumes continue to grow and brands adopt additional product modules. While we are making OlaPay commercially available to all brands on the Ola platform, We are still early in the sales and deployment process, and at this point do not expect OloPay to be a material driver of growth for 2022. As we previously noted, the use cases and adaptations of the Olo platform throughout the past year has emboldened a broader vision for Olo, one in which we can touch, add value to, and derive revenue from all industry transactions, on and off premise, in what we refer to as digital entirety. Fulfilling this vision requires some near-term investments in the platform to capitalize on the opportunities our customers are pulling us into. And as we've seen first with dispatch and subsequently with rails, customer led opportunities have been great growth drivers for the company. Much of this investment is expected to occur in the first half of the year. And as we progress throughout the year, we expect to return to more normalized levels of profitability. More specifically, Incremental investments in R&D in 2022 are threefold. First, our acquisition of Omnivore, which will unlock a faster path to the development of solutions to address our on-premise opportunity, will decrease profitability by a couple million dollars this year. Secondly, we are increasing our investment in Olopay to more quickly bring borderless capabilities to market, while also setting the stage for processing card-present transactions. And lastly, We're increasing our investment in customer engagement in front of house solutions to tie it all together. A suite of digital ordering solutions to address both off-premise and on-premise ordering underpinned by a best in class customer engagement suite in a seamless payment experience. We're confident that these investments will unlock future growth opportunities for OLO in 2023 and beyond. To summarize, we delivered another strong quarter of operational and financial performance. We are delivering on our mission and believe OLO's position at the center of the digital restaurant experience will continue to drive an attractive combination of strong revenue growth and profitability. I'd now like to turn it over to the operator to begin the Q&A session. Operator?

Thank you. And at this time, we'll be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 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 start keys. One moment, please, while we poll for questions.

And our first question comes from the line of Brent Braceland with Piper Sandler.

Please proceed with your question.

Good afternoon, and thanks for taking the question here. Impressive to see the seventh straight quarter profitability even with onboarding the acquisition of Wisely, but I wanted to spend a little time on Omnivore if we could. What's the difference between kind of the omnivore menu management system and OLO dispatch rails outside looking in? It does look like similar functionality. And then Peter was hoping you could frame the revenue contribution you're factoring in from this acquisition in 22 or at a minimum walk through the pricing model for omnivore. Thanks.

Hey Brent, this is Noah. Thanks for the questions. So thinking about Omnivore and the capabilities that we are pulling into the OLO platform as a result of the acquisition, one of the things that really appeals to us about Omnivore's integrations is the way in which they're two-way integrations and allow for what's called sort of an open check. So think about this as putting your card on file at the bar and the ability to keep that tab open. You can keep adding to it. We think that kind of open check two-way interaction with the point of sale is really compelling for those on-premise occasions when you are placing multiple orders on the same check. And that's going to be key for the table service ordering experience. It's also just an incredible library of partners that are partners today with Omnivore, not yet partners with Holo. adding to that partner ecosystem, taking us from over 200 partners to now over 300 partners, and really staying true to that philosophy of being an open platform and an open ecosystem in a way that benefits restaurant brands, our customers, and the industry to create the most flexible stack that they choose from the best in class technology partners out there.

Yeah, and Brent, Peter here.

Yeah, specific to the revenue contribution. So the revenue contributions in material, as Noah mentioned there, it's really about acquiring the capabilities to enhance OLO's on-premise opportunity and ecosystem. And in conjunction with doing that, really adding a fantastic product and engineering team to the existing OLO ecosystem. So we're really excited about bringing the Omnivore team over to OLO.

Great. And just as a quick follow-up, Noah, if I go to the Omnivore customer page, it lists customers like Outback, Steakhouse, Burger King, HMS Host as customers. Is this a technology that's broadly deployed across all of these locations, or is it oftentimes partially deployed, just trying to – think through the existing footprint that Omnivore has and that will be folded into the OLO location footprint over time?

Yeah, I think the best way to understand how Omnivore is used today as an independent entity is mainly by a partner ecosystem of other technology solutions. There are restaurant brands that are utilizing the omnivore stack for things like the menu management solution or what's shortened as an acronym to MMS. And those might be some of the restaurant brands that you're naming. But I would moreover think about this as a POS integration suite that enables technology partners to integrate into the in-store environment and the back of house environment without having to do all of the heavy lifting that we know very well from 10 plus years of doing POS integrations into legacy POS platforms used by the enterprise restaurant segment as a way of integrating into those restaurant technology environments.

