Olo Inc. (NYSE: OLO) entered the market with a bang on Wednesday. Through the course of the pandemic, restaurants have suffered and adjusted their models to deal with less foot traffic, and Olo is seeking to solve this. Now more than ever, Olo believes the digital space for restaurants is evolving and that its initial public offering will position it well to take advantage.
The company priced its 18 million shares at $25 apiece, with an overallotment option for an additional 2.7 million shares. At this price, the entire offering is valued up to $517.5 million. On Monday the company had an expected price range of $20 to $22 for the stock.
The underwriters for the offering are Goldman Sachs, JPMorgan, RBC Capital Markets, Piper Sandler, Raine Group, Stifel, Truist Securities and William Blair.
The company was originally founded in 2005, and it provides a leading cloud-based, on-demand commerce platform for multi-location restaurant brands. This is the company that restaurants are using to build their direct-to-consumer brands.
The company primarily helps restaurants with digital ordering for the industry, and management believes that the restaurant industry will be moving more into the digital space in terms of delivery, on-demand ordering, drive-through and more.
In terms of the technical jargon, “Olo provides restaurants with a business-to-business-to-consumer, enterprise-grade, open SaaS platform to manage their complex digital businesses and enable fast and more personalized experiences for their customers.”
At the end of 2020, Olo had about 400 brand customers representing over 64,000 active locations using its platform. The customers’ digital same-store sales increased, on average, by 44% for the month ended December 2019 when compared to the month ended December 2018. This trend has further accelerated over the past year, with digital same-store sales up 156% for the month ended December 2020, when compared to the month ended December 2019.
Management described its finances as follows:
Since inception 15 years ago, we have raised less than $100.0 million of primary investment capital, net of share repurchases, and as of December 31, 2020, we had cash and cash equivalents of $75.8 million with no outstanding debt. During the years ended December 31, 2018, 2019, and 2020, we generated revenue of $31.8 million, $50.7 million, and $98.4 million, respectively, representing year-over-year growth of 59.4% and 94.2%. During the years ended December 31, 2018, 2019, and 2020, we generated gross profit of $21.0 million, $35.1 million, and $79.8 million, respectively, or 66.0%, 69.3%, and 81.0% as a percentage of revenue, respectively. During the years ended December 31, 2018 and 2019, we incurred net losses of $11.6 million and $8.3 million, respectively, and during the year ended December 31, 2020, we generated net income of $3.1 million.
The company intends to use the net proceeds from the offering for general corporate purposes, including working capital, operating expenses and capital expenditures.
Olo stock traded up 25% at $31.06, in a range of $30.56 to $32.44 on the day thus far. As of 12 p.m. Eastern, about 4 million shares had moved.
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