S-1/A

S-1/A 1 d867519ds1a.htm S-1/A S-1/A

As filed with the Securities and Exchange Commission on March 8, 2021.

Registration No. 333-253314

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

AMENDMENT NO. 1

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

Olo Inc.

(Exact name of Registrant as specified in its charter)

Delaware

7372

20-2971562

(State or other jurisdiction of

incorporation or organization)

(Primary Standard Industrial

Classification Code Number)

(I.R.S. Employer

Identification Number)

285 Fulton Street

One World Trade Center, 82^nd Floor

New York, New York 10007

(212) 260-0895

(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

Noah Glass

Founder and Chief Executive Officer

Olo Inc.

285 Fulton Street

One World Trade Center, 82^nd Floor

New York, New York 10007

(212) 260-0895

(Name, address, including zip code, and telephone number, including

area code, of agent for service)

Copies to:

Nicole Brookshire

Stephane Levy

Brandon Fenn

Cooley LLP

55 Hudson Yards

New York, NY 10001

(212) 479-6000

Nithya B. Das

Chief Legal Officer and Corporate Secretary

Olo Inc.

285 Fulton Street

One World Trade Center, 82^nd Floor

New York, NY 10007

(212) 260-0895

John J. Egan, III

Edwin M. O’Connor

Andrew R. Pusar

Goodwin Procter LLP

620 Eighth Avenue

New York, NY 10018

(212) 813-8800

Approximate date of commencement of proposed sale to the public:

As soon as practicable after this registration statement is declared effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ☐		Accelerated filer ☐		Non-accelerated filer ☒		Smaller reporting company ☒		Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

CALCULATION OF REGISTRATION FEE



Title of Each Class of Securities to be Registered	Amount to be Registered⁽¹⁾	Proposed Maximum Offering Price Per Share	Proposed Maximum Aggregate Offering Price⁽²⁾	Amount of Registration Fee⁽³⁾
Class A common stock, par value $0.001 per share	20,700,000	$18.00	$372,600,000	$40,651

(1)	Includes 2,700,000 shares that the underwriters have the option to purchase. See “Underwriting (Conflicts of Interest).”

(2)	Estimated solely for the purpose of computing the registration fee in accordance with Rule 457(a) under the Securities Act of 1933, as amended.

(3)	$10,910 of this registration fee was previously paid by the Registrant in connection with the filing of its Registrant’s Statement on Form S-1 on February 19, 2021.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant will file a further amendment which specifically states that this Registration Statement will thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement will become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

Subject to Completion, Dated March 8, 2021

18,000,000 Shares

LOGO

CLASS A COMMON STOCK

This is an initial public offering of shares of Class A common stock of Olo Inc. We are offering 18,000,000 shares of Class A common stock.

Prior to this offering, there has been no public market for our Class A common stock. It is currently estimated that the initial public offering price for our Class A common stock will be between $16.00 and $18.00 per share. Our Class A common stock has been approved for listing on the New York Stock Exchange, or NYSE, under the symbol “OLO.”

We have two classes of common stock: Class A common stock and Class B common stock. The rights of the holders of Class A common stock and Class B common stock are identical, except with respect to voting, conversion and transfer rights. Each share of Class A common stock is entitled to one vote. Each share of Class B common stock is entitled to ten votes and is convertible at any time into one share of Class A common stock. The holders of our outstanding Class B common stock will hold approximately 99% of the voting power of our outstanding capital stock immediately following this offering.

We are an “emerging growth company” and a smaller reporting company as defined under the federal securities laws and, as such, we have elected to comply with certain reduced reporting requirements for this prospectus and may elect to do so in future filings.

Investing in our Class A common stock involves risks. See “Risk Factors” beginning on page 24 to read about factors you should consider before buying our Class A common stock.

Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.


	Per Share	Total
Initial public offering price	$	$
Underwriting discounts and commissions⁽¹⁾	$	$
Proceeds, before expenses, to Olo Inc.	$	$

(1)	See the section titled “Underwriting (Conflicts of Interest)” for additional information regarding compensation payable to the underwriters.

At our request, the underwriters have reserved up to 900,000 shares of Class A common stock, or up to 5% of the shares to be issued by us and offered by this prospectus for sale, at the initial public offering price, to our directors, certain of our customers and partners, and the friends and family members of certain of our employees, directors, customers, and partners. See “Prospectus Summary—The Offering—Directed Share Program” for additional information.

We have granted the underwriters an option for a period of 30 days to purchase up to an additional 2,700,000 shares of Class A common stock at the initial public offering price less the underwriting discounts and commissions.

The underwriters expect to deliver the shares of Class A common stock to purchasers on , 2021.


Goldman Sachs & Co. LLC		J.P. Morgan		RBC Capital Markets


Piper Sandler		The Raine Group		Stifel		Truist Securities		William Blair

Prospectus dated , 2021.

LOGO

A Leading SaaS Platform for On-Demand Restaurant Commerce

LOGO

OLO AT-A-GLANCE 2005 FOUNDED NYC HEADQUARTERS 64K RESTAURANTS 400 BRANDS 1.8M ORDERS PER DAY $14.6B 2020 GMV* GROSS MERCHANDISE VALUE AS OF Q4 2020 *

LOGO

ATTRACTIVE OPERATING MODEL 94% Y/Y REVENUE GROWTH* 120%+ NET REVENUE RETENTION** 81% GROSS MARGIN* 16% OPERATING MARGIN* AS OF 2020. SUSTAINED SINCE Q1 2018. SEE “MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS” FOR ADDITIONAL INFORMATION ON NET REVENUE RETENTION. *

LOGO

FUELED BY A $400B SHIFT TO DIGITAL ORDERING* 1B 750M 500M 250M 0M 2005 2010 CUMULATIVE OLO TRANSACTIONS *SOURCE: EMARKETER, PACKAGED FACTS, INCISIV 2015 2020 OLO ORDER NUMBER 1 Billion

LOGO

OLO POWERS THE LEADING ENTERPRISE BRANDS FAST CASUAL CASUAL DINING FAMILY DINING COFFEE & SNACK QUICK SERVICE

LOGO

THE OLO ON-DEMAND COMMERCE PLATFORM OPEN ECOSYSTEM WITH 100+ TECHNOLOGY PARTNERS

TABLE OF CONTENTS

Prospectus


	Page
PROSPECTUS SUMMARY.		1
RISK FACTORS		24
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS		63
MARKET, INDUSTRY, AND OTHER DATA		65
USE OF PROCEEDS		66
DIVIDEND POLICY		67
CAPITALIZATION		68
DILUTION		71
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		74
LETTER FROM NOAH GLASS, FOUNDER AND CEO		103
BUSINESS		107
MANAGEMENT		132
EXECUTIVE COMPENSATION		141
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS		160
PRINCIPAL STOCKHOLDERS		164
DESCRIPTION OF CAPITAL STOCK		168
SHARES ELIGIBLE FOR FUTURE SALE		174
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES TO NON-U.S. HOLDERS OF OUR CLASS A COMMON STOCK		177
UNDERWRITING (CONFLICTS OF INTEREST)		182
LEGAL MATTERS		188
EXPERTS		188
WHERE YOU CAN FIND ADDITIONAL INFORMATION		188
INDEX TO FINANCIAL STATEMENTS		F-1

Through and including , 2021 (the 25^th day after the date of this prospectus), all dealers effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to a dealer’s obligation to deliver a prospectus when acting as an underwriter and with respect to an unsold allotment or subscription.

Neither we nor any of the underwriters have authorized anyone to provide any information or to make any representations other than those contained in this prospectus or in any free writing prospectuses we have prepared. Neither we nor any of the underwriters take responsibility for, or can provide no assurance as to the reliability of, any other information that others may give you. We and the underwriters are offering to sell, and seeking offers to buy, shares of our Class A common stock only under circumstances and in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of our Class A common stock. Our business, financial condition, results of operations, and prospects may have changed since such date.

For investors outside the United States: neither we nor any of the underwriters have done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside of the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of the shares of our Class A common stock and the distribution of this prospectus outside of the United States.

We use in this prospectus our Olo logo, for which a U.S. trademark application has been filed. The Olo logo, “Olo” and our other registered and common law trade names, trademarks, and service marks are the property of Olo. This prospectus also includes trademarks, tradenames, and service marks that are the property of other organizations. Solely for convenience, trademarks and tradenames referred to in this prospectus appear (after the first usage) without the ^® and ^™ symbols, but those references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or that the applicable owner will not assert its rights, to these trademarks and tradenames.

PROSPECTUS SUMMARY

This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our Class A common stock. You should read this entire prospectus carefully, including the sections titled “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Business,” and our financial statements and the related notes included elsewhere in this prospectus, before making an investment decision. Unless the context otherwise requires, all references in this prospectus to “Olo,” the “company,” “we,” “our,” “us” or similar terms refer to Olo Inc.

Overview

Olo provides a leading cloud-based, on-demand commerce platform for multi-location restaurant brands.

Our platform powers restaurant brands’ on-demand commerce operations, enabling digital ordering and delivery, while further strengthening and enhancing the restaurants’ direct consumer relationships. Consumers today expect more on-demand convenience and personalization from restaurants, particularly through digital channels, but many restaurants lack the in-house infrastructure and expertise to satisfy this increasing demand in a cost-effective manner. Olo provides restaurants with a business-to-business-to-consumer, enterprise-grade, open SaaS platform to manage their complex digital businesses and enable fast and more personalized experiences for their customers. Our platform and application programming interfaces, or APIs, seamlessly integrate with a wide range of solutions, unifying disparate technologies across the restaurant ecosystem. Restaurant brands rely on Olo to increase their digital and in-store sales, maximize profitability, establish and maintain direct consumer relationships, and collect, protect, and leverage valuable consumer data. As a result, we nearly doubled the gross merchandise value, or GMV, which we define as the gross value of orders processed through our platform, in each of the last five years and reached nearly $14.6 billion in GMV during the year ended December 31, 2020. Our well-established platform has led many of the major publicly traded and top 50 fastest growing private restaurant brands, measured by overall sales, in the United States to work with us and has been a factor in our high dollar-based net revenue retention. See the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for additional information on how we calculate dollar-based net revenue retention. Further, industry-recognized outlets, including Restaurant Business Online, QSR Magazine, and AP News, have also deemed Olo a leading food ordering platform for the restaurant industry.

The $1.6 trillion food industry is one of the largest consumer markets in the United States. According to the National Restaurant Association, restaurants accounted for $863 billion of that spend in 2019, surpassing grocery in aggregate consumer spending, before dropping to $659 billion in 2020 as a result of COVID-19. However, consumer spending on restaurants is expected to rebound to $1.1 trillion by 2024 according to analysis by The Freedonia Group. Growing consumer demand for convenience has made off-premise consumption, which includes take-out, drive-thru, and delivery orders, the single largest contributor to restaurant industry growth. Even before the onset of the COVID-19 pandemic, off-premise consumption accounted for 60% of restaurant orders in 2020, and was expected to contribute 70% to 80% of total restaurant industry growth in the next five years, according to the National Restaurant Association. Meanwhile, delivery continues to grow as a percentage of sales. The average portion of total sales from third-party delivery in the 12 months ending August 2019 was 6.5%. Even prior to the COVID-19 pandemic, that was expected to increase to 10% in 2020. As consumers have become accustomed to the immediate convenience of on-demand commerce, they are demanding the same digital experience from restaurants, placing significant pressure on restaurants to deploy solutions. This demand has only accelerated since the onset of COVID-19, as on-demand commerce has become a necessity for the majority of restaurants.

Restaurants are an incredibly complex segment of the retail industry, making their shift to on-demand commerce especially challenging. The four walls of the restaurant uniquely serve as both the factory and showroom floor: restaurant operators must manage the intricacies of food production and customer service simultaneously while providing the high-quality, consistency, and hospitality that engenders consumer loyalty and trust. Furthermore, restaurants serve food that is perishable, has near infinite configurations, and must be made to order for just-in-time consumption under strict regulatory standards for health and safety. Most restaurant brands, which we define as a specific restaurant brand or restaurant chain, do not have the expertise or the resources to develop their own solutions to manage on-demand commerce and are more acutely challenged because their in-store technology is comprised of a fragmented set of legacy solutions, many of which were developed before the internet. At the same time, delivery service providers, or DSPs, and ordering aggregators have catalyzed digital demand, but pose new challenges for restaurant brands through lower long-term profitability, increased complexity, disintermediation of the restaurant’s direct relationship with the consumer and, increasingly, directly competitive food offerings. Additionally, restaurants face increasing economic pressure with an intensely competitive landscape, which has only been exacerbated by the COVID-19 pandemic. Due to its unique complexities and challenges, the restaurant industry has historically been one of the lowest penetrated on-demand commerce segments of the retail industry, with digital sales accounting for less than 10% of sales, according to a report published by Cowen Equity Research in 2019.

Our open SaaS platform is purpose-built to meet these complex needs and align with the interests of the restaurant industry. For over 10 years, we have developed our platform in collaboration with many of the leading restaurant brands in the United States. We believe our platform is the only independent open SaaS platform for restaurants to provide seamless digital ordering and efficient delivery enablement, offering centralized management of a restaurant’s entire digital business. Our platform includes the following core modules:

●

Ordering. A fully-integrated, white-label, on-demand commerce solution, enabling consumers to order directly from and pay restaurants via mobile, web, kiosk, voice, and other digital channels.

●

Dispatch. A fulfillment solution, enabling restaurants to offer, manage and expand direct delivery while optimizing price, timing, and service quality.

●

Rails. An aggregator and channel management solution, allowing restaurants to control and syndicate menu, pricing, location data, and availability, while directly integrating and optimizing orders from third-parties into the restaurants’ point-of-sale, or POS, systems.

Leading restaurant brands trust Olo’s enterprise-grade platform for its capabilities, reliability, security, scalability, and interoperability. Our platform currently handles, on average, nearly 2 million orders per day and has peaked at close to 5,000 orders per minute. We continually invest in architectural improvements so our system can scale in tandem with our continued growth. Additionally, both internal and external security experts frequently test our system for vulnerabilities. We have never experienced a material breach of customer or consumer data. Our open SaaS platform integrates with over 100 restaurant technology solutions including POS systems, aggregators, DSPs, payment processors, user experience, or UX, and user interface, or UI, providers, and loyalty programs, giving our customers significant control over the configuration and features of their distinct digital offering.

approximately 400 brand customers representing over 64,000 active locations using our platform. We consider each specific restaurant brand to be a customer, even if owned by a parent organization that owns multiple restaurant brands, and define an active location as a specific restaurant location that has deployed one or more of our modules. Our average initial contract length is generally three years with continuous one-year automatic renewal periods, providing visibility into our future financial performance. Our enterprise brands, meaning those brands having 50 or more locations, are also highly loyal. Over the last five years, on average nearly 99% of our enterprise brand customers, which accounted for 91% of our total active locations as of December 31, 2020, have continued using our Ordering module each year. Our customers’ digital same-store sales has increased, on average, by 44% for the month ended December 31, 2019 when compared to the month ended December 31, 2018. This trend has further accelerated over the past year, with digital same-store sales up 156% for the month ended December 31, 2020 when compared to the month ended December 31, 2019.

We have a highly efficient go-to-market model as a result of our industry thought leadership, partnership approach with our restaurant customers, and experienced enterprise sales, customer success, and deployment teams. Unlike other enterprise software businesses, where the sales team works to add a single location or division and expand to others, we enter into relationships at the brand’s corporate level and secure exclusivity across all company-owned and franchise locations. This enables us to deploy our modules across all new and existing brand locations without any additional sales and marketing costs, and upsell new offerings to the brand itself, rather than each individual location. As of December 31, 2019 and 2020, 44% and 71% of our customers used all three of our modules, respectively.

We refer to our business model as a transactional SaaS model as it includes both subscription and transaction-based revenue streams, and we designed it to align with our customers’ success. Our model allows our customers to forego the cost of building, maintaining, and securing their own digital ordering and delivery platforms and to retain direct relationships with their consumers while maximizing profitability. Our hybrid-pricing model provides us with a predictable revenue stream and enables us to further grow our revenue as our customers increase their digital order volume. We generate subscription revenue from our Ordering module and transaction revenue from our Rails and Dispatch modules. We charge our customers a fixed monthly subscription fee per restaurant location for access to our Ordering module. In addition, a growing portion of our customers purchase an allotment of monthly orders for a fixed monthly fee and pay us an additional fee for each excess order, which we also consider to be subscription revenue. Our transaction revenue includes revenue generated from our Rails and Dispatch modules. Customers who subscribe to our Rails and Dispatch modules pay a fee on a per transaction basis. In most cases, we also charge aggregators, channel partners, and other service providers in our ecosystem on a per transaction basis for access to our Rails and Dispatch modules. We also derive transactional revenue from other products, including Network, which allows brands to take orders from non-marketplace digital channels (e.g., Google Food Ordering, which enables restaurants to fulfill orders directly through Google search results and Maps pages). These products generate fees predominantly through revenue sharing agreements with partners. For the years ended December 31, 2018, 2019, and 2020, 93.2%, 80.8%, and 56.7% of our platform revenue was subscription revenue, respectively, and 6.8%, 19.2%, and 43.3% was transaction revenue, respectively.

During the years ended December 31, 2018, 2019, and 2020, we generated gross profit of $21.0 million, $35.1 million, and $79.8 million, respectively, or 66.0%, 69.3%, and 81.0% as a percentage of revenue, respectively. During the years ended December 31, 2018 and 2019, we incurred net losses of $11.6 million and $8.3 million, respectively, and during the year ended December 31, 2020, we generated net income of $3.1 million. During the years ended December 31, 2018 and 2019, we incurred operating losses of $8.8 million and $5.1 million, respectively and during the year ended December 31, 2020, we generated operating income of $16.1 million. During the years ended December 31, 2018 and 2019, we incurred non-GAAP operating losses of $4.6 million and $0.2 million, respectively, and during the year ended December 31, 2020, we generated non-GAAP operating income of $21.8 million. See the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for additional information on our non-GAAP metrics.

COVID-19 Update

On March 11, 2020, the World Health Organization declared COVID-19 a global pandemic, impacting communities in the United States and across the world. Responses to the outbreak continue to develop, as consequences have affected communities and economies across the world. State mandated lockdowns have adversely impacted many restaurants, as public health regulations transformed or even halted daily operations. In order to stay in business, restaurants were forced to more aggressively adopt digital solutions to provide on-demand services, off-premise dining and delivery solutions for consumers, if they were not already. In just the first few weeks of the COVID-19 shutdowns in the United States, 59% of restaurant operators added new curbside pickup offerings and 20% added new online ordering or pre-pay functionalities as a direct response to the coronavirus pandemic, according to a survey by eMarketer. Consumers were receptive to these changes, with 30% of them affirming that they had begun using restaurant delivery and 50% affirming they had begun take out services, mostly due to COVID-19, according to a report by Packaged Facts.

Although we are optimistic that the emphasis on on-demand commerce in the food services industry will be an enduring trend, we do not have certainty on the long-term impact these developments will have on the industry. The degree of the pandemic’s effect on our restaurant partners across the food services industry will depend on many factors, particularly on government regulations and their impact on the financial viability of restaurant operations as well as the duration of the pandemic. We will continue to monitor these developments and their implications on our business. The COVID-19 pandemic could materially adversely impact our business, financial condition, and results of operations. In the absence of updated industry sources giving effect to the market shifts precipitated by COVID-19, we have included in this prospectus select market research that was published prior to the COVID-19 outbreak and without considerations for its potential effects. Refer to “Risk Factors” in this prospectus for additional information regarding the impact of COVID-19 on our business.

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Impact on Our Operations:

During the month of March 2020, in accordance with local, state, and national regulations, we closed our offices in New York, and transitioned our employees to work-from-home and efficiently adapted our operations to a remote working environment. In addition, we were able to operate without terminating or furloughing our employees. As the pandemic continued, we grew our employee base to scale the business in order to meet the increased customer demands we were facing.

We continue to monitor updates and consider regulatory guidance for reopening office locations. We believe that we are well equipped to support full or partial remote work without disruption to our business.

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Impact on Our Customers:

As many restaurants faced on-premise dining restrictions, our customers needed to transition and adapt their businesses quickly. In a recent survey of Olo customers, approximately 70% of respondents offered more off-premise delivery and pick-up options in response to COVID-19. We focused on optimizing the deployment process for our new customers and offered adaptive solutions to help them navigate through this challenging business environment. We reprioritized our strategic roadmap to address the most important solutions for our customers, including enhancements to our curbside pick-up functionality. As curbside pick-up became an even more integral component of restaurant transactions, we further enabled our platform capabilities so restaurants could more efficiently manage these orders, adding quick response, or QR, code functionality, kiosk ordering solutions, and additional ecosystem partners. We engaged with our customers to collaborate on implementing the most relevant short- and long-term solutions. In addition to helping our customer brands react to COVID-19, we recognized the importance of supporting the restaurant industry and front-line workers directly and made donations to the Restaurant Employee Relief Fund.

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Impact on Our Financials:

Our revenue for the quarters ended March 31, 2020, June 30, 2020, September 30, 2020, and December 31, 2020 increased by 55.2%, 100.2%, 94.2%, and 117.6%, respectively, compared to 2019. While many restaurants have been struggling during this period, we have been uniquely positioned to expand our footprint and help support the restaurant industry when it was most in need. While we expect on-premise dining to return over time, we believe that off-premise offerings will continue to be an essential part of a restaurant’s operations.

Industry Background

There are a number of important industry trends driving our market opportunity.

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Restaurants are facing complex challenges and are under significant economic pressure. The restaurant landscape has become increasingly dynamic, with competition coming from existing restaurant brands, new restaurant brands, aggregators and ghost kitchens, that frequently have sophisticated digital, marketing, ordering, and distribution strategies. As a result, it is difficult for some restaurants to attract and retain loyal consumers. Moreover, restaurant brands are increasingly having to share their revenue with aggregators. These challenges have only been exacerbated by COVID-19 as many governments imposed restrictions to on-premise dining, resulting in significant financial losses and many closures. All restaurant operators have had to adapt to these new, complex challenges or risk losing their business. There is now a real urgency for restaurants to adopt cost-effective digital solutions in order to support their businesses and drive margin expansion and incremental sales over the longer term.

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The restaurant industry is massive and enterprises are rapidly expanding market share. The nearly $700 billion restaurant industry is undergoing a dynamic transformation, being forced to adapt to the new market environment created by COVID-19. According to the National Restaurant Association, the restaurant industry’s share of the dollars spent on food increased from 25% in 1955 to 51% in 2019, representing the first time in history that restaurants have surpassed grocery in aggregate sales. While restaurants have lost some traction against grocery due to COVID-19, we expect the increase in restaurant spend when compared to grocery to continue over the long-term, and according to analysis by The Freedonia Group, consumer spending on restaurants is expected to increase to $1.1 trillion by 2024. Enterprise restaurant brands in particular are rapidly increasing their share

of the market as they are able to leverage their scale to more effectively deploy on-demand commerce solutions than many small and medium business, or SMB, restaurants. We expect consumers will continue to demand digital solutions from restaurants that offer more convenience and personalization, helping to drive sales and expand the industry.

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Consumer behavior is shifting towards on-demand commerce convenience. In today’s on-demand economy, and even more so during the COVID-19 pandemic, consumers expect goods and services to be easily ordered through digital means. According to a 2019 Salesforce.com, Inc. publication, 66% of all consumers cite instant and on-demand fulfillment of purchases as important and approximately 50% say that they will switch brands if a company does not proactively anticipate their needs. The COVID-19 pandemic has only accelerated this long-term shift in consumer demand for adaptive on-demand commerce platforms. We believe these trends will continue to accelerate in the restaurant industry in particular as advances in technology allow restaurants to further reduce friction in digital ordering and fulfillment to further satisfy consumers’ new engagement preferences.

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Off-premise dining is the main engine of restaurant growth, with pickup continuing to lead. Off-premise dining has continued to grow rapidly, accounting for 63% of U.S. restaurant transactions in 2019. Prior to the COVID-19 pandemic, off-premise dining had been expected to contribute 70% to 80% of total restaurant industry growth in the next five years according to the National Restaurant Association. Since then, off-premise offerings have become an even more critical part of a restaurant’s business and long-term growth. While off-premise consumption is growing rapidly, only approximately 3% of total restaurant orders were fulfilled through delivery in 2018, and 39% and 21% were attributed to take-out and drive-thru, respectively. Restaurants operators have known the importance of off-premise offerings, with 78% of operators identifying off-premise solutions as a strategic priority, according to the State of the Industry Report published by the National Restaurant Association in 2019. COVID-19 has accelerated this shift with at least 27% of restaurant operators reporting having added new off-premise delivery options since the pandemic began, according to a survey by the National Restaurant Association. While consumers currently appear less apprehensive to visit restaurants and dine-in than they did at the beginning of the pandemic, usage of delivery and carry-out options remains higher than pre-COVID-19 levels. According to a recent survey by the National Restaurant Association, approximately 70% of restaurant operators across service categories plan to keep the changes they made to their restaurant after COVID-19 has subsided.

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Digital restaurant ordering is experiencing rapid growth in a shifting landscape. Both direct and indirect digital ordering channels are powering this expansion. Aggregators created consumer applications to meet the growing demand for convenient restaurant food, helping expand off-premise dining. In addition, major consumer facing platforms are embedding food ordering into products such as maps and search results, making it even more convenient for consumers to place orders from their favorite restaurant brands. Furthermore, COVID-19 tailwinds have accelerated this expansion, forcing restaurants to develop direct digital ordering operations or leverage indirect channels to meet customers’ digital demands through this unpredictable period. These channels are expected to drive the expansion of the U.S. online food delivery market, a subset of the restaurant digital ordering market, from $356 billion in 2019 to $470 billion by 2025, according to industry research.

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Restaurant brands must evolve to own digital relationships with their consumers. Like any other retailer, understanding and owning the consumer relationship is vital to restaurants

as it allows them to better analyze interactions, customize offerings, and maximize the long-term value of their consumers. However, restaurants risk losing direct consumer relationships if they are heavily reliant on aggregators, which generally do not provide visibility into who is ordering or enable a restaurant to articulate its unique brand value. According to a recent survey by the National Restaurant Association, 64% of adults prefer to order directly through the restaurant for delivery, compared to only 18% who prefer to order through a third-party service for delivery. In fact, over 70% of Olo customers in a recent survey indicated that their primary reason to own their own branded digital storefront was to own a direct relationship with their guests. The majority of respondents have 50% or less of their online orders coming through an aggregator compared to their own channel, and they expect their mix of aggregator order volumes to decrease in the future relative to their own channel. Additionally, aggregators typically limit a restaurant’s ability to collect and use data about consumers and orders transacted through the aggregator. Consumers also value this direct and personal connectivity with restaurant brands, and we believe consumers would rather interact directly with a brand than through an intermediary.

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On-demand commerce has substantial opportunity to expand penetration in the restaurant industry. The nearly $700 billion restaurant market in the United States continues to be one of the most underpenetrated in terms of on-demand commerce at less than 10% of industry sales, according to research published by Cowen Equity Research, as well as U.S. government data. In comparison, sectors such as books and electronics have digital penetration well over 50%. Restaurants are uniquely positioned to benefit from consumers’ demand for digital convenience, but are limited by significant complexities in the restaurant ecosystem, which have slowed penetration to-date.

Complexities of the Current Ecosystem

The key complexities that hinder restaurants’ digital transformation progress include:

POS and Technology Integration

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Inconsistent technologies within and across brand locations. Restaurant brands historically have not standardized the type of technology platforms that must be deployed across their locations. For example, in our survey, 70% of respondents indicated they use two to four different technology providers to collect orders across various channels. This has led to significant differences in the types of technology that restaurants use across a brand and even within a given restaurant location.

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Multiple platforms within a restaurant. Many brands have multiple POS systems, payment processors, and now tablets to manage incoming orders across various aggregators. In addition, many of these technologies have become deeply entrenched into their operations, making them difficult to replace with more modern solutions. These platforms cannot act quickly and harmoniously to meet the changing needs of restaurants, particularly during the COVID-19 pandemic.

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Disparate integrations across the ecosystem. Many restaurants have adopted narrow point solutions that do not integrate seamlessly with other systems, such as POS systems, aggregators, DSPs, payment processors, UI and UX providers, and loyalty programs. Restaurant location operators often lack the technical expertise and resources necessary to integrate both legacy and modern technologies.

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Static, legacy software infrastructure. Legacy restaurant systems were not built for modern, cloud-based environments. As a result, many lack the reliability, scalability, and security capabilities that today’s SaaS solutions offer, leaving restaurants and their consumer data vulnerable. Furthermore, brands are unable to access their consumer data, as it resides in different systems and databases that cannot communicate with each other.

Food and Menu Management

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Numerous, highly modifiable menu items. Restaurant menus are inherently complex, highly configurable, and frequently updated for changing consumer preferences, out-of-stock ingredients, or product recalls. In addition, restaurants must ensure menus and pricing are always accurately reflected across their various channels to ensure consumers have the latest information and receive the exact food they order, particularly as food allergies, dietary preferences, and other health issues become more prevalent. This has made it challenging for restaurant brands, who are increasingly expected to offer intuitive digital menus where consumers can add, subtract, or modify a wide variety of ingredients or menu items, creating a nearly infinite number of order permutations.

Order Channels

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Multiple ordering channels. Today’s restaurants need to seamlessly manage on-premise and off-premise operations to ensure they provide the optimal experience to all of their consumers. In-store orders are only one part of the overall operation, as restaurants receive off-premise orders from several different direct and indirect channels, which often require multiple POS systems and tablets at a single location. Food orders can be placed directly through restaurants’ mobile applications or over the phone and indirectly from aggregators at the same time. Many restaurants are not equipped to balance this on-premise and off-premise dynamic, let alone the direct and indirect channels of ordering.

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Shifting from serial to parallel processing. Restaurants are accustomed to serial order processing, which means that they receive an order from an on-premise consumer and fulfill it accordingly. With the rise of off-premise dining and multiple direct and indirect channels for ordering, restaurants increasingly receive multiple orders simultaneously. Legacy restaurant technology is not properly equipped to centralize and track these orders or help restaurants prioritize orders to ensure high quality fulfillment or to provide accurate estimates of when the food will be ready. Restaurants require modernization to better accommodate parallel processing and streamline their operations.

Operations and Logistics

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Complex, on-demand logistics management. A report published by Cowen Equity Research in 2019 projects that the majority of restaurant growth will come from expanded off-premises dining, which we expect will continue to place significant operational burdens on restaurants. Restaurant staff must prepare food at exactly the right time to ensure optimal quality. Restaurants must adapt locations to better accommodate take-out orders and manage multiple DSPs to ensure consumers get their food reliably at a cost-effective price. The COVID-19 pandemic has only exacerbated these complexities, as restaurants have had to adapt their operations to accommodate the massive increase in delivery and take-out orders, in particular.

Building a Digital Brand and Owning the Consumer Relationship

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Navigating the shift to digital branding. Many restaurants have spent decades building brand equity with their consumers and securing their loyalty. Meanwhile, consumers themselves are seeking direct engagement with brands through digital channels. However, restaurants lack the tools they need to interact and engage with their consumers across digital channels and to foster those direct relationships.

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Competition for the direct consumer relationship. As aggregators have scaled, they have often disintermediated restaurants’ direct consumer relationships. Each consumer is more valuable to an aggregator than any individual restaurant brand and, therefore, aggregators can afford to spend more than a particular restaurant brand to acquire a consumer. These aggregators are digitally savvy, have more capabilities in search engine marketing and optimization, and are specialists at leveraging data to acquire consumers and extract much higher customer lifetime value relative to the cost of acquiring a consumer. Many restaurants do not have the digital aptitude to stay competitive, and are at risk of losing direct contact with their consumers.

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Inability to access and leverage consumer data. Establishing direct digital relationships enables restaurants to collect data and learn from consumer interactions, evolve their offerings, and drive increased consumer loyalty. However, restaurants’ legacy technologies generally do not have the capabilities to collect, organize, and analyze these consumer data sets. There are also no major customer relationship management solutions built exclusively for the restaurant industry at scale. As a result, restaurants are forced to collect and integrate data from disparate systems, making it almost impossible to draw impactful, data-driven insights.

Our Platform

We provide a leading on-demand commerce platform designed for multi-location restaurant brands. Our customers use our software to create unique direct-to-consumer digital ordering experiences, manage orders across channels, and enable delivery across their restaurant locations. We have an open SaaS platform that seamlessly integrates with technology solutions throughout the restaurant ecosystem, including most POS systems, aggregators, DSPs, payment processors, UI and UX providers, and loyalty programs. We provide restaurants with a centralized system to manage their digital business and ensure consumers receive better, faster, and more personalized service while increasing restaurant order volume and improving yield at lower cost.

