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On Monday, Goldman Sachs reaffirmed their Neutral stance on Olo Inc. (NYSE:OLO) shares, upholding an $8.50 price target. The investment firm’s analysis followed Olo’s announcement of their fourth-quarter performance, which surpassed expectations with revenue exceeding Wall Street’s forecasts by 5% and EBIT margins approximately 300 basis points better than anticipated. Olo’s stock experienced a 4% rise following the release of these results. According to InvestingPro data, the company maintains strong financial health with a GOOD overall score, supported by robust liquidity metrics and a current ratio of 7.52.
Olo, a provider of on-demand commerce platforms for multi-location restaurants, has issued a first-quarter revenue guidance for 2025 that is 1% higher than analyst expectations, with operating margins aligning with predictions. The company’s full-year revenue guidance for 2025 suggests a 2% increase over Wall Street’s forecast, accompanied by roughly 180 basis points higher margins, as reported by FactSet. InvestingPro analysis shows impressive revenue growth of 24.81% in the last twelve months, with a healthy gross margin of 54.9%. Subscribers can access detailed forecasting tools and 6 additional ProTips for deeper insights.
A significant contributor to Olo’s financial success was Olo Pay, which generated over $70 million in revenue for the year, accounting for 25% of the company’s total revenue. This performance notably exceeded the initial projection of around $60 million and more than doubled the $30 million recorded in 2023. In addition to Olo Pay, the fourth quarter saw multiple brands adopting Olo’s Engage suite, which leverages guest data to drive profitable customer traffic as opposed to relying on deals and discounts.
The firm also highlighted the potential of Catering+, a service designed to enhance catering operations for restaurants, which saw multiple brand deployments during the quarter. Goldman Sachs expressed optimism about the adoption of Olo Pay, the Engage suite, and Catering+, as well as the improvement in Olo’s Rule of 40 profile, which increased to 31 in 2024 from 24 in 2023.
Goldman Sachs analysts are looking for signs of increased cross-selling and a more meaningful margin improvement in Olo Pay as they continue to monitor the company’s performance. Despite the positive developments, the firm has chosen to maintain their Neutral rating and twelve-month price target at $8.50 for Olo stock.
In other recent news, Olo Inc. reported its fourth-quarter 2024 earnings, which aligned with analyst expectations, achieving an earnings per share (EPS) of $0.06 and revenue of $76.1 million. This represents a 21% year-over-year revenue increase, and the company’s full-year revenue reached $284.9 million, marking a 25% rise from the previous year. Olo’s operating income for the quarter increased to $11.5 million, up from $6.8 million, reflecting a 15.1% operating margin. The company also maintained a strong net revenue retention rate of 115%. Olo introduced several product enhancements, including AI-powered features, and expanded its market presence. Analysts noted that Olo’s revenue slightly exceeded forecasts, coming in at $76.1 million compared to the expected $72.79 million. The company has set a revenue guidance of $333 million to $336 million for 2025, with a focus on expanding its Olopay revenue. The partnership with Freedom Pay is expected to accelerate card present payments, which is a significant development for the company’s growth strategy.
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