Great. Good morning, everyone. Thanks for joining us, kicking off day three of the Needham TMT Conference. My name is Bernie McTernan, the internet analyst here at Needham & Company, and my pleasure to introduce the team at Olo. We have CFO Peter Benevides. Peter, thanks again for joining us. Thanks for having us. Great. Well, can you start, maybe a high-level question, by just explaining the, the major pain point to us that Olo's trying to solve for, for restaurants, and how your technology has evolved with things like Olo Pay that are becoming increasingly more important to your product set? Yeah, great question. So, you know, I think at the core, the mission that we are trying to achieve is really to enable hospitality at scale within the restaurant industry. And really what that means is providing our customers with various tools and applications to better engage with their guests. And in some cases, that means being able to do more with less as a brand, so being able to drive more efficiency within their business, but at the same time, deliver elevated hospitality to their guests. And as you mentioned there, Bernie, you know, Olo Pay has been a big part of that, and the reason for that is, when combining both the digital ordering platform as well as the payments capability, it is giving brands better insights into their guests, how their guests are interacting with the brand. And through that information, brands are then able to deliver better hospitality by knowing a little bit more about that guest. So, we're really excited about the progress that we've made over the past year and a half, two years on Olo Pay, and that has been a great foundation for the Engage platform, which essentially houses all of that data in a guest data platform for the brands to then utilize to, again, better engage with their guests. Yeah. And so you mentioned, Peter, giving, you know, brands better data, better insights, so digitizing these restaurants and hospitality companies more data to on their consumers. How are they leveraging it? Yeah. It, you know, it's really exciting to see what, you know, what the brands are doing with the data. Yeah, we have a number of examples on our website, but, you know, there's two that come to mind that we shared this past quarter on our earnings call. A brand by the name of Sonny's BBQ, they're utilizing the data platform in addition to different product modules that are feeding data into that platform. So, they're utilizing Ordering platform, Rails, and Dispatch, and what they're doing with that information is then through better insights on who their guests are, using that information to, in their case, help to grow their subscriber base in their email communication so that they have the ability to better interact with their guests. Through those insights, what they've also discovered is that 15% of their guests are driving the majority of their sales, which I think is actually a pretty common trend in the industry, where you kind of have this, you know, Pareto principle to some extent where the majority of your sales are being driven by the minority of your customers. So, knowing who those customers are and how best to engage and reward and keep them is critical to growing the business. We shared another example on the call with First Watch, again, another user of the Engage platform. And what they've been able to do through automated email campaigns is better identify the types of promotions that customers want to see and at what point do they want to see those promotions. As a result of that, we're able to increase the average order value for those customers. Over the period of time that they measured, which I think was around 90 days, they increased sales by $2.7 million. So, it's really, again, like, there's different use cases across the brands, but essentially by having this very, you know, enriched data about your guests, they can better engage and help to drive, drive incremental sales. The one other thing I would add is, right now, a lot of that is being built on the back of digital ordering data, and we announced this past quarter two new partnerships with NCR Voyix and Qu, which are gonna allow us to now access data that is happening on premise, which, when combined with the data that we know digitally, will really provide that kind of first industry omni-channel view of what the guest is doing. And we think that will be a very, very powerful thing for brands to have, and we can talk a little bit about that in more detail in a moment. But I think ultimately, that's a huge win for the brands. Got it. Yeah, no, that, that all makes a lot of sense, and a great way to frame the conversation. Maybe, you know, one of the beauties of this conference is that it is right after earnings season, so what were some of your, your key takeaways from this past earnings? And before you, before you answer, I just wanna remind the audience that if you do have any questions, please type them in the portal, and we'll be sure to get to them. But yeah, Peter, we'd love the, the key takes from earnings. Yeah. Q1 was a great start to the year. When I think about financial performance, beat on the top line, beat on our non-GAAP operating income guidance as well, and raising the full year in excess of the Q1 beat. So clearly, momentum being driven within the business and I think is also indicative of our strategy playing out. As I mentioned a moment ago, we also announced two new partnerships on the POS front, which are not only moving us toward card-present processing, but also, again, allowing us to capture that on-premise transaction data. And we announced a number of new platform capabilities through Smart Cross-Sells, Olo Pay Card-Present for kiosks, which