My name is Logan Reich. I'm the restaurants analyst here at RBC, and we're joined with the Olo CFO, Peter Benevides. Thank you very much for joining. Welcome to RBC. Yeah, thanks for having us. So I have a long list of questions here, but maybe before we dive into it, can you just sort of give an overview of, of Olo? I know you're sort of known more as a restaurant tech company, but obviously, we're at the payments conference, and payments is becoming a bigger part of the story. So maybe you can kinda just sort of give a little bit of a background on the company. Yeah, absolutely. So for those of you who don't know Olo, we are a vertical software company. We focus on the restaurant industry as the vertical. I think we are most well known for digital ordering and delivery as sort of the first products we and as you mentioned, over time, we've moved into payments and now guest engagement. We've traditionally focused on the enterprise segment of the industry, which we define as brands that have five or more locations per brand. And over time, we have moved down into that kind of smaller segment of the industry. We initially began with much larger enterprises, on average, about 100 locations per brand. By the numbers, we have over 81,000 active locations on the platform today across over 700 brands. We've had over 85 million consumers have transacted over the platform over the past 12 months. What that means is that we are in a position where on one side, we have a network of 81,000 locations, on the other side, 85 million+ guests, which puts us in a great position to harness that data and really enable what we call our mission of hospitality at scale. What that, what that really means is really using that data and the applications that we've built to enable brands to deliver hospitality or high-touch hospitality at QSR speeds. Again, we do that by leveraging those network effects, coupled with the applications that we've developed over the years. Gotcha. No, that's great. I definitely wanna dive into the, the payments part of it. But I guess, like, you know, you mentioned that the 700 brands, 81,000 restaurants, like, you guys have some pretty impressive logos, that you guys do business with, like Denny's and P.F. Chang's. Can you just sort of like, how you approach the, the market and sort of, you know, how your customer base has expanded over, over time? Yeah. So as I mentioned earlier, we traditionally have focused on the enterprise segment of the market, and then over time, as we've built out the you know the various partnerships that we have from an integration standpoint, that allowed us to move into other segments of the industry to provide our service in a cost-effective or economical way. So, and what I mean by that is having done the POS integrations, payment integrations, loyalty integrations, by building out over 400 different partners that are now tapped into the platform, that's allowed us to service other segments of the industry. And we work with some of the largest brands out there. four of the top 25 are on the platform today, down, as I mentioned, to sort of the 5+ locations per brand. Yeah. No, that's great. And I imagine that's a big sort of like TAM expansion story for you guys, where you're able to, you know, first address larger businesses and then, you know, move into smaller- That's right ... SMB sort of restaurants. No, that's great. And then I guess on the payments side, can you just sort of give a high-level view of the payments journey to date? Why'd you move in that direction, and sort of, what's next and where you're at? Yeah, so great question. So, when I think back to the sort of genesis of Olo Pay, this was really something that our customers were pulling us into. Prior to the launch of Olo Pay, traditionally, what we had done, and we still do this today for brands that are not utilizing Olo Pay, which is we would integrate into the traditional processors, and sort of act as a gateway to process transactions. What we found was brands were seeking better performance in terms of how they're delivering that payment experience. So things like higher authorization rates, lower fraud rates, lower chargeback rates, these were all things that brands were asking for and saying to Olo: "How can you guys help?" At the same time, they were looking for innovation, things as simple as mobile wallets, where a lot of the traditional processors, from a digital standpoint, weren't offering those capabilities. Mm-hmm. Brands were hopeful that through the development of Olo Pay, we would be able to offer things like mobile wallets. Then the real, I'd say, you know, unlock was the ability to make payments strategic and use payments as a way to know more about your guest and allow guests to transact in a logged-in state. By doing that, we're able to combine what we know about that guest with all of the transaction-level detail, basket-level detail, to build out a guest profile that the brands can then use to know more about their guests and help drive a variety of business decisions. So again, this was a conversation through, we have something called a Product Advisory Council, where we work with our brands to help ideate on solutions, and Olo Pay was something that emerged through those conversations. We initially began with card not present as the transaction type, so think of that as synonymous with digital transactions. And now the plan is to broaden that capability into card-present transactions, which would be more of the on-premise, non-digital transactions. Mm-hmm. And why that's important, as you know, the number of transactions that occur in a non-digital state are pretty material