Olo (OLO) Upgraded at Stifel to 'Buy' on Strong 2Q Results, Announces Partnership with Just Eat Takeaway.com (GRUB)
Shares of Olo (NYSE: OLO) are up almost 1% in pre-open Wednesday after the company presented better-than-expected Q2 results.
Olo posted Q2 EPS of $0.03 per share to top the $0.01 expected from the market analysts. Revenue came in at $35.9 million to also beat the $34 million consensus.
“The second quarter was another strong quarter of profitable growth for Olo. Restaurant digital sales proved durable during the second quarter, demonstrating that the restaurant industry’s digital transformation is not just about delivery but all ordering modes. We are excited that Olo’s platform is enabling restaurant brands to digitize every transaction, not just delivery transactions,” said Noah Glass, Olo’s Founder and CEO.
On the guidance front, Olo projects Q3 revenue between $36 and $36.5 million vs $34.65 million guidance. Full-year revenue is expected at $145.2 million (at the midpoint of guidance), again higher than $140.78 million.
Furthermore, the commerce platform announced a deal with a major food ordering and delivery company Just Eat Takeaway.com (NASDAQ: GRUB).
The partnership will see integrated digital orders into the point-of-sale (POS) of tens of thousands of restaurant brand locations using Olo Rails.
“By teaming up with Olo, our restaurant partners can now use Rails to provide a reliable and streamlined behind-the-counter process for restaurant team members, while also ensuring order accuracy and a great experience for diners,” said Kevin Kearns, Senior Vice President of Restaurants at Grubhub.
Following impressive Q2 results, Stifel analyst Brad Reback upgraded shares to “Buy” from “Hold” and moved to $41.00 per share on the price target.
“Coupled with ongoing secular shifts in how we digitally engage with restaurants as mobile ordering extends well beyond delivery, in addition to upcoming product releases and the likely general availability of a payment solution in 2022, we have higher conviction in the company’s ability to sustain 30%+ growth for several years to come,” Reback said in a note sent to clients.
On the GRUB partnership, he notes;
“[The partnership] expands Olo's Rails product opportunity (especially among existing common customers as well as GrubHub's longer-tail emerging brand clientele, as well as continued strength in winning replatforming business — as enterprise brands, particularly in the QSR segment, move to replace legacy, home-grown solutions, with Olo's deep product offering).”
Truist analyst Terry Tillman has raised estimates and the PT to $44.00 per share on the Buy-rated stock.
“We were pleased with 2Q21 results, reflective of continued strong durable 53% y/y platform revenue growth despite very difficult comps. Non-GAAP operating margin and free cash flow were also well in excess of our estimates. The company is performing well ahead of expectations in terms of active location growth for the year. We are incrementally more confident in strong compounding growth and upside to our forward active location and ARPU assumptions,” Tilman wrote in a client note.
Olo share price is up 7.6% YTD.