We engineered our platform to handle the most complex issues for the leading restaurant brands, but with the simplicity and ease-of-use required within an individual restaurant. We developed our infrastructure with application programming interfaces, or APIs, which facilitate interactions across and integrate with multiple software programs and components of the restaurant ecosystem. We enable more streamlined data collection and facilitate analytical decision-making, so restaurants can better understand and adapt to unique consumer preferences. We are constantly innovating and enhancing our platform, with our continuously deployed, multi-tenant architecture ensuring all restaurant locations are always using the latest technology.

Our platform includes the following core modules:

Ordering

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Secure, white-label, direct-to-consumer, front-end solution enables consumers to directly order from and pay restaurants via mobile, web, kiosk, car, voice, and other digital channels.

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Integrates with our customers’ back-end systems and provides a scalable digital ordering infrastructure behind custom front-end applications.

Dispatch

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Enables restaurants to offer and expand delivery for orders generated via their own websites and applications.

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Manages each restaurant’s delivery options and selects DSPs, including in-house couriers, based on optimal price, timing, availability, and other attributes.

Rails

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Centralizes and manages location specific menu, pricing, and availability, enabling automatic updates across multiple ordering channels.

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Integrates orders from aggregators into a restaurant’s POS systems.

Our Position in the Restaurant Industry

Restaurants rely on our enterprise-grade open SaaS platform to power their critically important digital ordering and fulfillment offerings. Our focus on developing solutions has aligned with restaurant brands’ interests, and our history of deploying our platform to approximately 400 restaurant brands through exclusive direct digital ordering relationships has allowed us to build what we believe is one of the largest technology ecosystems in the restaurant industry. We integrate with over 100 technology partners and believe that this positions us to be the only party able to unify and enhance the utility of disparate technologies across the industry, including POS systems, aggregators, DSPs, payment processors, UI and UX providers, and loyalty programs.

We believe that our approach to building this two-sided network, comprised of restaurants and technology partners, has given us a valuable position that is deeply embedded within the restaurant industry. We intend to expand our influence and position as we onboard new customer brands, integrate with additional modern or legacy software systems and technology providers, improve our platform’s functionality, develop new modules, continue to provide industry-leading security, and as our restaurant customers increasingly process orders through digital channels.

Key Benefits of Our Platform

Restaurants use our intuitive ordering, delivery, and aggregator enablement platform to streamline restaurant operations and provide a superior consumer experience. Our platform enables restaurants to overcome the complexities of building and growing a digital business, own the overall consumer relationship, and scale, secure, and centralize their on-demand commerce operations with our enterprise-grade technology. The key benefits of our platform include:

Overcome the Complexities of Restaurant On-Demand Commerce Operations

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Utilize Olo as a centralized source of data. Our restaurant brand customers, many of whom leverage multiple technology providers across locations, can manage menus, including menu-item availability, and day-to-day operations with permission-based administration tools and reporting, utilizing Olo as a centralized source of data.

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Extensible, modular platform. We have an open SaaS platform that integrates with over 100 restaurant technology solutions across the restaurant ecosystem. These integrations allow us to streamline order processing and fulfillment, and keep information in sync with a variety of POS systems, aggregators, DSPs, payment processors, UX and UI providers, and loyalty programs. Our platform’s extensibility ensures restaurants are able to quickly adapt and address problems they face as the landscape rapidly evolves.

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Manage demand across platforms to optimize yield. Our Rails module consolidates demand across aggregators, allowing our customers to generate more orders through an intuitive, coordinated system. Our customers are able to monitor and parallel process orders across the various channels and more easily and accurately prioritize and fulfill orders. We also help our restaurant brand customers optimize yield during peak periods by prioritizing different ordering channels as needed to ensure the highest priority items are fulfilled while maximizing profitability.

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Enable and manage a restaurant’s delivery functions across providers. Our Dispatch module enables restaurants to automatically select the optimal delivery provider for an individual order based on dozens of attributes, such as delivery time, order size or value, cost of delivery, or service level, for each individual order at each individual location. Restaurant brands are able to fulfill orders just-in-time to allow for a better consumer experience at a competitive cost.

Enhance and Own the Consumer Experience

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Own the consumer relationship. Our platform enables restaurants to provide individually branded and direct-to-consumer experiences across devices through our web and mobile front-end or via customized consumer experiences using our APIs and third-party UI and UX providers. This unique consumer experience extends beyond aesthetic and operative functionality to expanded order offerings like upsell, group ordering, and loyalty programs. With Olo, restaurants know their consumers better and can more effectively meet their needs while maximizing on-demand commerce results.

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Leverage powerful data and analytics to guarantee the highest quality consumer experience. We enable our customers to collect a significant amount of data that they can use to generate valuable insights into their consumers’ ordering behaviors. Restaurant brands and their individual locations can leverage this data to better manage operations, provide consumers with a more personalized experience, and drive incremental sales.

Scalable and Secure Operations with Enterprise Grade Technology

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Built for ensuring scalability and reliability. Our software infrastructure is cloud-hosted and highly flexible with the ability to handle large spikes in traffic and withstand many failure scenarios. Our high-availability, frequently deployed, multi-tenant architecture ensures that all of our customers are able to operate with the latest features and the

newest innovations of the latest version of our platform. While our platform currently handles, on average, nearly 2 million orders per day, we continually invest in architectural improvements so our system can scale in tandem with our continued growth.

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Enterprise-grade security and privacy. Our customers trust our platform with their most sensitive consumer and business data and many have run security assessments of our platform to verify that it has robust security capable of protecting their consumer data. We also employ in-house Blue and Red Security Teams that constantly monitor the platform, testing for and addressing vulnerabilities. Our technology also incorporates privacy-safe practices and tools as an integral and foundational part of our platform’s approach. Privacy best practices are proactively embedded into our systems and infrastructure.

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Secure by design. Our software engineering practices consider, evaluate, and manage risk throughout the design, development, and deployment phases to provide best-in-class security across our platform. This includes risk and threat evaluation at the inception of all of our products and services, leveraging zero trust, least privilege, and role based access concepts, secure development training, avoiding common security anti-patterns, and extensive automated and manual security testing. Our security program also includes regular third-party examinations for security, including annual PCI-DSS Attestation of Compliance, or AoC, and SOC 1 and SOC 2 audits. The SOC 2 report demonstrates our compliance with the American Institute of Certified Public Accountants’ trust service principles criteria for security, availability, confidentiality, and processing integrity.

Our Market Opportunity

We believe our total addressable market opportunity is $7 billion based on our current product offerings and focus on enterprise restaurants primarily in the United States. To arrive at this figure, we determined the number of enterprise restaurant locations and number of orders that we could generate revenue from on a per location basis. According to a 2019 publication by the NPD Group, there are approximately 300,000 enterprise restaurant locations across the United States. We determined the number of orders per enterprise location, based on industry research, by dividing their total sales by the average order value in the United States. To determine our opportunity per location, we then multiplied the implied number of orders by the percentage of digital orders, and by our actual average fee per order, and then added our actual annual average subscription fee per location as of December 31, 2020 to get the estimated total annual average revenue per restaurant location. This figure was then multiplied by the number of enterprise locations to arrive at the U.S. estimate.

Driven by the COVID-19 pandemic, digital platforms are enabling many more restaurant transactions, including on-premise solutions such as table-top dining through the use of QR codes and kiosk ordering. While this is one of many potential opportunities, we believe that we can fulfill these transactions as we introduce new solutions to enable these services. By providing more products and services to our customers, we believe we can increase our fees per transaction, which could expand our total addressable market further to $15 billion.

As we provide more products and services and increase our efforts to pursue SMB restaurants, we believe our total addressable market will expand further. This is based on an increase the total number of SMB restaurants we serve, which would expand our market potential by an approximately 400,000 additional estimated restaurant locations. If successful, we believe this expansion would allow Olo to reach a total addressable market of $20 billion. We believe our opportunity outside of the United States is at least as large as our domestic opportunity implying a total global addressable market of $40 billion.

Our Growth Strategies

We aim to be the leading on-demand commerce platform for the restaurant industry. The principal components of our growth strategy are:

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Add new large multi-location and high-growth restaurant brands and scale with them. We believe there is a substantial opportunity to continue to grow our customer base within the U.S. restaurant industry, adding to our approximately 400 existing brands across more than 64,000 active locations. We intend to continue to drive new customer growth by leveraging our brand and experience within the industry, and expanding our sales and marketing efforts. We have also historically pursued and will continue to target the most well-capitalized, fastest growing restaurant brands in the industry. As our restaurant brand customers open new locations, we are well-positioned to organically grow our revenue with little to no incremental sales and marketing costs to target additional locations.

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Upsell existing customers additional modules. As of December 31, 2019 and 2020, 44% and 71% of our customers used all three of our modules, respectively. We believe that we are well-positioned to upsell our remaining customers, as our modules provide significant value, are simple to add, operate seamlessly together, and improve restaurant brands’ on-demand commerce capabilities and consumer experience.

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Enable higher transaction volume. We will continue to work with our existing restaurant customers to enable higher transaction volumes at their locations particularly through direct channels. As on-demand commerce grows to represent a larger share of total off-premise food consumption, we expect to significantly benefit from this secular trend through increased revenue. As we continue to expand our product offerings across both on and off-premise dining and improve our current software, we also believe there is an opportunity to increase our share of the transaction volume that flows through our platform both through direct channels and revenues from aggregators.

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Develop and launch new product offerings. We intend to continue to invest in expanding the functionality of our current platform and broadening capabilities that address new opportunities, particularly around payments, on-premise dining, and data analytics. We plan to continue broadening our new product offerings for on-premise transactions, such as table top ordering, as the COVID-19 impacted restaurant landscape offers increased opportunity for technology integration even for on-premise dining. We believe this strategy will provide new avenues for growth and allow us to continue to deliver differentiated high-value outcomes to both our customers and stockholders.

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Expand our ecosystem. We plan to expand our current ecosystem of developers, user experience designers, and other partners to better support our customers, attract new customers, and strengthen our competitive position. We believe that we can leverage our partnerships with POS systems, aggregators, DSPs, payment processors, UX and UI providers, and loyalty programs to deliver additional value to our customers.

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Grow our longer-term market opportunity. While we have not made any significant investments in this area to date, we believe there is an opportunity to partner with SMB brands to enable their on-demand commerce presence. Additionally, as many of our customers operate internationally, we believe there is a robust opportunity to expand their usage of our platform outside of the United States. We also believe that our platform can be applied to other verticals beyond the restaurant industry that are undergoing similar digital transformations. For example, we currently work with a number of grocery chains and convenience stores who use our software to help their consumers order ready-to-eat meals, and we may expand our efforts in these or other verticals in the future.

Risk Factors Summary

Investing in our Class A common stock involves substantial risks. The risks described in the section titled “Risk Factors” immediately following this summary may cause us to not realize the full potential of our key benefits or to be unable to successfully execute all or part of our strategy. Some of the more significant risks include the following:

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Our rapid growth may not be sustainable and depends on our ability to attract new customers, retain revenue from existing customers, and increase sales to both new and existing customers.

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The COVID-19 pandemic could materially adversely affect our business, financial condition, and results of operations.

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Our limited operating history with our new modules in a new and developing market makes it difficult to evaluate our current business and future prospects, and may increase the risk that we will not be successful.

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Our business could be harmed if we fail to manage our growth effectively.

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We have a history of losses and we may be unable to sustain profitability.

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Our sales cycles can be long and unpredictable, and our sales efforts require considerable investment of time and expense. If our sales cycle lengthens or we invest substantial resources pursuing unsuccessful sales opportunities, our operating results and growth would be harmed.

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We expect fluctuations in our financial results, making it difficult to project future results, and if we fail to meet the expectations of securities analysts or investors with respect to our results of operations, our stock price and the value of your investment could decline.

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Our business depends on customers increasing their use of our platform, and any loss of customers or decline in their use of our platform could materially and adversely affect our business, results of operations, and financial condition.

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If we fail to continue to improve and enhance the functionality, performance, reliability, design, security, or scalability of our platform in a manner that responds to our customers’ evolving needs, our business may be adversely affected.

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Our growth depends in part on the success of our strategic relationships with third parties and our ability to integrate with third-party applications and software.

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Our Dispatch module currently relies on a limited number of DSPs.

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Our Rails module currently relies on a limited number of aggregators.

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We currently generate significant revenue from our largest restaurant customers, and the loss or decline in revenue from any of these customers could harm our business, results of operations and financial condition.

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Security breaches, denial of service attacks, or other hacking and phishing attacks on our systems or the systems with which our platform integrates could harm our reputation or subject us to significant liability and adversely affect our business and financial results.

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Our business is highly competitive. We may not be able to compete successfully against current and future competitors.

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If we cannot maintain our corporate culture as we grow, our success and our business and competitive position may be harmed.

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Our future success depends in part on our ability to drive the adoption of our platform by international and SMB customers, and to expand into new, on-demand commerce verticals.

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We may be subject to claims by third parties of intellectual property infringement.

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We identified a material weakness in our internal control over our financial reporting process. If we are unable to remediate this material weakness, we may not be able to accurately or timely report our financial condition or results of operations.

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The dual-class structure of our common stock will have the effect of concentrating voting control with our existing stockholders, executive officers, directors, and their affiliates, which will limit your ability to influence the outcome of important transactions and to influence corporate governance matters, such as electing directors, and to approve material mergers, acquisitions, or other business combination transactions that may not be aligned with your interests.

Our Corporate Information

We were incorporated in Delaware in June 2005. In January 2020, we changed our name from Mobo Systems, Inc. to Olo Inc. Our principal executive offices are located at 285 Fulton Street, One World Trade Center, 82nd Floor, New York, New York 10007, and our telephone number is (212) 260-0895. Our website address is www.olo.com. Information contained on, or that can be accessed through, our website is not incorporated by reference in this prospectus, and you should not consider information on our website to be part of this prospectus or in deciding to purchase our Class A common stock.

Implications of Being an Emerging Growth Company and a Smaller Reporting Company

We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. We may take advantage of certain exemptions from various public company reporting requirements, including not being required to have our internal control over financial reporting audited by our independent registered public accounting firm under Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and any golden parachute payments. We may take advantage of these exemptions for up to five years or until we are no longer an emerging growth company, whichever is earlier. In addition, the JOBS Act provides that an “emerging growth company” can delay adopting new or revised accounting standards until those standards apply to private companies. We have elected to use the extended transition period under the JOBS Act.

Accordingly, our financial statements may not be comparable to the financial statements of public companies that comply with such new or revised accounting standards.

We will remain an emerging growth company until the earliest of: (1) the last day of the fiscal year following the fifth anniversary of this offering; (2) the last day of the first fiscal year in which our annual gross revenue is $1.07 billion or more; (3) the date on which we have, during the previous rolling three-year period, issued more than $1.0 billion in non-convertible debt securities; and (4) the last day of the fiscal year in which the market value of our equity securities, which includes Class A common stock and Class B common stock held by non-affiliates exceeds $700 million as of June 30 of such fiscal year.

We are also a smaller reporting company as defined in the Securities Exchange Act of 1934, as amended. We may continue to be a smaller reporting company even after we are no longer an emerging growth company. We may take advantage of certain of the scaled disclosures available to smaller reporting companies and will be able to take advantage of these scaled disclosures for so long as (i) the market value of our voting and non-voting common stock held by non-affiliates is less than $250 million measured on the last business day of our second fiscal quarter or (ii) our annual revenue is less than $100 million during the most recently completed fiscal year and the market value of our voting and non-voting common stock held by non-affiliates is less than $700 million measured on the last business day of our second fiscal quarter. Specifically, as a smaller reporting company, we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and have reduced disclosure obligations regarding executive compensation, and, similar to emerging growth companies, if we are a smaller reporting company with less than $100 million in annual revenue, we would not be required to obtain an attestation report on internal control over financial reporting issued by our independent registered public accounting firm.

THE OFFERING

Class A common stock offered by us

18,000,000 shares

Option to purchase additional shares of Class A common stock offered by us

2,700,000 shares

Class A common stock to be outstanding immediately after this offering

18,000,000 shares (20,700,000 shares if the option to purchase additional shares is exercised in full).

Class B common stock to be outstanding immediately after this offering

124,012,926 shares

Total Class A common stock and Class B common stock to be outstanding after this offering

142,012,926 shares

Use of proceeds

We estimate that our net proceeds from the sale of our Class A common stock that we are offering will be approximately $281.1 million (or approximately $324.0 million if the underwriters’ option to purchase additional shares of our Class A common stock from us is exercised in full), assuming an initial public offering price of $17.00 per share, the midpoint of the estimated price range set forth on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

The principal purposes of this offering are to increase our capitalization and financial flexibility, to create a public market for our Class A common stock, and to facilitate our future access to the capital markets. As of the date of this prospectus, we cannot specify with certainty all of the particular uses for the net proceeds we receive from this offering. However, we currently intend to use the net proceeds we receive from this offering for general corporate purposes, including working capital, operating expenses, and capital expenditures. We may also use a portion of the net proceeds we receive from this offering to acquire complementary businesses, products, services, or technologies. However, we do not have agreements or commitments to enter into any acquisitions at this time.

See the section titled “Use of Proceeds” for additional information.

Directed share program

At our request, the underwriters have reserved up to 900,000 shares of Class A common stock, or 5% of the shares offered by this prospectus, for sale at the initial public offering price, to our directors, certain of our customers and partners, and the friends and family members of certain of our employees, directors, customers, and partners. Shares purchased through the directed share program will not be subject to a lock-up restriction, except in the case of shares purchased by any of our directors or officers and certain of our employees and existing equity holders. The number of shares of Class A common stock available for sale to the general public will be reduced to the extent these individuals purchase such reserved shares. Any reserved shares not so purchased will be offered by the underwriters to the general public as the same basis as the other shares of Class A common stock offered by this prospectus. See the section titled “Underwriting (Conflicts of Interest)—Directed Share Program” for additional information.

Voting rights

We will have two classes of common stock: Class A common stock and Class B common stock. Class A common stock is entitled to one vote per share and Class B common stock is entitled to ten votes per share. Holders of Class A common stock and Class B common stock will generally vote together as a single class, unless otherwise required by law or our amended and restated certificate of incorporation that will be in effect in connection with the closing of this offering. Once this offering is completed, based on the number of shares outstanding as of December 31, 2020, the holders of our outstanding Class B common stock will own approximately 87% of our outstanding shares and control approximately 99% of the voting power of our outstanding shares, and our executive officers, directors, and stockholders holding more than 5% of our outstanding shares, together with their affiliates, will beneficially own, in the aggregate, approximately 77% of our outstanding shares and control approximately 87% of the voting power of our outstanding shares. The holders of our outstanding Class B common stock will have the ability to control the outcome of matters submitted to our stockholders for approval, including the election of directors and the approval of any change in control transaction. See the section titled “Principal Stockholders” and “Description of Capital Stock” for additional information.

Risk factors

You should carefully read the section titled “Risk Factors” beginning on page 24 and the other information included in this prospectus for a discussion of facts that you should consider before deciding to invest in shares of our Class A common stock.

Conflicts of interest

Affiliates of Raine Securities LLC own more than 10% of our common stock. Because Raine Securities LLC is an underwriter for this offering, it is deemed to have a “conflict of interest” within the meaning of FINRA Rule 5121(f)(5)(B). Accordingly, this offering is being made in compliance with the requirements of FINRA Rule 5121. Pursuant to that rule, the appointment of a “qualified independent underwriter” is not required in connection with this offering as the member primarily responsible for managing the public offering does not have a conflict of interest, is not an affiliate of any member that has a conflict of interest and meets the requirement of paragraph (f)(12)(E) of Rule 5121. Raine Securities LLC will not confirm sales to discretionary accounts without the prior written approval of the account holder. See “Underwriting (Conflicts of Interest).”

NYSE trading symbol

“OLO”

The number of shares of Class A common stock and Class B common stock that will be outstanding after this offering is based on no shares of Class A common stock and 124,012,926 shares of Class B common stock outstanding as of December 31, 2020, and excludes:

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8,195,343 shares and 30,966,095 shares of Class B common stock issuable upon the exercise of stock options outstanding as of December 31, 2020 under our 2005 Equity Incentive Plan, or 2005 Plan, and our 2015 Equity Incentive Plan, or 2015 Plan, respectively, with a weighted-average exercise price of $0.16 per share and $2.40 per share, respectively;

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6,759,710 shares of Class B common stock issuable upon the exercise of outstanding stock options issued after December 31, 2020 pursuant to our 2015 Plan, with a weighted-average exercise price of $9.73 per share;

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151,640 shares of Class B common stock issuable upon the exercise of a warrant to purchase Series A-1 redeemable convertible preferred stock, which will become a warrant to purchase shares of Class B common stock upon the closing of this offering, at an exercise price of $0.17 per share;

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19,416,069 shares of Class A common stock reserved for future issuance under our 2021 Equity Incentive Plan, or 2021 Plan, which will become effective in connection with this offering, as well as any future increases, as well as annual automatic evergreen increases, in the number of shares of Class A common stock reserved for issuance thereunder, and any shares underlying outstanding stock awards granted under our 2005 Plan or our 2015 Plan that expire or are repurchased, forfeited, cancelled or withheld, as more fully described in the section titled “Executive Compensation—Equity Incentive Plans”;

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3,900,000 shares of Class A common stock reserved for issuance under our 2021 Employee Stock Purchase Plan, or ESPP, as well as any future increases, including annual automatic evergreen increases, in the number of shares of Class A common stock reserved for future issuance under our ESPP; and

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1,729,189 shares of our Class A common stock that we have reserved and may donate to a donor-advised fund after the completion of this offering, as more fully described in “Business—Social Responsibility and Community Initiatives.”

In addition, unless we specifically state otherwise, the information in this prospectus assumes:

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a 17-for-1 forward stock split of our Class B common stock and redeemable convertible preferred stock effected on March 5, 2021;

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the filing of our amended and restated certificate of incorporation, which will occur immediately prior to the completion of this offering;

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the automatic conversion of all outstanding shares of redeemable convertible preferred stock outstanding as of December 31, 2020 into an aggregate of 98,514,932 shares of Class B common stock, which will occur immediately prior to the completion of this offering;

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the reclassification of all outstanding shares of our common stock into an equivalent number of shares of our Class B common stock, which occurred on March 5, 2021;

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the issuance of 1,646,501 shares of Class B common stock upon the settlement of outstanding stock appreciation rights pursuant to our 2015 Plan, upon the completion of this offering;

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the exercise of warrants to purchase 1,531,207 shares of preferred stock, with a weighted-average exercise price of $0.26 per share;

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no exercise of the underwriters’ option to purchase additional shares of Class A common stock in this offering; and

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no exercise of the outstanding stock options or warrants to purchase 151,640 shares of Series A-1 redeemable convertible preferred stock, which will become warrants to purchase shares of Class B common stock upon the completion of this offering, each as described above.

SUMMARY FINANCIAL DATA

The summary statement of operations data for the years ended December 31, 2018, December 31, 2019, and December 31, 2020 and the summary balance sheet data as of December 31, 2020 have been derived from our audited financial statements included elsewhere in this prospectus. You should read the financial data set forth below in conjunction with our financial statements and the accompanying notes and the information in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained elsewhere in this prospectus. Our historical results are not necessarily indicative of the results to be expected for any period in the future.


	Year Ended December 31,
	2018			2019			2020
	(in thousands)
Revenue:
Platform	$	28,319		$	45,121		$	92,764
Professional services and other		3,480			5,570			5,660

Total revenue		31,799			50,691			98,424

Cost of revenues:

Platform⁽¹⁾		8,722			11,920			14,334
Professional services and other⁽¹⁾		2,095			3,666			4,334

Total cost of revenue		10,817			15,586			18,668

Gross profit		20,982			35,105			79,756

Operating expenses:
Research and development⁽¹⁾		17,123			21,687			32,907
General and administrative⁽¹⁾		8,341			12,157			22,209
Sales and marketing⁽¹⁾		4,299			6,351			8,545

Total operating expenses		29,763			40,195			63,661

Income (loss) from operations		(8,781	)		(5,090	)		16,095

Other income (expenses):
Interest expense		(173	)		(219	)		(157	)
Other income, net		100			36			28
Change in fair value of warrant liability		(2,681	)		(2,959	)		(12,714	)

Total other expenses		(2,754	)		(3,142	)		(12,843	)

Income (loss) before income taxes		(11,535	)		(8,232	)		3,252
Provision for income taxes		17			26			189

Net income (loss) and comprehensive income (loss)	$	(11,552	)		$(8,258)			$3,063

Accretion of redeemable convertible preferred stock to redemption		(136	)		(136	)		(70	)
Undeclared 8% non-cumulative dividend on participating securities		—			—			(2,993	)

Net income (loss) attributable to Class B common stockholders	$	(11,688	)	$	(8,394	)	$	—

Net loss per share attributable to Class B common stockholders, basic and diluted⁽²⁾	$	(0.98	)	$	(0.48	)		—

Weighted-average shares used in computing net loss per share, basic and diluted⁽²⁾		11,955,165			17,446,216			20,082,338

Pro forma unaudited net income per share attributable to Class B common stockholders, basic⁽³⁾							$	0.11

Pro forma unaudited net income per share attributable to Class B common stockholders, diluted⁽³⁾							$	0.09

(1)	Includes stock-based compensation expense as follows:


	Year Ended December 31,
	2018		2019		2020
	(in thousands)
Cost of revenue—platform	$	410	$	253	$	556
Cost of revenue—professional services and other		34		46		124
Research and development		1,409		814		1,497
General and administrative		1,928		3,493		2,827
Sales and marketing		415		220		376

Total stock-based compensation expense	$	4,196	$	4,826	$	5,380

(2)	See Note 13 to our financial statements included elsewhere in this prospectus for an explanation of the calculations of our basic and diluted earnings per share attributable to Class B common stockholders.

(3)

The unaudited pro forma net income per share attributable to Class B common stockholders used in the calculation of unaudited pro forma basic and diluted net income per share attributable to Class B common stockholders for the year ended December 31, 2020 was $12.9 million, which excluded the effects of (i) the fair value expense on preferred stock warranty liability of $12.7 million, (ii) accretion of redeemable convertible preferred stock of $70,000, and (iii) non-cumulative dividends on participating securities of $3.0 million. The unaudited pro forma net income attributable to Class B common stockholders was further adjusted to include the impact of stock-based compensation expense related to the vesting of the SARs of $2.8 million.

The unaudited pro forma weighted-average number of shares outstanding used to determine pro forma basic net income per share attributable to Class B common stockholders for the year ended December 31, 2020 was 118,656,634 and included the impact of the (i) automatic conversion of all outstanding shares of redeemable convertible preferred stock to 95,396,588 shares of Class B common stock, (ii) assumed exercise of Series C redeemable convertible preferred stock warrants for the issuance of 1,531,207 Class B common stock and (iii) assumed issuance of Class B common stock related to the vesting of 1,646,501 SARs. The unaudited pro forma weighted-average number of shares outstanding used to determine pro forma diluted net income per share attributable to Class B common stockholders for the year ended December 31, 2020 was 143,133,035 and further included the impact of (i) 24,329,849 of stock options and (ii) 146,553 of Class B common stock warrants.


	As of December 31, 2020
	Actual			Pro Forma (unaudited)⁽¹⁾		Pro Forma As Adjusted^(2)(3)(4) (unaudited)
	(in thousands)
Balance Sheet Data:
Cash and cash equivalents	$	75,756		$	75,756	$	356,809
Total assets		134,424			134,424		415,477
Working capital⁽⁵⁾		53,242			72,977		354,050
Redeemable convertible preferred stock warrant liability		19,735			—		—
Redeemable convertible preferred stock		111,737			—		—
Total stockholders’ (deficit) equity		(52,481	)		78,991		360,044

(1)

The unaudited pro forma balance sheet data gives effect to (a) the reclassification of all outstanding shares of our common stock into an equivalent number of shares of our Class B common stock, which occurred on March 5, 2021, (b) an increase to additional paid-in capital and accumulated deficit related to stock-based compensation expense of $2.8 million associated with stock appreciation rights, or SARs, and the issuance of 1,646,501 shares of Class B common stock upon the settlement of outstanding SARs upon the completion of this offering, (c) the automatic conversion of all outstanding shares of redeemable convertible preferred stock into an aggregate of 98,514,932 shares of Class B common stock, (d) the reclassification of our redeemable convertible preferred stock warrant liability to additional paid-in capital in connection with this offering with respect warrants to purchase 1,682,847 shares of our outstanding redeemable convertible preferred stock, of which 1,531,207 will be exercised in connection with this offering and 151,640 will remain outstanding and convert into warrants to purchase our Class B common stock, and (e) the filing and effectiveness of our amended and restated certificate of incorporation, (b), (c), (d) and (e) of which will occur immediately prior to the completion of this offering.

(2)

The unaudited pro forma as adjusted balance sheet data gives effect to (a) the items described in footnote (1) above and (b) our receipt of estimated net proceeds from the sale of 18,000,000 shares of Class A common stock that we are offering at an assumed initial public offering price of $17.00 per share, the midpoint of the estimated price range set forth on the cover page of this prospectus, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

(3)

A $1.00 increase (decrease) in the assumed initial public offering price of $17.00 per share, the midpoint of the estimated price range set forth on the cover page of this prospectus, would increase (decrease) each of cash and cash equivalents, total assets, working capital and total stockholders’ (deficit) equity by $16.8 million, assuming that the number of shares of Class A common stock offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting the estimated underwriting discounts and commissions. Similarly, each increase (decrease) of 1,000,000 shares in the number of shares of Class A common stock offered by us would increase (decrease) each of cash and cash equivalents, total assets, working capital and total stockholders’ (deficit) equity by $15.9 million, assuming the assumed initial public offering price of $17.00 per share of Class A common stock remains the same, and after deducting the estimated underwriting discounts and commissions.

(4)	Pro forma as adjusted cash and cash equivalents and total assets do not give effect to $2.3 million of deferred offering costs that had been paid as of December 31, 2020.

(5)	Working capital is defined as current assets less current liabilities.

RISK FACTORS

Investing in our Class A common stock involves a high degree of risk. You should consider and read carefully all of the risks and uncertainties described below, as well as other information included in this prospectus, including our financial statements and related notes appearing elsewhere in this prospectus, before making an investment decision. The risks described below are not the only ones we face. The occurrence of any of the following risks or additional risks and uncertainties not presently known to us or that we currently believe to be immaterial could materially and adversely affect our business, financial condition, or results of operations. In such case, the trading price of our Class A common stock could decline, and you may lose some or all of your original investment.

Risks Related to Our Business and Industry

Our rapid growth may not be sustainable and depends on our ability to attract new customers, retain revenue from existing customers, and increase sales to both new and existing customers.

We principally generate revenues through subscription revenue from our Ordering module, transaction fees associated with the use of our Rails and Dispatch modules, and professional service fees from the deployment and integration of our platform. While the number of customers using our platform, the number of modules that each customer uses, and the volume of transactions on our platform have grown rapidly in recent years, there can be no assurance that we will be able to retain these customers or acquire new customers, deploy additional modules to these customers, or that the volume of transactions on our platform will continue to increase. Our costs associated with subscription renewals and additional module deployments are substantially lower than costs associated with generating revenue from new customers. Therefore, if we are unable to retain or increase revenue from existing customers, even if such losses are offset by an increase in new customers or an increase in other revenues, our operating results could be adversely impacted.

We may also fail to attract new customers, increase the volume of transactions on our platform, retain or increase revenue from existing customers, or increase sales of our modules to both new and existing customers as a result of a number of factors, including:

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reductions in our current or potential customers’ spending levels;

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reduction in the number of transactions using our Ordering, Rails, and Dispatch modules due to the abatement of the effects of COVID-19 or otherwise;

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competitive factors affecting the software as a service, or SaaS, or restaurant brand software applications markets, including the introduction of competing platforms, discount pricing, and other strategies that may be implemented by our competitors;

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our ability to execute on our growth strategy and operating plans;

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a decline in our customers’ level of satisfaction with our platform and customers’ usage of our platform;

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the difficulty and cost to switch to a competitor may not be significant for many of our customers;

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changes in our relationships with third parties, including our delivery service provider, or DSP, ordering aggregator, or aggregator, customer loyalty, and payment processor partners;

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failure to maintain compatibility with third party systems or failure to integrate with new systems;

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the timeliness and success of new modules we may develop;

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concerns relating to actual or perceived security breaches;

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the frequency and severity of any system outages; and

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technological changes or problems.