Helpful. Great to see the streak of profitable growth continue here. I'll cede the floor and get back in the queue. Thanks.

Thanks, Brent.

Our next question comes from the line of Stephen Sheldon with William Blair. Please proceed with your question.

Hey, nice results here, and congrats on the OloPay launch. And so on that, I get that you're not including much financial contribution in 2022, but how are you thinking about the potential financial contributions as we think about the medium term or the next two to three years? What are you targeting, and what levels of interest have you seen in your existing enterprise customer base with us?

Yeah, so I can take the first part, and Noah, please pile on. So in terms of how we think about the revenue opportunity, we talked earlier as part of our prepared remarks, the quantity of GMV that was processed over the platform this year, over $20 billion in GMV, up from $14.6 billion last year. When we think about the revenue opportunity, it's really through that lens. And it's through that lens coupled with the continuation of more and more orders being digital in nature. And that's what gets us really excited about the revenue opportunity. And as we've shown in the past, you know, initially with dispatch, subsequently with rails, we have a very effective upsell motion in which we sell into the brand and are adopted across all locations within that brand. So the combination of those trusted relationships and the magnitude of GNV processed over the platform gives us conviction that this is a really exciting opportunity.

Stephen, maybe just to tack on to that, from a long, long-term perspective, as we think about the TAM for OloPay, we look at this, if we were to peel it out as a discrete TAM, it's a $9 billion or thereabouts TAM that we're going after in OloPay. And that's really what makes it incredibly compelling. We look at it as a 4X multiplier in the amount of revenue that we can generate on a per order basis. And, you know, it's compelling from an OLO investment perspective. It is something that, you know, we're being pulled into, frankly, by OLO customers, OLO restaurant brands saying, I need to have a more streamlined payment solution than I have today. There's tons of friction in the way that payments works in restaurant on-demand commerce today. And if I can tap into a network of 85 million consumers that don't have to create a username, don't have to create a password, don't have to remember that username or password, and don't have to reenter their credit card each time, but can have that magical one-tap experience that many have experienced with platforms like ShopPay in the past, another two-sided payment network. That is a huge unlock, and it's something that enables the restaurant to make their direct digital ordering program more convenient than restaurant delivery marketplace experiences from an ordering and payment perspective. So we think it's a really big idea. We've heard that from our customers. It's what gives us conviction that we've got a really exciting, massive, two-sided network payment network to build here between our 79,000 restaurants on one side and 85 million consumers on the other side, and that we can bring to life a solution that truly represents OLO going from strength to strength in a two-sided network that benefits everybody who touches it.

Got it. That's really helpful, and it sounds like a very large opportunity. Maybe shifting gears, follow-up, virtual brand seems like you're getting a lot of traction there. I guess how important has that become to the overall – OLO's overall business? And if an existing OLO customer expands to add the virtual brand module, how does the contract and monetization there work? Does that create additional subscription revenue, or is it just monetized more so by more transaction volume through the platform process?

Yeah, so in terms of how that is monetized, Stephen, it is monetized through a combination of incremental SAS fees in addition to per transaction fees. And I guess going back to your earlier question around the level of importance, really I would answer that through the lens of the customer, which is our goal is to make sure that we're developing a platform that allows our brands to adapt to the environment as well as maximize revenue per square foot. And virtual brands allow our customers to do that. And in conjunction with that, you know, we're fortunately monetizing that initiative. But it is certainly important to our customers and an area of focus for the company.

Great. Thank you, guys.

Our next question comes from the line of Matt Hedberg with RBC Capital Markets. Please proceed with your question.

