Hello, my name is Clarke Jeffries. I'm on the software research team here at Piper Sandler. Very pleased to have Peter Benevides, CFO of Olo, with us. So thank you for making the trip out. Thanks for having us. Yeah, absolutely. Maybe you can start us off with an introduction to Olo. You know, what is the market you serve, and what's the scale of the business today? Yeah, great. So thank you for, again, for having us. Great to see you all. So Olo is an open SaaS platform for restaurants. Restaurant is the end market that we service, and our core product is across three product suites: Order, Pay, and Engage. And the way to think about the Order suite is, it is a host of solutions to enable digital ordering for both on-premise and off-premise occasions, as well as enable delivery through both first-party and third-party instances. Our Pay product is a purpose-built payments platform that is native to the Olo platform, and today, that's servicing the card-not-present transaction, and in the near future, we will also service the card-present transaction. And then lastly, our Engage suite is a, a suite of marketing solutions that allow our brands to collect guest data, analyze that guest data, and then act upon that guest data. And I'd, I'd say the common denominator across all three of those product suites really is guest data, and the ability to leverage that information to ultimately drive business decisions and better engage with your guests. Oh, perfect. Maybe we can talk about some of those individual solutions. I know, I think it's always helpful to think about: How does the business grow? How does the solution scale? And so maybe go through one. You know, an example customer, how do they go from being a 10,000, you know- Yep ... annual spend customer to $100,000 or more? Yeah. Yeah. So fundamentally, how we grow the business is by adding more locations to the platform, and then increasing the amount of revenue we earn on a per-location basis, which we define as ARPU. In terms of how we expand ARPU, it's through the combination of multi-module adoption, so increasing the number of products that brands are subscribing to, as well as driving transaction growth on the platform. And in terms of how we expand ARPU from, you know, 10,000 to something north of that, again, really comes down to those building blocks of subscribing to more products and increasing the number of transactions that are on the platform. Typically, brands initiate with Olo today for the ordering platform, so supporting their digital commerce needs. Then from there, move into, you know, native payments in the form of Pay, and then, marketing capabilities in the form of, of Engage. In particular, with Pay, given the outsized impact that can have on revenue per transaction, that's really what drives brands from that, in your example, $10,000 per location, to something north of that. Yeah. And, you know, the restaurant industry, typically, people think of the restaurant, you know, on the corner of their main street in their, in their city. Mm-hmm. You know, maybe talk about, you know, who are the customers you're serving? Who are some of the largest customers you're serving? This is really an enterprise model focus. That, that's exactly right. So we historically have focused on the enterprise segment of the market, which years ago, we would define as, call it, 100 locations per brand and up. And then over the years, we've expanded that aperture to include, you know, fewer locations. And I think now we're around, even supporting, brands with as few as five locations per brand, which we define as emerging enterprise segment of the market. And, that approach has served us well, in part because we've been able to efficiently grow the business, given our go-to-market motion. So we sell into the brand, and then we are generally, typically adopted across all locations within that brand. And the reason for that is, if you think about the service that we're providing, we are consumer-facing technology, where in that example, you need to have a homogenized experience. The experience needs to be consistent across all of your locations within that brand. And in many cases, there is fragmentation that exists in the brand, whether that's multiple POSs, multiple payment providers, et cetera. That's very common within the enterprise segment of the market, and we sit on top of all of that complexity and then create that unified guest experience. And because of that, the go-to-market motion, the efficiency in that motion, has really helped to, you know, to drive the business forward. Yeah, absolutely. Let's maybe turn to maybe some, you know, near-term commentary around demand environment. Yeah. You know, I think it's been a multi-year process of digital becoming a nice-to-have to essential during some of these, you know, shelter-in-place lockdowns. And then now we're in this sort of maturation of a more digital strategy. So, you know, how would you characterize the demand picture at the current moment? You know, what's the appetite with these brands to invest in digital at this point? Yes. I think there's two ways to think about it. There's the consumer aspect or the guest, in restaurant speak, as well as the brand component. I would say from a guest perspective, I would define the current environment as durable. And I think a good data point to focus on is, if you look within the industry, today, about 15% of transactions are digital. And that has been pretty consistent, I'd say, for maybe the past four-six quarters, where if you look across other verticals that were you know, benefited as a result of the kind of COVID