within the restaurant vertical. Today, about 16% of transactions are digital. Those are the ones that we can touch today through the card not present offering, but there's another 84% of transactions that are still non-digital. Mm-hmm. So through the development of Card Present processing, that will allow us to touch the other 84% of transactions. And the plan is to be in market in the second half of this year, with our Card Present offering, and then hopefully, revenue contribution beginning in 2025. ... No, no, that's great. And I feel like, you know, a lot of, you know, businesses are sort of adding payments as a, as a solution to their pre-existing sort of software and data set. I guess, like, sort of, you kind of touched on it a little bit. Maybe dive a little bit more into like how the state of the competition is today and sort of where you're fitting in and what, I guess, solution you're providing that's not provided by others. Yeah. So I think there is maybe a misconception that when broadly across the restaurant landscape, POS and payment are the same. Mm-hmm. That is true in the more sort of like SMB single, you know, single chain operator segment. As you move upmarket into the enterprise, it's more typical to see POS and payment separate. So you have a POS provider, and then you have a traditional payment processor sitting alongside that POS. So through the Olo Pay offering, really what we're doing is displacing the traditional processor in that equation, and it doesn't require a rip and replace POS situation. You can continue to use the same POS and use Olo Pay for payments. And the way that we approach the conversation is really twofold. There's the kind of pure table stakes around having a product that is high performing. So I touched on it earlier, authorization rates, fraud rates, chargeback rates. You need to outperform the incumbent on those metrics. The kind of real unlock is then using payments as a way to acquire that data about that guest and then combine it with information you know about that guest, either through the digital transaction or through what you know about what is going on in the POS, and then use that information to enrich the data platform. From there, brands can use that information to know more about their guests. What are the trends or the characteristics of the highest lifetime value guests within my brand? How do I go out and scale those characteristics, find more users like them, or implement things like menu design that most correlates to those highest lifetime value guests? That becomes the true North Star, what drives brand decisions. You can only do that if you're combining both the payment data set along with the transaction data set, which is what we're capable of doing. No, no, that's great. And then I want to talk a little bit about on the go-to-market strategy of just like, sort of, how are you approaching? Are you selling into your existing user base today, or do you kind of view it as a driver of, of new, new logo adds going forward and sort of- you know, how do you think about that over... You know, obviously, it's sort of a, a relatively newer initiative for you guys. How do you think of that over the course of the next, I don't know, couple of years? Yeah. So it's a combination of both. I'd say within the, what we define as the emerging enterprise segment, so that is the segment of, call it, 5 locations, up to 99 locations per brand. It is typical for that segment of the market to take multiple modules from the onset of the relationship, and that usually includes payments as well. So through that new sales motion, that's where you see, you know, the highest initial adoption of, of pay within that segment. Within the enterprise segment, that's where you see a lot of the upsell motion, or cross-sell motion, and, again, we've had quite a bit of success to date on the Card Not Present opportunity, and the plan is to then leverage that same approach in terms of making payment strategic as a way to have success with the Card Present offering as well. And, you know, one of the things that we've done over the past 18+ months is that we've created more specialization within the go-to-market team so that we have teams that are focused on the enterprise and emerging enterprise segments, but supporting them underneath are sales engineers and solution consultants that are verticalized to the three product suites: Order, Pay, and Engage What that means is we have folks that have very, very deep expertise when it comes to payments, so that when we're in conversations with the office of the CFO or the treasury, they can speak and go really deep on topics that are relevant for payments. So that's been a very successful sort of matrixed approach to how we go to market, and I think part of what has driven the success in Card Not Present to date. Gotcha. No, no, that's great. And then you guys, just on the financial impact, you kind of talked about doubling revenue to $60 million this year. I guess maybe looking, you know, for a little bit further out, sort of how do you see that, evolving as a contribution to the business, and then sort of impact on margins and sort of how you guys view it, from a financial impact? Yeah. So lot to unpack there. So we launched Olo Pay Card Not Present in early 2022. That first year, we generated a little over $6 million of gross revenue on about $250 million of GPV, so gross payment volume. That then grew to over $30 million this past year and over $1 billion of GPV. So great growth, and now we're on pace to exceed $60 million of gross revenue this calendar year. And again, this is just for the card-not-present offering. Now, if you