Additionally, we anticipate that our revenue growth rate will decline over time to the extent that the number of customers using our platform increases and we achieve higher market penetration rates. Furthermore, to the extent our market penetration among larger potential customers increases, we may be required to target smaller customers to maintain our revenue growth rates, which could result in lower gross profits. As our growth rate declines, investors’ perception of our business may be adversely affected and the trading price of our Class A common stock could decline as a result. To the extent our growth rate slows, our business performance will become increasingly dependent on our ability to retain revenue from existing customers and increase sales to existing customers.

The COVID-19 pandemic could materially adversely affect our business, financial condition, and results of operations.

The COVID-19 pandemic, the measures attempting to contain and mitigate the effects of the COVID-19 pandemic, including stay-at-home, business closures, indoor dining restrictions, and other restrictive orders, and the resulting changes in consumer behaviors, have disrupted the restaurant industry, our normal operations and impacted our employees, partners, and customers. We expect these disruptions and impacts to continue. In response to the COVID-19 pandemic, we have taken a number of actions that have impacted and continue to impact our business, including transitioning employees across our offices (including our corporate headquarters) to remote work-from-home arrangements, potentially cancelling business development events, and imposing travel and related restrictions. Given the continued spread of COVID-19 and the resultant personal, economic, and governmental reactions, we may have to take additional actions in the future that could harm our business, financial condition, and results of operations. We continue to monitor the situation and may adjust our current policies as more information and guidance become available. Once our employees are able to return to our office space, we may experience decreased workforce productivity and disruptions if employees return on a staggered basis. Suspending travel and doing business remotely on a long-term basis could negatively impact our marketing efforts, our ability to enter into customer contracts in a timely manner, our international expansion efforts, and our ability to recruit employees across the organization. These changes could negatively impact our sales and marketing in particular, which could create operational or other challenges as our workforce remains predominantly remote. In addition, our management team has spent, and will likely continue to spend, significant time, attention, and resources monitoring the COVID-19 pandemic and associated global economic uncertainty and seeking to manage its effects on our business and workforce.

With the onset of COVID-19, we began to see an increase in transaction volumes as consumers turned to online ordering as compared to in-person dining. This shift began at end of the first quarter of 2020 and continued through the balance of 2020. We also experienced an increase in our penetration of our Rails and Dispatch modules, as evidenced by an increase from 44% in 2019 to 71% in 2020 of our customers using all three of our modules. The combination of increased transaction volumes and increased multi-module adoption resulted in an increase in transaction revenue as a percentage of platform revenue. For the years ended December 31, 2018, 2019, and 2020, 93.2%, 80.8%, and 56.7% of our platform revenue was subscription revenue, respectively, and 6.8%, 19.2%,

and 43.3% was transaction revenue, respectively. While we have benefited from the acceleration of demand for off-premise dining, our business and financial results could be materially adversely affected in the future if these trends do not continue. For example, as the effects of shelter-in-place orders abate with the roll-out of vaccines in the United States and consumers potentially return to pre-COVID digital ordering preferences and habits, the trends we experienced in 2020 on multi-module adoption and transaction volume may not continue and our revenue may fluctuate in the near term.

The degree to which COVID-19 will affect our business and results of operations will depend on future developments that are highly uncertain and cannot currently be predicted. These development include but are not limited to the duration, extent, and severity of the COVID-19 pandemic, actions taken to contain the COVID-19 pandemic, including restrictions on indoor dining that could impact our customers, the impact of the COVID-19 pandemic and related restrictions on economic activity and domestic and international trade, and the extent of the impact of these and other factors on our employees, partners, vendors, and customers. The COVID-19 pandemic and related restrictions could limit our customers’ ability to continue to operate, serve customers, or make timely payments to us. It could disrupt or delay the ability of employees to work because they become sick or are required to care for those who become sick, or for dependents for whom external care is not available. It could cause delays or disruptions in services provided by key suppliers and vendors, increase vulnerability of us and our partners and service providers to security breaches, denial of service attacks or other hacking or phishing attacks, or cause other unpredictable effects. It could also result in declines in order volume as consumers potentially return to pre-COVID digital ordering preferences and habits.

The COVID-19 pandemic also has caused heightened uncertainty in the global economy. If economic conditions further deteriorate, consumers may not have the financial means to make purchases from our customers and may delay or reduce discretionary purchases, negatively impacting our customers and our results of operations. Uncertainty from the pandemic may cause prospective or existing customers to defer purchasing decisions in anticipation of new modules or enhancements by us or our competitors. Our small and medium business, or SMB, brands may be more susceptible to general economic conditions than our enterprise brands, which may have greater liquidity and access to capital. Uncertain and adverse economic conditions also may lead to increased refunds and chargebacks, reduced demand for our platform, lengthening of sales cycles, loss of customers, and difficulty in collections. Since the impact of COVID-19 is ongoing, the effect of the COVID-19 pandemic and the related impact on the global economy may not be fully reflected in our results of operations until future periods. Volatility in the capital markets has been heightened during recent months and such volatility may continue, which may cause declines in the price of our Class A common stock.

Further, to the extent there is a sustained general economic downturn and our solutions are perceived by customers and potential customers as costly, or too difficult to deploy or migrate to, our revenue may be disproportionately affected by delays or reductions in on-demand commerce spending. Competitors may respond to market conditions by lowering prices and attempting to lure away our customers. In addition, the increased pace of consolidation in the restaurant industry and the loss of partners that may have gone out of business or may have merged with other of our partners, may result in reduced overall spending on our platform. We cannot predict the timing, strength, or duration of any economic slowdown, instability, or recovery, generally or within the restaurant industry. If the economic conditions of the general economy or markets in which we operate worsen from present levels, our business, results of operations, and financial condition could be materially and adversely affected.

In 2015 and 2017, we launched our Dispatch and Rails modules, respectively, and in 2016 we began to offer a transactional-based pricing model for our Ordering module. While the recent

introduction of these new offerings and this new pricing model have contributed significantly to our recent growth in revenue, we have little experience with these new modules and pricing model, which makes it difficult to accurately assess our future prospects. You should consider our future prospects in light of the challenges and uncertainties that we face, including:

●

the fact that our business has grown rapidly and it may not be possible to fully discern the trends that we are subject to;

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that we operate in a new and developing market with a rapidly changing competitive landscape;

●

that we may be unable to accurately predict our revenue and operating expenses for new modules that we release;

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our ability to enhance or retain our brand among customers and potential customers;

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that we may in the future enter into additional new and developing markets that may not develop as we expect or that our platform or modules may not adequately address; and

●

that elements of our business strategy are new and subject to ongoing development.

We have encountered and will continue to encounter risks and difficulties frequently experienced by growing companies in rapidly changing industries, including increasing and unforeseen expenses as we continue to grow our business. If our assumptions regarding these risks and uncertainties, which we use to plan and operate our business, are incorrect or change, or if we do not manage these risks successfully, our reputation, business, results of operations, and prospects will be harmed.

Our business could be harmed if we fail to manage our growth effectively.

The rapid growth we have experienced in our business places significant demands on our operational infrastructure. The scalability and flexibility of our platform depends on the functionality of our technology and cloud infrastructure and its ability to handle increased traffic and demand. The growth in the number of third-party ecosystem partners, customers using our platform, and the number of orders processed, coordinated, and delivered through our Ordering, Rails, and Dispatch modules has increased the amount of data and requests that we process. Additionally, new modules, solutions, services, and restaurant ecosystem partners that we integrate may significantly increase the load on our technology infrastructure. Any problems with the transmission or storage of increased data and requests could result in harm to our brand or reputation. Moreover, as our business grows, we will need to devote additional resources to improving our operational infrastructure and continuing to enhance its scalability in order to maintain the performance of our platform, including by improving or expanding cloud infrastructure.

This rapid growth has also placed, and will likely continue to place, a significant strain on our managerial, administrative, operational, financial, and other resources. As a result, we intend to increase headcount significantly in the near future to further expand our overall business, with no assurance that our revenues will continue to grow. As we grow, we will be required to continue to improve our operational and financial controls and reporting procedures and we may not be able to do so effectively. In addition, our management team has little experience leading a large, potentially global business operation, so our management may not be able to lead any such growth effectively.

We have a history of losses and we may be unable to achieve or sustain profitability.

We have incurred significant losses since inception. We generated net losses of $11.6 million and $8.3 million for the years ended December 31, 2018 and December 31, 2019, respectively. We

generated net income of $3.1 million for the year ended December 31, 2020. As of December 31, 2020, we had an accumulated deficit of $69.3 million. These losses and accumulated deficit are a result of the substantial investments we made to grow our business and we expect to make significant expenditures to expand our business in the future. We anticipate that we will continue to incur losses in the near-term as we increase our operating expenses, including, without limitation, as a result of expected increases in:

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sales and marketing expenses, as we continue to expand our sales efforts and spend on marketing activities;

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research and development expenses, as we continue to introduce new modules and enhance existing modules to extend the functionality of our platform;

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expenses related to customer service and support, which is critical to our continued success and ability to maintain a strong reputation for our brand;

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expenses related to further investments in our network infrastructure in order to support the continued growth of our business and to meet the demands of continuously changing security and operational requirements; and

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general costs and administrative expenses as a result of our continued growth and the increased costs associated with being a public company.

These increased expenditures will make it harder for us to achieve or sustain profitability and we cannot predict if we will achieve or sustain profitability in the near term or at all. Historically, our costs have increased each year due to these investments and we expect to continue to incur increasing costs to support our anticipated future growth. In addition, the costs associated with acquiring new customers may materially rise in the future, including if we expand international sales efforts outside of the United States and Canada, increase our efforts to pursue SMB restaurant brands, or increase sales efforts to other verticals. If we are unable to generate adequate revenue growth and manage our expenses, we may continue to incur significant losses and may not achieve or sustain profitability.

We may also make decisions that would reduce our short-term operating results if we believe those decisions will improve the experiences of our customers and consumers and if we believe such decisions will improve our operating results over the long-term. These decisions may not be consistent with the expectations of investors and may not produce the long-term benefits that we expect, in which case our business may be materially harmed.

We have historically incurred significant costs and experienced long sales cycles when selling to customers. In the restaurant brand market segment, the decision to adopt our modules may require the approval of multiple technical and business decision makers, including security, compliance, operations, finance and treasury, marketing, and IT. In addition, while our customers may more quickly deploy our modules on a limited basis, before they will commit to deploying our modules at scale, they often require extensive education about our modules and significant customer support time or pilot programs, engage in protracted pricing negotiations and seek to secure development resources. In addition, sales cycles for our customers in general and larger customers in particular, are inherently complex and unpredictable. These complex and resource intensive sales efforts could place additional

strain on our development and engineering resources. Further, even after our customers contract to use our platform, they may require extensive integration or deployment resources from us before they become active customers, which have at times extended to multiple quarterly periods following the execution of the agreement. Because we generally only generate Ordering, Rails, and Dispatch module revenue after our platform is deployed, if we are unable to deploy our platform with our customers in a timely manner, our results of operations and financial condition may be harmed. Finally, our customers may choose to develop their own solutions that do not include any or all of our modules. They also may demand reductions in pricing as their usage of our modules increases, which could have an adverse impact on our gross margin. If we are unable to increase the revenue that we derive from these customers, then our business, results of operations and financial condition may be adversely affected.

Our results of operations have fluctuated in the past and are expected to fluctuate in the future due to a variety of factors, many of which are outside of our control. As a result, our past results may not be indicative of our future performance. In addition to the other risks described herein, factors that may affect our results of operations include the following:

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fluctuations in demand for or pricing of our platform, or any of our modules;

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fluctuations in usage of our platform, or any of our modules, including due to the potential lack of durability of the growth we have experienced in the near term due to COVID-19 and the associated shelter-in-place orders on consumer preferences for digital ordering and customer adoption of multi-modules as COVID-19 associated restrictions abate;

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our ability to attract new customers;

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our ability to retain our existing customers;

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the timing of our customer purchases and deployments;

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customer expansion rates and the pricing and quantity of subscriptions renewed and transactions processed through our platform;

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timing and amount of our investments to expand the capacity of our third-party cloud infrastructure providers;

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the investment in new modules relative to investments in our existing infrastructure and platform;

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fluctuations or delays in purchasing decisions in anticipation of new modules or enhancements by us or our competitors;

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changes in customers’ budgets and in the timing of their budget cycles and purchasing decisions;

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our ability to control costs, including our operating expenses;

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the amount and timing of payment for operating expenses, particularly research and development and sales and marketing expenses, including sales commissions;

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the amount and timing of non-cash expenses, including stock-based compensation, goodwill impairments and other non-cash charges;

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the amount and timing of costs associated with recruiting, training and integrating new employees and retaining and motivating existing employees;

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the effects of acquisitions and their integration;

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general economic conditions, both domestically and internationally, as well as economic conditions specifically affecting industries in which our customers participate;

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health epidemics or pandemics, such as the COVID-19 pandemic;

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the impact of new accounting pronouncements;

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changes in regulatory or legal environments that may cause us to incur, among other elements, expenses associated with compliance;

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changes in the competitive dynamics of our market, including consolidation among competitors, customers, or our partners; and

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significant security breaches of, technical difficulties with, or interruptions to, the delivery and use of our modules and platform capabilities or third-party applications or point of sale or management systems that our platform integrates with.

Any of these and other factors, or the cumulative effect of some of these factors, may cause our results of operations to vary significantly. If our quarterly results of operations fall below the expectations of investors and securities analysts who follow our stock, the price of our Class A common stock could decline substantially, and we could face costly lawsuits, including securities class action suits.

Our ability to grow and generate incremental revenue depends, in part, on our ability to maintain and grow our relationships with existing customers, to have them increase their deployment and use of our platform and Ordering, Rails, and Dispatch modules, and to increase or maintain transaction volume on our platform. Although our customers generally have multi-year contracts with us, they generally have the right to elect not to renew by providing at least 90 days’ written notice prior to the expiration date of the contract. In addition, if our customers do not increase their use of our platform or adopt and deploy additional modules, or if they reduce the number of locations using our platform, then our revenue may decline and our results of operations may be harmed. Customers may not renew their contracts with us or reduce their use of our platform for any number of reasons, including if they are not satisfied with our platform or modules, the value proposition of our platform or our ability to meet their needs and expectations, security or platform reliability issues, or if they decide to build their own solution internally or if they decide to temporarily or permanently close their restaurants in a location then affected by the COVID-19 pandemic. Additionally, consumers may change their purchasing habits or reduce their orders from our current customers, which could harm their business and reduce their use of our platform. We cannot accurately predict our customers’ usage levels and the loss of customers or reductions in the number of locations that use our platform or their usage levels of our modules may each have a negative impact on our business, results of operations,

and financial condition and may cause our expansion rate to decline. If a significant number of customers cease using, or reduce their usage of our platform, then we may be required to spend significantly more on sales and marketing than we currently plan to spend in order to maintain or increase revenue from our customers. Such additional sales and marketing expenditures could adversely affect our business, results of operations, and financial condition.

The on-demand commerce and digital ordering markets are characterized by rapid technological change, frequent new product and service introductions, and evolving industry standards. Our success has been based on our ability to identify and anticipate the needs of our customers and design and maintain a platform that provides them with the tools they need to operate their businesses in a manner that is productive and meets or exceeds their expectations. Our ability to attract new customers, retain revenue from existing customers, and increase sales to both new and existing customers will depend in large part on our ability to continue to improve and enhance the functionality, performance, reliability, design, security, and scalability of our platform. Additionally, to achieve and maintain market acceptance for our platform, we must effectively integrate with new or existing software solutions that meet changing customer demands in a timely manner.

As we expand our platform and services, and as the number of our customers with higher volume sales increases, we expect that we will need to offer increased functionality, scalability and support, including to keep our platform, systems, and services secure, which requires us to devote additional resources to such efforts. To the extent we are not able to enhance our platform’s functionality in order to maintain its utility and security, enhance our platform’s scalability in order to maintain its performance and availability, or improve our support functions in order to meet increased customer service demands, our business, operating results, and financial condition could be adversely affected.

We may experience difficulties with software development that could delay or prevent the development, deployment, introduction, or implementation of new modules and enhancements. Software development involves a significant amount of time, as it can take our developers months to update, code, and test new and upgraded modules, and integrate those modules into our platform. We must also continually update, test, certify, maintain, and enhance our software platform. We may make significant investments in new modules or enhancements that may not achieve expected returns. The continual improvement and enhancement of our platform requires significant investment and we may not have the resources to make such investment. Our improvements and enhancements may not result in our ability to recoup our investments in a timely manner, or at all. The improvement and enhancement of the functionality, performance, reliability, design, security, and scalability of our platform is expensive and complex, and to the extent we are not able to perform it in a manner that responds to our customers’ evolving needs, our business, operating results, and financial condition will be adversely affected.

Our growth depends in part on the success of our strategic relationships with third parties and our ability to integrate with third-party applications and software.

The success of our platform depends, in part, on our ability to integrate third-party applications, software, and other offerings into our platform. We anticipate that the growth of our business will continue to depend on third-party relationships, including relationships with our point of sale, or POS, systems, DSPs, aggregators, digital agencies, payment processors, loyalty providers, and other partners. In addition to growing our third-party partner ecosystem, we have entered into agreements

with, and intend to pursue additional relationships with, other third parties, such as search engine and social media, location services, voice ordering, autonomous vehicle, and virtual kitchen providers. Identifying, negotiating, and documenting relationships with third parties and integrating third-party content and technology requires significant time and resources, and third-party providers may choose to terminate their relationship with us, compete directly against us, enter into exclusive arrangements with our competitors, or make material changes to their businesses, solutions, or services that could be detrimental to our business.

Third-party developers may change the features of their offering of applications and software or alter the terms governing the use of their offerings in a manner that is adverse to us. We may also be unable to maintain our relationships with certain third-parties if we are unable to integrate our platform with their offerings. In addition, third-parties may refuse to partner with us or limit or restrict our access to their offerings. We may not be able to adapt to the data transfer requirements of third party offerings. If third-party applications or software change such that we do not, or cannot, maintain the compatibility of our platform with these applications and software, or if we fail to ensure there are third-party applications and software that our customers desire to add to their ordering or delivery portals, demand for our platform could decline. If we are unable to maintain technical interoperability, our customers may not be able to effectively integrate our platform with other systems and services they use. If we fail to integrate our platform with new third-party offerings that our customers need to operate their businesses, or to provide the proper support or ease of integration our customers require, we may not be able to offer the functionality that our customers and their consumers expect, which would harm our business.

The third party service providers we integrate with may not perform as expected under our agreements or under their agreements with our customers, we or our customers may in the future have disagreements or disputes with such providers, or such providers may experience reduced growth, reduce incentives for our customers’ consumers to make delivery orders or otherwise change their business models in ways that are disadvantageous to us or our customers. For example, if the DSP providers we partner with for our Dispatch module were to increase prices of the delivery to customers, the number of orders made through our platform could be reduced and our business may be harmed. In addition, if our Rails providers were to reduce incentives for consumers to order through those respective aggregators, our revenue and business may be harmed. If we lose access to solutions or services from a particular partner, or experience a significant reduction or disruption in the supply of services from a current partner, it could have an adverse effect on our business and operating results.

Our Dispatch module currently relies on a limited number of DSPs.

The availability of DSPs generally, and of specific DSPs in certain markets, is integral to the value that our Dispatch module provides to our customers and our ability to generate revenue from orders fulfilled through Dispatch. However, the delivery service provider market has not yet fully developed and could be adversely affected by various conditions, including industry consolidation, changes in labor and independent contractor laws and changes in pricing models, the success of competitors or competing solutions for customers, and general economic conditions. In general, there is more than one DSP available to fulfill delivery orders through Dispatch. In certain markets, however, delivery orders are fulfilled by one or a limited number of DSPs, with a subset of such DSPs being responsible for fulfilling a majority of orders in that market. In addition, certain of these DSPs may be, or may be perceived to be, in competition with us with respect to some of our offerings and, as a result, may be less incentivized to continue to partner with us. If one or more DSPs that represents a significant volume of our Dispatch transactions overall, or DSPs that represent a significant volume of our Dispatch transactions in any single market, are no longer able to continue to provide timely and reliable delivery services, or if we or a DSP terminate our partnership, we could experience significant interruptions in the delivery of orders through our Dispatch module, which could have an adverse effect on our business, financial condition, and results of operations.

Our Rails module currently relies on a limited number of aggregators.

Our Rails module integrates with a limited number of digital ordering aggregators to fulfill third-party ordering transactions on our platform. These aggregators could decide to create new software that is incompatible with our platform, enter into exclusive agreements directly with our customers or potential customers, or enter into agreements directly with our competitors or potential future competitors of ours that are exclusive or on terms that are more favorable than those we offer to our customers. Certain of these aggregators may be, or may be perceived to be, in competition with us with respect to some of our offerings and, as a result, may be less incentivized to continue to partner with us. Moreover, recently a number of aggregators have merged, consolidated, or gone out of business, which could reduce the number of aggregators on our Rails module, reduce our revenue and limit the effectiveness of Rails. In the event that any of the largest digital ordering aggregators do not integrate with our platform, or create software that is incompatible or competes with our platform by directly integrating with one of our customers, our ability to generate transactional revenue using our Rails module will decline, which could harm our business and results of operation. If we or one or more of these aggregators that represents a significant volume of our Rails transactions overall terminate our partnership, it could have an adverse effect on our business, financial condition, and results of operations.

For the years ended December 31, 2018, 2019, and 2020, Rails module transaction revenue from our largest digital ordering aggregator, DoorDash Inc., or DoorDash, accounted for an aggregate of 2.6%, 10.2%, and 19.3% of our total revenue, respectively, and DoorDash accounted for a substantial majority of our transaction revenue from our Rails module during the years ended December 31, 2018, 2019, and 2020.

Our agreement with DoorDash has an initial two-year term, which began on March 30, 2017, with a one-year renewal period, unless either party notifies the other party in writing at least 90 days prior to the renewal term. Either party may terminate the agreement upon material breach of the terms of the agreement by the other party, subject to notice and opportunity to cure. The termination of this agreement would materially and adversely impact our revenue and could impair our profitability.

Security breaches, denial of service attacks, or other hacking and phishing attacks on our systems or the systems with which our platform integrates could harm our reputation or subject us to significant liability, and adversely affect our business and financial results.

We operate in the on-demand commerce industry, which is prone to cyber-attacks. In our operation as a private company, our board of directors reviews cybersecurity risks brought to its attention by members of senior management who report up to our board of directors. We have an established in-house security team which is responsible for reviewing and overseeing our cybersecurity program and bringing any cybersecurity risks to the attention of the board of directors and the audit committee at regular meetings of the audit committee. Failure to prevent or mitigate security breaches and improper access to or disclosure of our data, our customers’ data, or their consumers’ data, could result in the loss or misuse of such data, which could harm our business and reputation. The security measures we have integrated into our systems and processes, which are designed to prevent or minimize security breaches, may not function as expected or may not be sufficient to protect our internal networks and platform against attacks. Further, our platform also integrates with third-party applications and POS and management systems over which we exercise no control. Such third-party applications and POS and management systems are also susceptible to security breaches, which could directly or indirectly result in a breach of our platform. The failure of a customer’s third-party front-end provider to adequately protect their systems could result in an attack that we are unable to prevent from the back-end, which could result in a service outage for all customers, and may require us to take the affected customer offline to restore service to the platform for other customers. In addition,

techniques used to sabotage or to obtain unauthorized access to data change frequently. As a result, we may be unable to anticipate these techniques or implement adequate measures to prevent an intrusion into our networks directly, or into our platform through the third-party applications or POS and management systems with which our platform integrates. Our exposure to security breaches may be heightened because our platform is accessible through hundreds of our customers’ white label domains and mobile applications.

Our storage and use of our customers’ data concerning their restaurants and consumers is essential to their use of our platform, which stores, transmits and processes our customers’ proprietary information and information relating to them and consumers. If a security breach were to occur, as a result of third-party action, employee error, malfeasance, or otherwise, and the confidentiality, integrity or availability of our customers’ data was disrupted, we could incur significant liability to our customers and their consumers, and our platform may be perceived as less desirable, which could negatively affect our business and damage our reputation. In addition, any loss of customer or individual consumer data could create significant monetary damages for us that may harm our ability to operate the business.

A security vulnerability in our platform or point of sale integration software could compromise our customers’ in-store networks, which could expose customer or consumer information beyond what we collect through our platform. As a multitenant SaaS provider, despite our logical separation of data between customers, we may face an increased risk of accidentally commingling data between customers due to employee error, a software bug, or otherwise, which may result in unauthorized disclosure of data between customers. We may in the future be subject to distributed denial of service, or DDoS, attacks, a technique used by hackers to take an internet service offline by overloading its servers. A DDoS attack could delay or interrupt service to our customers and their consumers and may deter consumers from ordering or engaging with our customers’ restaurants. Our platform and third-party applications may also be subject to DDoS attacks in the future and we cannot guarantee that applicable recovery systems, security protocols, network protection mechanisms and other procedures are or will be adequate to prevent network and service interruption, system failure, or data loss. In addition, computer malware, viruses, hacking, credential stuffing, social engineering, phishing, physical theft, and other attacks by third parties are prevalent in our industry. We may experience such attacks in the future and, as a result of our increased visibility, we believe that we are increasingly a target for such breaches and attacks.

Moreover, our platform and third-party applications, services, or POS and management systems integrated with our platform could be breached if vulnerabilities in our platform or third-party applications or POS and management systems are exploited by unauthorized third parties or due to employee error, malfeasance, or otherwise. Further, third parties may attempt to fraudulently induce employees or customers into disclosing sensitive information such as user names, passwords, or other information or otherwise compromise the security of our internal networks, electronic systems and/or physical facilities in order to gain access to our data or our customers’ data. Because techniques used to obtain unauthorized access change frequently and the size and severity of DDoS attacks and security breaches are increasing, we may be unable to implement adequate preventative measures or stop DDoS attacks or security breaches while they are occurring. In addition to our own platform and applications, some of the third parties we work with may receive information provided by us, by our customers, or by our customers’ consumers through web or mobile applications integrated with our platform. If these third parties fail to adhere to adequate data security practices, or in the event of a breach of their networks, our own and our customers’ data may be improperly accessed, used, or disclosed.

Any actual or perceived DDoS attack or security breach of our platform, systems, and networks could damage our reputation and brand, expose us to a risk of litigation and possible liability

and require us to expend significant capital and other resources to respond to and alleviate problems caused by the DDoS attack or security breach. Our ability to retain adequate cyber-crime and liability insurance may be reduced. Some jurisdictions have enacted laws requiring companies to notify individuals of data security breaches involving certain types of personal data and our agreements with certain customers and partners require us to notify them in the event of a security incident. Such mandatory disclosures are costly, could lead to negative publicity, and may cause our customers to lose confidence in the effectiveness of our data security measures. Moreover, if a high-profile security breach occurs with respect to another SaaS provider or one of the service providers we partner with, customers may lose trust in the security of the SaaS business model generally, which could adversely impact our ability to retain revenue from existing customers or attract new ones. Any of these events could harm our reputation or subject us to significant liability, and materially and adversely affect our business and financial results.

If our software or APIs contain serious errors or defects, we may lose revenue and market acceptance and may incur costs to defend or settle claims with our customers.

Software or APIs such as ours may contain errors, defects, security vulnerabilities, or software bugs that are difficult to detect or correct, particularly when first introduced or when new versions or enhancements are released. Despite internal testing, our platform may contain serious errors or defects, security vulnerabilities, or software bugs that we may be unable to successfully correct in a timely manner or at all, which could result in lost revenue, significant expenditures of capital, a delay or loss in market acceptance, and damage to our reputation and brand, any of which could have an adverse effect on our business and results of operations. For example, our payment processing code may contain a software bug or other misconfiguration, resulting in failure to collect payment for orders that are otherwise fulfilled, which could result in significant refunds owed to our customers. A software or API bug could also result in a customer receiving an item other than what they ordered or an ingredient to which they are allergic, causing reputational harm to us. In addition, our tax calculation code may also contain errors or defects, which may result in differences payable by us or fines owed by us, or our fraud detection software could identify false positives in the system, and in turn could reduce transactional revenue. Furthermore, our platform allows us to deploy new versions and enhancements to all of our customers simultaneously. To the extent we deploy new versions or enhancements that contain errors, defects, security vulnerabilities, or software bugs to all of our customers simultaneously, the consequences would be more severe than if such versions or enhancements were only deployed to a smaller number of our customers.

Because our customers use our platform for processes that are critical to their businesses, errors, defects, security vulnerabilities, service interruptions, or software bugs in our platform and APIs could result in losses to our customers. Although we endeavor to limit our liability in customer agreements, our customers may be entitled to significant compensation from us in the form of service level credits or to pursue litigation against us for any losses they suffer or cease conducting business with us altogether. Further, a customer could share information about bad experiences on social media, at industry conferences, or with peer companies, which could result in damage to our reputation and loss of future sales. There can be no assurance that provisions typically included in our agreements with our customers that attempt to limit our exposure to claims against us would be enforceable or adequate or would otherwise protect us from liabilities or damages with respect to any particular claim. Even if not successful, a claim brought against us by any of our customers would likely be time-consuming and distracting to our management team and costly to defend, and such a claim could seriously damage our reputation and brand, making it harder for us to sell our modules.

We and certain of our third-party partners, service providers, and subprocessors transmit and store personal information of our customers and consumers. If the security of this information is compromised or is otherwise accessed without authorization, our reputation may be harmed and we may be exposed to liability and loss of business.

We transmit and store personal information and other confidential information of our partners, our customers, and consumers. Third-party applications integrated with our platform may also handle or store personal information, credit card information, including cardholder data and sensitive authentication data, or other confidential information. We do not proactively monitor the content that our customers upload and store, or the information provided to us through the applications integrated with our platform, and, therefore, we do not control the substance of the content on our servers, which may include personal information. Additionally, we use dozens of third-party service providers and subprocessors to help us deliver services to customers and consumers. These service providers and subprocessors may handle or store personal information, credit card information, or other confidential information. There may in the future be successful attempts by third parties to obtain unauthorized access to the personal information of our partners, our customers, and consumers. This information could also be otherwise exposed through human error, malfeasance, or otherwise. The unauthorized release, unauthorized access, or compromise of this information could have an adverse effect on our business, financial condition, and results of operations. Even if such a data breach did not arise out of our actions or inactions, or if it were to affect one or more of our competitors or our customers’ competitors, the resulting consumer concern could negatively affect our customers and our business.

We integrate with a number of third-party service providers in order to meet our customers’ needs, and although we contractually require our customers to ensure the security of such service providers, a security breach of one of these providers could become negatively associated with our brand, or our assistance in responding to such a breach could tie up our internal resources. By the nature of the integrations, we could also get directly drawn into any resulting lawsuits. We are also subject to federal, state, and provincial laws regarding cybersecurity and the protection of data. Some jurisdictions have enacted laws requiring companies to notify individuals of security breaches involving certain types of personal information and our agreements with customers and partners require us to notify them in the event of certain security incidents. Additionally, some jurisdictions, as well as our contracts with certain customers, require us to use industry-standard or reasonable measures to safeguard personal information or confidential information. As cardholder data and sensitive authentication data is transmitted through our platform, we may be required by card networks and our contracts with payment processors to adhere to the Payment Card Industry Data Security Standards, or PCI-DSS.

Our failure to comply with legal, regulatory or contractual requirements, and the rules of payment card networks and self-regulatory organizations, including PCI-DSS, around the security of personal information, cardholder data, or sensitive authentication data, could lead to significant fines and penalties imposed by regulators and card networks, as well as claims by our customers, consumers, or other relevant stakeholders. These proceedings or violations could force us to spend money in defense or settlement of these proceedings, result in the imposition of monetary liability or injunctive relief, divert management’s time and attention, increase our costs of doing business, and materially adversely affect our reputation and the demand for our platform. In addition, if our security measures fail to protect credit card information adequately, we could be liable to our partners, our customers and, consumers for their losses. As a result, we could be subject to fines, we could face regulatory or other legal action, and our customers could end their relationships with us. There can be no assurance that the limitations of liability in our contracts would be enforceable or adequate or would otherwise protect us from any such liabilities or damages with respect to any particular claim. We also cannot be sure that our existing insurance coverage and coverage for errors and omissions will continue to be available on acceptable terms or will be available in sufficient amounts to cover one or

more large claims, or that our insurers will not deny coverage as to any future claim. The successful assertion of one or more large claims against us that exceeds our available insurance coverage, or changes in our insurance policies, including premium increases, or the imposition of large deductible or co-insurance requirements, could have an adverse effect on our business and results of operations.

We are subject to stringent and changing privacy laws, regulations and standards, and contractual obligations related to data privacy and security. Our actual or perceived failure to comply with such obligations could harm our reputation, subject us to significant fines and liability, or adversely affect our business.