is really interesting, and also some additional features in Catering+. Okay, awesome. And then also, just kind of last, high-level question before we dive into some of the details there, but just macro backdrop, you know, how does it feel for you guys? Health of the consumer, I'm sure you have some or could have some interesting insights. Yeah, I mean, I think it's kind of more the same in terms of where we were last quarter in terms of what we're seeing within the industry. And what we're seeing is there's definitely a trade-off in terms of taking price or increasing price and traffic. So, I think brands are being very cautious around how much they push there because they know that there is a trade-off. I think in some ways that's actually beneficial for Olo because what that means is now brands are really looking for other ways to drive leverage within their business, and that could be adopting tools to help drive the top line, or it could be utilizing tools to help with the overall efficiency of the operations. For example, kiosks is a great way to drive more leverage in your cost of labor. So, we're seeing a lot of interest from brands around you know kind of that framing. Like, "Help me do more with less and at the same time, deliver that elevated hospitality that I want to deliver to the guest. I don't want to compromise guest experience for you know for efficiency." So helping you know having those conversations and helping them balance that equation is something that we're seeing continue. And you know when we think about how does that impact our business, and I've mentioned this on previous calls, if you look at the composition of our customers, about two-thirds of our customers are limited service in nature. So think of those as kind of the lower price point offerings versus the other one-third being full service, where price points are a bit higher. I think to some extent, if there's a trade-down effect of folks migrating from higher price point to lower price point offerings, we're somewhat insulated from that, given that the composition of our brands leans more toward limited service restaurants. All of that said, when we think about our guidance and our guidance philosophy, it's really through that lens of what do we see going on in the macro environment. Let's make sure that we're prudent in terms of how we think about the guide and factoring all of those factors in. Great. Oh, great. Let's dive into those new POS integrations that you were talking about. Would love to get just some more details on the, you know, mechanics, the strategic value of those, and the financial implications of those two new integrations. Yeah. So, historically, the way in which we would integrate into POS platforms is really through the order injection process. So there is some bidirectional information that's being shared between the POS and Olo today, but generally speaking, the objective of those integrations was to push orders into the store in an integrated way that would allow the restaurant kitchen staff essentially to prepare information in a seamless way. So orders that are happening outside of the four walls of the restaurant are then getting pushed into the assembly line that is happening on premise, so there's really no disruption in flow. That was kind of the historical way in which we would integrate into the POS. Through the new partnerships announcements with NCR Voyix and Qu, we're taking those relationships a step further and on two fronts. So, through the new partnerships, this will allow us to offer card-present processing to our brands, and the reason why that's important is if you think about just the amount of transactions that happen within the industry every year, about 16% of those are digital transactions. And digital, you can think of digital as synonymous with card-not-present processing, which we have today. The other 84% of transactions are non-digital, and you can think of that synonymously with card-present processing. So as we move into card-present processing, that's going to open up a much larger opportunity in terms of monetizable GMV for the payments platform. That's the, the revenue piece of it or the financial opportunity piece of it. The other strategic, you know, importance of that, of the partnerships is the ability to now see data that is happening on-premise through these new POS integrations. So, why that's important is, by combining both the payment transaction and combining what is happening on the POS, we'll now be able to combine that information with what we know about that guest digitally and really build out that 360 view of the guest, which I think will be very, very important as brands, again, think of ways to better engage with their guests, drive leverage, drive efficiency in their, in their business. So really that's kind of the genesis of the POS relationships and what these two announcements now bring to the table. ... It makes a lot of sense. And maybe you touched on it earlier, but just wanted to make sure we drive the point home in terms of just the importance of omni-channel for Olo. Yeah, I think it's super important given that, again, if you're thinking about it through the lens of the brand, and we actually have a slide in our investor presentation, where we talk about it's not digital and non-digital, it's one business. And what that is meant to say is there, the operational components of digital and non-digital, they're not two separate worlds anymore. They really are overlapping worlds, and because of that, how you operate your business and how you collect and utilize data needs to be in a way that is really looking at that guest journey, whether they're ordering digitally or non-digital. Right now, we're