think about that $1 billion of GPV that was processed on the platform last year, as compared to the amount of GMV, so just the gross sales activity on the platform, which was about $26 billion, that means we're, call it, a little less than 4% penetrated just within the install base for those digital transactions. Mm-hmm. Now, that $26 billion, if that is representative of the 16% of digital transactions I mentioned earlier, that means as Card Present becomes available, that $26 billion is more like $160 billion of gross sales activity just within the install base. Mm-hmm. ... So in reality, that $1 billion of GPV is less than 1% of just the installed base opportunity for payments, and that's really what we're, you know, focused on, and see as a big opportunity as Card Present comes online. And what that means in terms of growth potential and margins is that that will be a huge opportunity to accelerate gross profit growth. Of course, that's a trade-off from a gross margin perspective on a blended basis- Sure. But we tend to think about it from a gross profit growth potential, and then how, as that grows, gross profit dollars, how can we drop more and more of that to the bottom line in the form of operating income? So it's really that kind of calculus that we look at the opportunity and the as Card Present comes online and what gets us really excited about the future. No, no, that's, that's fantastic. I want to move on to a little bit more on the, on the data platform, and I think you guys are doing some, some really interesting stuff, and I feel like, you know, data is, is something that's very valuable to, to investors and companies these days. Just sort of how do you approach the, the data, the data product, and, and how are your, your customers utilizing that? And, and maybe just sort of position that relative to what, what some of the other competitors might be doing. Yeah. So I think it's important to note that from our perspective, and we think that this is definitely consistent thinking across, you know, many of the enterprise brands we support today, is that really the guest database or the guest database of record is really the new sort of paradigm and control point for the industry. Mm-hmm. I think there is a perception that, you know, the world revolves around the POS, and the POS is what sort of dictates the decisions around what you buy and sort of the elements of control within the four walls of the restaurant. But in reality, it's really about who controls that guest database and then how the brand is able to leverage that guest database to help drive business decisions. We feel like we're in a great position from that perspective because of the momentum that we've made in terms of building out the brands and locations on one side and the network of guests on the other, and having all of that information to then build out that guest database. So there's a couple things to, to note on that front that, announcements we've made this past quarter, I think that continues that path to becoming the control point around the guest database of record. So we announced three new POS partnerships this past quarter, NCR Voyix, Qu, and Tray. And what that's gonna allow is Olo to, one, process payments alongside the POS, but two, have, the ability to access data that is, occurring on the POS so that we can combine that data with the payment transaction and then enrich that guest database. Mm-hmm. So for the first time, brands will be able to really have a true omni-channel view of their guest, whether they're transacting on-premise, whether they're transacting digitally, and then again, use that information to understand more about their highest lifetime value guests and use that information to drive decisions. So, we're excited about those announcements. We think it aligns directly with the strategy that we're in the process of implementing, and again, through the announcement, or the rollout of card-present processing in the back half of this year, it that really rounds out the capabilities. Gotcha. No, no, that's fantastic. And then, I mean, it's interesting 'cause you guys have a, I guess, a more of a top-level view versus, like, an individual, an individual restaurant or an individual label. Like, are you guys able to take your holistic customer profile data from different restaurants and maybe bring those insights to, to specific customers, obviously in a, in a privacy-safe way? Or sorry, how do you approach the data from, like, a higher level across the broader space versus just a single, single brand? Yeah. So we're not, we're not cross-sharing data today. Sure. So it's all captive to that particular brand. But something that is similar to sort of what you're thinking there is a product or capability we announced at the same time that we announced Olo Pay card-not-present availability, is a capability called Borderless. And what Borderless is, it's a password-less login, where as a guest, you are saving your login and payment credential at the Olo platform level, so that any time you subsequently check out or go through the checkout process at a Borderless-enabled location or brand, you can check out in a single factor authentication. So you enter in your email address, you get a challenge text, you hit that link, and then everything populates on the page. Why that's important is because it really flipped the kind of the percent of guests that would check out in a logged-in state. Prior to Borderless, normally, guests, 1/3 would check out in a logged-in state. For the most part, people would just check out as guests. I myself would do it because there's so much friction in, you know, entering your