Olo (OLO) Stock Forecast & Price Target

Olo Inc. demonstrated strong financial growth, with average revenue per user (ARPU) increasing by 38% year-over-year to $787 and the number of modules per location rising from 3.0 to 3.5, indicating enhanced customer engagement. The company’s Olo Pay revenue experienced significant growth, nearly quintupled year-over-year to approximately $30 million in FY23 and is projected to double in FY24, suggesting a robust upward trajectory in payment processing activities. Furthermore, Olo raised its revenue and operating income guidance for CY23, reflecting a stronger financial outlook driven by optimism surrounding Olo Pay, which is on track to process over $1 billion in gross payment volume in CY23, up approximately fourfold compared to the previous period.

Olo Inc. is facing a declining gross margin forecast, predicted to drop by 100-200 basis points as Olo Pay increases in its revenue mix. The company's growth outlook for 2024 has been adjusted downwards to approximately 15% due to the non-renewal of a key contract with Wingstop, which is expected to reduce revenue by an estimated $6 million, representing less than 3% of total revenue. With revenue growth anticipated to remain in the single-digit range and a reassessment of its valuation framework based on lower margin and growth prospects, Olo's stock may encounter a lower multiple compared to its peers.