The regulatory framework for privacy and security issues in the United States is rapidly evolving. Laws in all 50 states require us to provide notice to customers when certain sensitive personal information has been disclosed as a result of a data breach. These laws are frequently inconsistent, and compliance in the event of a widespread data breach is costly. Moreover, states regularly enact new laws and regulations, which require us to provide consumers with certain disclosures related to our privacy practices, as well as maintain systems necessary to allow customers to invoke their rights. For example, on January 1, 2020, California adopted the California Consumer Privacy Act of 2018, or CCPA, which provides new data privacy rights for consumers and new operational requirements for covered businesses. The CCPA gives California residents more control over their personal information and includes a statutory damages framework and private right of action imposing civil penalties against businesses that fail to comply with certain security practices. Although the CCPA’s implementation standards and enforcement practices are likely to remain uncertain for the foreseeable future, the CCPA may increase our compliance costs and exposure to liability. More so, additional states that adopt privacy laws that differ from the CCPA may require us to do unanticipated and unbudgeted work in order to comply with additional privacy and data security requirements. The costs associated with compliance may impede our development and could limit the adoption of our services. Finally, any failure by our vendors to comply with applicable law or regulations could result in proceedings against us by governmental entities or others.

Additionally, virtually every foreign jurisdiction in which our current or potential future customers may operate has established privacy and data security laws, rules, and regulations. The European Union, or EU, has adopted the General Data Protection Regulation, or GDPR, which went into effect on May 25, 2018. Among other requirements, the GDPR regulates transfers of personally identifiable information from the EU to non-EU countries, such as the United States. Under the GDPR, fines of up to €20 million or up to 4% of the annual global revenue of the noncompliant company, whichever is greater, could be imposed for violations of certain GDPR requirements. Moreover, individuals can claim damages as a result of GDPR violations. Other jurisdictions outside the EU are similarly introducing or enhancing privacy and data security laws, rules, and regulations, which may increase the risks associated with non-compliance.

Certain current or potential future customers are subject to the GDPR and we may be required to assist such customers with their compliance obligations. While we are not currently subject to the GDPR ourselves, many of our customers are subject to the GDPR. We may be required to expend resources to assist our customers with such compliance obligations. Assisting our customers in complying with the GDPR or complying with the GDPR ourselves if we expand our business to the EU in the future may cause us to incur substantial operational costs or require us to change our business practices to maintain such information in the European Economic Area.

We publish privacy policies, self-certifications, such as the EU-US Privacy Shield, and other documentation regarding our collection, processing, use and disclosure of personal information, credit card information, and other confidential information. Recently the ES-US Privacy Shield was declared insufficient by the Court of Justice of the European Union and the EU-US Privacy Shield is no longer a

valid mechanism to comply with EU data protection requirements relating to data transfers. We do not know when, or if, the EU-US Privacy Shield will become an effective mechanism for data transfers. Although we endeavor to comply with our published policies, certifications, and documentation, we may at times fail to do so or may be perceived to have failed to do so. Such failures can subject us to potential international, local, state, and federal action if they are found to be deceptive, unfair, or misrepresentative of our actual practices, resulting in reputational or financial harm to the company. Globally, there have been numerous lawsuits brought against technology companies related to their privacy and data security practices. If those lawsuits are successful, it could increase the risk that we may be exposed to liability for similar practices. Furthermore, if customer concerns regarding data security increase, customers may be hesitant to provide us with the data necessary to provide our service effectively. This could generally limit the adoption of our product and the growth of our company.

Payment transactions processed on our platform may subject us to regulatory requirements and the rules of payment card networks, and other risks that could be costly and difficult to comply with or that could harm our business.

The payment card networks require us to comply with payment card network operating rules, including special operating rules that apply to us as a “payment service provider” that provides payment processing-related services to merchants and payment processors. The payment card networks set these network rules and have discretion to interpret them and change them. We are also required by our payment processors to comply with payment card network operating rules and we have agreed to reimburse our payment processors for any fines they are assessed by payment card networks as a result of any rule violations by us or our customers. Any changes to or interpretations of the network rules that are inconsistent with the way we and the payment processors and merchants currently operate may require us to make changes to our business that could be costly or difficult to implement. If we fail to make such changes or otherwise resolve the issue with the payment card networks, the networks could fine us, cancel or suspend our registration as a payment service provider, or prohibit us from processing payment cards, which would have an adverse effect on our business, financial condition, and operating results. In addition, violations of the network rules or any failure to maintain good standing with the payment card networks as a payment service provider could impact our ability to facilitate payment card transactions on our platform, increase our costs, or could otherwise harm our business. If we were unable to facilitate payment card transactions on our platform, or were limited in our ability to do so, our business would be materially and adversely affected.

If we fail to comply with the rules and regulations adopted by the payment card networks, we would be in breach of our contractual obligations to our payment processors, financial institutions, or partners. Such failure to comply may subject us to fines, penalties, damages, higher transaction fees and civil liability, and could eventually prevent us from processing or accepting payment cards or could lead to a loss of payment processor partners, even if there is no compromise of customer or consumer information. In the event that we are found to be in violation of any of these legal or regulatory requirements, our business, financial condition, and results of operations could be harmed.

We believe the licensing requirements of the Financial Crimes Enforcement Network and state agencies that regulate banks, money service businesses, money transmitters, and other providers of electronic commerce services do not apply to us. One or more governmental agencies may conclude that, under its statutes or regulations, we are engaged in activity requiring licensing or registration. In that event, we may be subject to monetary penalties, adverse publicity, and may be required to cease doing business with residents of those states until we obtain the requisite license or registration.

For the years ended December 31, 2018, 2019, and 2020, our 10 largest restaurant customers generated an aggregate of approximately 35%, 30%, and 21% of our revenue, respectively. Although these customers enter into long-term contracts with us, they may reduce or terminate their usage of our platform or decide not to renew their agreements with us.

We have in the past, and we may in the future, lose one or more of our largest restaurant customers. While no such losses have been material to date, in the event that any other of our largest restaurant customers do not continue to use our platform, use fewer of our modules, use our modules in a more limited capacity, or not at all, or if the volume of transactions processed on our platform declines, our business, results of operations, and financial condition could be adversely affected in the future.

Our business is highly competitive. We may not be able to compete successfully against current and future competitors.

We face competition in various aspects of our business and we expect such competition to intensify in the future, as existing and new competitors, including some of our current ecosystem partners, introduce new solutions or enhance existing solutions that are directly competitive with our modules. Our platform combines functionality from numerous product categories, and we may compete against providers in each of these categories including white-label digital ordering solution providers, restaurant-focused POS platforms, aggregators that provide direct digital ordering solutions, and custom software providers. Our potential new or existing competitors may be able to develop solutions that are better received by customers or may be able to respond more quickly and effectively than we can to new or changing opportunities, technologies, regulations, or customer requirements. Some ordering aggregators sell solutions that are competitive with our core platform and they may become more aggressive in their sales tactics, including by bundling competitive solutions with their delivery or aggregator products. If competitors, many of which are much better capitalized than we are, are successful in providing our customers with a more attractive solution or pricing, our business and results of operation may be harmed.

Competition may intensify as current or future competitors enter into business combinations or alliances or raise additional capital, or as established companies in other market segments or geographic markets expand into our market segments or geographic markets. For instance, current or future competitors could use strong or dominant positions in one or more markets to gain a competitive advantage against us in areas where we operate including by integrating additional or competing platforms or features into solutions they control, such as additional payment, rewards, or delivery platforms or features. In addition, certain customers may choose to partner with our competitors in a specific geographic market, or choose to engage exclusively with our competitors. Further, our current ecosystem partners could add features to their solutions, including point of sale functionality, limit or terminate the availability of their products on our platform, or directly compete with our solutions by expanding their product offerings. Current and future competitors may also choose to offer a different pricing model or to undercut prices in an effort to increase their market share. If we cannot compete successfully against current and future competitors, our business, results of operations, and financial condition could be negatively impacted.

Mergers of or other strategic transactions by our competitors, our customers, or our partners could weaken our competitive position or reduce our revenue.

If one or more of our competitors, aggregator partners, or DSPs were to consolidate or partner with another one of our competitors, aggregator partners, or DSPs, the change in landscape could adversely affect our ability to compete effectively. Our competitors may also establish or strengthen cooperative relationships with our third party ecosystem partners, thereby limiting our ability to promote our platform. In addition, we may lose customers that merge with or are acquired by companies using a competitor’s or an internally developed solution. Disruptions in our business caused by these events could adversely affect our revenue growth and results of operations.

If we fail to maintain a consistently high level of customer service or if we fail to manage our reputation, our brand, business, and financial results may be harmed.

We believe our focus on customer service and support is critical to onboarding new customers, retaining our existing customers and growing our business. As a result, we have invested heavily in the quality and training of our support team along with the tools they use to provide this service. If we are unable to maintain a consistently high level of customer service, we may lose existing customers or fail to increase revenues from existing customers. In addition, our ability to attract new customers is highly dependent on our reputation and on positive recommendations from our existing customers. Any failure to maintain a consistently high level of customer service, or a market perception that we do not maintain high-quality customer service, could adversely affect our reputation and the number of positive customer referrals that we receive.

We are dependent on the continued services and performance of our senior management and other key employees, the loss of any of whom could adversely affect our business, operating results, and financial condition. We may also engage the services of third parties who provide consulting services to support our business and the failure to identify and/or retain such third parties could adversely affect our business, operating results and financial condition.

Our future performance depends on the continued services and contributions of our senior management, including our Founder and Chief Executive Officer, Noah Glass, and other key employees to execute on our business plan, keep our platform stable and secure, and to identify and pursue new opportunities and platform innovations. The failure to properly manage succession plans or the loss of services of senior management or other key employees could significantly delay or prevent the achievement of our strategic objectives. From time to time, there may be changes in our senior management team resulting from the hiring or departure of executives, which could disrupt our business. We do not maintain key person life insurance policies on any of our employees with the exception of Noah Glass, our Founder and Chief Executive Officer. The loss of the services of one or more of our senior management or other key employees for any reason could adversely affect our business, financial condition, and operating results, and require significant amounts of time, training, and resources to find suitable replacements and integrate them within our business, and could affect our corporate culture.

We engage the services of third parties who provide us with certain consulting services to support our business. Any failure to identify and/or retain such third parties could adversely affect our business, operating results and financial condition and could require significant amounts of time and resources to find suitable replacements.

If we cannot maintain our corporate culture as we grow, our success and our business and competitive position may be harmed.

We believe that a key contributor to our success to date has been our corporate culture, which is based on transparency, innovation, and entrepreneurial spirit. Any failure to preserve our culture

could negatively affect our ability to retain and recruit personnel, which is critical to our growth, and to effectively focus on and pursue our corporate objectives. Our substantial anticipated headcount growth and our transition from a private company to a public company may make it difficult to maintain these important aspects of our culture. If we fail to maintain our corporate culture, or if we are unable to retain or hire key personnel, our business and competitive position may be harmed.

If we are unable to hire, retain, and motivate qualified personnel, our business may be adversely affected.

Our future success depends, in part, on our ability to continue to attract and retain highly skilled personnel. Competition for these personnel is intense, especially for engineers experienced in designing and developing SaaS or on-demand commerce applications, products managers and designers, and experienced enterprise sales professionals.

Further, our ability to increase our customer base, especially among restaurant brands, SMBs, potential international customers and other customers we may pursue, or to achieve broader market acceptance of our platform will depend, in part, on our ability to effectively organize, focus and train our sales, marketing and customer success personnel.

Our ability to convince restaurant brands to use our platform or adopt additional modules will depend, in part, on our ability to attract and retain sales personnel with experience selling to large enterprises. We believe that there is significant competition for experienced sales professionals with the skills and technical knowledge that we require. Our ability to achieve significant revenue growth in the future will depend, in part, on our ability to recruit, train, and retain a sufficient number of experienced sales professionals, particularly those with experience selling to restaurant brands or large enterprises. In addition, even if we are successful in hiring qualified sales personnel, new hires require significant training and experience before they achieve full productivity, particularly for sales efforts targeted at restaurant brands and new territories. Our recent hires and planned hires may not become as productive as quickly as we expect and we may be unable to hire or retain sufficient numbers of qualified individuals in the future in the markets where we do business.

In the past we have experienced, and we expect to continue to experience, difficulty in hiring employees with the appropriate qualifications, particularly if we significantly expand headcount in the near-term. Many of the companies with which we compete for experienced personnel have greater resources than we have. If we hire employees from competitors or other companies, their former employers may attempt to assert that these employees or we have breached their legal obligations, resulting in a diversion of our time and resources. In addition, prospective and existing employees often consider the value of the equity awards they receive in connection with their employment. If the perceived value of our equity awards declines, experiences significant volatility, or increases such that prospective employees believe there is limited upside to the value of our equity awards, it may adversely affect our ability to recruit and retain key employees. If we fail to attract new personnel or fail to retain and motivate our current personnel, our business and future growth prospects would be harmed.

Additionally, many of our employees currently work remotely, which has allowed us to reduce capital expenditures on office space, leases, and other related costs. If we increase the number of employees who do not work remotely, we could incur increased costs and expenses in order to provide the appropriate office infrastructure for these personnel.

We rely upon Amazon Web Services and other infrastructure to operate our platform, and any disruption of or interference with our use of these providers would adversely affect our business, results of operations, and financial condition.

We outsource substantial portions of our cloud infrastructure to Amazon Web Services, or AWS, Cloudflare, and other infrastructure providers. Our customers need to be able to access our platform at any time, without interruption or degradation of performance. Their failure to access our platform could make us liable for service credits or, in more severe cases, contractual breaches. We are, therefore, vulnerable to service interruptions at AWS, Cloudflare, and other infrastructure providers, which could decrease the number of transactions we process on our platform and negatively impact our revenue. We have experienced, and expect that in the future we may experience interruptions, delays and outages in service and availability due to a variety of factors, including infrastructure changes, human or software errors, website hosting disruptions, and capacity constraints including those related to the complexity and number of order permutations. Capacity constraints could be due to a number of potential causes, including technical failures, natural disasters, fraud, or security attacks. In addition, if an infrastructure provider’s security is compromised, or our modules or platform are unavailable or our customers or their consumers are unable to use our platform within a reasonable amount of time or at all, then our business, results of operations, and financial condition could be adversely affected. In some instances, we may not be able to identify the cause or causes of these performance problems within a period of time acceptable to our customers. It may become increasingly difficult to maintain and improve our platform performance, especially during peak usage times, as our platform become more complex and the usage of our platform increases. To the extent that we do not effectively address capacity constraints, either through AWS or alternative providers of cloud infrastructure, our business, results of operations, and financial condition may be adversely affected. In addition, any changes in service levels from AWS may adversely affect our ability to meet our customers’ requirements.

In addition, AWS provides us with service pursuant to an agreement that continues until terminated by either party. Pursuant to our agreement with AWS, we have committed to spending $3.4 million over the two-year period of November 2019 through November 2021. AWS may terminate the agreement by providing 90 days prior written notice, and it may, in some cases, terminate the agreement immediately for cause upon notice. Although we expect that we could receive similar services from other third parties, arranging alternative cloud infrastructure services could be costly, complicated, and time-consuming, and we could experience interruptions on our platform and in our ability to make our modules available to customers. Our agreement with AWS also includes a minimum spending commitment, part of which may be forfeited if we were to switch providers.

Any of the above circumstances or events may harm our reputation, cause customers to stop using our platform, impair our ability to increase revenue from existing customers, impair our ability to grow our customer base, subject us to financial penalties and liabilities under our service level agreements and otherwise harm our business, results of operations, and financial condition.

We may be unable to achieve or maintain data transmission capacity.

Our customers often draw significant numbers of consumers to their websites and mobile applications over short periods of time, including during key television events, marketing events, holidays, or during peak delivery times, which significantly increases the traffic on our servers and the volume of transactions processed on our platform. Our infrastructure or software may be unable to achieve or maintain capacity high enough to handle increased traffic or process transactions in a timely manner. Our failure to achieve or maintain high capacity could significantly reduce demand for our platform. Further, as we continue to attract larger restaurant customers, the volume of data stored and transactions processed on our platform will increase, especially if such customers draw significant numbers of consumers over short periods of time. In the future, we may be required to allocate

resources, including spending substantial amounts of money, to build, purchase, or lease additional infrastructure in order to handle the increased load. Our ability to deliver our platform also depends on the development and maintenance of internet and mobile application infrastructure by third parties, including by our cloud service provider. Such development and maintenance includes the maintenance of reliable networks with the necessary speed, data capacity, and bandwidth. If one of these third parties suffers from capacity constraints, our business may be adversely affected.

Our business and prospects would be harmed if changes to technologies used in our platform or new versions or upgrades of operating systems or applications adversely impact the process by which customers and consumers interface with our platform.

We believe that our platform’s functionality, simplicity, positive user experience, and ability to integrate with multiple technology partners in the restaurant ecosystem have helped us to expand and offer our platform to customers who may have limited technical personnel. In the future, providers of mobile, website, or other operating systems or applications could introduce new features, policies or rules that would make it difficult for customers to use our platform. In addition, mobile devices, websites, operating systems, or other applications could introduce new features, change existing operating systems, APIs, or other specifications such that they would be incompatible with our platform, or prevent delivery or aggregator partners from accessing customers who are using our platform. Any changes to technologies used in our platform, existing features that we rely on, or operating systems, APIs, or applications that make it difficult for customers to access our platform or consumers to access our customers’ ordering applications or websites, may make it more difficult for us to maintain or increase our revenue and could adversely impact our business and prospects.

The estimates of market opportunity and forecasts of market growth included in this prospectus may prove to be inaccurate, and even if the market in which we compete achieves the forecasted growth, our business could fail to grow at similar rates, if at all.

The estimates of market opportunity and forecasts of market growth included in this prospectus may prove to be inaccurate. Market opportunity estimates and growth forecasts included in this prospectus are subject to significant uncertainty and are based on assumptions and estimates that may not prove to be accurate, including the risks described herein. Even if the market in which we compete achieves the forecasted growth, our business could fail to grow at similar rates, if at all.

The variables that go into the calculation of our market opportunity are subject to change over time, and there is no guarantee that any particular number or percentage of addressable customers covered by our market opportunity estimates will purchase our platform at all or generate any particular level of revenue for us. Any expansion in our market depends on a number of factors, including the cost, performance, and perceived value associated with our platform and those of our competitors. Even if the market in which we compete meets the size estimates and growth forecasted in this prospectus, our business could fail to grow at similar rates, if at all. Additionally, ghost or dark kitchens could become more prominent, thereby reducing the total number of potential restaurant brand customers, and they may not use our platform or modules as much as restaurant brand customers. Our growth is subject to many additional factors, including our success in implementing our business strategy, which is subject to many risks and uncertainties. Accordingly, the forecasts of market growth included in this prospectus should not be taken as indicative of our future growth. For more information regarding our estimates of market opportunity and the forecasts of market growth included in this prospectus, see the section titled “Market, Industry, and Other Data.”

Our future success depends in part on our ability to drive the adoption of our platform by international and SMB customers, and to expand into new, on-demand commerce verticals.

Although we currently do not derive significant revenue from customer accounts located outside the United States, and do not derive any revenue from customer accounts outside of North America, the future success of our business may depend, in part, on our ability to expand our customer base worldwide. However, because we have limited experience with international customers or in selling our platform internationally, our business model may not be successful or have the same traction outside the United States. As a result, our investment in marketing our platform to these potential customers may not be successful. Additionally, our success may depend in part on our ability to increase our partnerships with SMB customers. These customers may have different requirements than our larger restaurant brand customers, and therefore may not find our platform to be as attractive as our existing customers. They may also be unwilling to agree to pay subscription or transactional fees for our platform or modules at the levels required to make these transaction profitable, or they may request additional functionality, training, customer service, or software integrations. We also believe that our platform can be applied to other on-demand commerce verticals beyond the restaurant industry, and plan to focus on sectors or opportunities that are also undergoing the digital transformations. If we are unable to increase the revenue that we derive from international and SMB restaurant customers, or deploy our platform in other on-demand commerce verticals, then our business, results of operations, and financial condition may be adversely affected.

We may be subject to claims by third parties of intellectual property infringement.

The software industry is characterized by the existence of a large number of patents, trademarks, copyrights, trade secrets, and other intellectual property rights, and frequent claims and related litigation regarding such intellectual property rights. Third parties have in the past asserted, and may in the future assert, that our platform, modules, technology, methods or practices infringe, misappropriate, or otherwise violate their intellectual property or other proprietary rights. Such claims may be made by our competitors seeking to obtain a competitive advantage or by other parties. Additionally, non-practicing entities purchasing intellectual property assets for the purpose of making claims of infringement may attempt to extract settlements from us. The risk of claims may increase as the number of modules that we offer and competitors in our market increases and overlaps occur. In addition, to the extent that we gain greater visibility and market exposure, we face a higher risk of being the subject of intellectual property infringement claims.

Any such claims, regardless of merit, that result in litigation could result in substantial expenses, divert the attention of management, cause significant delays in introducing new or enhanced services or technology, materially disrupt the conduct of our business and have a material and adverse effect on our brand, business, financial condition, and results of operations. Although we do not believe that our proprietary technology, processes, and methods have been patented by any third party, it is possible that patents have been issued to third parties that cover all or a portion of our business. As a consequence of any patent or other intellectual property claims, we could be required to pay substantial damages, develop non-infringing technology, enter into royalty-bearing licensing agreements, stop selling or marketing some or all of our modules, or re-brand our modules. We may also be obligated to indemnify our customers against intellectual property claims, and we may have to pay substantial settlement costs, including royalty payments, in connection with any such claim or litigation and to obtain licenses, or modify applications, which could be costly. If it appears necessary, we may seek to secure license rights to intellectual property that we are alleged to infringe at a significant cost, potentially even if we believe such claims to be without merit. If required licenses cannot be obtained, or if existing licenses are not renewed, litigation could result. Litigation is inherently uncertain and can cause us to expend significant money, time and attention to it, even if we are ultimately successful. Any adverse decision could result in a loss of our proprietary rights, subject us to

significant liabilities, require us to seek licenses for alternative technologies from third parties, prevent us from offering all or a portion of our modules and otherwise negatively affect our business and operating results.

We could incur substantial costs in protecting or defending our intellectual property rights, and any failure to protect our intellectual property or prevent third parties from making unauthorized use of our technology could adversely affect our business, results of operations, and financial condition.

Our success depends, in part, on our ability to protect our brand and the proprietary methods and technologies that we develop under the intellectual property laws of the United States and, potentially in the future, foreign jurisdictions so that we can prevent others from using our inventions and proprietary information. Although we own one registered trademark in the United States as of December 31, 2020, we hold no issued patents and therefore would not be entitled to exert patents to exclude or prevent our competitors from using our proprietary technology, methods, and processes to the extent independently developed by our competitors.

We rely primarily on trade secret laws and confidentiality agreements with our business partners, employees, consultants, advisors, customers, and other current or prospective partners in our efforts to protect our proprietary technology, confidential information, processes, methods, and intellectual property. These confidentiality agreements may not effectively prevent disclosure of our confidential information or the unauthorized use of our technology, and it may be possible for unauthorized parties to copy our software or other proprietary technology or information, or to develop similar software independently without our having an adequate remedy for unauthorized use or disclosure of our confidential information. In addition, others may independently discover our trade secrets and proprietary information, and in these cases, we would not be able to assert any trade secret rights against those parties. Costly and time-consuming litigation could be necessary to enforce and determine the scope of our proprietary rights, and failure to obtain or maintain trade secret protection could adversely affect our competitive business position.

In addition, the laws of some countries do not protect intellectual property and other proprietary rights to the same extent as the laws of the United States. To the extent we expand our international activities, our exposure to unauthorized copying, transfer and use of our proprietary technology or information may increase.

We cannot be certain that our means of protecting our intellectual property and proprietary rights will be adequate or that our competitors will not independently develop similar technology. If we fail to meaningfully protect our intellectual property and proprietary rights, our business, results of operations, and financial condition could be adversely affected.

Any future litigation against us could be costly and time-consuming to defend.

We may become subject to legal proceedings and claims that arise in the ordinary course of business, such as claims brought by our customers, our partners, or third parties in connection with commercial disputes or our technology or employment claims made by our current or former employees. Litigation might result in substantial costs and may divert management’s attention and resources, which might seriously harm our business, financial condition, and results of operations. Insurance might not cover such claims, might not provide sufficient payments to cover all the costs to resolve one or more such claims, and might not continue to be available on terms acceptable to us. A claim brought against us that is uninsured or underinsured could result in unanticipated costs, potentially harming our business, financial position, and results of operations.

We use open source software in our platform, which could negatively affect our ability to sell our services or subject us to litigation or other actions.

We rely on open source software in our proprietary platforms and we expect to continue to rely on open source software in our platform in the future. The terms of certain open source licenses to which we are subject have not been interpreted by U.S. or foreign courts, and there is a risk that these licenses could be construed in a manner that could impose unanticipated conditions or restrictions on our ability to commercialize our platforms. Certain open source projects also include other open source software and there is a risk that those dependent open source libraries may be subject to inconsistent licensing terms. This could create further uncertainties as to the governing terms for the open source software. Moreover, we cannot ensure that we have not incorporated and are currently relying on additional open source software in our platform in a manner that is inconsistent with the terms of the applicable license or our current policies and procedures. Although we employ open source software license screening measures, if we were to combine our proprietary software platform with open source software in a certain manner we could, under certain open source licenses, be required to release the source code of our proprietary platform, which could allow our customers and competitors to freely use such software solutions without compensation to us. Additionally, we may from time to time face claims from third parties: claiming ownership of, or demanding release of, the open source software or derivative works that we developed using such software, which could include our proprietary source code, or otherwise seeking to enforce the terms of the applicable open source license. These claims could result in litigation and we could be required to incur significant legal expenses defending against such allegations and could be subject to significant damages, required to comply with onerous conditions or restrictions, required to make our proprietary source code for our platform and any modifications and derivative works developed using such open source software generally available at no cost, purchase a costly license or cease offering the implicated services unless and until we can re-engineer them to avoid use of the open source software in dispute, which could disrupt the business dependent on the affected platforms. This re-engineering process could require significant additional research and development resources, and we may not be able to complete it successfully. In addition to risks related to license requirements, use of certain open source software can lead to greater risks than use of third-party commercial software, as open source licensors generally do not provide warranties or controls on the origin of software. From time to time, there have been claims challenging the ownership rights in open source software against companies that incorporate it into their products and the licensors of such open source software provide no warranties or indemnities with respect to such claims. As a result, we and our customers could be subject to lawsuits by parties claiming ownership of what we believe to be open source software. Some open source projects have known vulnerabilities and architectural instabilities and are provided on an “as-is” basis which, if not properly addressed, could negatively affect the performance of our platform. Any of these risks could be difficult to eliminate or manage, and if not addressed, could have a negative effect on our business, results of operations, and financial condition.

Our brand is integral to our success. If we fail to effectively maintain, promote, and enhance our brand, our business and competitive advantage may be harmed.

We believe that maintaining, promoting, and enhancing the Olo brand is critical to expanding our business. Maintaining and enhancing our brand will depend largely on our ability to continue to provide high-quality, well-designed, useful, reliable, and innovative modules, which we may not do successfully in the future.

Errors, defects, security incidents, disruptions, or other performance problems with our platform, including with third-party applications, services, or partners, may harm our reputation and brand. We may introduce new modules or terms of service that our customers or consumers do not like, which may negatively affect our brand. Additionally, if our customers or consumers have a

negative experience using our modules or third-party solutions integrated with our platform, such an experience may affect our brand, especially as and if we continue to attract multi-location restaurant customers to our platform.

We receive significant media coverage in the United States, especially in the restaurant trade press. Any unfavorable media coverage or negative publicity about our company, for example, the quality and reliability of our platform, our privacy and security practices or the loss or misuse of our customer data or consumers’ personal information, our platform changes, litigation, or regulatory activity, or regarding the actions of our partners or our customers, could seriously harm our reputation. Such negative publicity could also adversely affect the size, demographics, engagement, and loyalty of our customers, and result in decreased revenue, which could seriously harm our business.

We believe that the importance of brand recognition will increase as competition in our market increases. In addition to our ability to provide reliable and useful modules at competitive prices, successful promotion of our brand will depend on the effectiveness of our marketing efforts. While we primarily market our platform through direct sales efforts, our platform is also marketed through a number of free traffic sources, including customer referrals and word-of-mouth. Our efforts to market our brand have involved significant expenses, which we intend to increase, and as our market becomes increasingly competitive, these marketing initiatives may become increasingly difficult and expensive. Our marketing spend may not yield increased revenue, and even if it does, any increased revenue may not offset the expenses we incur in building and maintaining our brand.

Activities of customers or partners or the content of our customers’ websites or mobile applications could damage our brand, subject us to liability, and harm our business and financial results.

Our terms of service and acceptable use policy prohibit our customers and partners from using our platform to engage in illegal or otherwise prohibited activities and our terms of service and acceptable use policy permit us to terminate a customer’s or partner’s account if we become aware of such use. Customers or partners may nonetheless engage in prohibited or illegal activities including in connection with their use of our products and services, which could subject us to civil or governmental liability or enforcement. We do not proactively monitor or review the appropriateness of the content of our customers’ websites or mobile applications and we do not have control over such content or our customers’ activities. The safeguards we have in place may not be sufficient for us to avoid liability, including through litigation, or avoid harm to our brand, especially if such inappropriate or illegal use is high profile, which could adversely affect our business and financial results. In addition, if we expand internationally, we may be subject to similar actions in foreign jurisdictions alleging that customers’ store content violates laws in foreign jurisdictions.

Unfavorable conditions in our industry or the global economy, or reductions in digital ordering transaction volume or technology spending, could adversely impact the health of our customers and limit our ability to grow our business and negatively affect our results of operations.

Our results of operations may vary based on the impact of changes in our industry or the global economy on us or our customers and potential customers. Negative conditions in the general economy both in the United States and abroad, including conditions resulting from changes in gross domestic product growth, decreases in restaurant and digital ordering spending, financial and credit market fluctuations, international trade relations, political turmoil, natural catastrophes, epidemics, warfare and terrorist attacks on the United States, Canada, or elsewhere, could cause a reduction in customer locations and digital ordering transaction volumes, a decrease in business investments, including spending on technology, business interruptions resulting from a destruction of our headquarters, and negatively affect the growth of our business.

More specifically, we are heavily reliant on the restaurant, food, and delivery industries and any downturn or fundamental shift in those industries could significantly impact our results. Reports, whether true or not, of foodborne illnesses and injuries caused by food tampering have severely injured the reputations of participants in the food business and could do so in the future. The potential for acts of terrorism on the United States’ food supply also exists and, if such an event occurs, it could harm our business and results of operations. In addition, reports of foodborne illnesses or food tampering could, as a result of negative publicity about the restaurant industry, harm our business and results of operations.

In addition, we contract directly with our DSPs to provide delivery services to our restaurant customers through Dispatch and then invoice our restaurant customers for the cost associated with DSP services. As a result, we may be required to make payments to DSPs prior to receiving payment from our restaurant customers for DSP transactions, which could reduce the amount of cash and cash equivalents we have available for the period between payment to the DSPs and receipt of payment from the restaurant customer. In addition, if any of our restaurant customers were to go out of business, become insolvent, or otherwise be unable to pay for DSP transactions, we would be responsible for making payments to the DSPs that our customers otherwise would have made, which could adversely affect our business.

Lastly, the increased pace of consolidation in certain industries may result in reduced overall spending on our platform and modules. We cannot predict the timing, strength, or duration of any economic slowdown, instability, or recovery, generally or within any particular industry.

Increases in food, labor, and occupancy costs could adversely affect results of operations.

Our financial success is dependent, in part, on the ability of our restaurant customers to increase digital ordering and maintain profitability. These customers may experience increased operating costs, including as a result of changes to food, labor, occupancy, insurance, and supply costs, as well as costs of safety equipment related to the COVID-19 pandemic, and they may be unable to recover these costs through increased menu prices. Various factors beyond our control, including government regulations relating to independent contractor classifications and minimum wage increases, may affect the total cost of digital food orders to consumers. If our current or future customers are unable to maintain or increase digital orders, or maintain profitability, our business, financial condition, and results of operations could be harmed.

We may make acquisitions or enter into joint ventures or other partnerships, which could divert management’s attention, result in operating difficulties and dilution to our shareholders and otherwise disrupt our operations and adversely affect our business, operating results, or financial position.