credit card information and I don't know my username and password. I would just check out as a guest. The problem with that is the brand has no idea who you are, right? Sure. Maybe they have your email, but they don't really have any transaction history. What Borderless does is actually inverts that number, where over 70% of guests are now checking out in a logged-in state. So that now means the brand knows who I am. They know not only the transaction that I just made, but they also know transactions that I made maybe at that location or other locations within my brand. And there's a roadmap there to build upon that, to include other things like dietary restrictions and preferences, et cetera, so that the next time I go to check out, I'm being surfaced with information that is relevant to me- Mm-hmm ... based on that data, and you can really personalize the experience through the Borderless capability. Of course, and I would imagine that's a tailwind to conversion and- Exactly. the value prop that you're adding to restaurants. Exactly. On that, like, you know, obviously, you guys have some big, big, big brands with probably big budgets. Like, sort of how do you think about the DIY version of build it yourself versus, you know, sort of what you guys obviously bring to the table? Mm-hmm. Like, I'd imagine that's a calculus most companies are doing, and clearly, you guys are- Yeah tilting that in your way with a lot of brands. Yeah. So since the IPO, I think we've had over a dozen brands that have cut off of homegrown tech onto the Olo platform, and I think there's a couple reasons why. One is total cost of ownership. It, it is truly apples and oranges between leveraging the the capabilities that we've developed versus trying to build it your own. And I think oftentimes what catches folks by surprise is not necessarily the CapEx. Mm-hmm. It's not the upfront costs, it's the ongoing maintenance to make sure that it's, the system is reliable, it's secure, it's scalable, etc. We spend close to $100 million a year in R&D, and that's great, right? 'Cause we can then leverage those dollars across all of the brands that are using the service. That's a lot of investment for a single brand to make- Mm-hmm ... in their digital infrastructure. So that I think is one reason. The other reason is really around platform innovation, and when you go it alone, you forgo some of the innovation that we've developed. So, for example, Borderless, which I just mentioned, that would be something that you would forgo as a brand by trying to build your own, you know, in-house technology. So I think the trend over time will be brands will, more and more brands will cut off of homegrown tech and onto the Olo platform for whatever digital ordering and guest engagement needs they have, and we're, you know, we're obviously happy to help. The one thing I would say is, what we've done over time is we've developed the platform so that the modules within our suites are, for the most part, standalone APIs. So I think there is a perception that when you choose Olo, you have to take all of the things, when in reality, that's not the case. You can come to Olo and use specific APIs to round out maybe the thing that you've built. Mm-hmm. So maybe you don't need to build first-party delivery, you can leverage Dispatch, or if you need third-party marketplace connectivity, you can use Rails. You don't have to take the entire order suite. And then hopefully, over time, we can, you know, prove out the overall value of the platform and win more and more business. But we did that intentionally to develop each of the product modules as standalone APIs. Gotcha. No, that's, that's great. And then you guys obviously signed Dutch Bros. I think that was a pretty big deal last quarter. Can you sort of just walk us through how that deal came together? And then, you know, I think we touched on a little bit of, like, larger versus smaller, but, like, potential for those sort of deals to, to continue in the future and just sort of how you kind of view those big, like, sticker, sticker- Yeah. -points. We're really excited about the Dutch Bros announcement for a couple reasons. One, obviously a fantastic brand growing, you know, really quickly, have great ambitions to scale. So I think that's great that we can, you know, grow alongside their growth. But also, if you look at their service model, they are very drive-through focused. Mm-hmm. Within the industry today, I think about 37% of transactions are still done through the drive-through. That's right. So, there's a significant amount of transactions that still happen through the drive-through, and none of those transactions are digital, right? Mm-hmm. It's all through, still through the, through the voice box, the traditional drive-through- Sure ... method. For a brand like Dutch Bros to see digital as a way to unlock a better experience in the drive-through, either through driving more efficiency or even maybe perhaps channel shift to pick up versus drive-through, I think will grab the attention of other brands that are heavily reliant on the drive-through to look to digital as a way to drive more efficiency in their business. So we're hopeful through this announcement, through the implementation and success of this program, other enterprise brands that are heavily focused on the drive-through will also look to digital as a way to drive efficiency in their business. Yeah. No, no, that's great. And then jumping around a little bit here, but just sort of on the financial algorithm and the growth trajectory of the business, I mean, you guys have talked a little bit more about growth being driven from ARPU versus