Olo Inc

This compares to $9.9 million and 19% a year ago. Research and development expense for the first quarter was $13.9 million or 21% of total revenue. This compares to $15.7 million or 30% of total revenue a year ago. General and administrative expense for the first quarter was $9.3 million or 14% of total revenue. This compares to $10.4 million and 20% a year ago. Operating income for the first quarter was $5.6 million. This compares to $1.2 million a year ago. Operating margin was approximately 8% in Q1, and the year-over-year improvement reflects the combination of our focus on managing cost as well as growth and revenue. Sequentially, the decline in profitability from Q4 2023 reflects seasonality around factors such as tax resets and benefit expense increases associated with the new calendar year, as well as costs associated with hosting our annual customer conference, Beyond Four, in March. Net income in the first quarter was $7.8 million, or 5 cents per share, based on approximately 172.7 million fully diluted weighted average shares outstanding. Turning our attention to the balance sheet and cash flow statement. Our cash, cash equivalent, and short and long-term investments total approximately $377 million as of March 31st, 2024. Pursuant to our current share repurchase program, in the first quarter, we repurchased 2.8 million shares for a total of approximately $15 million. Since the introduction of our share repurchase program, we have repurchased 14.3 million shares for approximately $93.1 million. We had approximately $6.9 million remaining on the authorization as of the end of the quarter and have since completed the program. And today, we announced that our board has authorized a new $100 million share repurchase program. Net cash provided by operating activities was $6 million in the quarter compared to $7.2 million in the quarter a year ago. Free cash flow was $2.8 million compared to $3.9 million a year ago. I'll wrap up by providing our guidance for the second quarter and full year 2024. For the second quarter of 2024, we expect revenue in the range of $67.5 million and $68 million, and non-GAAP operating income in the range of $5.5 million and $5.9 million. For the fiscal year 2024, we are raising revenue and non-GAAP operating income guidance. We now expect revenue in the range of $274.5 million and $276.5 million, and non-GAAP operating income in the range of $23 million and $24.5 million. A few things to keep in mind as you consider our outlook for the year. We got off to a solid start to the year, as reflected in our raised full-year guidance. That said, we continue to take a prudent approach to our full-year outlook. We expect trends in the restaurant industry will remain similar to what we saw in 2023, consistent growth in digital ordering, a continued need to improve efficiency to offset rising costs, and macro uncertainty. Revenue guidance continues to assume a two-thirds, one-third split between incremental revenue from existing projects currently in deployment and new projects signed and deployed in-year, which will be driven primarily by ARPU expansion as OLO Pay scales, and we have further success in selling multiple modules in our order and engage suite. In terms of gross margin, we now expect the sequential decline will be less pronounced. Specifically, we expect Q2 gross margin to decrease approximately 100 to 150 basis points from Q1's gross margin and for this range of decline to occur from Q2 to Q3 and from Q3 to Q4. The change from our initial expectation of 150 to 200 basis points is due to a shift of certain costs from cost of revenue to operating expenses, as well as from better cost optimization within the platform. In terms of non-GAAP operating income, we expect to generate operating leverage in the second half of the year compared to the first half, directly consistent with prior year trends. Finally, as a reminder, the quarterly pacing of operating expenses will be slightly different in the first half of 2024 versus prior years. As we stated on our last call, this year's annual compensation increases begin hitting in Q2. Historically, annual comp increases began in Q1. To wrap up, we got off to a strong start this year. We are making good progress across our key strategic priorities and believe we are well positioned to deliver on our updated financial targets for the year. We remain at the early stages of the digitization of the restaurant industry and believe OLO's portfolio of solutions helps brands solve many of their most pressing operational challenges. Further, our open platform approach is allowing us to significantly increase the scale of our data asset and do more to help brands increase their sales and improve their operations. With that, I'd now like to turn it over to the operator to begin the Q&A session. Operator?

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

Yeah, good afternoon, gentlemen. Can you hear me okay? Loud and clear, Terry.