Olo's Q1 Earnings Deliver Surprises: Strong Revenue Growth and Margin Expansion Fuel Optimism

Olo Inc. (NYSE: OLO), a leading provider of cloud-based solutions for the restaurant industry, delivered a strong first-quarter 2025 earnings report that exceeded expectations. The company reported non-GAAP EPS of $0.08, beating estimates by $0.02, while revenue soared to $80.7 million, surpassing forecasts by $3.26 million. This outperformance, coupled with margin improvements and strategic wins, has investors optimistic about Olo’s growth trajectory.

Revenue Growth and Margin Expansion: A Shift Toward Profitability

Olo’s revenue surged 21% year-over-year, driven by its platform-driven business model. Platform revenue, which accounts for the bulk of its top line, rose 20% to $79.2 million, highlighting the scalability of its software-as-a-service (SaaS) offerings. Gross profit expanded 19% to $44.3 million (55% of revenue), while non-GAAP gross profit grew 18% to $49.2 million (61% of revenue), reflecting operational efficiencies.

The real standout was Olo’s operating margin improvement. The GAAP operating loss narrowed to $2.4 million (3% of revenue), a dramatic turnaround from a $7.2 million loss (11% of revenue) in Q1 2024. Non-GAAP operating income jumped to $11.5 million (14% of revenue), up from $5.6 million (8% of revenue) a year earlier. This margin expansion, fueled by better cost management and higher customer retention, positions Olo to capitalize on its growing ecosystem.

Operational Metrics Signal Customer Stickiness

Olo’s dollar-based net revenue retention rate (NRR) remained robust at 111%, indicating that existing customers are increasing their spend. This is critical for SaaS businesses, as it underscores the value of Olo’s multi-module platform. Meanwhile, average revenue per unit (ARPU) rose 12% year-over-year to $911, reflecting deeper penetration of its modules (Order, Pay, Engage) among clients.

The company also added 2,000 new active locations sequentially, bringing the total to 88,000 locations, up 8% year-over-year. This expansion highlights Olo’s ability to attract both enterprise and emerging brands, such as Cupbop Korean BBQ and Swensons, which adopted multi-suite solutions.

Strategic Momentum and Innovation Drive Long-Term Value

Q1 saw Olo execute on its product-led growth strategy, with notable wins:
- Ben & Jerry’s deployed Olo Ordering, Rails, and Pay for card-not-present transactions.
- Gong Cha and Pilot Travel Centers adopted Olo Rails.
- Waffle House expanded with the Dispatch module, while First Watch integrated Olo Pay.

Product innovation also accelerated, with the beta launch of Olo Guest Intelligence, a data analytics tool that provides actionable insights via its dashboard. This enhancement aims to deepen customer engagement and loyalty. Additionally, Catering+ saw expansions with El Pollo Loco and Halal Guys, while Engage integrated with Thanx for loyalty programs.

Leadership changes further bolstered Olo’s sales capabilities, with the hiring of Parrish Chapman as Chief Sales Officer, a veteran from GRUBBRR and Samsung, signaling a focus on scaling revenue.

Financial Guidance and Risks

For Q2 2025, Olo projects revenue of $82.0–82.5 million and non-GAAP operating income of $11.5–11.8 million. Full-year 2025 guidance calls for $338.5–340.0 million in revenue, a 16% increase over 2024, with non-GAAP operating margins expected to hit 14.3%, up from 8.4% in Q1 2024.

Risks remain, including macroeconomic pressures, competition from rivals like Toast and Upserve, and customer retention challenges. However, Olo’s $401.8 million cash reserves and its 88,000-location network provide a moat against these headwinds.

Stock Price Reaction and Investment Takeaway

The stock rose 0.87% after hours to $8.12, building on a 7.61% gain during regular trading, as investors focused on the revenue beat and margin improvements. While the GAAP EPS of $0.01 fell short of expectations, the non-GAAP results and forward guidance suggest Olo is executing its strategy to deliver profitable growth.

Conclusion: A Compelling Play on Restaurant Tech

Olo’s Q1 results underscore its transition from a revenue-focused company to one prioritizing profitability and customer lifetime value. With $29 billion in GMV processed annually for 750+ brands, its platform’s network effects and data-driven tools position it to capitalize on the $1.5 trillion U.S. food-away-from-home market.

The 14% non-GAAP operating margin and 111% NRR signal a resilient business model, while the $400 million cash position offers flexibility for strategic initiatives. While risks like macroeconomic uncertainty linger, Olo’s execution in Q1 and its strong balance sheet make it a compelling investment in the fragmented restaurant tech space. Investors seeking exposure to a scalable, data-driven SaaS leader with strong fundamentals should take note.