Great. Thanks for taking my questions, guys, and congrats on both the acquisition and OLO Pay. Super exciting. Peter, you know, at the midpoint, if I'm doing the math right, it looks like your guidance is kind of low 30% revenue growth this year. Obviously, you noted the really difficult compare in one queue and that acceleration from there. When we think about the full-year guide, it sounds like you're not including anything from Omnivore. I'm wondering, when you acquired Wisely, I think you said it might contribute mid-single digit revenue this year, or I should say in 2021, and maybe about $10 million for 2022. Is that kind of still the assumption that we should be using? Yes, that's right. Got it. Okay. Okay. And then... You see the obviously, there's, you talked about the online several growth drivers here, obviously, one of them that you I think, in your guides, Peter, you talked about 10% growth in ARPU is sort of the expectation for 2022. You know, I'm wondering on the location ads, I think, you know, you added about 15,000 this year, maybe 14,000, organic, excluding wisely, do you think you'll add sort of the same, or maybe more locations in 2022? That's sort of what's embedded in in in sort of the initial revenue guide?

Yeah, so our expectation for 2022 is to add a similar amount of net new locations to the platform, coupled with a full year growth of ARPU of around 10%. In terms of how we think about the active locations quarter to quarter, I would estimate a pretty even distribution quarter to quarter, although noting that there can be changes quarter to quarter depending on you know, a number of factors. So we tend to think about things on a full year perspective. And for 2022, again, we're targeting a similar number of net ads as we achieved in 2021.

Got it. Thanks a lot. Congrats, guys.

Our next question comes from the line of Brad Reback with Steful. Please proceed with your question.

Great. Thanks very much. Noah, there was a lot of talk in 4Q around restaurants needing to throttle digital orders because of headcount issues. What type of impact did you guys see from that? And has that continued here in 1Q?

Hey, Brad, thanks for the question. I really feel like our platform is designed for exactly this sort of challenge for restaurants. And I think in the past I have commented on helping restaurants to do more with less and being a force multiplier for them. And I think that's what restaurants are seeing about digital broadly and about Olo specifically and all of the different solution suites. We've broken it now into five different solution suites. I think we talk a lot about ordering and dispatch and rails, and we're more than just a three trick pony. We have 12 different products now across five product suites and order management and delivery and customer engagement and front of house management and payments. And all of these things in their own way are helping restaurant brands to do more with the labor that they have and to focus their hospitality really on delivering excellent consumer experiences informed by all the data that's being thrown off by these digital interactions with customers. So I think that is part of All those mandates, something that we've historically done over our entire lifespan as a company, and that especially in times of a labor crunch, a labor shortage, is really being felt by restaurants and helping them to manage both their off-premise experiences and their on-premise experiences and ultimately deliver hospitality to the consumer.

Got it. And then switching gears a bit, The digital entirety strategy seems extremely forward-looking and clearly where the market is going. That being said, it's pretty broad. So as you think about go-to-market and your current resources, your salespeople, etc., where do you think they are in that learning curve and how long do you think it takes to get them fully up to speed on selling the vision?

Well, I think this is a great segue from your last question. I mean, this is where we are being pulled into the on-premise opportunities from our customers saying to us, we want the same digitally enriched experience for our consumers on premise that we have off premise. It's now one business. We don't want to have two different systems to manage off-premise customers versus on-premise customers. We want it to be one system, one platform. We want that to be a digitally informed platform that has customer centricity at its core. So that's really the thing that's pulling us into the four walls of the restaurant. And I think that is something that we've talked about seeing glimpses of before in kiosk ordering, in QR code ordering, but imagining how restaurants can guide consumers there and ultimately create higher hospitality experiences for consumers and while also requiring less labor from the restaurant, is I think where you see a win for the operator and a win for the consumer. And we think that Olo is the best positioned company to play that role of being the platform that ties together off-premise and on-premise and connects it all back to the 85 million consumers and then some that are utilizing the Olo platform as their way of engaging with the restaurant that they love in our network.

Excellent. Thanks very much. Sure thing.

And our next question comes from the line of Sterling Audie with JP Morgan. Please proceed with your question.

Hi. This is Drew on for Sterling. Given that the 2022 outlook includes that $10 million of WISD contribution, what else might be softening in the business to get to the full-year revenue guidance?

I can take that one, Drew. I think from a high level, the underlying fundamentals of the business remain really strong. I think as we think about the year ahead, we remain prudent in the assumptions that we put forward and making sure that we're setting expectations that we feel comfortable with and having communicated north of 30% as our target growth rate for the foreseeable future. We're excited about, you know, what we've set ahead for this year.

Okay, got it. Thank you.