From time to time, we may evaluate potential strategic acquisition, joint venture, or partnership opportunities. Any transactions that we enter into could be material to our financial condition and results of operations. The process of acquiring and integrating another company or technology could create unforeseen operating difficulties and expenditures. Acquisitions and other partnerships involve a number of risks, such as:

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diversion of management time and focus from operating our business;

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use of resources that are needed in other areas of our business;

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in the case of an acquisition, implementation or remediation of controls, procedures, and policies of the acquired company;

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in the case of an acquisition, difficulty integrating the accounting systems and operations of the acquired company and maintaining the quality and security standards consistent with our brand, including potential risks to our corporate culture;

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coordination of product, engineering, and selling and marketing functions, including difficulties and additional expenses associated with supporting legacy services and platform and hosting infrastructure of the acquired company and difficulty converting the customers of the acquired company onto our platform and contract terms, including disparities in the revenues, licensing, support, or professional services model of the acquired company;

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in the case of an acquisition, retention and integration of employees from the acquired company;

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unforeseen costs or liabilities, including potential legal liability for violations of applicable law or industry rules and regulations arising from prior or ongoing acts or omissions by the acquired company or partner that are not discovered by due diligence during the acquisition or partnership process;

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adverse effects to our existing business relationships with partners and customers as a result of the acquisition or joint venture;

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the possibility of adverse tax consequences;

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litigation or other claims arising in connection with the acquired company or partner; and

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in the case of foreign acquisitions, the need to integrate operations across different cultures and languages and to address the particular economic, currency, political, and regulatory risks associated with specific countries.

In addition, a significant portion of the purchase price of companies we acquire may be allocated to acquired goodwill and other intangible assets, which must be assessed for impairment at least annually. In the future, if our acquisitions do not yield expected returns, we may be required to take charges to our operating results based on this impairment assessment process, which could adversely affect our results of operations.

Acquisitions and investments may also result in dilutive issuances of equity securities, which could adversely affect our share price, or result in issuances of securities with superior rights and preferences to our Class A common stock, or the incurrence of debt with restrictive covenants that limit our future uses of capital in pursuit of business opportunities.

We may not be able to identify acquisition or investment opportunities that meet our strategic objectives, or to the extent such opportunities are identified, we may not be able to negotiate terms with respect to the acquisition or investment that are acceptable to us. At this time, we have made no commitments or agreements with respect to any such material transactions.

We rely on software licensed from, and services rendered by, third parties in order to provide our modules and run our business.

We rely on software licensed from, and services rendered by, third parties in order to provide our modules and run our business. Third-party software and services may not continue to be available on commercially reasonable terms, or at all. Any loss of the right to use, or any failures of, third-party

software or services could result in delays in our ability to provide our modules or run our business until equivalent software or services are developed by us or, if available, identified, obtained and integrated, which could be costly and time-consuming and may not result in an equivalent module, any of which could cause an adverse effect on our business and operating results. Further, customers could assert claims against us in connection with such service disruption or cease conducting business with us altogether. Even if not successful, a claim brought against us by any of our customers would likely be time-consuming and costly to defend and could seriously damage our reputation and brand, making it harder for us to sell our modules.

Our pricing decisions and pricing models may adversely affect our ability to attract new customers and retain existing customers.

In 2015 and 2017, we launched our Dispatch and Rails modules, respectively, and in 2016 we began to offer a transactional-based pricing model for our Ordering module. As a result, we have limited experience determining the optimal prices for our modules and may be unable to convert existing customers from a flat-fee model to our transactional based pricing models. We have changed our pricing model from time to time and expect to do so in the future or sell new modules. However, given our limited experience with selling new modules, it may turn out that the new pricing models, or the pricing for any other modules we may develop, is not optimal, which may result in our modules not being profitable or not gaining market share. As competitors introduce new solutions that compete with ours, especially in the digital ordering and delivery spaces where we face significant competition, we may be unable to attract new customers at the same price or based on the same pricing models that we have used historically. Pricing decisions and pricing models may also impact the mix of adoption among our modules and negatively impact our overall revenue. Moreover, restaurant brands may be sensitive to price increases or to the prices offered by competitors. As a result, in the future we may be required to reduce our prices, which could adversely affect our revenue, profitability, financial position, and cash flows.

Provisions of our financial instruments may restrict our ability to pursue our business strategies.

We currently have a credit facility, which requires us, and any debt instruments we may enter into in the future may require us, to comply with various covenants that limit our ability to, among other things:

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dispose of or encumber assets;

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complete mergers or acquisitions;

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incur additional indebtedness;

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pay dividends or make other distributions to holders of our shares;

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make specified investments;

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change certain key management personnel;

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engage in any business other than the businesses we currently engage in; and

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engage in transactions with affiliates.

These restrictions could inhibit our ability to pursue our business strategies. If we default under our credit facility, and such event of default is not cured or waived, the lender could terminate

commitments to lend and cause all amounts outstanding with respect to the debt to be due and payable immediately. Our assets and cash flow may not be sufficient to fully repay borrowings under our outstanding debt instruments if some or all of these instruments are accelerated upon a default.

We may also incur additional indebtedness in the future. The instruments governing such indebtedness could contain provisions that are as, or more, restrictive than our existing debt instruments. If we are unable to repay, refinance, or restructure our indebtedness when payment is due, the lenders could proceed against the collateral granted to them to secure such indebtedness, as applicable, or force us into bankruptcy or liquidation.

Changes in our effective tax rate or tax liability may have an adverse effect on our results of operations.

Our effective tax rate could increase due to several factors, including:

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changes in the relative amounts of income before taxes in the various jurisdictions in which we operate that have differing statutory tax rates;

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changes in tax laws, tax treaties, and regulations or the interpretation of them, including the Tax Cuts and Jobs Act;

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changes to our assessment about our ability to realize our deferred tax assets that are based on estimates of our future results, the prudence and feasibility of possible tax planning strategies, and the economic and political environments in which we do business;

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the outcome of current and future tax audits, examinations, or administrative appeals; and

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limitations or adverse findings regarding our ability to do business in some jurisdictions.

Any of these developments could adversely affect our results of operations.

We could be required to collect additional sales taxes or be subject to other tax liabilities that may increase the costs our customers would have to pay for our modules and adversely affect our results of operations.

An increasing number of states have considered or adopted laws that attempt to impose tax collection obligations on out-of-state companies. Additionally, the Supreme Court of the United States recently ruled in South Dakota v. Wayfair, Inc. et al, or Wayfair, that online sellers can be required to collect sales and use tax despite not having a physical presence in the buyer’s state. In response to Wayfair, or otherwise, states or local governments may adopt, or begin to enforce, laws requiring us to calculate, collect, and remit taxes on sales in their jurisdictions. A successful assertion by one or more states requiring us to collect taxes where we presently do not do so, or to collect more taxes in a jurisdiction in which we currently do collect some taxes, could result in substantial tax liabilities, including taxes on past sales, as well as penalties and interest. The imposition by state governments or local governments of sales tax collection obligations on out-of-state sellers could also create additional administrative burdens for us, put us at a competitive disadvantage if they do not impose similar obligations on our competitors, and decrease our future sales, which could have a material adverse effect on our business and results of operations.

Our ability to use our net operating losses to offset future taxable income may be subject to certain limitations.

As of December 31, 2019 and 2020, we had approximately $46.8 million and $31.7 million of federal net operating losses, or NOLs. Approximately $12.6 million of the federal NOLs will expire at

various dates beginning in 2035 through 2037 if not utilized, while the remaining amount will have an indefinite life. As of December 31, 2019 and 2020, we had approximately $38.0 million and $26.2 million of state NOLs. Of the state NOLs, some may follow the Tax Cut and Jobs Act and are indefinite life and most are definite life with various expiration dates beginning in 2025 through 2039. The federal research and development tax credits were approximately $1.3 million as of each of December 31, 2019 and 2020, respectively. The federal research credits will begin to expire in 2026. In general, under Section 382 of the Internal Revenue Code of 1986, as amended, or the Code, a corporation that undergoes an “ownership change,” as defined under Section 382 of the Code and applicable Treasury Regulations, is subject to limitations on its ability to utilize its pre-change NOLs to offset future taxable income. We may experience a future ownership change, including, potentially, in connection with this offering, under Section 382 of the Code that could affect our ability to utilize the NOLs to offset our income. Furthermore, our ability to utilize NOLs of companies that we have acquired or may acquire in the future may be subject to limitations. There is also a risk that due to regulatory changes, such as suspensions on the use of NOLs or other unforeseen reasons, our existing NOLs could expire or otherwise be unavailable to reduce future income tax liabilities, including for state tax purposes. For these reasons, we may not be able to utilize a material portion of the NOLs reflected on our balance sheet, even if we attain profitability, which could potentially result in increased future tax liability to us and could adversely affect our operating results and financial condition.

Our reported financial results may be adversely affected by changes in accounting principles generally accepted in the United States.

U.S. generally accepted accounting principles, or GAAP, are subject to interpretation by the Financial Accounting Standards Board, or FASB, the Securities and Exchange Commission, or SEC, and various bodies formed to promulgate and interpret appropriate accounting principles. A change in these principles or interpretations could have a significant effect on our reported results of operations and could affect the reporting of transactions already completed before the announcement of a change.

If our estimates or judgments relating to our critical accounting policies prove to be incorrect, our results of operations could be adversely affected.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in our consolidated financial statements and accompanying notes appearing elsewhere in this prospectus. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, as provided in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates.” The results of these estimates form the basis for making judgments about the carrying values of assets, liabilities and equity, and the amount of revenue and expenses that are not readily apparent from other sources. Significant estimates and judgments involve revenue recognition, and the valuation of our stock-based compensation awards, including the determination of fair value of our Class A common stock, among others. Our results of operations may be adversely affected if our assumptions change or if actual circumstances differ from those in our assumptions, which could cause our results of operations to fall below the expectations of securities analysts and investors, resulting in a decline in the market price of our Class A common stock.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of a

company’s annual or interim financial statements will not be prevented or detected on a timely basis. We identified a material weakness in our internal control over our financial statement close process specifically related to insufficient written policies and procedures for accounting and financial reporting and the lack of properly designed controls related to accounting for revenue recognition in accordance with standards under Accounting Standards Codification (“ASC”) Topic 606 (“ASC 606”), Revenue from Contracts with Customers. These control deficiencies could result in a misstatement of our accounts or disclosures that would result in a material misstatement of our financial results that would not be prevented or detected, and accordingly, we determined that these control deficiencies constitute a material weakness.

We are working to remediate this material weakness through the development and implementation of processes and controls over the financial reporting process. Specifically, we have:

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in the process of implementing a new revenue recognition system which will significantly reduce the number of manual controls currently required to recognize revenue;

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engaged external resources to assist with remediation efforts and internal control execution as well as to provide additional training to existing personnel, including the development of written policies and procedures in certain areas; and

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continued to hire additional internal resources with appropriate knowledge and expertise to effectively operate financial reporting processes and internal controls.

While we have designed and are implementing new controls to remediate this material weakness, they have not operated for a sufficient period of time to demonstrate the material weakness has been remediated. We cannot assure you that the measures we have taken to date will be sufficient to remediate the material weakness we identified or avoid the identification of additional material weaknesses in the future. If the steps we take do not remediate the material weakness in a timely manner, there could continue to be a reasonable possibility that this control deficiency or others could result in a material misstatement of our annual or interim financial statements that would not be prevented or detected on a timely basis.

Furthermore, investors’ perceptions that our internal controls are inadequate or that we are unable to produce accurate financial statements on a timely basis may harm our stock price.

As a result of being a public company, we are obligated to develop and maintain proper and effective internal controls over financial reporting, and any failure to maintain the adequacy of these internal controls may adversely affect investor confidence in our company and, as a result, the value of our Class A common stock.

We are required, pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, or Section 404, to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting for the fiscal year ending December 31, 2021. This assessment will need to include disclosure of any material weaknesses identified by our management in our internal control over financial reporting. In addition, our independent registered public accounting firm will be required to attest to the effectiveness of our internal control over financial reporting in our first annual report required to be filed with the SEC following the date we are no longer an “emerging growth company” or after we are no longer a “smaller reporting company.” We have recently commenced the costly and challenging process of compiling the system and processing documentation necessary to perform the evaluation needed to comply with Section 404, but we may not be able to complete our evaluation, testing, and any required remediation in a timely fashion once initiated. Our compliance with Section 404 will require that we incur substantial expenses and expend significant management efforts. We currently do not have an internal audit group, and we will need to hire additional accounting and

financial staff with appropriate public company experience and technical accounting knowledge and compile the system and process documentation necessary to perform the evaluation needed to comply with Section 404.

During the evaluation and testing process of our internal controls, if we identify one or more material weaknesses in our internal control over financial reporting, we will be unable to certify that our internal control over financial reporting is effective. We cannot assure you that there will not be material weaknesses or significant deficiencies in our internal control over financial reporting in the future. As we have had a material weakness in the past, any failure to maintain internal control over financial reporting could severely inhibit our ability to accurately report our financial condition or results of operations. If we are unable to conclude that our internal control over financial reporting is effective, or if our independent registered public accounting firm determines we have a material weakness or significant deficiency in our internal control over financial reporting, we could lose investor confidence in the accuracy and completeness of our financial reports, the market price of our Class A common stock could decline, and we could be subject to sanctions or investigations by the SEC or other regulatory authorities. Failure to remedy any material weakness in our internal control over financial reporting, or to implement or maintain other effective control systems required of public companies, could also restrict our future access to the capital markets.

We may require additional capital, which additional financing may result in restrictions on our operations or substantial dilution to our stockholders, to support the growth of our business, and this capital might not be available on acceptable terms, if at all.

We have funded our operations since inception primarily through equity financings, borrowings under our credit facility, and sales of our platform and core modules. We cannot be certain when or if our operations will generate sufficient cash to fully fund our ongoing operations or the growth of our business. We intend to continue to make investments to support our business, which may require us to engage in equity or debt financings to secure additional funds. Additional financing may not be available on terms favorable to us, if at all. In particular, the current COVID-19 pandemic has caused disruption in the global financial markets, which may reduce our ability to access capital and negatively affect our liquidity in the future. If adequate funds are not available on acceptable terms, we may be unable to invest in future growth opportunities, which could harm our business, operating results, and financial condition. If we incur additional debt, the debt holders would have rights senior to holders of common stock to make claims on our assets, and the terms of any debt could restrict our operations, including our ability to pay dividends on our Class A common stock. Furthermore, if we issue additional equity securities, stockholders will experience dilution, and the new equity securities could have rights senior to those of our Class A common stock. Because our decision to issue securities in the future will depend on numerous considerations, including factors beyond our control, we cannot predict or estimate the amount, timing, or nature of any future issuances of debt or equity securities. As a result, our stockholders bear the risk of future issuances of debt or equity securities reducing the value of our Class A common stock and diluting their interests.

We recognize revenue from customer subscriptions over the term of the subscription agreement and, therefore, a significant downturn in our business may not be immediately reflected in our operating results.

We recognize revenue from subscription agreements monthly over the terms of these agreements, which is typically three years or longer. As a result, a significant portion of the revenue we report in each quarter is generated from customer agreements entered into during previous periods. Consequently, a decline in new subscriptions or renewed subscriptions in any one quarter may not impact our financial performance in that quarter, but might negatively affect our revenue in future quarters. If a number of contracts expire and are not renewed in the same quarter, our revenue may

decline significantly in that quarter and subsequent quarters. Accordingly, the effect of significant declines in sales of our platform or modules may not be reflected in our short-term results of operations.

We experience significant seasonal fluctuations in our financial results, which could cause our stock price to fluctuate.

Our business is highly dependent on the behavior patterns of restaurant brands and consumers. We may experience a relative increase or decrease in the use of our Ordering, Rails, and Dispatch modules depending on the season and customer type, which may be difficult to assess. Additionally, our revenue can also be impacted by sales cycles and seasonality, which vary depending on customer type. Finally, even after we have executed a contract with a customer, deployment of our platform and the related modules is typically lower than average in the fourth quarter. As a result, seasonality will likely cause fluctuations in our financial results on a quarterly basis, and other seasonality trends may develop may similarly impact our results of operation.

Risks Related to this Offering and Ownership of Our Class A Common Stock

Our stock price may be volatile, and the value of our Class A common stock may decline.

The market price of our Class A common stock may be highly volatile and may fluctuate or decline substantially as a result of a variety of factors, some of which are beyond our control, including:

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actual or anticipated fluctuations in our financial condition or results of operations;

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variance in our financial performance from expectations of securities analysts;

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changes in the pricing of our modules;

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changes in our projected operating and financial results;

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changes in laws or regulations applicable to our platform and modules;

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announcements by us or our competitors of significant business developments, acquisitions, or new offerings;

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our involvement in litigation;

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future sales of our Class A common stock by us or our stockholders, as well as the anticipation of lock-up releases;

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significant data breaches, disruptions to or other incidents involving our software;

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changes in senior management or key personnel;

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the trading volume of our Class A common stock;

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changes in the anticipated future size and growth rate of our markets; and

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general economic and market conditions.

Broad market and industry fluctuations, as well as general economic, political, regulatory, and market conditions, may also negatively impact the market price of our Class A common stock. In

addition, technology stocks have historically experienced high levels of volatility. In the past, companies that have experienced volatility in the market price of their securities have been subject to securities class action litigation. We may be the target of this type of litigation in the future, which could result in substantial expenses and divert our management’s attention.

Our Class B common stock has ten votes per share, whereas our Class A common stock, which is the stock we are offering in this offering, has one vote per share. Our existing stockholders, all of which hold shares of Class B common stock, will collectively own shares representing approximately 99% of the voting power of our outstanding capital stock immediately following the closing of this offering, based on the number of shares outstanding as of December 31, 2020. Our directors and executive officers and their affiliates will collectively beneficially own, in the aggregate, shares representing approximately 67.6% of the voting power of our outstanding capital stock immediately following the closing of this offering, based on the number of shares outstanding as of December 31, 2020. As a result, the holders of our Class B common stock will be able to exercise considerable influence over matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions, such as a merger or other sale of our company or our assets, even if their stock holdings represent less than a majority of the outstanding shares of our capital stock. This concentration of ownership will limit the ability of other stockholders to influence corporate matters and may cause us to make strategic decisions that could involve risks to you or that may not be aligned with your interests. This control may adversely affect the market price of our Class A common stock.

Further, future transfers by holders of our Class B common stock will generally result in those shares converting into shares of our Class A common stock, subject to limited exceptions, such as certain transfers effected for tax or estate planning purposes. The conversion of shares of our Class B common stock into shares of our Class A common stock will have the effect, over time, of increasing the relative voting power of those holders of Class B common stock who retain their shares in the long term.

In addition, while we do not expect to issue any additional shares of Class B common stock following the listing of our Class A common stock on the NYSE, any future issuances of Class B common stock would be dilutive to holders of Class A common stock. Such issuances would also reduce the voting power of our Class A common stock as compared to Class B common stock and could further concentrate the voting power of holders of our Class B common stock relative to holders of our Class A common stock.

We cannot predict the impact our dual-class structure may have on the market price of our Class A common stock.

We cannot predict whether our dual-class structure, combined with the concentrated control of our stockholders who held our capital stock prior to the completion of our offering, including our executive officers, employees, and directors and their affiliates, will result in a lower or more volatile market price of our Class A common stock or in adverse publicity or other adverse consequences. For example, certain index providers have announced restrictions on including companies with multiple class share structures in certain of their indices. In July 2017, FTSE Russell and Standard & Poor’s

announced that they would cease to allow most newly public companies utilizing dual or multi-class capital structures to be included in their indices. Under the announced policies, our dual class capital structure would make us ineligible for inclusion in any of these indices. Given the sustained flow of investment funds into passive strategies that seek to track certain indexes, exclusion from stock indexes would likely preclude investment by many of these funds and could make our Class A common stock less attractive to other investors. As a result, the market price of our Class A common stock could be adversely affected.

No public market for our Class A common stock currently exists, and an active public trading market may not develop or be sustained following this offering.

No public market for our Class A common stock currently exists. An active public trading market for our Class A common stock may not develop following the completion of this offering or, if developed, it may not be sustained. The lack of an active market may impair your ability to sell your shares at the time you wish to sell them or at a price that you consider reasonable. The lack of an active market may also reduce the fair value of your shares. An inactive market may also impair our ability to raise capital to continue to fund operations by selling shares and may impair our ability to acquire other companies or technologies by using our shares as consideration.

We will have broad discretion in the use of the net proceeds to us from this offering and may not use them effectively, which could affect our results of operations and cause our stock price to decline.

We will have broad discretion in the application of the net proceeds to us from this offering, including for any of the purposes described in the section titled “Use of Proceeds,” and you will not have the opportunity as part of your investment decision to assess whether the net proceeds are being used appropriately. Because of the number and variability of factors that will determine our use of the net proceeds from this offering, our ultimate use may vary substantially from our currently intended use. Investors will need to rely upon the judgment of our management with respect to the use of proceeds. Pending use, we may invest the net proceeds from this offering in short-term, investment-grade, interest-bearing securities, such as money market accounts, certificates of deposit, commercial paper, and guaranteed obligations of the U.S. government that may not generate a high yield for our stockholders. If we do not use the net proceeds that we receive in this offering effectively, our business, financial condition, results of operations, and prospects could be harmed, and the market price of our Class A common stock could decline.

Future sales of our Class A common stock in the public market following this offering could cause the market price of our Class A common stock to decline.

Sales of a substantial number of shares of our Class A common stock in the public market following the completion of this offering, or the perception that these sales might occur, could depress the market price of our Class A common stock and could impair our ability to raise capital through the sale of additional equity securities. Many of our existing equity holders have substantial unrecognized gains on the value of the equity they hold based upon the price of this offering, and therefore they may take steps to sell their shares or otherwise secure the unrecognized gains on those shares. We are unable to predict the timing of or the effect that such sales may have on the prevailing market price of our Class A common stock.

All of our directors and officers and the holders of substantially all of our Class B common stock and securities convertible into our Class B common stock are subject to lock-up agreements that restrict their ability to transfer shares of our capital stock for 175 days from the date of this prospectus, subject to certain exceptions, provided that, up to 20% of the common stock (including common stock

issuable upon exercise of vested options) held by employees and former employees (but excluding current executive officers and directors and certain members of management) may be sold beginning at the commencement of trading on the first trading day on which our common stock is listed on the NYSE and ending on the last day of the quarter following the most recent quarter for which quarterly or annual, as applicable, financial statements are included in this prospectus. Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC may, in their sole discretion, permit our stockholders who are subject to these lock-up agreements to sell shares prior to the expiration of the lock-up agreements, subject to applicable notice requirements. If not earlier released, all of the shares of Class A common stock sold in this offering will become eligible for sale upon expiration of the 175-day lock-up period, except for any shares held by our affiliates as defined in Rule 144 under the Securities Act of 1933, as amended, or the Securities Act.

In addition, there were 39,161,438 shares of Class B common stock issuable upon the exercise of options outstanding as of December 31, 2020. We intend to register all of the shares of Class A common stock and Class B common stock issuable upon exercise of outstanding options or other equity incentives we may grant in the future, for public resale under the Securities Act. The shares of Class A common stock will become eligible for sale in the public market to the extent such options are exercised, subject to the lock-up agreements described above and compliance with applicable securities laws.

Further, based on shares outstanding as of December 31, 2020, holders of approximately 120,765,606 shares, or 85.0% of our capital stock after the completion of this offering, will have rights, subject to some conditions, to require us to file registration statements covering the sale of their shares or to include their shares in registration statements that we may file for ourselves or other stockholders.

Our issuance of additional capital stock in connection with financings, acquisitions, investments, our equity incentive plans, or otherwise will dilute all other stockholders.

We expect to issue additional capital stock in the future that will result in dilution to all other stockholders. We expect to grant equity awards to employees, directors, and consultants under our equity incentive plans. We may also raise capital through equity financings in the future. As part of our business strategy, we may acquire or make investments in companies, products, or technologies and issue equity securities to pay for any such acquisition or investment. Any such issuances of additional capital stock may cause stockholders to experience significant dilution of their ownership interests and the per share value of our Class A common stock to decline.

If our operating and financial performance in any given period does not meet the guidance that we provide to the public or the expectations of investment analysts, the market price of our Class A common stock may decline.

We may, but are not obligated to, provide public guidance on our expected operating and financial results for future periods. Any such guidance will comprise forward-looking statements, subject to the risks and uncertainties described in this prospectus and in our other public filings and public statements. Our ability to provide this public guidance, and our ability to accurately forecast our results of operations, may be impacted by the COVID-19 pandemic. Our actual results may not always be in line with or exceed any guidance we have provided, especially in times of economic uncertainty, such as the current global economic uncertainty being experienced as a result of the COVID-19 pandemic. If, in the future, our operating or financial results for a particular period do not meet any guidance we provide or the expectations of investment analysts, or if we reduce our guidance for future periods, the market price of our Class A common stock may decline as well. Even if we do issue public guidance, there can be no assurance that we will continue to do so in the future.

If securities or industry analysts do not publish research or publish unfavorable or inaccurate research about our business, the market price and trading volume of our Class A common stock could decline.

The market price and trading volume of our Class A common stock following the completion of this offering will be heavily influenced by the way analysts interpret our financial information and other disclosures. We do not have control over these analysts. If few securities analysts commence coverage of us, or if industry analysts cease coverage of us, our stock price would be negatively affected. If securities or industry analysts do not publish research or reports about our business, downgrade our Class A common stock, or publish negative reports about our business, our stock price would likely decline. If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, demand for our Class A common stock could decrease, which might cause our stock price to decline and could decrease the trading volume of our Class A common stock.

You will experience immediate and substantial dilution in the net tangible book value of the shares of Class A common stock you purchase in this offering.

The initial public offering price of our Class A common stock will be substantially higher than the unaudited pro forma net tangible book value per share of our Class A common stock immediately after this offering. If you purchase shares of our Class A common stock in this offering, you will suffer immediate dilution of $14.52 per share, or $14.27 per share if the underwriters exercise their over-allotment option in full, representing the difference between our unaudited pro forma as adjusted net tangible book value per share after giving effect to the sale of Class A common stock in this offering and the assumed public offering price of $17.00 per share, the midpoint of the price range set forth on the cover page of this prospectus. See the section titled “Dilution.”

We do not intend to pay dividends for the foreseeable future and, as a result, your ability to achieve a return on your investment will depend on appreciation in the price of our Class A common stock.

We have never declared or paid any cash dividends on our capital stock, and we do not intend to pay any cash dividends in the foreseeable future. Any determination to pay dividends in the future will be at the discretion of our board of directors. Accordingly, you may need to rely on sales of our Class A common stock after price appreciation, which may never occur, as the only way to realize any future gains on your investment.

We are an “emerging growth company” and a “smaller reporting company,” and we cannot be certain if the reduced reporting and disclosure requirements applicable to emerging growth companies and smaller reporting companies will make our Class A common stock less attractive to investors.

We are an “emerging growth company” and a “smaller reporting company,” as defined in the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” and “smaller reporting companies,” including the auditor attestation requirements of Section 404, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. Pursuant to Section 107 of the JOBS Act, as an emerging growth company, we have elected to use the extended transition period for complying with new or revised accounting standards until those standards would otherwise apply to private companies. As a result, our consolidated financial statements may not be comparable to the financial statements of issuers who are required to comply with the effective dates for new or revised accounting standards that are applicable to

public companies, which may make our Class A common stock less attractive to investors. In addition, if we cease to be an emerging growth company, we will no longer be able to use the extended transition period for complying with new or revised accounting standards.

We will remain an emerging growth company until the earliest of: (1) the last day of the fiscal year following the fifth anniversary of this offering; (2) the last day of the first fiscal year in which our annual gross revenue is $1.07 billion or more; (3) the date on which we have, during the previous rolling three-year period, issued more than $1 billion in non-convertible debt securities; and (4) the last day of the fiscal year in which the market value of our equity securities, which includes Class A common stock and Class B common stock held by non-affiliates exceeds $700 million as of June 30 of such fiscal year.

We may continue to be a smaller reporting company even after we are no longer an emerging growth company. We may take advantage of certain of the scaled disclosures available to smaller reporting companies and will be able to take advantage of these scaled disclosures for so long as (i) the market value of our voting and non-voting common stock held by non-affiliates is less than $250 million measured on the last business day of our second fiscal quarter or (ii) our annual revenue is less than $100 million during the most recently completed fiscal year and the market value of our voting and non-voting common stock held by non-affiliates is less than $700 million measured on the last business day of our second fiscal quarter.

We cannot predict if investors will find our Class A common stock less attractive if we choose to rely on these exemptions. For example, if we do not adopt a new or revised accounting standard, our future results of operations may not be as comparable to the results of operations of certain other companies in our industry that adopted such standards. If some investors find our Class A common stock less attractive as a result, there may be a less active trading market for our Class A common stock, and our stock price may be more volatile.

Our management team has limited experience managing a public company.

Our management team has limited experience managing a publicly-traded company, interacting with public company investors and securities analysts, and complying with the increasingly complex laws pertaining to public companies. These new obligations and constituents require significant attention from our management team and could divert their attention away from the day-to-day management of our business, which could harm our business, results of operations, and financial condition.

We will incur increased costs as a result of operating as a public company, and our management will be required to devote substantial time to compliance with our public company responsibilities and corporate governance practices.

As a public company, we will incur significant legal, accounting, and other expenses that we did not incur as a private company, which we expect to further increase after we are no longer an “emerging growth company.” The Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of the NYSE and other applicable securities rules and regulations impose various requirements on public companies. Our management and other personnel devote a substantial amount of time to compliance with these requirements. Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. We cannot predict or estimate the amount of additional costs we will incur as a public company or the specific timing of such costs.

Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of our company more difficult, limit attempts by our stockholders to replace or remove our current management, and limit the market price of our Class A common stock.

Provisions in our amended and restated certificate of incorporation and amended and restated bylaws, as they will be in effect upon the completion of this offering, may have the effect of delaying or preventing a change of control or changes in our management. Our amended and restated certificate of incorporation and amended and restated bylaws will include provisions that:

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authorize our board of directors to issue, without further action by the stockholders, shares of undesignated preferred stock with terms, rights, and preferences determined by our board of directors that may be senior to our Class A common stock;

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require that any action to be taken by our stockholders be affected at a duly called annual or special meeting and not by written consent;

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specify that special meetings of our stockholders can be called only by our board of directors, the chairperson of our board of directors, or our chief executive officer;

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establish an advance notice procedure for stockholder proposals to be brought before an annual meeting, including proposed nominations of persons for election to our board of directors;

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establish that our board of directors is divided into three classes, with each class serving three-year staggered terms;

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prohibit cumulative voting in the election of directors;

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provide that our directors may be removed for cause only upon the vote of at least 66 2/3% of our outstanding shares of voting stock;

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provide that vacancies on our board of directors may be filled only by a majority of directors then in office, even though less than a quorum; and

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require the approval of our board of directors or the holders of at least 66 2/3% of our outstanding shares of voting stock to amend our bylaws and certain provisions of our certificate of incorporation.

These provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors, which is responsible for appointing the members of our management. In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which generally, subject to certain exceptions, prohibits a Delaware corporation from engaging in any of a broad range of business combinations with any “interested” stockholder for a period of three years following the date on which the stockholder became an “interested” stockholder. Any of the foregoing provisions could limit the price that investors might be willing to pay in the future for shares of our Class A common stock, and they could deter potential acquirers of our company, thereby reducing the likelihood that you would receive a premium for your shares of our Class A common stock in an acquisition.

Our amended and restated certificate of incorporation will designate the Court of Chancery of the State of Delaware and, to the extent enforceable, the federal district courts of the United States of America as the exclusive forums for substantially all disputes between us and our stockholders, which will restrict our stockholders’ ability to choose the judicial forum for disputes with us or our directors, officers, or employees.

Our amended and restated certificate of incorporation, as will be in effect upon the completion of this offering, will provide that the Court of Chancery of the State of Delaware is the exclusive forum for the following types of claims or causes of action under Delaware statutory or common law: any derivative claims or causes of action brought on our behalf; any claims or causes of action asserting a breach of a fiduciary duty; any action asserting a claim against us arising pursuant to the Delaware General Corporation Law, our amended and restated certificate of incorporation, or our amended and restated bylaws; or any action asserting a claim against us that is governed by the internal affairs doctrine. The provisions would not apply to suits brought to enforce a duty or liability created by the Exchange Act. In addition, our amended and restated certificate of incorporation will provide that the federal district courts of the United States of America will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act, subject to and contingent upon a final adjudication in the State of Delaware of the enforceability of such exclusive forum provision.

