Olo (OLO) Q2 Revenue Jumps 22%

Key Points

• Revenue (GAAP) exceeded expectations at $85.7 million for Q2 2025, up 22% year-over-year.

• Earnings per share (Non-GAAP) was $0.07 for Q2 2025, but gross margin (GAAP) contracted.

• Olo entered a definitive $2.0 billion acquisition agreement with Thoma Bravo in July 2025, suspending future public guidance.

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Olo (NYSE:OLO), a software provider specializing in digital ordering and payment solutions for the restaurant industry, released its second quarter results on August 4, 2025. The company reported GAAP revenue of $85.7 million versus expectations of $82.2 million for Q2 2025. Non-GAAP earnings per share were $0.07, missing analyst forecasts of $0.075 for Q2 2025. The results highlighted continued growth in customer locations and increased product adoption, although some profitability metrics, particularly gross margin (GAAP), showed pressure compared to the prior year. The period was capped by the announcement of a $2.0 billion cash acquisition by Thoma Bravo. Overall, the quarter reflected steady top-line expansion and active innovation but included margin contraction and the removal of forward-looking guidance as Olo prepares to go private.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.

Understanding Olo’s Business and Focus Areas

Olo is a cloud-based platform that powers digital ordering, payment, and engagement solutions for over 750 restaurant brands. Restaurants use its software to accept, process, and fulfill digital orders, both for takeout and delivery. At the core, Olo’s platform connects the many technology tools a restaurant uses, such as point-of-sale (POS) systems, delivery providers, loyalty programs, and guest engagement tools.

The company focuses on building technology that is highly integrative and easy to scale, enabling restaurants to manage millions of daily orders. Its recent priorities include expanding modular offerings (Order, Pay, Engage), deepening integration with existing client infrastructure, and growing the number of active locations and recurring revenue per location. The critical metrics for its success include customer retention rates, platform adoption, and the ability to cross-sell its expanding suite of restaurant-focused solutions.

Key Developments and Quarterly Highlights

For Q2 2025, Olo’s total revenue (GAAP) climbed 22% from the prior year. This growth in GAAP revenue outpaced consensus analyst estimates, driven by a 9% rise in active restaurant locations to roughly 89,000 in Q2 2025. Average revenue per unit (ARPU) increased 12% year-over-year to approximately $955, underscoring deeper product adoption and expanded platform use at existing customer sites. Customer expansion remained a notable strength, with net revenue retention—measuring both customer stickiness and upsell—registering at 114% for Q2 2025, Dollar-based net revenue retention (NRR) was 114%.

Olo’s Borderless, a password-free digital checkout feature, reached 19 million user accounts as of Q2 2025 and is now active across more than 450 restaurant brands. This tool lets diners use a single login across multiple restaurant brands, making for smoother digital orders and stronger data collection. Another milestone highlighted in the period was the signing of Chipotle for a Catering+ pilot, a win that signals Olo’s continued ability to land major enterprise clients—even those with their own internal technologies. Additional enterprise wins contributed to growth in “flywheel” customers: brands utilizing all three major product suites—Order, Pay, and Engage—for a deeper integration and customer data ecosystem.

Non-GAAP operating income was $13.1 million, up 72% year-over-year. Though there was clear improvement in this metric, Q2 2025 saw material gross margin compression. The gross margin (Non-GAAP) narrowed from 63% to 57% for Q2 2025. General and administrative expenses (GAAP) increased 86% year-over-year in Q2 2025, partly due to $2 million in merger-related costs. Olo recorded a GAAP operating loss of $2.7 million in Q2 2025 compared to a prior-year profit.

The company generated positive non-GAAP free cash flow for the three months ended June 30, 2025, Non-GAAP free cash flow improved to $24.0 million in Q2 2025 from $14.2 million in Q2 2024. Olo ended Q2 2025 with $309.3 million in cash and equivalents on its balance sheet. Product development and platform innovation were again key themes, as Olo made progress on initiatives such as Olo Pay for card-present payments, Borderless expansion, and the Olo Guest Intelligence product suite—all designed to help restaurants personalize guest experiences and boost operational efficiencies.

Looking Ahead: Acquisition and Forward Outlook

In July, the company entered into an agreement to be acquired by Thoma Bravo for $10.25 per share, valuing the business at approximately $2.0 billion in equity value. The acquisition represented a 65% premium to Olo’s prior unaffected share price as of April 30, 2025. Following this, Olo withdrew its prior financial guidance for fiscal year 2025 and suspended its practice of providing financial guidance and will not hold further public earnings calls while the deal moves toward closing.

Management did not provide a new outlook for the year or upcoming quarters. This means public shareholders now have limited visibility into future performance or strategic direction beyond the pending acquisition. Investors should monitor ongoing trends in cost structure and active customer expansion, especially as the company navigates the transition to private ownership. OLO does not currently pay a dividend.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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JesterAI is a Foolish AI, based on a variety of Large Language Models (LLMs) and proprietary Motley Fool systems. All articles published by JesterAI are reviewed by our editorial team, and The Motley Fool takes ultimate responsibility for the content of this article. JesterAI cannot own stocks and so it has no positions in any stocks mentioned. The Motley Fool has positions in and recommends Olo. The Motley Fool has a disclosure policy.