primarily focused on the digital interactions with the brand, and therefore, the data is somewhat limited. Now, through the new partnership announcements that we made, that's really gonna round out our data capabilities and really will bridge with the payment platform, will allow us to see that guest through all those different journeys and allow brands to better engage and interact and market to those guests. But I think it's hugely important for delivering better hospitality and knowing more about your guest, given again, that those two worlds have really kind of merged together. Maybe just from a high level to make sure I understand it, when you say the 16% digital, 84% card- present, so digital, that... Would that just be online ordering that you're facilitating? And then obviously, card- present, someone's paying with a credit card at the store or whatever else it may be. That's exactly it. Yep. Okay, got it. Okay, so maybe just if you could talk about scaling the Card-Present operations and the financial impact. Yeah. So, as I mentioned earlier, this past quarter, we announced Olo Pay Card-Present availability for the kiosk experience, or the kiosk use case. And again, that's important because as brands continue to be pressured by input costs, commodities, labor, et cetera, kiosks are a great way to drive efficiency in their business. So, we can now power Olo Pay Card-Present processing at the kiosk. So that's a step toward full general availability of Olo Pay Card-Present. In terms of general availability, we're still targeting the second half of 2024, with revenue contribution really being in 2025, given just, you know, sales cycles and deployment cycles. I do want to just emphasize or just maybe run through a little math as to why that is so, both important and exciting for Olo. So this past year, we processed about $26 billion of GMV on the platform, and if you think of that $26 billion as being the 16% of industry transactions that are digital, that means just within our install base, there's probably north of $160 billion of GMV being processed, both non-digitally and digitally, just within our customer base, just within the 81,000 locations we have on the platform today. Now, this past year, we processed $1 billion of GPV, so that's the, that's the GMV that ran over the Olo Pay platform. So, when I think about the opportunity, the near-term opportunity, it's really the $1 billion of GPV as compared to the $160 billion of GMV being processed across our existing customer base, which I think that math is less than 1% penetrated. So this is what really gets us excited about the card-present opportunity, and then, of course, the ability to collect that data for brands to then utilize within the Engage suite is just a, an amazing, you know, one-two combination. Right. So, what's the process? 'Cause it... You know, I understand how the 26 becomes the 160. What needs to happen for that $1 billion of GPV to scale? Like, is that, you know, is that sales force knocking on the door, getting, driving more adoption? Like, how much of this is, like, automated and will just happen kind of automatically? Would love to get that, know how that progression could potentially work. Yeah. So, part of it is product driven, so we're doing the work now to enable card-present processing. So that part of it is product driven, so, but once we get through that work, it's really about enabling the sales force to sell that product to our existing customer base. Now, I think the new POS announcements is one way that we think we can get some momentum there because for brands that want that omni-channel view, adopting card-present payments is a way in which they can make that happen. But also, I think the success that we've had within card-not-present for Olo Pay becomes a great lead gen into the card-present conversation. So, now brands will want unified payments and a unified data set, which we would be able to enable as they adopt card- present. So, we have a couple levers I think that we can pull in order to get some momentum within card- present, but I think, you know, step one is let's get the product work done to enable card- present, and then we'll think about the different go-to-market strategies. ... Okay, understood now. Makes a lot of sense. Seems like a huge opportunity. Maybe moving on to another new opportunity you're in catering. So Catering+, what's new here for Olo? What's the incremental opportunity? And clearly, like, the bullishness or your bullishness for the platform came through last earnings call. Why are you so excited about adding catering? Yeah, it's a big market to start. So that I think is part of what's driving the excitement. You know, interestingly, I was at a trade conference late last week, where I would say two-thirds of the content was catering-focused, which I thought was really interesting. And, you know, brands are really thinking about, again, a part of this comes down to the framing of do more with less, right? And if I have, you know, remnant kitchen capacity that I could then utilize for catering, that's really gonna help to drive my revenue per square foot and drive the unit economics in my business. So brands are really excited about catering and what that can do for their business. This is something that we've been working on for a while, and, you know, we, we've had to do work that is operationally different from how you would run a kind of mealtime on-demand channel. So things like production sheets, tax-exempt status, house accounts, all these types of things that are unique to the catering experience we've had to develop over time, and we're really excited that we're now in the market with a full-featured catering offering. The other thing