These choice of forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, or other employees. If a court were to find either choice of forum provision contained in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions. For example, the Court of Chancery of the State of Delaware recently determined that the exclusive forum provision of federal district courts of the United States of America for resolving any complaint asserting a cause of action arising under the Securities Act is not enforceable.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this prospectus, including statements regarding our future results of operations or financial condition, business strategy and plans and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” or “would” or the negative of these words or other similar terms or expressions. These forward-looking statements include, but are not limited to, statements concerning the following:

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our expectations regarding our revenue, expenses, and other operating results;

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the durability of the growth we have experienced in the near term due to COVID-19 and the associated shelter-in-place orders on consumer preferences for digital ordering and customer adoption of multi-modules as COVID-19 associated restrictions abate;

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our ability to acquire new customers and successfully retain existing customers;

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our ability to increase usage of our platform and upsell and cross sell additional modules;

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our ability to achieve or sustain our profitability;

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the effects of COVID-19 and the associated global economic uncertainty or other public health crises;

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future investments in our business, our anticipated capital expenditures, and our estimates regarding our capital requirements;

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the loss or decline in revenue from any of our largest customers and our resulting financial condition;

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our ability to compete effectively with existing competitors and new market entrants;

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the costs and success of our sales and marketing efforts, and our ability to promote our brand;

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our reliance on key personnel and our ability to identify, recruit, and retain skilled personnel;

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our ability to effectively manage our growth, including any international expansion;

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our ability to protect our intellectual property rights and any costs associated therewith; and

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the growth rates of the markets in which we compete.

You should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this prospectus primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition and operating results. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors described in the section titled “Risk

Factors” and elsewhere in this prospectus. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this prospectus. The results, events and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this prospectus. And while we believe that information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.

The forward-looking statements made in this prospectus relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this prospectus to reflect events or circumstances after the date of this prospectus or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments.

MARKET, INDUSTRY, AND OTHER DATA

This prospectus contains estimates, projections, and other information concerning our industry, our business, and the markets for our products. Some market data and statistical information contained in this prospectus are also based on management’s estimates and calculations, which are derived from our review and interpretation of the independent sources listed below, our internal research, and knowledge of our market. This information involves a number of assumptions and limitations, and you are cautioned not to give undue weight to these estimates. In addition, projections, assumptions, and estimates of the future performance of the industry in which we operate and our future performance are necessarily subject to uncertainty and risk due to a variety of factors, including those described in the sections titled “Risk Factors” and “Special Note Regarding Forward-Looking Statements.” These and other factors could cause results to differ materially from those expressed in the projections and estimates made by the independent third parties and us.

Unless otherwise expressly stated, we obtained industry, business, market, and other data from the reports, publications and other materials and sources listed below. In some cases, we do not expressly refer to the sources from which this data is derived. In that regard, when we refer to one or more sources of this type of data in any paragraph, you should assume that other data of this type appearing in the same paragraph is derived from the same sources, unless otherwise expressly stated or the context otherwise requires.

USE OF PROCEEDS

We estimate that we will receive net proceeds from this offering of approximately $281.1 million (or approximately $324.0 million if the underwriters exercise their option to purchase additional shares of our Class A common stock from us) based on an assumed initial public offering price of $17.00 per share of Class A common stock, the midpoint of the estimated price range set forth on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

A $1.00 increase (decrease) in the assumed initial public offering price of $17.00 per share of Class A common stock, the midpoint of the estimated price range set forth on the cover page of this prospectus, would increase (decrease) the net proceeds to us from this offering by approximately $16.8 million, assuming the number of shares of Class A common stock offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting estimated underwriting discounts and commissions. Similarly, each increase (decrease) of 1,000,000 shares in the number of shares of Class A common stock offered by us would increase (decrease) the net proceeds to us from this offering by approximately $15.9 million, assuming the assumed initial public offering price of $17.00 per share of Class A common stock remains the same, and after deducting estimated underwriting discounts and commissions.

We will have broad discretion over how to use the net proceeds we receive from this offering. We intend to invest the net proceeds we receive from the offering that are not used as described above in investment-grade, interest-bearing instruments.

DIVIDEND POLICY

We have never declared or paid cash dividends on our capital stock. We currently intend to retain all available funds and future earnings, if any, to fund the development and expansion of our business, and we do not anticipate paying any cash dividends in the foreseeable future. In addition, our loan and security agreement with Pacific Western Bank contains restrictive covenants that prohibit us, subject to certain exceptions, from paying dividends on our Class A common stock and Class B common stock, and future debt securities or other financing arrangements could contain similar or more restrictive negative covenants. Any future determination regarding the declaration and payment of dividends, if any, will be at the discretion of our board of directors and will depend on then-existing conditions, including our financial condition, operating results, contractual restrictions, including in our then-existing debt arrangements, capital requirements, business prospects, and other factors our board of directors may deem relevant.

CAPITALIZATION

The following table sets forth our cash and capitalization as of December 31, 2020:

●

on an actual basis;

●

on an unaudited pro forma basis, giving effect to (1) the reclassification of all outstanding shares of our common stock into an equivalent number of shares of our Class B common stock, which occurred on March 5, 2021, (2) an increase to additional paid-in capital and accumulated deficit related to stock-based compensation expense of $2.8 million associated with stock appreciation rights, or SARs, and the issuance of 1,646,501 shares of Class B common stock upon the settlement of outstanding SARs upon the completion of this offering, (3) the automatic conversion of all outstanding shares of redeemable convertible preferred stock into an aggregate of 98,514,932 shares of Class B common stock, (4) the reclassification of our redeemable convertible preferred stock warrant liability to additional paid-in capital in connection with this offering with respect warrants to purchase 1,682,847 shares of our outstanding redeemable convertible preferred stock, of which 1,531,207 will be exercised in connection with this offering and 151,640 will remain outstanding and convert into warrants to purchase our Class B common stock, and (5) the filing and effectiveness of our amended and restated certificate of incorporation, (2)-(5) will occur immediately prior to the completion of this offering; and

●

on an unaudited pro forma as adjusted basis, giving effect to (1) the unaudited pro forma adjustments described above and (2) our receipt of estimated net proceeds from the sale of 18,000,000 shares of Class A common stock that we are offering at an assumed initial public offering price of $17.00 per share, the midpoint of the price range set forth on the cover page of this prospectus, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

You should read this table together with the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and related notes included elsewhere in this prospectus.


	As of December 31, 2020
	Actual			Pro Forma (unaudited)			Pro Forma As Adjusted⁽¹⁾ (unaudited)
	(in thousands, except share and per share amounts)
Cash and cash equivalents	$	75,756		$	75,756		$	356,809

Redeemable convertible preferred stock warrant liability		19,735			—			—
Redeemable convertible preferred stock, $0.001 par value, 60,509,120 shares authorized, 58,962,749 shares issued and outstanding, actual, and no shares authorized, issued and outstanding, pro forma unaudited and pro forma unaudited as adjusted		111,737			—			—
Stockholders’ (deficit) equity:
Preferred stock, $0.001 per share, no shares authorized, issued and outstanding, actual, 20,000,000 shares authorized and no shares issued and outstanding, pro forma and pro forma as adjusted		—			—			—
Common stock, $0.001 par value, 177,650,000 shares authorized, 22,320,286 shares issued and outstanding, actual, and no shares authorized, issued and outstanding, pro forma unaudited and pro forma unaudited as adjusted		22			—			—
Class A common stock, $0.001 par value, no shares authorized, issued and outstanding, actual, 1,700,000,000 shares authorized, and no shares issued and outstanding, pro forma unaudited, 1,700,000,000 shares authorized and 18,000,000 shares issued and outstanding, pro forma unaudited as adjusted		—			—			18
Class B common stock, $0.001 par value, no shares authorized, issued and outstanding, actual, 185,000,000 shares authorized, 124,012,926 issued and outstanding, pro forma unaudited and pro forma unaudited as adjusted		—			124			124
Additional paid-in capital		16,798			151,015			432,050
Accumulated deficit		(69,301	)		(72,148	)		(72,148	)

Total stockholders’ (deficit) equity	$	(52,481	)	$	78,991		$	360,044

Total capitalization	$	78,991		$	78,991		$	360,044

(1)	Pro forma as adjusted cash and cash equivalents and total assets each does not give effect to $2.3 million of deferred offering costs that had been paid as of December 31, 2020.

A $1.00 increase (decrease) in the assumed initial public offering price of $17.00 per share of Class A common stock, the midpoint of the estimated price range set forth on the cover page of this prospectus, would increase (decrease) each of our unaudited pro forma as adjusted cash and cash equivalents, additional paid-in capital, total stockholders’ (deficit) equity and total capitalization by approximately $16.8 million, assuming the number of shares of Class A common stock offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting estimated underwriting discounts and commissions. Similarly, each increase (decrease) of 1,000,000 shares in the number of shares of Class A common stock offered by us would increase (decrease) each of our unaudited pro forma as adjusted cash and cash equivalents, additional paid-in capital, total stockholders’ (deficit) equity and total capitalization by approximately $15.9 million, assuming the assumed initial public offering price of $17.00 per share of Class A common stock remains the same, and after deducting estimated underwriting discounts and commissions.

The number of shares of common stock that will be outstanding after this offering is based on no shares of Class A common stock and 124,012,926 shares of Class B common stock outstanding as of December 31, 2020, and excludes:

●

6,759,710 shares of Class B common stock issuable upon the exercise of outstanding stock options issued after December 31, 2020 pursuant to our 2015 Plan, with a weighted average exercise price of $9.73 per share;

●

151,640 shares of Class B common stock issuable upon the exercise of a warrant to purchase Series A-1 redeemable convertible preferred stock, which will become a warrant to purchase shares of common stock upon the closing of this offering, at a weighted-average exercise price of $0.17 per share;

●

DILUTION

If you invest in our Class A common stock in this offering, your interest will be diluted to the extent of the difference between the initial public offering price per share of Class A common stock and the unaudited pro forma as adjusted net tangible book value per share immediately after this offering.

Our unaudited pro forma net tangible book value as of December 31, 2020 was $71.0 million, or $0.57 per share of common stock. Our unaudited pro forma net tangible book value per share represents the amount of our total tangible assets less our total liabilities, divided by the number of our shares of Class A common stock and Class B common stock outstanding as of December 31, 2020, after giving effect to (1) the reclassification of all outstanding shares of our common stock into an equivalent number of shares of our Class B common stock, which occurred on March 5, 2021, (2) the issuance of 1,646,501 shares of Class B common stock upon the settlement of outstanding stock appreciation rights upon the completion of this offering, (3) the automatic conversion of all outstanding shares of redeemable convertible preferred stock into an aggregate of 98,514,932 shares of Class B common stock, and (4) the reclassification of our redeemable convertible preferred stock warrant liability to additional paid-in capital in connection with this offering with respect warrants to purchase 1,682,847 shares of our outstanding redeemable convertible preferred stock, of which 1,531,207 will be exercised in connection with this offering and 151,640 will remain outstanding and convert into warrants to purchase our Class B common stock.

After giving effect to the sale by us of 18,000,000 shares of Class A common stock in this offering at an assumed initial public offering price of $17.00 per share, the midpoint of the estimated price range set forth on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us, our unaudited pro forma as adjusted net tangible book value as of December 31, 2020 would have been $352.1 million, or $2.48 per share, inclusive of deferred offering costs of $2.3 million paid as of December 31, 2020. This amount represents an immediate increase in unaudited pro forma net tangible book value of $1.91 per share to our existing stockholders and an immediate dilution in unaudited pro forma net tangible book value of $14.52 per share to new investors purchasing Class A common stock in this offering. We determine dilution by subtracting the unaudited pro forma as adjusted net tangible book value per share after this offering from the initial public offering price per share paid by investors purchasing Class A common stock in this offering. The following table illustrates this dilution on a per share basis:


Assumed initial public offering price per share			$	17.00
Unaudited pro forma net tangible book value per share as of December 31, 2020	$	0.57
Increase in unaudited pro forma as adjusted net tangible book value per share attributable to new investors purchasing shares of Class A common stock in this offering		1.91

Unaudited pro forma as adjusted net tangible book value per share after giving effect to this offering				2.48

Dilution in unaudited pro forma net tangible book value per share to new investors in this offering			$	14.52

The dilution information discussed above is illustrative only and may change based on the actual initial public offering price and other terms of this offering. A $1.00 increase (decrease) in the assumed initial public offering price of $17.00 per share of Class A common stock, the midpoint of the estimated price range set forth on the cover page of this prospectus, would increase (decrease) our unaudited pro forma as adjusted net tangible book value per share after this offering by $0.12 per share and increase (decrease) the dilution to new investors by $0.88 per share, in each case assuming

the number of shares of Class A common stock offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting estimated underwriting discounts and commissions. Similarly, each increase (decrease) of 1,000,000 shares in the number of shares of Class A common stock offered by us would increase (decrease) our unaudited pro forma as adjusted net tangible book value by approximately $0.09 per share and increase (decrease) the dilution to new investors by approximately $(0.09) per share, assuming the assumed initial public offering price of $17.00 per share of Class A common stock remains the same, and after deducting estimated underwriting discounts and commissions.

If the underwriters exercise their option to purchase additional shares of Class A common stock from us in full, our unaudited pro forma as adjusted net tangible book value would be $2.73 per share, and the dilution in unaudited pro forma net tangible book value per share to new investors in this offering would be $14.27 per share.

The following table summarizes, as of December 31, 2020, on an unaudited pro forma as adjusted basis as described above, the number of shares of our common stock, the total consideration and the average price per share (1) paid to us by existing stockholders and (2) to be paid by new investors acquiring our Class A common stock in this offering at an assumed initial public offering price of $17.00 per share, the midpoint of the estimated price range set forth on the cover page of this prospectus, before deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.


	Shares Purchased					Total Consideration					Average Price Per Share
	Number		Percent			Amount		Percent
Existing stockholders		124,012,926		87.3	%	$	151,015,000		33.0	%	$	1.22
New investors		18,000,000		12.7			306,000,000		67.0		$	17.00

Totals		142,012,926		100.0	%	$	457,015,000		100.0	%	$	3.22

Each $1.00 increase (decrease) in the assumed initial public offering price of $17.00 per share, the midpoint of the estimated price range set forth on the cover page of this prospectus, would increase (decrease) the total consideration paid by new investors and total consideration paid by all stockholders by approximately $16.8 million, assuming that the number of shares of Class A common stock offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions.

The number of shares of Class A common stock and Class B common Stock that will be outstanding after this offering is based on no shares of Class A common stock and 124,012,926 shares of Class B common stock outstanding as of December 31, 2020, and excludes:

●

151,640 shares of Class B common stock issuable upon the exercise of a warrant to purchase Series A-1 redeemable convertible preferred stock, which will become a warrant

to purchase shares of Class B common stock upon the closing of this offering, at a weighted-average exercise price of $0.17 per share;

●

19,416,069 shares of Class A common stock reserved for future issuance under our 2021 Equity Incentive Plan which will become effective in connection with this offering, as well as any future increases, as well as annual automatic evergreen increases, in the number of shares of common stock reserved for issuance thereunder, and any shares underlying outstanding stock awards granted under our 2005 Plan or our 2015 Plan that expire or are repurchased, forfeited, cancelled or withheld, as more fully described in the section titled “Executive Compensation—Equity Incentive Plans”;

●

To the extent that any outstanding options or warrants are exercised or new options are issued under our stock-based compensation plans, or that we issue additional shares of capital stock in the future, there will be further dilution to investors participating in this offering. If all outstanding options under each of our 2005 Plan and 2015 Plan as of December 31, 2020 were exercised or settled, then our holders of our Class B common stock, including the holders of these options, would own 90%, and our new investors would own 10%, of the total number of shares of our Class A common stock outstanding following the completion of this offering.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis summarizes the significant factors affecting the operating results, financial condition, liquidity, and cash flows of our company as of and for the period presented below. The following discussion and analysis should be read in conjunction with our financial statements and the related notes thereto included elsewhere in this prospectus. The discussion contains forward-looking statements, including with respect to the durability of the acceleration we have experienced in the near term on consumer preferences for digital ordering and customer adoption of multi-modules, that are based on the beliefs of management, as well as assumptions made by, and information currently available to, our management. Actual results could differ materially from those discussed in or implied by forward-looking statements as a result of various factors, including those discussed below and elsewhere in this prospectus, particularly in the sections entitled “Risk Factors” and “Special Note Regarding Forward-Looking Statements.”

Overview

Olo provides a leading cloud-based, on-demand commerce platform for multi-location restaurant brands.

Our platform powers restaurant brands’ on-demand commerce operations, enabling digital ordering and delivery, while further strengthening and enhancing the restaurants’ direct consumer relationships. Consumers today expect more on-demand convenience and personalization from restaurants, particularly through digital channels, but many restaurants lack the in-house infrastructure and expertise to satisfy this increasing demand in a cost-effective manner. Olo provides restaurants with a business-to-business-to-consumer, enterprise-grade, open SaaS platform to manage their complex digital businesses and enable fast and more personalized experiences for their customers. Our platform and application programming interfaces, or APIs, seamlessly integrate with a wide range of solutions, unifying disparate technologies across the restaurant ecosystem. Restaurant brands rely on Olo to increase their digital and in-store sales, maximize profitability, establish and maintain direct consumer relationships, and collect, protect, and leverage valuable consumer data. As a result, we nearly doubled the gross merchandise value, or GMV, which we define as the gross value of orders processed through our platform, in each of the last five years and reached nearly $14.6 billion in GMV during the year ended December 31, 2020. Our well-established platform has led many of the major publicly traded and top 50 fastest growing private restaurant brands, measured by overall sales, in the United States to work with us and has been a factor in our high dollar-based net revenue retention. Further, industry-recognized outlets, including Restaurant Business Online, QSR Magazine, and AP News, have also deemed Olo a leading food ordering platform for the restaurant industry.

We built Olo with the goal of being the leading SaaS platform for the restaurant industry by aligning the solutions we have developed with the needs of our customers. Our platform initially focused on enabling digital ordering, through the deployment of white label on-demand commerce websites and applications, and tools for digital order management. We then expanded our platform by launching Dispatch, our delivery enablement module, and Rails, our aggregator and channel management module. We believe our solution is the only independent SaaS platform for restaurants to provide seamless digital ordering and efficient delivery enablement, offering centralized management of a restaurant’s entire digital business. The key milestones in our corporate history are the following:

●

2005: Founder & CEO Noah Glass accepted $500,000 in Series A funding to start Mobo.

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2010: We renamed our product as Olo and shifted our focus to enterprise customers.

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2013: We surpassed $50 million in GMV and expanded our executive leadership team.

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2014: We surpassed $100 million in GMV, and restauranteur Danny Meyer joined our board of directors.

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2015: We launched Dispatch, our first significant product extension.

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2016: We surpassed $500 million in GMV.

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2017: We launched Rails and surpassed $1 billion in GMV.

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2018: We surpassed $2 billion in GMV.

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2019: We surpassed $5 billion in GMV.

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2020: We reached nearly $14.6 billion in GMV.

Leading restaurant brands trust Olo’s enterprise-grade platform for its capabilities, reliability, security, scalability, and interoperability. Our platform currently handles, on average, nearly 2 million orders per day and has peaked at close to 5,000 orders per minute. We continually invest in architectural improvements so our system can scale in tandem with our continued growth. Additionally, both internal and external security experts frequently test our system for vulnerabilities. We have never experienced a material breach of customer or consumer data. Our open SaaS platform integrates with over 100 restaurant technology solutions including point-of-sale, or POS, systems, aggregators, delivery service providers, or DSPs, payment processors, user experience, or UX, and user interface, or UI, providers, and loyalty programs, giving our customers significant control over the configuration and features of their distinct digital offering.

We are the exclusive direct digital ordering provider for our leading brands across all service models of the restaurant industry, including quick service, fast casual, casual, family, and snack food. Our customers include major publicly traded and the fastest growing private restaurant brands such as Chili’s, Wingstop, Shake Shack, Five Guys, and sweetgreen. As of December 31, 2020, we had approximately 400 brand customers representing over 64,000 locations using our platform. Our average initial contract length is generally three years with continuous one-year automatic renewal periods, providing visibility into our future financial performance. Our enterprise brands, meaning those brands having 50 or more locations, are also highly loyal. Over the last five years, on average nearly 99% of our enterprise brand customers, which accounted for 91% of our total active locations as of December 31, 2020, have continued using our Ordering module each year. Our customers’ digital same-store sales has increased, on average, by 44% for the month ended December 31, 2019 when compared to the month ended December 31, 2018. This trend has further accelerated over the past year, with digital same-store sales up 156% for the month ended December 31, 2020 when compared to the month ended December 31, 2019.

We refer to our business model as a transactional SaaS model as it includes both subscription and transaction-based revenue streams, and we designed it to align with our customers’ success. Our

model allows our customers to forego the cost of building, maintaining, and securing their own digital ordering and delivery platforms and to retain direct relationships with their consumers while maximizing profitability. Our hybrid-pricing model provides us with a predictable revenue stream and enables us to further grow our revenue as our customers increase their digital order volume. We generate subscription revenue from our Ordering module and transaction revenue from our Rails and Dispatch modules. We charge our customers a fixed monthly subscription fee per restaurant location for access to our Ordering module. In addition, a growing portion of our customers purchase an allotment of monthly orders for a fixed monthly fee and pay us an additional fee for each excess order, which we also consider to be subscription revenue. Our transaction revenue includes revenue generated from our Rails and Dispatch modules. Customers who subscribe to our Rails and Dispatch modules pay a fee on a per transaction basis. In most cases, we also charge aggregators, channel partners, and other service providers in our ecosystem on a per transaction basis for access to our Rails and Dispatch modules. We also derive transactional revenue from other products, including Network, which allows brands to take orders from non-marketplace digital channels (e.g., Google Food Ordering, which enables restaurants to fulfill orders directly through Google search results and Maps pages). These products generate fees predominantly through revenue sharing agreements with partners. For the years ended December 31, 2018, 2019, and 2020, 93.2%, 80.8%, and 56.7% of our platform revenue was subscription revenue, respectively, and 6.8%, 19.2%, and 43.3% was transaction revenue, respectively.

Our business has experienced rapid growth in a highly capital efficient manner. Since inception 15 years ago, we have raised less than $100.0 million of primary investment capital, net of share repurchases, and as of December 31, 2020, we had cash and cash equivalents of $75.8 million with no outstanding debt. During the years ended December 31, 2018, 2019, and 2020, we generated revenue of $31.8 million, $50.7 million, and $98.4 million, respectively, representing year-over-year growth of 59.4% and 94.2%. During the years ended December 31, 2018, 2019, and 2020, we generated gross profit of $21.0 million, $35.1 million, and $79.8 million, respectively, or 66.0% , 69.3%, and 81.0% as a percentage of revenue, respectively. During the years ended December 31, 2018 and 2019, we incurred net losses of $11.6 million and $8.3 million, respectively and during the year ended December 31, 2020, we generated net income of $3.1 million. During the years ended December 31, 2018 and 2019, we incurred operating losses of $8.8 million and $5.1 million, respectively, and during the year ended December 31, 2020 we generated operating income of $16.1 million. During the years ended December 31, 2018 and 2019, we incurred non-GAAP operating losses of $4.6 million, and $0.2 million, respectively, and during the year ended December 31, 2020, we generated non-GAAP operating income of $21.8 million.

Key Factors Affecting Our Performance

Add New Large Multi-Location and High-Growth Restaurant Brands

We believe there is a substantial opportunity to continue to grow our customer base across the U.S. restaurant industry, adding to our approximately 400 existing brands across more than 64,000 active locations. We consider each specific restaurant brand to be a customer, even if owned by a parent organization that owns multiple restaurant brands, and define active locations as a location where at least one of our modules is deployed. Our active locations increased 20% for the period from December 31, 2018 to December 31, 2019. The following year, our active locations increased 52% for the period from December 31, 2019 to December 31, 2020. We intend to continue to drive new customer growth by leveraging our brand and experience within the industry, and expanding our sales and marketing efforts. We have also historically pursued and will continue to target the most well-capitalized, fastest-growing restaurant brands in the industry. Our ability to attract new customers will depend on a number of factors, including our ability to innovate, the effectiveness and pricing of our new and existing modules, the growth of digital ordering, and the success of our marketing efforts.

Expand Within Our Existing Customer Base

Our large base of enterprise customers and transactional SaaS revenue model represent an opportunity for further revenue expansion from the sale of additional modules, and the addition of new restaurant locations. A key factor to our success in executing our expansion strategy will be our ability to retain our existing and future restaurant customers. Our exclusive, long-term, direct digital ordering contracts with our customers provide us the opportunity to form unique, trusted partnerships with our restaurant brands, further enhancing our ability to satisfy and retain our customers. Our average initial contract length is generally three years, providing visibility into our future performance. Over the last five years, on average nearly 99% of our enterprise brand customers have continued to use our Ordering module each year.

As of December 31, 2019 and 2020, 44% and 71% of our customers used all three of our modules, respectively. We believe this demonstrates a continued opportunity to further increase revenue within our existing customer base by expanding and deploying additional modules. We believe that we are well-positioned to upsell our remaining customers, as our modules provide significant value, are simple to add, and operate seamlessly together. In addition, we intend to continue to work with our existing brand customers in implementing their digital strategies, which we expect will promote continued growth. In addition, our average revenue per location in 2020 was approximately $1,740, which we calculate by dividing the total platform revenue in a given period by the average active locations in that same period. We believe this demonstrates our ability to grow within our customer base through the development of our products that our customers value.

We work to build relationships with the fastest growing restaurant brands in the industry, enabling us to grow our revenue as our customers scale their locations. As our customers expand locations, we are well positioned to expand to new locations beyond the existing 64,000 active locations that we serve. Our contracts with our customers provide that our modules are implemented across an entire restaurant chain, growing as our customers expand locations. Our ability to increase sales to existing customers will depend on a number of factors, including our customers’ satisfaction with our platform, competition, pricing, and overall shift in the market to digital ordering and delivery.

We have a history of growing with our customers as they increase their annual spend with us over time. The chart below illustrates the total revenue generated within a given cohort over the years presented. All brands from which we received revenue for the first time at any time prior to January 1, 2017 are grouped as a single cohort. Each other cohort represents brands from which we received revenue for the first time in a given fiscal year. For example, the fiscal year 2018 cohort represents all brands who earned revenue for the first time at any point between January 1, 2018 and December 31, 2018. We have seen significant expansion across all of our cohorts, even from brands that have been customers prior to 2017. For example, the fiscal year 2018 cohort increased its initial revenue from approximately $3.0 million to approximately $21.0 million in fiscal year 2020, representing an increase of approximately 700%. We expect cohort revenue will fluctuate from one period to another depending on, among other factors, our ability to increase revenue generated by the brands within a given cohort and other changes to products and services we offer to such brands. While we believe these cohorts are a fair representation of our overall customer base, there is no assurance that they will be representative of any future group of brands or periods.

EXPANDING CUSTOMER COHORTS

LOGO

A further indication of the propensity of our customers to continue to work with and expand their relationship with us over time is our dollar-based net revenue retention, which compares our revenue from the same set of active customers in one period to the prior year period. For the years ended December 31, 2018, 2019, and 2020, our dollar-based net revenue retention was above 120% for each fiscal quarter. We calculate dollar-based net revenue retention as of a period-end by starting with the revenue from the cohort of all active customers as of 12 months prior to such period-end, or the prior period revenue. Revenue is defined as all platform revenue. We define active customers as those that generate platform revenue in all three months within a given quarterly period. We then calculate the platform revenue from these same customers as of the current period-end, or the current period revenue. Current period revenue includes any expansion and is net of contraction or attrition over the last 12 months, but excludes platform revenue from new customers in the current period. We then divide the total current period revenue by the total prior period revenue to arrive at the point-in-time dollar-based net revenue retention. While we have maintained this high net revenue retention over the past three years, we expect this number to decrease over time as our customer base matures. We are also seeing a trend where customers are purchasing all of our products at signing, which provides us with more platform revenue from the start, but leaves less room for expansion.

Enable Higher Transaction Volume

Transaction revenue will continue to be an important source of our growth. We intend to continue to work with our existing restaurant customers to enable higher transaction volume at their locations, which may enable us to generate additional subscription and transaction revenue. As on-demand commerce grows to represent a larger share of total off-premise food consumption, we expect to significantly benefit from this secular trend as we capture a portion of this increased on-demand commerce order volume. Not only does our software create the opportunity to drive more orders for our customers, but we also expect that the industry’s secular tailwinds will help increase transaction

order volume as more consumers order food for off-premise consumption. As transaction volume increases, the subscription revenue we receive from our Ordering module may also increase as customers subscribe for higher tier ordering packages to enable more transactions. We evaluate our ability to drive increased transaction revenue by measuring digital same-store sales growth for our customers. Our customers’ digital same-store sales has increased, on average, by 44% for the month ended December 31, 2019 when compared to the month ended December 31, 2018. This trend has further accelerated over the past year, with digital same-store sales up 156% for the month ended December 31, 2020 when compared to the month ended December 31, 2019. We measure digital same-store sales by measuring the GMV for a given active restaurant brand location as compared to the GMV for the equivalent monthly period in the prior year. To determine same-store sales, we exclude locations that were not active in either the prior or current period. We believe that digital same-store sales growth is reflective of the future revenue opportunity inherent in our transactional SaaS revenue model because we expect our transaction revenue from our Rails and Dispatch modules to increase as the number of transactions and total GMV on our platform increases. In addition, as we continue to expand our product offerings and improve our current software, we also believe that we may be able to increase our share of the transaction revenue that flows through our platform. Our ability to increase transaction volume is dependent on the continued shift to digital ordering for off-premise food consumption and our ability to capture a meaningful portion of that shift. See “Components of Results of Operations — Revenue” for a further discussion of the impact of COVID- 19 and the associated shelter-in-place orders on our business.

Investment in Innovation and Growth

We have invested and intend to continue to invest in expanding the functionality of our current platform and broadening our capabilities to address new market opportunities, particularly around payments, catering, and data analytics. We also intend to continue to invest in enhancing awareness of our brand and developing more modules, features, and functionality that expand our capabilities to facilitate the extension of our platform to new use cases and industry verticals. We believe this strategy will provide new avenues for growth and allow us to continue to deliver differentiated, high-value outcomes to both our customers and stockholders. Specifically, we intend to invest in research and development to expand existing and build new modules, sales and marketing to promote our modules to new and existing customers and in existing and expanded geographies, professional services to ensure the success of our customers’ implementations of our platform, and other operational and administrative functions to support our expected growth and our transition to a public company. We expect our total operating expenses will increase over time and, in some cases, have short-term negative impacts on our operating margin. We also intend to continue to evaluate strategic acquisitions and investments in businesses and technologies to drive product and market expansion. Our future success is dependent, in part, on our ability to successfully develop, market, and sell new and existing modules to new and existing customers.

Grow Our Ecosystem

We plan to expand our current ecosystem of third-party partners to better support our customers. Our platform is highly configurable and deeply embedded into our customers’ disparate existing infrastructures. Our platform seamlessly integrates with technology providers across the restaurant ecosystem, including most POS systems, DSPs, aggregators, payment processors, and loyalty programs. We believe that we can leverage these unique partnerships to deliver additional value to our customers. We see opportunity to further broaden our partnership group and build upon the integrations we currently offer. We plan to continue to invest and expand our ecosystem of compatible third-party technology providers to allow us to service a broader network of restaurant brands. We believe that these technology partnerships make us a critical component for restaurant brands looking to enhance their digital ordering and delivery platforms. We intend to continue to invest

in building functionality that further integrates our platform with additional third-party technology providers, which expands our capabilities and facilitates the extension of our platform to new use cases and industry verticals. Our future success is dependent on our ability to continue to integrate with third-party technology providers in the restaurant ecosystem.

Expand Our Longer-Term Market Opportunity

While we have not made any significant investments in this area to date, we believe there is an opportunity to partner with small and medium businesses to enable their on–demand commerce presence. Additionally, as many of our customers operate internationally, we believe there is a significant opportunity to expand the usage of our platform outside of the United States. We also believe that our platform can be applied to other commerce verticals beyond the restaurant industry that are undergoing a similar digital transformation to deliver real-time experiences and on-demand fulfillment to consumers. For example, we currently partner with a number of grocery chains who use our Ordering module to help their consumers order ready-to-eat meals and may potentially expand these or other partnerships in the future. We anticipate that our operating expenses will increase as a result of these initiatives.

Components of Results of Operations

Revenue

We generate revenue primarily from platform fees and professional services.

Platform

Platform revenue primarily consists of fees that provide customers access to one or more of our modules and standard customer support. Our contracts typically begin with a minimum three-year term and auto-renew on an annual basis thereafter. We bill monthly in arrears. A majority of our platform revenue is derived from subscription fees from our Ordering module. Customers with subscriptions to our Ordering module can pay either a monthly flat fee or a reduced flat fee with a minimum, fixed number of monthly orders for a monthly fee once active with a module. Customers who elect the fixed number of monthly orders pay an additional fee for each excess order, which is also treated as subscription revenue.

