Olo Inc. (OLO): Why This Food Delivery Tech Leader Could Be a Top Stock in 2025

The food delivery tech sector is a battleground of innovation and scale, but few companies have demonstrated Olo Inc.’s (NYSE: OLO) ability to grow revenue, deepen customer relationships, and expand its ecosystem. With its Q1 2025 earnings report imminent—scheduled for May 8—the company is poised to reinforce its status as a leader in a market valued at over $180 billion. Let’s dissect the numbers behind Olo’s potential and why investors should pay close attention.

The Financial Engine: Growth Amid Challenges

Olo’s recent financial trajectory is nothing short of impressive. In 2024, it reported a 25% year-over-year revenue increase to $284.9 million, with Q4 alone hitting $76.1 million, a 21% YoY jump. For 2025, management has guided revenue between $333 million and $336 million, signaling sustained momentum. However, the devil is in the details. Non-GAAP operating income for 2025 is projected at $45.5–$47 million, which is a narrower margin compared to prior years. This reflects temporary pressure from scaling its Olo Pay division, which doubled its Gross Payment Volume (GPV) to $2.8 billion in 2024.

The stock’s recent dip to $6.25 (as of April 25, 2025) may reflect investor caution about these margin headwinds. Yet, the company’s track record of operational efficiency—evidenced by a 115% net revenue retention rate—suggests it can balance growth and profitability over time.

Strategic Moves: Building an Unassailable Ecosystem

Olo’s strength lies not just in its order management systems but in its ecosystem of 400+ integration partners and 750 restaurant brands, including giants like Shake Shack and Five Guys. Two strategic initiatives stand out:

1. The FreedomPay Partnership: By integrating its Olo Pay platform with FreedomPay, Olo aims to streamline payment processing for restaurants, slashing time-to-market and reducing reliance on third-party systems. This move could solidify its dominance in the $29 billion GMV it facilitated in 2024.

2. AI-Driven Innovation: Olo’s Engage platform, which saw 13 enhancements in 2024, now includes AI-powered menu recommendations and advanced analytics. These tools help restaurants boost customer engagement and reduce churn—a key driver of its 12% YoY ARPU growth.

The company’s borderless accounts—which allow customers to manage orders across multiple brands—surged from 2 million to 15 million in a year. This metric underscores Olo’s ability to lock in users through its ecosystem, a critical advantage in a fragmented market.

Market Position: A Leader with Room to Grow

Olo’s 86,000 active locations as of 2024 make it the second-largest player in North America by sales volume. Its 98% gross revenue retention rate suggests clients are doubling down on its platform, even as competitors like Toast and Uber Eats vie for share.

The company’s GPV—a proxy for its payment processing revenue—soared from $1 billion in 2023 to $2.8 billion in 2024, indicating strong adoption of Olo Pay. This is a high-margin business, and once scale is achieved, it could offset current margin pressures.

Risks and Reality Checks

The elephant in the room is margin compression. Scaling Olo Pay requires upfront investments in infrastructure and partnerships, which could strain profitability in the short term. Additionally, competition from integrated players like Toast, which combines point-of-sale and delivery solutions, remains a threat.

However, Olo’s customer retention metrics—including a net retention rate above 100%—suggest existing clients are finding value in the platform’s breadth. The company’s focus on operational leverage, such as reducing costs per transaction, could also help mitigate these risks.

Analysts and the Market: A “Moderate Buy” with Upside

Analysts currently rate OLO a “Moderate Buy”, citing its platform strength and expanding client base. The stock’s +4.26% jump following its Q4 2024 earnings highlights investor optimism around its execution.

If Q1 2025 results meet or exceed the $77.47 million revenue estimate, and management reaffirms its 2025 guidance, Olo could see a rerating. A successful FreedomPay rollout and continued GMV growth would further validate its ecosystem play.

Conclusion: A Stock to Watch, but Not for the Faint-Hearted

Olo’s combination of strong revenue growth, ecosystem expansion, and customer loyalty makes it a compelling play in the food tech sector. While margin pressures and competition are real risks, the company’s 12% ARPU growth, 115% net retention, and $2.8 billion GPV trajectory suggest it’s on track to deliver long-term value.

At its current price of $6.25, Olo offers a 36% upside to its 2024 peak of $8.50 if it can execute its 2025 targets. Investors should prioritize the May 8 earnings call for clues on margin management and Olo Pay’s progress. For those willing to bet on a company that’s not just keeping up with the food delivery boom but defining it, Olo Inc. remains a top stock to monitor in 2025.