impact, many of those e-commerce offerings have, in many cases, regressed to the mean. Whereas if you look at digital ordering within restaurants, has been pretty consistent. So it's definitely been a behavior that has stuck. I think part of it is because we eat 1,000 times per year, whereas, you know, in other e-commerce verticals, you may not need, you know, X number of, of shoes, et cetera. So I think the, the stickiness of that behavior has, has been durable. From the brand perspective, you know, late last year, we, we talked about sales and deployment cycles elongating within the, within the restaurant segment. And for the most part, that was being driven by some of the macro factors that the industry was dealing with, in particular, labor constraints and cost input or input costs, commodity pricing. And that really just drew a lot of attention from brands away from digital transformation initiatives onto many of these pressing needs. I'd say some of that has eased as we've moved throughout the year, but we remain kind of cautiously optimistic about the progress that's being made there. What brands are doing is that they're looking at quick wins that they can deploy, and that's part of the reason I think we've seen success in Olo Pay, is just the simple aspect of deployment and how that can be a quick win for the brands, or looking to do more with less. So, for example, how do I digitize the on-premise experience to drive more leverage in my business? So we're seeing brands embrace things like kiosks, QR code ordering and pay, and that helps in many ways augment some of the labor constraints that they have. So I think, when it comes to the brand perspective around the demand environment, I would say there's still a focus on digital transformation, but in particular, how do I do more with less? Yeah, that makes a lot of sense. And you, you know, went into about the question I was gonna ask next. Sounds like labor is easing, but digital is being increasingly seen as a way to get a quick win, to maybe circumnavigate, you know, the labor constraints- That's right ... that you're working with. Let's maybe talk about the industry. You know, you talked about 15% of the industry being digital. So, you know, why does being a pure play digital vendor make sense in this industry? And I guess maybe part of that is, you know, how did they view digital before? What was the main technology within restaurants before that they were implementing? So offering a digital pure play value is something new to them. Yeah. Yeah, so I would say that there's definitely a desire to continue to grow digital within the, you know, within the brand, in particular, omni-channel digital. So just not digital for off-premise, but digital for on-premise. And you're seeing examples now, within the industry of brands, utilizing, for example, kiosks, as the only way to transact within a brand, or of course, walking in and ordering from your mobile phone. And that is inherently 100% digital, and Olo is the backbone providing that or facilitating those transactions. And I think brands are looking at that and saying, "Gee, that is a great way to drive a lot of efficiency within the business, but in addition to that, a great way to collect data about the guest and know more about that guest." Whereas, kind of the historical experience would be going up into a POS, and you're sort of a, a nameless transaction. You have a, an order and a card swipe, but I don't really know much about you, versus when you leverage digital, you can know a lot more about your guests. So I think when it comes to this idea of 100% digital, it's as much about driving efficiency within the business, but I think equally knowing more about your guests and being able to deliver personalization. I think that's where, being a digital native solution for the industry, you know, presents a lot of opportunity for Olo as compared to maybe some of the more traditional legacy offerings. Yeah. Certainly, it comes to mind that retail has done a lot to do to really enhance patronage. To basically know who the customer is, know what their preferences are. You know, restauranting is a little bit harder to get to that level of capturing that information, especially maybe the quick service restaurants that interact versus- Mm-hmm ... you know, drive through or non-digital channels. Mm-hmm. You know, one question I get from investors is, you know, "Why aren't there horizontal players in this space?" You know, why don't you see broader tech platforms decide to go after the restaurant industry? You know, why does a vertical approach make a lot of sense from Engage to Pay to Ordering? Yeah, it's a, it's a great question. I think, just, using Engage as the example, the foundational element of the Engage suite is what we call a Guest Data Platform. I think from a horizontal perspective, it'd be considered a customer data platform or a CDP. And what's unique about our Guest Data Platform is that it really is purpose-built for the restaurant industry, in that, if you think about the number of integrations that we've developed over our 18-year history, you know, 24 POS integrations, similar amount of payment integrations, loyalty integrations, et cetera. When we're in conversations about the potential use of our data platform, we're able to get to time to value for our brands much quicker than a horizontal application could, because why would they have an integration with a sort of-... obscure loyalty provider within the restaurant vertical, and therefore, it's much harder for them to get to value, et cetera. And in fact, we've done, you know, some things