We also generate platform revenue primarily from transaction revenue from our Rails, Dispatch, and other modules. Customers who subscribe to our Rails and Dispatch modules pay a fee on a per transaction basis. We may also charge third-party aggregators and other service providers in our ecosystem a per transaction fee for access to our Rails and Dispatch modules.

For the years ended December 31, 2018, 2019 and 2020, Rails module transaction revenue from our largest digital ordering aggregator, DoorDash, accounted for an aggregate of 2.6%, 10.2%, and 19.3% of our total revenue, respectively, and this digital ordering aggregator accounted for a substantial majority of our transaction revenue from our Rails module during the years ended December 31, 2018, 2019, and 2020.

percentage of platform revenue. For the years ended December 31, 2018, 2019, and 2020, 93.2%, 80.8%, and 56.7% of our platform revenue was subscription revenue, respectively, and 6.8%, 19.2%, and 43.3% was transaction revenue, respectively. While we have benefited from the acceleration of demand for off-premise dining, our business and financial results could be materially adversely affected in the future if these trends do not continue. For example, as the effects of shelter-in-place orders abate with the roll-out of vaccines in the United States and consumers potentially return to pre-COVID digital ordering preferences and habits, the trends we experienced in 2020 on multi-module adoption and transaction volume may not continue and our revenue may fluctuate in the near term.

Professional Services and Other

Professional services and other revenue primarily consists of fees paid to us by our customers for the implementation of our platform. The majority of our professional service fees are billed on a fixed fee basis upon execution of our agreement.

Cost of Revenues

Platform

Platform cost of revenue primarily consists of costs directly related to our platform services, including expenses for customer support and infrastructure personnel, including salaries, taxes, benefits, bonuses, and stock-based compensation, which we refer to as personnel costs, third-party software licenses, hosting, amortization of internal-use software, and allocated overhead. We expect platform cost of revenue to increase in absolute dollars in order to support additional customer and transaction volume growth on our platform and decline as a percent of revenue over time.

Professional Services and Other

Professional services and other cost of revenue primarily consists of the personnel costs of our deployment team associated with delivering these services and allocated overhead.

Gross Profit

Gross profit, or revenue less cost of revenue, has been, and will continue to be, affected by various factors, including revenue fluctuations, our mix of revenue associated with various modules, the timing and amount of investments in personnel, increased hosting capacity to align with customer growth, and third-party licensing costs.

Operating Expenses

Our operating expenses consist of research and development, general and administrative, and sales and marketing expenses. Personnel costs are the most significant component of operating expenses.

Research and Development

Research and development expenses primarily consist of engineering and product development personnel costs and allocated overhead costs. Research and development costs exclude capitalized software development costs as they are capitalized as a component of property and equipment, net and amortized to platform cost of revenue over the term of their useful life. We expect our research and development expenses to increase in absolute dollars and as a percentage of revenue in the near term as we hire additional personnel and continue to make investments to innovate our platform and add additional modules.

General and Administrative

General and administrative expenses primarily consist of personnel costs and contractor fees for finance, legal, human resources, information technology, and other administrative functions. In addition, general and administrative expenses include insurance and travel-related expenses and allocated overhead. We expect our general and administrative expenses to increase on an absolute dollar basis and as a percent of revenue in the near-term. Following the completion of this offering, we expect to incur additional general and administrative expenses as a result of operating as a public company.

Sales and Marketing

Sales and marketing expenses primarily consist of sales, marketing, and other personnel costs, commissions, general marketing and promotional activities, and allocated overhead costs. Sales commissions earned by our sales force are deferred and amortized on a straight-line basis over the expected benefit period. We plan to continue to invest in sales and marketing by expanding our go-to-market activities, hiring additional sales representatives, and sponsoring additional marketing events and trade shows. We expect our sales and marketing expenses to increase on an absolute dollar basis and as a percent of revenue.

Other Income (Expenses)

Interest Expense

Interest expense consists of interest incurred on our outstanding borrowings under our outstanding debt facility. In 2020, we amended our loan agreement for our revolving line of credit. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.”

Other Income, Net

Other income, net consists primarily of income earned on our money-market funds in cash and cash equivalents.

Change in Fair Value of Redeemable Convertible Preferred Stock Warrant Liability

The change in the fair value of warrant liability relates to warrants issued to purchase our convertible preferred stock that are classified as liabilities on the balance sheet.

Provision for Income Taxes

Provision for income taxes primarily relates to U.S. federal and state income taxes where we conduct business.

Results of Operations

The following table sets forth our statement of operations data for the periods indicated:


	Year Ended December 31,
	2018			2019			2020
	(in thousands)
Revenue:
Platform	$	28,319		$	45,121		$	92,764
Professional services and other		3,480			5,570			5,660

Total revenue		31,799			50,691			98,424

Cost of revenues:
Platform ⁽¹⁾		8,722			11,920			14,334
Professional services and other ⁽¹⁾		2,095			3,666			4,334

Total cost of revenue		10,817			15,586			18,668

Gross profit		20,982			35,105			79,756

Operating expenses:
Research and development ⁽¹⁾		17,123			21,687			32,907
General and administrative ⁽¹⁾		8,341			12,157			22,209
Sales and marketing ⁽¹⁾		4,299			6,351			8,545

Total operating expenses		29,763			40,195			63,661

Income (loss) from operations		(8,781	)		(5,090	)		16,095

Other income (expenses):
Interest expense		(173	)		(219	)		(157	)
Other income, net		100			36			28
Change in fair value of warrant liability		(2,681	)		(2,959	)		(12,714	)

Total other expenses		(2,754	)		(3,142	)		(12,843	)

Income (loss) before income taxes		(11,535	)		(8,232	)		3,252
Provision for income taxes		17			26			189

Net income (loss) and comprehensive income (loss)	$	(11,552	)	$	(8,258	)	$	3,063

Accretion of redeemable convertible preferred stock to redemption		(136	)		(136	)		(70	)
Undeclared 8% non-cumulative dividend on participating securities		—			—			(2,993	)

Net income (loss) attributable to Class B common stockholders	$	(11,688	)	$	(8,394	)	$	—

(1)	Includes stock-based compensation expense as follows:


	Year Ended December 31,
	2018		2019		2020
Cost of revenue—platform	$	410	$	253	$	556
Cost of revenue—professional services and other		34		46		124
Research and development		1,409		814		1,497
General and administrative		1,928		3,493		2,827
Sales and marketing		415		220		376

Total stock-based compensation expense	$	4,196	$	4,826	$	5,380

The following table sets forth our statement of operations data expressed as a percentage of total revenue for the periods indicated:


	Year Ended December 31,
	2018			2019			2020
Revenue:
Platform		89.1	%		89.0	%		94.2	%
Professional services and other		10.9			11.0			5.8

Total revenue		100.0			100.0			100.0

Cost of revenues:
Platform		27.4			23.5			14.6
Professional services and other		6.6			7.2			4.4

Total cost of revenue		34.0			30.7			19.0

Gross profit		66.0			69.3			81.0

Operating expenses:
Research and development		53.8			42.8			33.4
General and administrative		26.2			24.0			22.6
Sales and marketing		13.5			12.5			8.7

Total operating expenses		93.6			79.3			64.7

Income (loss) from operations		(27.6	)		(10.0	)		16.4

Other income (expenses):
Interest expense		(0.5	)		(0.4	)		(0.2	)
Other income, net		0.3			0.1			0.0
Change in fair value of warrant liability		(8.5	)		(5.9	)		(12.9	)

Total other expenses		(8.7	)		(6.2	)		(13.0	)

Income (loss) before income taxes		(36.3	)		(16.2	)		3.3
Provision for income taxes		0.1			0.1			0.2

Net income (loss) and comprehensive income (loss)		(36.4	)		(16.3	)		3.1

Accretion of redeemable convertible preferred stock to redemption value		(0.4	)		(0.3	)		(0.1	)
Undeclared 8% non-cumulative dividend on participating securities		0.0			0.0			(3.0	)

Net income (loss) attributable to Class B common stockholders		(36.8	)%		(16.6	)%		—	%

Comparison of the Years Ended December 31, 2018, 2019, and 2020

Revenue


	Year Ended December 31,						2018 Change to 2019 Change			2019 Change to 2020 Change
	2018		2019		2020		% Change			% Change
	(in thousands)
Revenue:
Platform	$	28,319	$	45,121	$	92,764		59.3	%		105.6	%
Professional services and other		3,480		5,570		5,660		60.1	%		1.6	%

Total revenue	$	31,799	$	50,691	$	98,424		59.4	%		94.2	%

2019 Compared to 2020

Platform

Total platform revenue increased $47.6 million, or 105.6%, from $45.1 million for the year ended December 31, 2019 to $92.8 million for the year ended December 31, 2020. This increase was primarily the result of additional active customer locations coming onto the platform, as well as an increase in average revenue per location. Active customer locations increased to approximately 64,000 as of December 31, 2020 from approximately 42,000 as of December 31, 2019, and average revenue per location increased to approximately $1,740 for the fiscal year ending December 31, 2020 from approximately $1,160 for the fiscal year ending December 31, 2019. For the years ended December 31, 2019 and 2020, 80.8% and 56.7% of our platform revenue was subscription revenue, respectively, and 19.2% and 43.3% was transaction revenue, respectively.

Professional Services and Other

Total professional services and other revenue increased $0.1 million, or 1.6%, from $5.6 million for the year ended December 31, 2019 to $5.7 million for the year ended December 31, 2020. This increase was primarily a result of continued deployment of additional active locations, partially offset by lower other revenue.

2018 Compared to 2019

Platform

Total platform revenue increased $16.8 million, or 59.3%, from $28.3 million for the year ended December 31, 2018 to $45.1 million for the year ended December 31, 2019. This increase was primarily the result additional active customer locations coming onto the platform, as well as increased average revenue per location. Active customer locations increased to approximately 42,000 as of December 31, 2019 from approximately 35,000 as of December 31, 2018, and average revenue per unit increased to approximately $1,160 for the fiscal year ending December 31, 2019 from approximately $935 for the fiscal year ending December 31, 2018. For the years ended December 31, 2018 and 2019, 93.2% and 80.8% of our platform revenue was subscription revenue, respectively, and 6.8% and 19.2% was transaction revenue, respectively.

Professional Services and Other

Total professional services and other revenue increased $2.1 million, or 60.1%, from $3.5 million for the year ended December 31, 2018 to $5.6 million for the year ended December 31, 2019. This increase was primarily a result of continued deployment of additional active locations and increases in other revenue.

Cost of Revenue and Gross Margin


	Year Ended December 31,									2018 Change to 2019 Change			2019 Change to 2020 Change
	2018			2019			2020			% Change			% Change
	(in thousands)
Cost of revenues:
Platform	$	8,722		$	11,920		$	14,334			36.7	%		20.3	%
Professional services and other		2,095			3,666			4,334			75.0	%		18.2	%

Total cost of revenue	$	10,817		$	15,586		$	18,668			44.1	%		19.8	%
Percentage of revenue		34.0	%		30.7	%		19.0	%

2019 Compared to 2020

Platform Cost of Revenue

Total platform cost of revenue increased $2.4 million, or 20.3%, from $11.9 million for the year ended December 31, 2019 to $14.3 million for the year ended December 31, 2020. This increase was primarily the result of higher hosting costs due to increased transaction volume, as well as higher compensation costs associated with additional personnel to support growth in active locations.

Professional Services and Other Cost of Revenue

Total professional services and other cost of revenue increased $0.7 million, or 18.2%, from $3.7 million for the year ended December 31, 2019 to $4.3 million for the year ended December 31, 2020. This increase was primarily the result of higher compensation costs associated with additional personnel to support growth in active locations.

Gross Profit

Gross margin increased to 81.0% for the year ended December 31, 2020 from 69.3% for the year ended December 31, 2019. Increases in gross margin were driven by increased platform revenue and improved platform cost of revenue optimization.

2018 Compared to 2019

Platform Cost of Revenue

Total platform cost of revenue increased $3.2 million, or 36.7%, from $8.7 million for the year ended December 31, 2018 to $11.9 million for the year ended December 31, 2019. This increase was primarily the result of higher hosting costs due to increased transaction volume, as well as higher compensation costs associated with additional personnel to support growth in active locations.

Professional Services and Other Cost of Revenue

Total professional services and other cost of revenue increased $1.6 million, or 75.0%, from $2.1 million for the year ended December 31, 2018 to $3.7 million for the year ended December 31, 2019. This increase was primarily the result of higher compensation costs associated with additional personnel to support growth in active locations.

Gross Profit

Gross margin increased to 69.3% for the year ended December 31, 2019 from 66.0% for the year ended December 31, 2018.

Operating Expenses


	Year Ended December 31,									2018 Change to 2019 Change			2019 Change to 2020 Change
	2018			2019			2020			% Change			% Change
	(in thousands)
Operating expenses:
Research and development	$	17,123		$	21,687		$	32,907			26.7	%		51.7	%
General and administrative		8,341			12,157			22,209			45.7	%		82.7	%
Sales and marketing		4,299			6,351			8,545			47.7	%		34.5	%

Total operating expenses	$	29,763		$	40,195		$	63,661			35.1	%		58.4	%
Percentage of revenue		93.6	%		79.3	%		64.7	%

2019 Compared to 2020

Research and Development

Research and development expense increased $11.2 million, or 51.7%, from $21.7 million for the year ended December 31, 2019 to $32.9 million for the year ended December 31, 2020, primarily the result of higher compensation costs associated with additional personnel to support further investments in our platform development and continued product innovation. As a percent of total revenue, research and development expenses decreased to 33.4% for the year ended December 31, 2020 from 42.8% for the year ended December 31, 2019.

General and Administrative

General and administrative expense increased $10.1 million, or 82.7%, from $12.2 million for the year ended December 31, 2019 to $22.2 million for the year ended December 31, 2020, a result of increased compensation costs due to increased headcount to support the growth and stage of the organization, as well as, increased professional fees incurred in preparation for becoming a public company. As a percent of total revenue, general and administrative expenses decreased to 22.6% for the year ended December 31, 2020 from 24.0% for the year ended December 31, 2019.

Sales and Marketing

Sales and marketing expense increased $2.2 million, or 34.5%, from $6.4 million for the year ended December 31, 2019 to $8.5 million for the year ended December 31, 2020. This increase was primarily the result of additional compensation costs due to increases in headcount, as well as increased marketing spend associated with our annual user conference. As a percent of total revenue, sales and marketing expense decreased to 8.7% for the year ended December 31, 2020 from 12.5% for the year ended December 31, 2019.

2018 Compared to 2019

Research and Development

Research and development expense increased $4.6 million, or 26.7%, from $17.1 million for the year ended December 31, 2018 to $21.7 million for the year ended December 31, 2019, primarily the result of higher compensation costs associated with additional personnel to support further investments in our platform development as well as continued product innovation. As a percent of total revenue, research and development expenses decreased to 42.8% for the year ended December 31, 2019 from 53.8% for the year ended December 31, 2018.

General and Administrative

General and administrative expense increased $3.8 million, or 45.7%, from $8.3 million for the year ended December 31, 2018 to $12.2 million for the year ended December 31, 2019, primarily the result of additional compensation costs and professional fees incurred in preparation for becoming a public company, as well as additional rent expense associated with our new corporate headquarters. As a percent of total revenue, general and administrative expenses decreased to 24.0% for the year ended December 31, 2019 from 26.2% for the year ended December 31, 2018.

Sales and Marketing

Sales and marketing expense increased $2.1 million, or 47.7%, from $4.3 million for the year ended December 31, 2018 to $6.4 million for the year ended December 31, 2019. This increase was primarily the result of additional compensation costs due to increases in headcount. As a percent of total revenue, sales and marketing expense decreased to 12.5% for the year ended December 31, 2019 from 13.5% for the year ended December 31, 2018.

Other Income (Expense)


	Year Ended December 31,									2018 Change to 2019 Change			2019 Change to 2020 Change
	2018			2019			2020			% Change			% Change
	(in thousands)
Other income (expenses):
Interest expense	$	(173	)	$	(219	)	$	(157	)		26.6	%		(28.3	)%
Other income, net		100			36			28			(64.0	)%		(22.2	)%
Change in fair value of warrant liability		(2,681	)		(2,959	)		(12,714	)		10.4	%		329.7	%

Total other expenses	$	(2,754	)	$	(3,142	)	$	(12,843	)		14.1	%		308.8	%

2019 Compared to 2020

Interest Expense

Interest expense remained consistent at approximately $0.2 million in total costs for the years ended December 31, 2019 and December 31, 2020, a result of consistent borrowing amounts under our credit facility.

Other Income, Net

Other income, net remained consistent at approximately $0.1 million for the years ended December 31, 2019 and December 31, 2020, a result of interest earned on our money-market funds in cash and cash equivalents.

Change in Fair Value of Warrant Liability

The increase of $9.8 million in the fair value of warrant liability for the year ended December 31, 2020 was the result of an increase in value of our redeemable convertible preferred stock warrant liability.

2018 Compared to 2019

Interest Expense

Interest expense remained consistent at approximately $0.2 million in total costs for the years ended December 31, 2018 and December 31, 2019, a result of consistent borrowing amounts under our credit facility.

Other Income, Net

Other income, net remained consistent at approximately $0.1 million for the years ended December 31, 2018 and December 31, 2019, a result of interest earned on our money-market funds in cash and cash equivalents.

Change in Fair Value of Warrant Liability

The increase of $0.3 million in the fair value of warrant liability for the year ended December 31, 2019 was the result of an increase in value of our redeemable convertible preferred stock.

Provision for Income Taxes


	Year Ended December 31,						2018 Change to 2019 Change			2019 Change to 2020 Change
	2018		2019		2020		% Change			% Change
	(in thousands)
Provision for income taxes	$	17	$	26	$	189		52.9	%		626.9	%

Provision for income taxes primarily consists of state income taxes for the years ended December 31, 2018, 2019, and 2020. We maintain a full valuation allowance on our net federal and state deferred tax assets as we have concluded that it is not more likely than not that the deferred tax assets will be realized.

Quarterly Results of Operations

Quarterly Results of Operations

The following table sets forth our unaudited quarterly statements of operations data for each of the eight quarters in the period ended December 31, 2020. The information for each of these quarters has been prepared on a basis consistent with our audited annual financial statements appearing elsewhere in this prospectus and, in our opinion, include all normal recurring adjustments necessary for the fair statement of the financial information contained in those statements. The following unaudited quarterly financial data should be read in conjunction with our annual financial statements and the related notes included elsewhere in this prospectus. These quarterly results are not necessarily indicative of our operating results for a full year or any future period.

Quarterly Trends

Revenue

Our quarterly revenue increased in each period presented primarily due to increases in the number of active locations on the platform, increased adoption of additional product modules by our existing customers as evidenced by our net revenue retention, and an increase in transaction volumes. See “Components of Results of Operations — Revenue” for a further discussion of the impact of COVID- 19 and the associated shelter-in-place orders on our business.

Gross Margin

Our gross margin has improved over time as a result of increased average revenue per unit over this time period, driven by increased adoption of additional product modules per customer, and an increase in transaction volumes.

Operating Expenses

Research and development expense increased for all periods presented, primarily due to an increase in personnel-related expenses as we have continued to increase our headcount to support product and platform innovation.

General and administrative expense generally increased for all periods presented, primarily due to increases in personnel-related expenses, facilities costs, and professional service fees as we grow our business and scale operations.

Sales and marketing expense increased in the first, third and fourth quarter of each fiscal year due to an increase in expenses associated with higher personnel-related expenses as we continue to grow and scale the team and marketing expenses associated with our annual user conference. Our annual user conference occurs in the first quarter of the year, which generally results in lower second quarter spend relative to the first quarter.


	Three Months Ended (unaudited)
	March 31,			June 30,			September 30,			December 31,			March 31,			June 30,			September 30,			December 31,
	2019			2019			2019			2019			2020			2020			2020			2020
	(in thousands)
Revenue:
Platform	$	9,715		$	11,133		$	11,640		$	12,633		$	14,808		$	22,519		$	26,197		$	29,240
Professional services and other		637			1,006			2,522			1,405			1,260			1,785			1,308			1,307

Total revenue		10,352			12,139			14,162			14,038			16,068			24,304			27,505			30,547

Cost of revenues:
Platform		2,608			2,803			3,189			3,320			3,460			3,148			3,583			4,143
Professional services and other		416			938			1,354			958			882			1,113			1,196			1,143

Total cost of revenue		3,024			3,741			4,543			4,278			4,342			4,261			4,779			5,286

Gross profit		7,328			8,398			9,619			9,760			11,726			20,043			22,726			25,261

Operating expenses:
Research and development		4,497			5,034			5,658			6,498			7,217			7,628			7,870			10,192
General and administrative		1,928			4,958			2,327			2,944			4,832			4,844			5,462			7,071
Sales and marketing		1,650			1,433			1,609			1,659			2,280			1,806			2,002			2,457

Total operating expenses		8,075			11,425			9,594			11,101			14,329			14,278			15,334			19,720

Income (loss) from operations		(747	)		(3,027	)		25			(1,341	)		(2,603	)		5,765			7,392			5,541

Other income (expenses):
Interest expense		(58	)		(56	)		(55	)		(50	)		(46	)		(111	)		—			—
Other income, net		18			(11	)		18			11			11			7			(4	)		14
Change in fair value of warrant liability		(997	)		(649	)		(656	)		(657	)		(341	)		(1,676	)		(2,233	)		(8,464	)

Total other expenses		(1,037	)		(716	)		(693	)		(696	)		(376	)		(1,780	)		(2,237	)		(8,450	)

Income (loss) before income taxes		(1,784	)		(3,743	)		(668	)		(2,037	)		(2,979	)		3,985			5,155			(2,909	)
Provision (benefit) for income taxes		(1	)		—			23			4			47			47			47			48

Net income (loss) and comprehensive income (loss)	$	(1,783	)	$	(3,743	)	$	(691	)	$	(2,041	)	$	(3,026	)	$	3,938		$	5,108		$	(2,957	)


	Three Months Ended (unaudited)
	March 31,			June 30,			September 30,			December 31,			March 31,			June 30,			September 30,			December 31,
	2019			2019			2019			2019			2020			2020			2020			2020
Revenue:
Platform		93.8	%		91.7	%		82.2	%		90.0	%		92.2	%		92.7	%		95.2	%		95.7	%
Professional services and other		6.2			8.3			17.8			10.0			7.8			7.3			4.8			4.3

Total revenue		100.0			100.0			100.0			100.0			100.0			100.0			100.0			100.0

Cost of revenues:
Platform		25.2			23.1			22.5			23.7			21.5			13.0			13.0			13.6
Professional services and other		4.0			7.7			9.6			6.8			5.5			4.6			4.3			3.7

Total cost of revenue		29.2			30.8			32.1			30.5			27.0			17.5			17.4			17.3

Gross profit		70.8			69.2			67.9			69.5			73.0			82.5			82.6			82.7

Operating expenses:
Research and development		43.4			41.5			40.0			46.3			44.9			31.4			28.6			33.4
General and administrative		18.6			40.8			16.4			21.0			30.1			19.9			19.9			23.1
Sales and marketing		15.9			11.8			11.4			11.8			14.2			7.4			7.3			8.0

Total operating expenses		78.0			94.1			67.7			79.1			89.2			58.7			55.7			64.6

Income (loss) from operations		(7.2	)		(24.9	)		0.2			(9.6	)		(16.2	)		23.7			26.9			18.1

Other income (expenses):
Interest expense		(0.6	)		(0.5	)		(0.4	)		(0.4	)		(0.3	)		(0.5	)		—			—
Other income, net		0.2			(0.1	)		0.1			0.1			0.1			—			—			—
Change in fair value of warrant liability		(9.6	)		(5.3	)		(4.6	)		(4.7	)		(2.1	)		(6.9	)		(8.1	)		(27.7	)

Total other expenses		(10.0	)		(5.9	)		(4.9	)		(5.0	)		(2.3	)		(7.3	)		(8.1	)		(27.7	)

Income (loss) before income taxes		(17.2	)		(30.8	)		(4.7	)		(14.5	)		(18.5	)		16.4			18.7			(9.5	)
Provision (benefit) for income taxes		—			—			0.2			—			0.3			0.2			0.2			0.2

Net income (loss) and comprehensive income (loss)		(17.2	)%		(30.8	)%		(4.9	)%		(14.5	)%		(18.8	)%		16.2	%		18.6	%		(9.7	)%

Liquidity and Capital Resources

General

As of December 31, 2020, our principal source of liquidity was cash and cash equivalents totaling $75.8 million, which was held for working capital purposes, as well as the available balance of our revolving line of credit, described further below.

We have financed our operations primarily through sales of our equity securities and borrowings under our credit facility. We believe our existing cash and cash equivalents and amounts available under our outstanding credit facility will be sufficient to support our working capital and capital expenditure requirements for at least the next twelve months. Our future capital requirements will depend on many factors, including but not limited to our obligation to repay any remaining balance under our credit facility, our platform revenue growth rate, receivable and payable cycles, the timing and extent of investments in research and development, sales and marketing, and general and administrative.

Credit Facility

We are party to an Amended and Restated Loan and Security Agreement with Pacific Western Bank, or the Amended Loan and Security Agreement, for a revolving line of credit, or the credit facility. Under the Amended Loan and Security Agreement, effective February 11, 2020, we can borrow up to $35.0 million under a formula revolving line of credit, of which $25.0 million became available to us immediately on the agreement date. An additional $10.0 million will become available under the credit facility upon our achievement of revenue of at least $75.0 million in the year ended December 31, 2020. The amount available to us at any time is the lesser of (A) $25.0 million (or $35.0 million if revenue targets are achieved) or (B) five times our previous month’s recurring revenue. We can also borrow up to $5.0 million under a non-formula revolving line with aggregate borrowings under the formula and non-formula revolving line not to exceed $25.0 million (or $35.0 million if revenue targets are achieved). Advances under the formula revolving line of credit bear interest equal to the greater of (A) 0.20% above Pacific Western Bank’s prime rate then in effect; or (B) 4.50%. Advances under the non-formula revolving line of credit bear interest equal to the greater of (A) 0.75% above Pacific Western Bank’s prime rate then in effect; or (B) 5.00%. Interest is due and payable monthly in arrears. We may prepay advances under the credit facility in whole or in part at any time without premium or penalty, and the credit facility matures on February 11, 2022. Our obligations under the Amended Loan and Security Agreement are secured by substantially all of our assets. As of December 31, 2019, we had $3.5 million of outstanding borrowings under the credit facility. In March 2020, we borrowed an additional $15.0 million under the Amended Loan and Security Agreement, and the entire outstanding balance of $18.5 million was repaid in April 2020. As of December 31, 2020 we did not have any outstanding borrowings under the credit facility and had $25.0 million available to us under the credit facility.

The credit facility contains customary affirmative and negative covenants, including covenants that require Pacific Western Bank’s consent to, among other things, merge or consolidate or acquire assets outside the ordinary course of business, make investments, incur additional indebtedness or guarantee indebtedness of others, pay dividends and redeem and repurchase our capital stock, enter into transactions with affiliates outside the ordinary course of business, and create liens on our assets. We are also required to comply with certain minimum EBITDA and minimum revenue covenants. Specifically, measured monthly and calculated on a trailing three-month basis, we are required to achieve a minimum EBITDA target and a minimum revenue target as of the end of each month in 2020, including EBITDA of at least ($64,000) for the reporting period ending December 31, 2020 and revenue of at least $66.1 million for the reporting period ending December 31, 2020. We are in compliance with these covenants and would have been in compliance with these covenants as of December 31, 2020.

The credit facility also contains events of default that include, among other things, non-payment defaults, covenant defaults, insolvency defaults, cross-defaults to other indebtedness and material obligations, judgment defaults, inaccuracy of representations and warranties, and a material adverse change default. Any default that is not cured or waived could result in the acceleration of the obligations under the credit facility, an increase in the applicable interest rate under the credit facility to a per annum rate equal to 5.00% above the applicable interest rate, and would permit Pacific Western Bank to exercise remedies with respect to all of the collateral that is securing the credit facility.

The Amended Loan and Security Agreement will continue in full force and effect for so long as any obligations remain outstanding thereunder, provided, that, Pacific Western Bank has the right to terminate its obligation to make further advances to us immediately and without notice upon the occurrence and during the continuance of an event of default. We may terminate the formula revolving line or the non-formula revolving line at any time prior to the maturity date, upon two business days written notice to Pacific Western Bank, at which time all then outstanding obligations arising under the Amended Loan and Security Agreement, including any unpaid interest thereon, will accelerate and become immediately due and payable.

Redeemable Convertible Preferred Stock

In April 2020, we issued we issued 564,169 shares of Series E redeemable convertible preferred stock at a price per share of $88.62 for total proceeds of approximately $50.0 million.

Cash Flows

The following table presents a summary of our cash flows from operating, investing, and financing activities for the period indicated.


	Year Ended December 31,									2018 Change to 2019 Change			2019 Change to 2020 Change
	2018			2019			2020			% Change			% Change
	(in thousands)
Net cash (used in) provided by operating activities	$	(4,178	)	$	2,422		$	20,768			(158.0	)%		757.5	%
Net cash used in investing activities		(195	)		(1,352	)		(1,273	)		593.3	%		(5.8	)%
Net cash provided by financing activities	$	4,431		$	225		$	45,326			(94.9	)%		20,044.9	%

Operating Activities

For the year ended December 31, 2020, net cash provided by operating activities was $20.8 million, primarily due to net income of $3.1 million adjusted for non-cash charges of $19.4 million and a net decrease in our operating assets and liabilities of $1.7 million. The non-cash adjustments primarily relate to the change in the fair value of redeemable convertible preferred stock warrants of $12.7 million, stock-based compensation of $5.4 million, depreciation and amortization of $0.7 million and allowance for doubtful accounts of $0.6 million. The net decrease in operating assets and liabilities is primarily driven by an increase in accounts receivable of $31.5 million and deferred contract costs of $2.0 million due to the growth in our revenue. These increases are offset by an increase in accounts payable and accrued expenses of $32.0 million related primarily to higher fees owed to delivery service providers and vendors of $25.4 million and $2.7 million, respectively, a result of growth in Dispatch order volumes and operations and an increase in deferred rent of $0.6 million in connection with our new corporate headquarters.

For the year ended December 31, 2019, net cash provided by operating activities was $2.4 million, primarily due to a net loss of $8.3 million adjusted for non-cash charges of $8.2 million and a net decrease in our operating assets and liabilities of $2.5 million. The non-cash adjustments primarily relate to stock-based compensation of $4.8 million, the change in the fair value of redeemable convertible preferred stock warrants of $3.0 million and depreciation of $0.4 million. The net decrease in operating assets and liabilities is primarily driven by an increase in accounts receivable of $7.1 million and deferred contract costs of $1.1 million due to the growth in our revenue. These increases are offset by an increase in accounts payable and accrued expenses of $9.0 million related primarily to higher fees owed to delivery service providers and vendors of $4.1 million and $3.4 million, respectively, and an increase in deferred rent of $1.5 million in connection with our new corporate headquarters.

For the year ended December 31, 2018, net cash used in operating activities was $4.2 million, primarily due to a net loss of $11.6 million adjusted for non-cash charges of $7.1 million and a net decrease in our operating assets and liabilities of $0.3 million. The non-cash adjustments primarily relate to stock-based compensation of $4.2 million, the change in the fair value of warrants of $2.7 million and depreciation of $0.2 million. The net decrease in operating assets and liabilities is

primarily driven by an increase in accounts payable and accrued expenses of $6.0 million related primarily to increased fees owed to vendors and Delivery Service Providers of $2.9 million and $1.7 million, respectively, and an increase in unearned revenue and contract assets of $0.4 million related to the overall growth of our business. These increases are offset by increases in accounts receivable of $4.3 million and deferred contract costs of $0.8 million due to an increase in revenue and increases in prepaid expenses of $1.0 million to support the growth in the business.

Investing Activities

Cash used in investing activities was $1.3 million during the year ended December 31, 2020, primarily due to $0.8 million for the development of internal software and $0.5 million for purchases of computer and office equipment, furniture and fixtures, and leasehold improvements, investments to support further product development and to expand our corporate office.

Cash used in investing activities was $1.4 million during the year ended December 31, 2019, primarily due to $0.8 million for the development of internal software and $0.6 million for purchases of computer and office equipment, furniture and fixtures, and leasehold improvements, investments to support further product development and to expand our corporate office.

Cash used in investing activities was $0.2 million during the year ended December 31, 2018, primarily due to purchases of office equipment and leasehold improvements to expand our corporate office.