I would say is, similar to many of the product modules that we have on the platform today, we developed catering as a standalone offering, and what that means is if you come to Olo, you don't have to take all of the things. You can just take catering if that's the solution or the issue that you're trying to resolve, and then you can also bolt on other product modules within the catering platform. So if you want Pay to power payments within catering, we can do that. If you wanna enable delivery of your catering orders, you can leverage Dispatch for first-party delivery of your catering orders. And interestingly, when we developed Dispatch, we also created essentially filters that allow brands to specify, even down to the vehicle type, who comes and picks up the food on your behalf. And that's important when you think about catering because you may need, you know, you may wanna reduce that filter to only folks that are driving Suburbans because you know you're gonna be delivering large amounts of food versus maybe somebody in a sedan. There's this customization that you can do within the Dispatch platform that actually aligns really well with the Catering+ platform. So, we're really excited. It's a big market opportunity, and we've seen a lot of early momentum and think this is a great opportunity. Got it. And so when did the... so it sounded like the service is already launched. When do you expect it to actually be a more significant contributor to revenue? Yeah, I mean, it's starting this year. In terms of revenue contribution, I think it will ramp as we go throughout the year because of the, you know, timing between both signing and then implementing the platform. And again, I, you know, what's interesting is it's been a solution that is really servicing all aspects of our customer base. So we have enterprise customers, emerging enterprise, really across all different restaurant segments as well. So we're excited about the opportunity. Interesting. And what about, you know, you mentioned that, you know, in the industry there's maybe more excitement for catering, just talking about your experience at the trade show. How does your product compare to the competition out there, and thinking of someone like ezCater? Yeah, it's a little different in that I think ezCater, I would think of similar to other third-party marketplaces that are really focused on B2C demand gen versus Olo Catering+, which is really white label first-party catering. So it's a little bit different. I think, you know, there are other providers out there, but I think the ability to combine our catering offering with the order suite, as an example, I think allows brands kind of more, you know, effectiveness or efficiency in terms of how they run their operation with that single pipe from Olo, bringing orders in and trafficking those orders within their store. So there are benefits to having ordering and Catering+ together. But at... To your question around ezCater, so a little bit different of a business model. Yep, makes sense. Maybe pivoting over to Borderless, just would love to get an update there. What's driving growth in the counts, and how do you see it translating to success for Olo's brands? Yeah, Borderless is, it's just so fun to watch that product evolve. I think we announced Borderless, we announced Borderless around the same time that we announced general availability of Olo Pay. But we hit our first kind of big Borderless account milestone in Q3, eclipsing 1 million users in Q3. That then grew to 2 million in Q4, and then this past quarter, we eclipsed 4 million accounts, which we disclosed on the Q1 call. So that doubling of user count is just incredible growth to see. Now, in terms of how that's providing value. From a guest perspective, that is really reducing the friction in the checkout process. So in lieu of having to remember a username or password or enter in credit card detail, you can check out essentially in one motion in a single-factor authentication, enter your email, get a text, hit that link, and you're on your way. That is hugely beneficial for the guest, and frankly, I think we can admit that we've all come to expect that experience. We want frictionless checkout. We're seeing it in other aspects of retail, and that should be the expectation. So we're happy that we can deliver that, and guests are definitely seeing the value. From the brand perspective, what's really powerful about Borderless is because that guest is checking out in a logged-in state, the brand now knows who that guest is. Prior to rolling out Borderless, what we saw on the platform was about 70% of guests did not check out in a logged-in state. They would check out as a guest that... I'm sure you've done it, Bernie. I've done it myself. 'Cause you don't want to go through the, the hassle of trying to find your username and password, et cetera, and they would just check out. The problem with that is the guest has no idea who you are, and, and they can't really build a profile on you to better serve you and better engage with you. We've totally flipped the script with Borderless, and now what we're finding is over 70% of guests are actually checking out in a logged-in state when Borderless is enabled, and that's super powerful. So now the brands know who the guest is, they know what they're, you know, what they've ordered historically and so on, and that, in some ways, is what is helping the smart cross-sell capability. Because we're now using that information, all of that contextual information, to better recommend incremental items through the checkout process. So a lot of brand value, I think, is being driven by Borderless. From Olo's perspective, today, we're not explicitly monetizing Borderless. How