recently within our go-to-market motion, in that we are pre-populating the data platform with actual data of our existing brands, so that when we're having conversations about what using the Olo platform could look like, it's not a, you know, John Doe, and here's what could actually- you could use the system for. It's real data from their actual use of the order platform and the payment platform. So I think that's really palatable and exciting for brands to utilize. So I think it really comes down to, again, that vertical focus and the integrations that we've built up over the years, and the ability to get to value quicker is how we win against horizontal solutions. Yeah. Certainly, if you're part of the transactional layer, you're the provider of the data, you know, you're not maybe in a middleware layer where you're the CDP, and you have to interact with a transactional layer that's not- Exactly. -your own. That's spot on. And because we are an example of the order platform, we're seeing information down to the actual basket line item level, and then we can use that information to then enrich that data platform or that data profile within the platform. Yeah, perfect. You know, another thing I get questions on is marketplaces. You know, the delivery service providers, marketplaces, in an incredible amount of mind share with consumers. How do restaurants view these marketplace vendors? I think maybe investors also try to understand where they can sit in the stack of restaurant technology, because I think, you know, maybe 10 years ago, depending on the timeframe, tablets were on the desk of every restaurant operator, and they were doing individual order systems. So today, you know, are they partners? Are they rivals? You know, resellers? Are they necessary channels, but it's a strained relationship? Maybe, you know, talk about those marketplaces. Yeah. Look, I think marketplaces are an important constituent in the overall, you know, restaurant tech ecosystem. In particular, they do a great job of, you know, gathering demand, and they also, in many cases, help to facilitate the delivery as a delivery service provider. We work with marketplaces in really two ways, primarily. Via our Rails product, in which we are taking the information we know about an individual location, syndicating that out to third-party marketplaces, so such that when a transaction happens on a third-party marketplace, we are then ingesting that order down into that restaurant location in an integrated way. To your point about all of the tablets that you would typically see within a restaurant, you can remove those tablets and utilize Olo Rails to directly integrate all of those orders. And then in the case of our Dispatch product, we're also working with the marketplace delivery service providers to help enable first-party delivery. So what we've done is we've partnered with all of the national and local delivery service providers, and under a single API, are able to offer those services nationally, such that if you are a national brand and there's a particular delivery service provider who has great operations in the Northwest and someone else who is stronger in the Southwest, that's okay. You can use Dispatch, and we will enable delivery across all of those different markets. So again, marketplaces are integral to that, to those products and that experience. What is interesting is you're starting to see sort of what played out in the hotel and OTA scenario maybe five-10 years ago start to play out in the restaurant vertical, in that if you think back to things like best price guarantee, book direct, and loyalty type of tactics in the OTA and hotel dynamic, you know, five-10 years ago, you're starting to now see that play out in restaurants as well, where if you book direct or order direct within restaurants, you'll get a better price than if you were to order from a third-party marketplace. That's okay from Olo's perspective because we've built the technology that allows our brands to do just that. So we have the ability for omni-channel pricing and, and so on. It's just interesting to think about how that's starting to play out in this industry. Yeah. I'm sure a lot of the consumers of those marketplaces may not be aware that the price that they're paying is not actually the real price if you were in the restaurant. There is a natural inflation- Yeah ... in order to, you know, leverage that channel. You know, just the last question on that, have you seen any instances of marketplaces being able to land software within an enterprise environment in any meaningful way? No, not, not within enterprise. I think there's some examples within kind of the, the, what we call the small chain or independent market, where you may have a third-party marketplace that can help stand up a, you know, a, a simplified digital ordering instance. But when it comes to enterprise, enterprise needs and complexity, that's when you need a real, you know, scaled robust feature set company like Olo. Yeah, perfect. Let's maybe talk about Olo Pay. You know, you're expected to reach low $20s million in revenue from Olo Pay. That's kind of a raise from what you were thinking entering the year. Mm-hmm. You know, maybe let's talk about the, you know, the pace of adoption, the quick wins. And I think maybe specifically, who are the companies that are the early adopters, and who are the companies that, you know, have pushed that decision off, but you, you're hopeful about them in the future? Yeah. So we've been really excited and pleased with the momentum that we've seen in Olo Pay to date. You know, walking into the year, I think we