Shares of restaurant technology company Olo (OLO 5.85%) went up on Wednesday after the company reported financial results for the fourth quarter of 2024. As of 12:40 p.m. ET, Olo stock was up about 6%, but it had been up nearly 12% earlier in the day.
There are 86,000 restaurant locations that use Olo's technology -- it started as online ordering, but it offers a variety of services today to meet the needs of restaurant companies. And 2024 was a good year for Olo. Full-year revenue was up 25% year over year, thanks to Q4 revenue that came in above management's guidance.
Olo's outlook for 2025 is good too. The company expects full-year revenue of $333 million to $336 million. That's a growth rate of about 17%, which is a slowdown from 2024 but still relatively strong. Moreover, management expects full-year adjusted operating income of up to $47 million, a substantial step up from its adjusted operating income of $33 million in 2024.
Olo capped off a good year and things look promising for 2025, which is why the stock is up today.
Olo is certainly a financially strong company with $361 million in cash, cash equivalents, and short-term investments and no long-term debt. And trading at just 4 times sales, it's reasonably valued considering its growth.
But there is a wrinkle to this growth. The company's revenue has increased in recent years due to making more per restaurant location that's using its software. That's a good thing. But the number of restaurants using its technology at the end of 2024 was lower than the number at the end of 2022.
Olo lost a major customer, which accounts for this. But still, competitors are growing their customer bases at faster rates, which is something to consider before buying Olo stock today. There's reason for optimism, but investors should account for competitive risks.
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