Financing Activities

Cash provided by financing activities was $45.3 million during the year ended December 31, 2020, reflecting $49.8 million of proceeds from the issuance of preferred stock, net of cost, $15.0 million of proceeds from the line of credit, and $2.6 million of net proceeds from the exercise of stock options. Increases were partially offset by $18.5 million of repayment of the line of credit, $2.2 million of payments for offering costs related to this offering, and $1.4 million for payment of employee taxes related to stock option net exercise.

Cash provided by financing activities was $0.2 million during the year ended December 31, 2019, reflecting $0.4 million of proceeds from the exercise of stock options and warrants, partially offset by $0.2 million of payments for offering costs related to this offering.

Cash provided by financing activities was $4.4 million during the year ended December 31, 2018, reflecting proceeds from borrowings under our line of credit for $3.5 million and the exercise of stock options and warrants, which were $0.8 million and $0.1 million, respectively.

Certain Non-GAAP Financial Measures

We report our financial results in accordance with generally accepted accounting principles in the United States, or GAAP. To supplement our financial statements, we provide investors with non-GAAP operating income (loss) and free cash flow, each of which is a non-GAAP financial measure.

Non-GAAP Operating Income (Loss)

Non-GAAP operating income (loss) is defined as operating income (loss), adjusted for the impact of stock-based compensation expense and amortization of internally developed software expense. Management believes that it is useful to exclude certain non-cash charges and non-core operational charges from non-GAAP operating income (loss) because (1) the amount of such

expenses in any specific period may not directly correlate to the underlying performance of our business operations; and (2) such expenses can vary significantly between periods as a result of the timing of new stock-based awards and secondary transactions. The presentation of the non-GAAP financial measures is not intended to be considered in isolation, or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.

The following table presents a reconciliation of GAAP operating loss to non-GAAP operating income (loss) for the following periods:


	Year Ended December 31,
	2018			2019			2020
	(in thousands)
Operating income (loss)	$	(8,781	)	$	(5,090	)	$	16,095
Stock-based compensation expense		4,196			4,826			5,380
Internally developed software amortization		—			108			316

Non-GAAP operating income (loss)	$	(4,585	)	$	(156	)	$	21,791

Non-GAAP Free Cash Flow

Free cash flow represents net cash used in operating activities, reduced by purchases of property and equipment, and capitalization of internally developed software. Free cash flow is a measure used by management to understand and evaluate our liquidity and to generate future operating plans. The reduction of capital expenditures facilitates comparisons of our liquidity on a period-to-period basis and excludes items that we do not consider to be indicative of our liquidity. We believe that free cash flow is a measure of liquidity that provides useful information to investors and others in understanding and evaluating the strength of our liquidity and future ability to generate cash that can be used for strategic opportunities or investing in our business in the same manner as our management and board of directors. Nevertheless, our use of free cash flow has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our financial results as reported under GAAP. Further, our definition of free cash flow may differ from the definitions used by other companies and therefore comparability may be limited. You should consider free cash flow alongside our other GAAP-based financial performance measures, such as net cash used in operating activities, and our other GAAP financial results. The following table presents a reconciliation of free cash flow to net cash used in operating activities, the most directly comparable GAAP measure, for each of the periods indicated.


	Year Ended December 31,
	2018			2019			2020
	(in thousands)
Net cash (used in) provided by operating activities	$	(4,178	)	$	2,422		$	20,768
Purchase of property and equipment		(195	)		(573	)		(399	)
Capitalization of internally developed software		—			(779	)		(874	)

Non-GAAP free cash flow	$	(4,373	)	$	1,070		$	19,495

Contractual Obligations and Commitments

The following table sets forth the amounts of our significant contractual obligations and commitments with definitive payment terms as of December 31, 2020:


	Payment due by Period
	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
	(in thousands)
Operating lease obligations	$	29,138	$	3,514	$	6,885	$	5,665	$	13,074
Unconditional purchase obligations⁽¹⁾		1,750		1,750		—		—		—

Total	$	30,888	$	5,264	$	6,885	$	5,665	$	13,074

(1)	Unconditional purchase obligations relate to cloud-based services to support our infrastructure.

The commitment amounts in the table above are associated with contracts that are enforceable and legally binding and that specify all significant terms, including fixed or minimum services to be used, fixed, minimum or variable price provisions, and the approximate timing of the actions under the contracts. The table does not include obligations under agreements that we can cancel without a significant penalty.

Off-Balance Sheet Arrangements

We did not have during the periods presented, and we do not currently have, any off-balance sheet financing arrangements or any relationships with unconsolidated entities or financial partnerships, including entities sometimes referred to as structured finance or special purpose entities, that were established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

Critical Accounting Policies

Our discussion and analysis of financial condition and results of operations are based upon our financial statements included elsewhere in this prospectus. The preparation of our financial statements in accordance with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. We base our estimates on past experience and other assumptions that we believe are reasonable under the circumstances, and we evaluate these estimates on an ongoing basis. Actual results may differ from those estimates.

Our critical accounting policies are those that materially affect our financial statements and involve difficult, subjective or complex judgments by management. A thorough understanding of these critical accounting policies is essential when reviewing our financial statements. We believe that the critical accounting policies listed below are the most difficult management decisions as they involve the use of significant estimates and assumptions as described above.

Revenue Recognition

We recognize revenue in accordance with Topic 606, which we adopted as of January 1, 2018 on a modified retrospective basis. We generate revenue from providing our customers access to our platform. We recognize revenue when we transfer promised goods or services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or

services. This is determined by following a five-step process which includes (1) identifying the contract with a customer, (2) identifying the performance obligations in the contract, (3) determining the transaction price, (4) allocating the transaction price, and (5) recognizing revenue when or as we satisfy a performance obligation.

The identification of distinct performance obligations in a contract requires judgment. Our performance obligations primarily include access to our platform and its different modules and implementation services associated with the platform. We believe that non-complex implementation services are generally distinct performance obligations while complex implementation services are generally combined with our platform services into one performance obligation.

The implementation fees in our contracts are variable. We estimate how many months it will take to implement the platform into the customer environment, including time to get restaurant franchise locations onboarded. This estimate is multiplied by the fixed monthly fee to determine the transaction price.

We allocate the transaction price of the contract to each distinct performance obligation based on a relative standalone selling price basis. We determine standalone selling price based on the price at which the performance obligation is sold separately. If the standalone selling price is not observable through past transactions, we estimate the standalone selling price taking into account available information such as market conditions and internally approved pricing guidelines related to the performance obligations.

Stock-Based Compensation

Accounting for stock-based compensation requires us to make a number of judgments, estimates, and assumptions. If any of our estimates prove to be inaccurate, our net loss and operating results could be adversely affected.

We estimate the fair value of stock options granted to employees using the Black-Scholes option-pricing model, which requires the input of subjective assumptions, including (1) the fair value of common stock, (2) the expected stock price volatility, (3) the expected term of the award, (4) the risk-free interest rate, and (5) expected dividends. Effective January 1, 2018, we changed our accounting policy to account for forfeitures as they occur. Prior to January 1, 2018, forfeitures were estimated at the date of grant and revised, if necessary, in subsequent periods. These assumptions are estimated as follows:

●

Fair value of common stock. Because our Class A common stock is not yet publicly traded, we are required to estimate the fair value of our Class A common stock, as discussed in “Common Stock Valuations” below.

●

Expected volatility. Due to the lack of historical and implied volatility data of our Class A common stock, the expected stock price volatility has been estimated based on the average historical stock volatilities of several peer public companies over a period equivalent to the expected term of the awards. We selected companies with comparable characteristics to us, including enterprise value, risk profiles and position within the industry and with historical share price information sufficient to meet the expected term of the stock options. The historical volatility data has been computed using the daily closing prices for the selected companies.

●

Expected term. For employee awards granted at-the-money, we estimate the expected term based on the simplified method, which is the mid-point between the vesting date and

the end of the contractual term for each award since our historical share option exercise experience does not provide a reasonable basis upon which to estimate the expected term. For non-employee awards and employee awards granted out-of-the-money, our best estimate of the expected term is the contractual term of the award.

●

Risk-free rate. The risk-free rate is based on the United States Treasury yield curve in effect at the time of the grant, whose term is consistent with the expected life of the stock option.

The fair value of each stock option grant is estimated on the date of grant using the Black Scholes option pricing model with the following assumptions:


	Year Ended December 31,
	2018	2019	2020
Expected term (years)	5.53 – 10.0	5.09 – 10.0	5.50 – 6.08
Volatility	45% – 50%	45% – 50%	43% – 66%
Risk-free interest rate	2.85% – 3.19%	1.60% – 2.50%	0.37% – 1.63%
Fair value of common stock	$1.38 – $2.56	$2.66 – $3.76	$4.06 – $9.05

Common Stock Valuations

The fair value of our shares of common stock underlying the stock options has historically been determined by the board of directors, with contemporaneous third-party valuations, as there was no public market for our common stock. We believe that our board of directors has the relevant experience and expertise to determine the fair value of our common stock. Given the absence of a public trading market of our common stock, and in accordance with the American Institute of Certified Public Accountants Practice Aid, Valuation of Privately Held Company Equity Securities Issued as Compensation, our board of directors exercised reasonable judgment and considered a number of objective and subjective factors to determine the best estimate of the fair value of our common stock at each grant date.

These factors include:

●

relevant precedent transactions involving our capital stock;

●

the liquidation preferences, rights, and privileges of our convertible preferred stock relative to the common stock;

●

our actual operating and financial performance;

●

current business conditions and projections;

●

our stage of development;

●

the likelihood and timing of achieving a liquidity event for the shares of common stock underlying the stock options, such as an initial public offering, given prevailing market conditions;

●

any adjustment necessary to recognize a lack of marketability of the common stock underlying the granted options;

●

recent secondary stock sales and tender offers;

●

the market performance of comparable publicly traded companies; and

●

U.S. and global capital market conditions.

In valuing our common stock, our board of directors determines the value using both the income and the market approach valuation methods. The income approach estimates value based on the expectation of future cash flows that a company will generate. These future cash flows are discounted to their present values using a discount rate based on our weighted average cost of capital, or WACC. To derive our WACC, a cost of equity was developed using the Capital Asset Pricing Model and comparable company betas, and a cost of debt was determined based on our estimated cost of borrowing. The costs of debt and equity were then weighted based on our actual capital structure. The market approach estimates value based on a comparison of our company to comparable public companies in a similar line of business and acquisitions in the market. From the comparable companies, a representative market multiple is determined and subsequently applied to our financial results to estimate our enterprise value.

Application of these approaches involves the use of estimates, judgment, and assumptions that are highly complex and subjective, such as those regarding our expected future revenue, expenses, and future cash flows, discount rates, market multiples, the selection of comparable companies, and the probability of possible future events. Changes in any or all of these estimates and assumptions or the relationships between those assumptions impact our valuations as of each valuation date and may have a material impact on the valuation of our common stock.

For valuations after the completion of this offering, our board of directors will determine the fair value of each share of underlying common stock based on the closing price of our common stock as reported on the date of grant. Future expense amounts for any particular period could be affected by changes in our assumptions or market conditions.

Based on the assumed initial public offering price per share of $17.00, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, the aggregate intrinsic value of our outstanding stock options as of December 31, 2020 was $590.2 million, with $457.1 million related to vested stock options.

Redeemable Convertible Preferred Stock Warrant Liability

Accounting for warrants requires us to make judgments, estimates, and assumptions. If any of our estimates prove to be inaccurate, our net loss and operating results could be adversely affected.

The fair value of the warrants was determined by first estimating the fair value of the enterprise based on recent transactions of our securities. An Option-Pricing Method, or OPM, was then used to allocate our total equity value to our different classes of equity according to their rights and preferences. This method treats classes having the attributes of common stock and preferred stock securities as call options on the value of the company equity, with exercise prices based on the liquidation preferences of preferred stockholders. Our classes of stock are modeled as a call option that give the owner the right to buy the underlying enterprise value at an exercise price. The OPM requires the input of subjective assumptions, including the expected term, which represents the estimate point for when liquidity will be achieved.

100

At December 31, 2018, the fair value of each redeemable convertible preferred stock warrant was estimated using the OPM with the following assumptions:


Expected term (years)	3.0
Volatility	45	%
Risk-free interest rate	2.9	%

At December 31, 2019 and 2020, given the significant increase in fair value of each series of redeemable convertible preferred stock relative to the redeemable convertible preferred stock warrant’s exercise price, we estimated the preferred stock warrant liability using the intrinsic value of each redeemable convertible preferred stock warrant since the warrants are significantly in-the-money and the Black Scholes inputs have a de minimis impact on their value.

Recent Accounting Pronouncements

For a description of our recently adopted accounting pronouncements and recently issued accounting standards not yet adopted, see Note 2 to our financial statements: “Significant Accounting Policies” appearing elsewhere in this prospectus.

Quantitative and Qualitative Disclosures About Market Risk

We are exposed to market risks in the ordinary course of our business. Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily a result of exposure to potential changes in interest rates. We do not enter into investments for trading or speculative purposes and have not used any derivative financial instruments to manage our interest rate risk exposure.

Interest Rate Risk

Our primary market risk exposure is changing interest rates in connection with the Amended Loan and Security Agreement with Pacific Western Bank. Interest rate risk is highly sensitive due to many factors, including U.S. monetary and tax policies, U.S. and international economic factors and other factors beyond our control. As of December 31, 2020, advances under the formula revolving line bear interest equal to the greater of (A) 0.75% above the Prime Rate then in effect; or (B) 5.00%. As of December 31, 2020, we had no outstanding debt under our credit facility.

Our interest-earning instruments also carry a degree of interest rate risk. As of December 31, 2020, we had cash and cash equivalents of $75.8 million.

Foreign Currency Exchange Risk

Our revenue and costs are denominated in U.S. dollars and are not subject to foreign currency exchange risk. However, to the extent we commence generating revenue outside of the United States that is denominated in currencies other than the U.S. dollar, our results of operations could be impacted by changes in exchange rates.

Inflation Risk

We do not believe that inflation has had a material effect on our business, results of operations, or financial condition. If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, results of operations and financial condition.

101

JOBS Act Accounting Election

We qualify as an “emerging growth company” pursuant to the provisions of the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. For as long as we are an “emerging growth company,” we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies,” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, exemptions from the requirements of holding advisory “say-on-pay” votes on executive compensation, and stockholder advisory votes on golden parachute compensation.

The JOBS Act also permits an emerging growth company like us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. We have elected to “opt-in” to this extended transition period for complying with new or revised accounting standards and, therefore, we will not be subject to the same new or revised accounting standards as other public companies that comply with such new or revised accounting standards on a non-delayed basis.

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LETTER FROM NOAH GLASS, FOUNDER AND CEO

Hi, I’m Noah Glass, the Founder and CEO of Olo. Thank you for reading our prospectus and considering an investment in Olo. I’ve been obsessed with on-demand commerce since moving to New York City in 2003.

You cannot ship a hot cup of coffee from a warehouse. That was the original insight that first led me to think about how to more effectively connect the convenience of on-demand commerce with the nearly $700 billion restaurant industry over 15 years ago. What if you could utilize the convenience and technology of the burgeoning e-commerce sector to order and pay for a coffee directly from your mobile phone and have it ready when you got to the restaurant? At Olo, we call that “on-demand commerce”: a form of e-commerce that is focused on the restaurant industry and allows a consumer to order and pay on-demand and have a made-to-order product prepared just-in-time for real-time pickup or same-hour delivery.

Today, Olo has grown to become a leading software-as-a-service (SaaS) platform for the restaurant industry, enabling over $14.6 billion in on-demand commerce in 2020 for a network of over 400 top restaurant brands across 64,000 locations. As a result of the substantial investments we have made to grow our business, we have incurred significant losses since inception and as of December 31, 2020, we had an accumulated deficit of $69.3 million. Our well-established platform has led many of the major publicly traded and top 50 fastest growing private restaurant brands, measured by overall sales, in the United States to work with us and has been a factor in our high dollar-based net revenue retention. See the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for additional information on how we calculate dollar-based net revenue retention. Further, industry-recognized outlets, including Restaurant Business Online, QSR Magazine, and AP News, have also deemed Olo a leading food ordering platform for the restaurant industry.

Olo’s mission is to help our restaurant customers thrive by best meeting the needs of on-demand consumers. Olo is a software platform for restaurants. We are not an aggregator or marketplace for consumers. Our business-to-business-to-consumer (B2B2C) approach means that we are truly partners with our restaurant customers. We enable our restaurant customers to better serve their consumers, rather than competing with them for those same consumers. This differentiated market position has enabled us to establish one of the largest restaurant technology ecosystems with over 100 restaurant technology partners that integrate into Olo’s open SaaS platform and add value for our joint restaurant customers.

My fascination with the idea of more effectively connecting on-demand commerce with restaurants began when I first moved to New York City in 2003, carrying a Palm Pilot personal digital assistant. I came to believe that mobile devices would soon become ubiquitous and forever change how consumers conducted commerce with brick and mortar stores. My instinct was informed in equal parts by (1) my first restaurant industry job in 1998, as a pizza delivery driver at Pizzaman in my hometown of Newton, Massachusetts, and (2) spending a large chunk of 2003 and 2004 working in Johannesburg, South Africa with Endeavor (an organization dedicated to fostering high-growth entrepreneurship around the globe), where I first met mobile phone software developers and saw the inevitable ubiquity of smartphones and their potential impact for on-demand commerce in the restaurant industry. Throughout 2004, I worked with a small team of engineers based in Johannesburg to build a working prototype that enabled a simple mobile Internet device to construct and place a basic order from a limited menu and have that order ping a rudimentary point-of-sale (POS) application. Upon seeing the demo and hearing my business plan, my mentor David Frankel, a successful Internet entrepreneur and investor and current Olo board member, asked me if I had enough confidence in this idea to withdraw my admission to Harvard Business School and quit my job to pursue Olo in exchange

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for seed funding. It was a “burn the boats” prerequisite, with David testing my conviction level to make Olo my only path forward. I knew immediately that it was the right time to pursue the Olo opportunity. Smartphone mass adoption would happen exactly once in human history. This was the opportunity to plant a stake in the ground. Olo was born on June 1, 2005.

We live our values at Olo. Our three primary values are:

Family First: Our families make us who we are and are who we work for every day. Olo is our second family. This focus on family and a balanced approach to work and family life has enabled Olo to recruit, attract, and retain a world-class team. Olo has indeed become my second family. The initial twelve Olo employees have been together for over a decade. The relatively “new” members of the executive team joined when we truly hit market-product fit in 2013 and have been with the company ever since, making our average executive tenure over eight years. We have all built this company together, having one another’s backs, fighting through setbacks, and laughing all the way. Our family first value has never been more important than during COVID-19.

Drive: As a high school All American and four-year starting defenseman for Yale Men’s Lacrosse, I introduced Team Olo to the concept of a “groundball” and we speak often about the importance of having a “groundball mentality.” A groundball is not like a jump ball in basketball, which is disproportionately won by the player who is the tallest or has the highest vertical leap. Instead, a groundball transcends physicality and requires both skill and creativity at peak physical intensity in order to win. We celebrate that grit at Olo. We dig deep to do what others are unwilling or unable to do.

Excelsior: The New York state motto meaning “ever upward” in Latin. We are constantly striving for self and company improvement at all levels. We do not get comfortable. We do not stop. This manifests in a greater desire to improve our community and our world, not just our financials. One example of our work to strive for improvement in our community is our long-standing affiliation with Share Our Strength: the parent organization behind the No Kid Hungry campaign to end childhood hunger in America. We seek to be an advocate for the restaurant industry as its most restaurant-aligned technology partner. In furtherance of this value, we have launched an Olo for Good initiative focused on fostering a sustainable contribution to the communities in which we live, work, and service by integrating social responsibility and impact into our business. As part of this initiative, we have created a donor-advised fund, which will be funded with shares of our Class A common stock upon completion of this offering, and have joined the Pledge 1% movement committing one percent of Olo’s time and product, in addition to equity, to Olo for Good Initiatives.

Restaurants are an incredibly complex type of retailer. They are a mashup of a showroom and a factory, making on-demand commerce for restaurants more difficult than typical on-demand commerce. Our restaurant customers serve perishable, made-to-order products just-in-time with modifications, substitutions, and combinations, manifesting in a scale of permutations that non-restaurant retailers do not face. Add to that the uphill battle that we faced in our efforts to integrate legacy software and POS systems that were coded pre-Internet with our cloud-based platform, retrofitting a brick and mortar store for an on-demand experience. We knew that building an enterprise-grade, on-demand commerce software platform with the security and robust features restaurants need would be one of the most challenging vertical on-demand commerce developments and took an “if we can make it here, we can make it anywhere” approach that has served us well over the years.

Consumers place a premium on safety and food convenience. Consumers are outsourcing food preparation more than ever, with the restaurant industry recently surpassing the

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grocery industry in aggregate consumer spending for the first time in history. Even before the onset of the COVID-19 pandemic, 63% of restaurant transactions were for off-premise consumption (with delivery representing only 3%) and leaving just 37% of restaurant meals consumed at restaurants. Those numbers are shocking even to restaurant industry insiders and they represent the voracious consumer appetite for on-demand commerce at restaurants. COVID-19 has led to more consumers utilizing digital ordering, many forging new habits based on the safety of never having to leave their vehicle or home and the convenience of still being able to enjoy their favorite dishes from the restaurants they love.

The nearly $700 billion restaurant industry is facing new and significant challenges with pressured growth and margins as it adapts to on-demand commerce, exacerbated by COVID-19. COVID-19 has forced many restaurants (particularly independent and small chain restaurants) to close their doors temporarily or permanently. Nearly all restaurants that remain open for business have had to shift their operational model to be off-premise focused. We have helped our restaurant customers to launch new capabilities to meet the new consumer needs: delivery, curbside pickup, and tableside digital ordering.

We believe that our success is distinctly aligned with the long-term success of the restaurants we serve. In January 2020, Nation’s Restaurant News’ named me as the #1 most powerful restaurant executive in its 2020 Power List. I was deeply honored by this recognition of Olo’s important role in the restaurant industry. We know that Olo’s responsibility to perform has never been greater. We built Olo to align with our restaurant customers and to help them continue to thrive. As we have stepped up to help our customers manage through the COVID-19 crisis as a mission-critical component of the essential service restaurant industry, we are even more driven by our mission to help our customers survive and thrive.

If you believe that consumers like restaurant food and on-demand commerce, we hope you will also believe in the core tenets of Olo’s ongoing success. We are the restaurant industry’s leading open SaaS platform. Our first-scaler advantage enabled us to build industry wide solutions like Dispatch (nationwide same-hour delivery-as-a-service) and Rails (aggregator channel and revenue management). As of December 31, 2020, 71% of our customers used all three of our modules because these products met their needs and the shifting demands of consumers. However, as we model our opportunity over 15 years into our journey, we believe there is an incredible opportunity to add more restaurant customers, sales volume, and product offerings. That’s our not-so-secret formula. Although we have incurred significant losses since inception and we have a substantial accumulated deficit, these losses and accumulated deficit are a result of the substantial investments we made to grow our business and we expect to make significant expenditures to expand our business in the future. We will continue to invest in Team Olo and Olo’s customers, community, and partners, in keeping with Olo Director Danny Meyer’s “Enlightened Hospitality” philosophy that we believe to be in our stakeholders’ long-term best interest.

The restaurant industry is our first, not our only vertical. For now, we remain laser-focused on restaurants and supporting our restaurant customers. However, we believe that the on-demand commerce platform we are building for the restaurant industry is ultimately transferable to other retail verticals like the grocery stores, convenience stores, and others that have faced similar struggles adopting traditional on-demand commerce.

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We have miles to go before we sleep. I’ve been running Olo for over 15 years. I’d sign on to do it for the rest of my career, if given the chance. I’ve never been more excited about Olo’s opportunity and driven by our mission than I am today. Luckily, that has been true each day that I can remember and I’m confident that it will be true for a lifetime of tomorrows.

We would be honored for you to join us on this historic journey.

My best, Noah

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BUSINESS

Overview

Olo provides a leading cloud-based, on-demand commerce platform for multi-location restaurant brands.

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brand or restaurant chain, do not have the expertise or the resources to develop their own solutions to manage on-demand commerce and are more acutely challenged because their in-store technology is comprised of a fragmented set of legacy solutions, many of which were developed before the internet. At the same time, delivery service providers, or DSPs, and ordering aggregators have catalyzed digital demand, but pose new challenges for restaurant brands through lower long-term profitability, increased complexity, disintermediation of the restaurant’s direct relationship with the consumer and, increasingly, directly competitive food offerings. Additionally, restaurants face increasing economic pressure with an intensely competitive landscape, which has only been exacerbated by the COVID-19 pandemic. Due to its unique complexities and challenges, the restaurant industry has historically been one of the lowest penetrated on-demand commerce segments of the retail industry, with digital sales accounting for less than 10% of sales, according to a report published by Cowen Equity Research in 2019.

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Ordering. A fully-integrated, white-label, on-demand commerce solution, enabling consumers to order directly from and pay restaurants via mobile, web, kiosk, car, voice, and other digital channels.

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Dispatch. A fulfillment solution, enabling restaurants to offer, manage and expand direct delivery while optimizing price, timing, and service quality.

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We are the exclusive direct digital ordering provider for our leading brands across all service models of the restaurant industry, including quick service, fast casual, casual, family, and snack food. Our customers include major publicly traded and the fastest growing private restaurant brands such as Chili’s, Wingstop, Shake Shack, Five Guys, and sweetgreen. As of December 31, 2020, we had approximately 400 brand customers representing over 64,000 active locations using our platform. Our average initial contract length is generally three years with continuous one-year automatic renewal periods, providing visibility into our future financial performance. Our enterprise brands, meaning those brands having 50 or more locations, are also highly loyal. Over the last five years, on average nearly 99% of our enterprise brand customers, which accounted for 91% of our total active locations as of December 31, 2020, have continued using our Ordering module each year. Our customers and the success they have had increasing their digital sales volumes are the best reflection of the value of our

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platform. Our customers’ digital same-store sales has increased, on average, by 44% for the month ended December 31, 2019 when compared to the month ended December 31, 2018. This trend has further accelerated over the past year, with digital same-store sales up 156% for the month ended December 31, 2020 when compared to the month ended December 31, 2019.

Our business has experienced rapid growth in a highly capital efficient manner. Since inception 15 years ago, we have raised less than $100.0 million of primary investment capital, net of share repurchases, and as of December 31, 2020, we had cash and cash equivalents of $75.8 million with no outstanding debt. During the years ended December 31, 2018, 2019, and 2020, we generated revenue of $31.8 million, $50.7 million, and $98.4 million, respectively, representing year-over-year growth of 59.4% and 94.2%. During the years ended December 31, 2018, 2019, and 2020, we generated gross profit of $21.0 million, $35.1 million, and $79.8 million, respectively, or 66.0%, 69.3% and 81.0% as a percentage of revenue, respectively. During the years ended December 31, 2018 and 2019, we incurred net losses of $11.6 million and $8.3 million, respectively and, during the year ended December 31, 2020, we generated net income of $3.1 million. During the years ended December 31, 2018 and 2019, we incurred operating losses of $8.8 million and $5.1 million, respectively, and during the year ended December 31, 2020, we generated operating income of $16.1 million. During the years ended December 31, 2018 and 2019, we incurred non-GAAP operating losses of $4.6 million and $0.2 million, respectively, and during the year ended December 31, 2020, we generated non-GAAP operating income of $21.8 million. See the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for additional information on our non-GAAP metrics.

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COVID-19 Update

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Impact on Our Operations:

During the month of March, in accordance with local, state, and national regulations, we closed our offices in New York, and transitioned our employees to work-from-home and efficiently adapted our operations to a remote working environment. In addition, we were able to operate without terminating or furloughing our employees. As the pandemic continued, we grew our employee base to scale the business in order to meet the increased customer demands we were facing.

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Impact on Our Customers:

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ordering solutions, and additional ecosystem partners. We engaged with our customers to collaborate on implementing the most relevant short- and long-term solutions. In addition to helping our customer brands react to COVID-19, we recognized the importance of supporting the restaurant industry and front-line workers directly and made donations to the Restaurant Employee Relief Fund.

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Impact on Our Financials:

Our revenue for the quarters ended March 31, 2020, June 30, 2020, September 30, 2020, and December 31, 2020 increased by 55.2%, 100.2%, 94.2%, and 117.6%, respectively, compared to 2019. For the years ended December 31, 2018, 2019, and 2020, 93.2%, 80.8%, and 56.7% of our platform revenue was subscription revenue, respectively, and 6.8%, 19.2%, and 43.3% was transaction revenue, respectively. While many restaurants have been struggling during this period, we have been uniquely positioned to expand our footprint and help support the restaurant industry when it was most in need. While we expect on-premise dining to return over time, we believe that off-premise offerings will continue to be an essential part of a restaurant’s operations. See “Components of Results of Operations - Revenue” for a further discussion of the impact of COVID-19 and the associated shelter-in-place orders on our business.

Industry Background

There are a number of important industry trends driving our market opportunity.

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Restaurants are facing complex challenges and are under significant economic pressure. The restaurant landscape has become increasingly dynamic, with competition coming from existing restaurant brands, new restaurant brands, aggregators and ghost kitchens, that frequently have sophisticated digital, marketing, ordering, and distribution strategies. As a result, it is difficult for some restaurants to attract and retain loyal consumers. Moreover, restaurant brands are increasingly having to share their revenue with aggregators. These challenges have only been exacerbated by COVID-19 as many governments imposed restrictions to on-premise dining, resulting in significant financial losses and many closures. All restaurant operators have had to adapt to these new, complex challenges or risk losing their business. There is now a real urgency for restaurants to adopt cost-effective digital solutions in order to support their businesses and drive margin expansion and incremental sales over the longer term.

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The restaurant industry is massive and enterprises are rapidly expanding market share. The nearly $700 billion restaurant industry is undergoing a dynamic transformation, being forced to adapt to the new market environment created by COVID-19. According to the National Restaurant Association, the restaurant industry’s share of the dollars spent on food increased from 25% in 1955 to 51% in 2019, representing the first time in history that restaurants have surpassed grocery in aggregate sales. While restaurants have lost some traction against grocery due to COVID-19, we expect the increase in restaurant spend when compared to grocery to continue over the long-term, and according to analysis by The Freedonia Group, consumer spending on restaurants is expected to increase to $1.1 trillion by 2024. Enterprise restaurant brands in particular are rapidly increasing their share of the market as they are able to leverage their scale to more effectively deploy on-demand commerce solutions than many small and medium business, or SMB restaurants. We expect consumers will continue to demand digital solutions from restaurants that offer more convenience and personalization, helping to drive sales and expand the industry.

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of off-premise offerings with 78% of operators identifying off-premise solutions as a strategic priority, according to the State of the Industry Report published by the National Restaurant Association in 2019. COVID-19 has accelerated this shift with at least 27% of restaurant operators reporting having added new off-premise delivery options since the pandemic began, according to a survey by the National Restaurant Association. While consumers currently appear less apprehensive to visit restaurants and dine-in than they did at the beginning of the pandemic, usage of delivery and carry-out options remains higher than pre-COVID-19 levels. According to a recent survey by the National Restaurant Association, approximately 70% of restaurant operators across service categories plan to keep the changes they made to their restaurant after COVID-19 has subsided.

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Restaurant brands must evolve to own digital relationships with their consumers. Like any other retailer, understanding and owning the consumer relationship is vital to restaurants as it allows them to better analyze interactions, customize offerings, and maximize the long-term value of their consumers. However, restaurants risk losing direct consumer relationships if they are heavily reliant on aggregators, which generally do not provide visibility into who is ordering or enable a restaurant to articulate its unique brand value. According to a recent survey by the National Restaurant Association, 64% of adults prefer to order directly through the restaurant for delivery, compared to only 18% who

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prefer to order through a third-party service for delivery. In fact, over 70% of Olo customers in a recent survey indicated that their primary reason to own their own branded digital storefront was to own a direct relationship with their guests. The majority of respondents have 50% or less of their online orders coming through an aggregator compared to their own channel, and they expect their mix of aggregator order volumes to decrease in the future relative to their own channel. Additionally, aggregators typically limit a restaurant’s ability to collect and use data about consumers and orders transacted through the aggregator. Consumers also value this direct and personal connectivity with restaurant brands, and we believe consumers would rather interact directly with a brand than through an intermediary.

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Complexities of the Current Ecosystem

The key complexities that hinder restaurants’ digital transformation progress include:

POS and Technology Integration

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Static, legacy software infrastructure. Legacy restaurant systems were not built for modern, cloud–based environments. As a result, many lack the reliability, scalability, and security capabilities that today’s SaaS solutions offer, leaving restaurants and their consumer data vulnerable. Furthermore, brands are unable to access their consumer data, as it resides in different systems and databases that cannot communicate with each other.

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Food and Menu Management

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Order Channels

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