had strong expectations within the emerging enterprise segment of the market, maybe more measured expectations within the enterprise segment of the market. But we've been pleased to see both segments perform really well. And even going a click deeper, if you look across the types of restaurants, so QSR, fast casual, et cetera, we've had success across all restaurant types. So all of the proof points have been very positive in terms of pay adoption and pay momentum. I'd say, in terms of conversations that haven't resulted in bookings to date, I would say it's less about being a laggard in the sense of wanting the product to develop more. It's more about, "Hey, I'm in this contractual relationship right now. Yeah I can't really make the transition. We'd love to, but we need to wait for this cycle to lapse." From our perspective, that's okay. Our typical agreements are 36 months in length, and then we have 1-year evergreen renewals. So we will get, you know, one, maybe multiple bites at the apple through that commerce relationship, and hope that over time, we can win that business. And then in some cases, we've heard from brands that having card-present is an important factor as well in deciding whether or not to transition to Olo for payment needs. And that is in part why we've moved forward with the development of Olo Pay for card-present transactions. We're not there yet in terms of being in market broadly. We're using this year to continue to beta test, focusing on kiosks to start, and then we'll build from there. But that's another component that we'll wanna focus on in order to really unlock Olo Pay's potential. Yeah. Yeah, certainly. And, you know, brief clarification on that, you know, think of that as those payment agreements as being typically tied to what they were using for point of sale. They were like, you know, they had some sort of agreement with a payment processor that would be attached to the point of sale. How does that exist in the card-not-present? Are there as many agreements? Is it tied together? Is it no man's land, like- Yeah, it's a bit of a mixed bag. I'd say in some cases, agreements will speak to the card-not-present processing. In some cases, it doesn't, so they can fork it off to another provider and not have any concerns there. But just on the POS and payment point, I think typically, within enterprise, those things are decoupled. If you go into more of the SMB segment of the market, that's where you see POS and payment tied together. Whereas within the enterprise segment, it's typically legacy point of sale and many of the sort of traditional payment processors decoupled. Which is to say that as we move into the card-present processing capabilities, it's not. Our ability to have success there is not dependent on a POS rip and replace. That's not what we're trying to do. It's going to be a substitute for the processing that sits alongside the POS, not a POS in and of itself. Yeah. And then, I mean, like, you know, last question on payments. 3% of revenue last year, you know, by my math, 10% this year. How, you know, how big could payments be long term? What do you, how are you thinking about it? Yeah, this is where card present becomes really interesting, so I'm just gonna run down some math. So today, I mentioned earlier, within the industry today, about 15% of transactions are digital, which is synonymous with, for the most part, with card not present, which means there's 85% of industry transactions are card present or non-digital. And if you think about that 15/85% split and then map that back to the GMV that's processed on Olo's platform, there's a huge opportunity just within our install base to drive payments revenue, both for card not present, but in particular, card present once ready. So last year, as an example, we processed $23 billion of GMV over the platform, and if you assume that that's 15% of what our brands processed that year, that means there's over $100 billion of GMV just within our install base that's being processed annually, that would be addressable once we have a card-present offering ready. So when I think about that math and what that means for future revenue potential and revenue mix, I think it's suffice to say that, you know, that number is gonna continue to grow, and it will have a, a big impact on both revenue and absolute dollars, as well as revenue mix. Yeah, perfect. Well, you know, last minute here, you know, final question from me: You know, what are you most excited about going into next year? Certainly the platform has evolved to have many more modules than when you went initially public. And Olo Pay seems to be doing incredibly well, but, you know, what are you most excited looking into the next year? Yeah. So we are, you know, continue to be really excited about the momentum we're seeing in the business currently and how that's, you know, carrying forward into next year. I'd say we continue to focus heavily on our ability to expand ARPU within our existing install base as a means to drive both ARPU and revenue growth. You mentioned there are 14 product modules. As of the end of last year, on average, customers used three product modules, so there's a huge opportunity to go from three and inch our way closer to that 14. And we feel like we're in a great position to do that. So I think that's what gets us really excited about, you know, about the next year. Yeah, perfect. Introduce customers to those new modules that have come, you know, in the last few years- Yep ... you know, on the Engage and Pay side. Exactly. Perfect, Peter. Well, thank you very much for joining us. Yeah. Thank you for having us.