we see incremental value is obviously through things like retention, et cetera, but we also see generally incremental orders as a result of Borderless. In particular, the cart conversion tends to be higher when Borderless is enabled versus non-Borderless, and that combined with the transactional software revenue model will help to increase revenue over time. Yeah, and you mentioned smart cross-sells. You know, we'd love for you to talk more about that product, but it just seems like it makes a whole lot of sense, not only from if you, you know, get a sandwich, you want a Diet Coke or something, but it's like it's easier for—like, the consumer could find the Diet Coke themselves, but it's a lot easier when it's served up to you. But can you just talk about that product a little bit more now that you mentioned it? Yeah, it's a really cool capability, and, you know what, effectively, what it's doing is taking what historically would have been static kind of recommendations and turning it into more of a real-time dynamic recommendation engine. And how that's being done is through more contextual information to inform what to recommend. So, for example, what do you have? What have you ordered historically could be a reason why something is being recommended or what do you have in your cart. Where are you located? You know, it's raining here in the Northeast. It's still warm, but maybe I would want to add a soup to my checkout experience because it's raining today. So all of that, like, contextual information then feeds the model to then make a recommendation to that guest. And, you know, we, we announced, Smart Cross-Sells this past quarter, and we're already up to... I believe, over 10,000 customers have enabled that feature, and that's not, again, similar to Borderless, that's not something that we are explicitly monetizing. But, I think as we are able to drive higher, AOV, that coupled with Olo Pay, if Olo Pay is enabled, will also help to increase incremental revenue. Right. And so, I mean, a lot of this conversation is coming back to giving, you know, Olo with c- having more data, giving your, your, your customers more data as well, too. I mean, has machine learning, AI, however we wanna call it, like, has that almost been, like, supercharged over the past year? Like, how do you guys think about, you know, machine learning and, and AI impacting either, A, you or your customers, and especially how it's, you know, maybe the, the, the gas has been or stepping the foot on the gas more recently? Yeah, yeah, it's a great question. So there's obviously things that we're doing internally, operationally to leverage AI. So think about, you know, the engineers and their ability to use things like Copilot and drive some efficiency in how they code. That's an obvious one, or even within customer support and using more intelligent chatbots through the customer support journey. That's another way that we're using AI internally. But externally, for purposes of product and purposes of our brands, there's a lot that we're doing. So we just talked about Smart Cross-Sells as a great example of how we're using AI to better inform the recommendation engine through the checkout experience. That's one example. We also announced a couple of quarters ago a capability called Order Ready AI, which essentially is looking at all of the different order volumes that are happening within that particular location. So looking at what's happening through the different digital channels, what is happening on-premise, and we're able to do that by having integrated into a KDS provider to see what's going on in the kitchen, what does the production capacity look like in the kitchen, and then based on that information, as incremental orders are being placed, we can more accurately determine the quote time for either the customer or the delivery driver to come and pick up the food, to then go out and, you know, either deliver or take out. That may sound, sound, you know, like, it may not sound like a big thing, but it's actually a pretty big thing. The reason for that is, one, obviously operationally, there's a ton of value in having more accurate quote times and making sure that the production line is being operated as efficiently as possible. But also when you think about the ecosystem partners, that provides a lot of value to that group as well. For example, we know that a key KPI for delivery drivers is dwell time. So how quickly they can get in the store and out will impact the number of deliveries they can facilitate per hour, and that delivery per hour is fundamental to the unit economics of our delivery service providers. So if we can help drive efficiency by really getting those quote times correct and summoning the delivery driver just in time to come get that food and deliver it on behalf of the guest, that just drives value throughout the entire chain. It makes the brand more efficient, the guest is happier, the driver's more efficient, and so on. So I think that's a great example of how we're leveraging AI within the platform. No, that, that's great. Maybe moving down to the, the financials, you know, location adds seem to be tracking around 5,000 net new for 2024. How do you expect that to ramp over the course of the year? Yeah, so consistent with what we shared on the last call on Q4 when we set guidance for the year, the plan is to add 5,000 net new on a full year basis, and we'll ramp throughout the year. We just added 1,000 this past quarter, so that's sort of in line with that ramp as we move throughout the year. And, you know, when we think about the plan overall from a top-line perspective, consistent with what we had done in 2023, the way we think about incremental revenue for the