And as a reminder, if anyone has any questions, you may press star 1 on your telephone keypad in order to join the Q&A queue. Our next question comes from the line of Connor Passarella with Truist Securities. Please proceed with your question.

Hey, it's Ian Conner here on for Terry. Thanks for taking my questions. I just want to start with one on the QSR segment. So we're really beginning to realize that it's definitely ripe for digital transformation. Just curious how the pipeline and new activity has been in that segment. And maybe do you see any notable new business demand shifts from various sub-segments served in 2022? Hey, Conner, you've got Noah here.

Thanks for the question. Yeah, we've noted on previous calls and continue to believe that QSR is a segment that is really ripe for digital. And I think all of the solutions that we have brought to market for different segments, the early adopting segments like fast casual and then casual dining and then family dining and coffee and snack are now available for QSR in a way that helps them to win back that edge in convenience that maybe as others have gotten into on-demand commerce, QSR has lost a bit of that convenience. And I think that is the legacy of the food business is that the most convenient channels tend to gain the most transaction volume over time. And so when you have on-demand commerce and you have all of these other competitors now in these other segments, enabling consumers to have their food ready and waiting when they arrive or delivered to them, the drive-through experience doesn't look as fast or convenient anymore. So I think that has been one of the drivers of QSR restaurant brands jumping into digital ordering and really being able to benefit from all of the work that we have done on the platform over the years to get started and get up the learning curve quickly. We have certainly seen that throughout 2021. We believe that will continue throughout 2022. There's been a lot of activity in restaurant brands in the QSR segment thinking about how they can create an optimal pickup experience or handoff experience from the operator side of handing the order over to the consumer or over to a delivery courier picking up on behalf of the consumer. Some have experimented with double lane drive-throughs in order to do that. some of the experience with parking spots or slots where they can do curbside pickup like the casual dining brands experimented with years ago. So I think it's a time of great excitement from the QSR segment, urgency from the QSR segment to get into the world of on-demand commerce and with it to understand the consumer through those digital interactions that on-demand commerce enables. And we imagine we will continue to see growth in that segment. I have noted in the past, and will do so again, this is a segment that's super compelling to us given that it represents a large number of restaurant locations broadly and in the enterprise segment specifically, and that it represents the largest number of transactions per location. And so it's really perfectly set up for our transactional SaaS model to be a big driver of growth going forward.

Great. That's, that's really helpful color. Appreciate that. Um, just had one quick one on, on wisely. So for, for customers on wisely, are there, are you seeing any correlation there with, uh, maybe more successful customer engagement feeding to, uh, lift and GMV and ARPU?

Thank you.

Well, I think one thing to comment on with wisely, you know, is being able to use a platform like wisely is truly about the brand understanding. customer lifetime value. That is the really compelling capability that Wisely's platform unlocks. And so a brand, for the first time, being able to identify who those top 20% of their customers are that tend to correlate with 60% of the order volume at their restaurant or the sales volume at their restaurant, that's incredibly compelling. I think that's something that wisely enables that helps brands to focus their marketing attention and expenditure on those high value customers who really move the needle from a sales perspective. And also, you know, these customers then inform every facet of the business. If you can understand who this cohort of high value customers are, You can understand what correlates to that high-value customer cohort. You can understand the menu mix that they like. You can understand the servers that serve them that, therefore, you would imagine are the most skilled servers who deliver the best experiences. You can imagine where other customers that fit the same profile live, work, and play, and where you should launch additional restaurant locations. That metric of customer lifetime value is really a true north metric that is helping restaurants make better decisions across every facet of the enterprise. And we think that is something that is oftentimes missed. This is not just a customer engagement tool. This is really a new way of viewing the business in a customer-centric manner that improves every facet of the business. And certainly, you know, if you were to talk to wisely customers and wisely customers who are also digital ordering customers of Olos, they would echo those sentiments.

Great, thank you.

And we have reached the end of the question and answer session, and I'll now turn the call back over to CEO Noah Glass for close remarks.

Okay, well thank you all for joining us again. As I hope you can hear from the content of our prepared remarks, our responses to your questions, and our general tone, we've never been more confident about our position or enthusiastic about our opportunity than we are today. I want to say thank you to Team Olo for another great quarter. We have miles to go before we sleep.

And this concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.