net adds. And, you know, I've obviously we talked about the payment side of it, and I would assume that's part of it, but can you sort of just give a sort of higher-level view of the growth algorithm going forward and- Yeah, so- ... you know, the P times Q calculus? Yeah. Yeah. So fundamentally, we grow the business by adding more locations to the platform and then increasing the the amount of revenue we earn on a per location basis, which we define as, as ARPU. And today, we have about 81,000 locations on the platform. Within the enterprise segment, there are 300,000 locations. So there's about, call it a 4x opportunity to expand locations from where we are today up to that 300,000. Comparatively, if you look at ARPU, I think we are around $3,200 per location per year based on our, on our last, reported numbers. We think that we have an opportunity to more than 20x that number, through the continued adoption of payments, coupled with other multi-module, adoption in the form of guest engagement and some of the other products that we have. That may seem like a large number, right? That would take you, call it that 3,200 up to 50K, but that would be a scenario where Olo is processing 100% of your transactions, and you're using, multiple modules across the platform. A typical enterprise brand processes about $1.5 million of sales per year. Mm-hmm. So that $50K would be about a 3%, call it, take rate on that revenue, which we think is a pretty reasonable assumption around the ARPU potential. So when we think about this year, in particular, ARPU will be a larger driver of growth. I think implied in our guidance is about a 20% ARPU growth year. Mm-hmm. With the balance of growth being driven by 5,000 new locations coming onto the platform. No, that's, that's fantastic, and we have about five minutes left. I just want to open up to see if the room had any questions. All right, we can jump back in. I'm a restaurant analyst, and we just had our consumer conference last week, and basically, everyone has been talking about consumer softness, you know, high-income versus low-income consumer. You guys are in, you know, a bit of a unique situation where you, you know, cover restaurants that might go, go towards the high-end consumer or low-income consumer. So I guess, what are you sort of seeing with consumer trends, top-level trends? Yeah. - just overall demand, with your, with your customer base? Yeah, we're well aware of sort of the consumer dynamic at play and sort of like how are brands thinking about that trade-off, and that trade-off being they know that if you continue to push on price, there's gonna be a corresponding impact to traffic. So, like, how do you balance that equation? And I'd say what that's leading to is brands really thinking about: How do I do more with less? Mm-hmm. What are things that I can do to help offset my input costs, so that I don't have to pass on so many costs to the consumer? So we're seeing things like kiosks as a- Sure ... a way to drive more leverage in-store operations so that you can bring down your input costs and don't have to, you know, raise prices. Sure ... at the consumer level. Another thing we're seeing a lot of interest in is catering, and I would also kind of bucket that under the do more with less concept as well because it really. It's really about: How do I maximize revenue per square foot? I have this fixed cost in my building, and maybe there are hours during the day where there's capacity that I could be fulfilling catering orders before I open the doors for mealtime ordering. Sure. That's a great way for me to drive more leverage and profitability in my business. So we're seeing a lot of brands show interest in catering, which has been a bright spot for Olo this year. The one other thing I would say on catering is similar to what I was saying before around developing our product modules as individual APIs or discrete APIs. We did the same thing with catering, which is another way in which we can engage with some of the largest brands out there that perhaps they've built their own digital technology. They built their own digital platform, but they didn't build catering, and they know- Sure ... catering is important. So those are conversations that we're having. So, the one thing for Olo is, if you look at our customer composition, about two-thirds of our brands would be defined as limited service. About one-third would be full service. So I think to the extent consumers trade down to lower-cost offerings, we're somewhat insulated from that perspective, given the composition of our customers being more limited service in nature. But I'd say again, I think the trend has been brands looking for technologies to do more with less and drive more leverage in their business because they know that they can't really, you know, keep pushing on price. Yeah. No, absolutely. That, that's fantastic. We covered a lot here, but, just... Is there anything sort of that's front of mind for you guys or, or things that we didn't cover that you think investors should know about the Olo story? Yeah, I think we are, we're really excited about the strategy coming together around being the guest database of record for our brands or for the industry at large. I think the new POS announcements that we talked about earlier is a big step in that direction, and then Card Present being available in the back half of this year really rounds out that strategy. You know, to the extent that we are successful in executing against that strategy, there's a great growth opportunity ahead. Yeah, absolutely. Well, fantastic. Thank you so much, Peter. Yeah. I appreciate your time. Thank you for having us.