platform, two-thirds of that is going to be driven by things that we walked into the year with, that are going through the implementation process. So those are clearly deals that we have a good line of sight on and give us confidence in that 5,000 net new adds. With one-third being driven by opportunities to both book and deploy in the calendar year, and that mix is again a mix that we had in 2023 and continued into 2024. Okay, got it. So that, that two-thirds, one-third, that's, that's pretty typical for a normal year? That's typical for you. That's right. Yeah. Okay, got it. Gross margin or, or gross profit growth, what gives you the confidence to say that 2024 will be the trough year for, for gross profit, year-over-year growth? Yeah. So card-present will be a key component of that, coming to market with card-present. Again, just given the quantum of gross profit dollars per location, that will be driven by card-present adoption, so that's part of it. The other part of it is, you know, when we think about the area of focus in 2023, we were very focused on scaling pay, and we did that not only because of the financial opportunity, but how pay can be a great lead gen engine for both the Engage platform as it spins off more and more data for our customers, but also for card-present, which we knew was coming in the back half of 2024. Now we're refocusing the attention within the go-to-market org to have more balance between the three primary suites, and as a result of that, I think that will help to drive greater, greater gross profit through more adoption of, of, of software capabilities or software products, which will then help to reaccelerate gross profit as we, as we move into 2025. Okay, great. And then just on the gross margin line, why do you expect the sequential or quarter-over-quarter erosion to be less severe than you did in February? Yeah, so really two things driving that. One is a reallocation of costs to OpEx. We moved some team members around to fill some roles within the OpEx group, and driving more cost efficiency within certain areas of platform cost of revenue. Yep, understood. What about sales and marketing leverage? It's been growing in lines, maybe even exceeding, revenue growth. When do you expect to be able to achieve more leverage on this line? Yeah. So, over the past, I'd say 18-24 months, we certainly stepped up investment in sales and marketing, really to align to the opportunity as well as our multi-suite offering. If you think back to 2021, early 2022, we really were a single-suite company with digital ordering and delivery, and then we layered on payment capabilities and now marketing technologies. And what that meant is we needed to broaden the sales and marketing organization to create more specialization within the group so that as prospects are exploring the different offerings, we have the skill set and the knowledge to go really deep on those particular product suites. That required us to scale up certain aspects of the go-to-market organization, in particular, sales engineering. And then we also moved into the emerging enterprise segment-... more aggressively than we had historically. We now have over 14,000 of our 81,000 are emerging enterprise by definition, which is an exciting vertical for us, given that those are brands that have, you know, future aspirations to scale into the enterprise segment, but also tend to adopt multiple modules from the onset of the relationship. So the starting ARPU tends to be higher within that segment as well. That all said, as we look ahead, we see in the second half of this year, we'll start to drive some incremental leverage within sales and marketing now that that step function of investment to align with the multi-product suite offering is, for the most part, behind us. Yep, makes sense. So maybe then combining those two thoughts where gross margin outlook looks better, as these new products scale, sales and marketing leverage co, leverage happens, what's the, just the output of that for, for non-GAAP operating income leverage? What kind of margin profile do you think you, you can realize in the next, call it, three to five years? Yeah, we haven't shared the multi-year view on that front, but I think what we're seeing, which I think is implied in the guidance that we shared, is that as we move throughout the year, operating margins will improve. And that was actually a similar dynamic to last year, where there's an investment typically that we do at the start of the year. You also have, you know, comp increases, merit increases, taxes, et cetera. So usually in the first half of the year, NGOI is a little bit less from a margin perspective, and then, as we move throughout the year, we drive more margin in the business, and that's what we anticipate for 2024 as well. Okay, great. And then just lastly from me, capital allocation, just how you guys think about using your cash, you know, M&A, buybacks, just, you know, how you're thinking about it. Yeah. So I think from an organic perspective, we're, you know, we're well, well-funded. We're doing the things that we want to do from an organic perspective. We announced a $100 million authorization this past quarter. We just finished the prior $100 million share buyback authorization, so we, we recently put a new plan in place, and then, in addition to that, you know, looking at some opportunistic M&A as well, more as kind of a, more like tech tuck-ins to help accelerate the product roadmap, kind of on that scale, is another area that we're, that we're looking at. Great. Well, Peter, let's leave it there. Thank you so much for joining us. Thanks, everyone who joined on the webcast. Good luck the rest of the day, and thanks again. Yeah, thanks for having us.