• Brett Schafer

Deep Dive: Olo

Listen On:

  1. Spotify

  2. Apple Podcasts

  3. What do they do? Olo sells software to restaurant chains to help organize their online ordering process (OLO=online ordering). It helps with mobile ordering, dispatch, and integrating with a POS system.

  4. History? Was founded by Noah Glass in 2005. They’ve raised $100 million since inception (ex-IPO). Glass is still the CEO today.

  5. Industry? Expected to be $1.1 trillion in restaurant spending in the U.S. by 2024, Olo estimates its TAM at $7 billion.

  6. Management? Glass is still CEO (he is 39 years old). Danny Meyer of Shake Shack fame is on the board of directors.

  7. Valuation? (As of recording) EV/sales of 38, EV/GP of 46, EV/OI north of 200.

  8. Earnings? $98 million in 2020 sales, up 94% YoY, 18% operating margin.

  9. Balance Sheet? Very clean balance sheet, and raised $400 million in the IPO.

  10. Potential Competitive Advantages? We had switching costs and the fact they are creating a “win-win” scenario for their customers with a white label solution.

  11. Potential Future Growth Opportunities? International expansion, SMBs, and the Google partnership were the ones we chose.

  12. Highlights? Management, growing fast while also staying profitable, and strong customer value proposition were some of the highlights we discussed.

  13. Lowlights? Increasingly competing with DoorDash and potential for artificial growth from COVID.

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Disclosure: The authors and podcast guests are not financial advisors. Brett Schafer and Ryan Henderson are portfolio managers at Arch Capital. Clients of Arch Capital may hold securities discussed on this podcast.


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