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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________________________________________
FORM 10-Q
_______________________________________________________________
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2022
¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 001-40213
olo-20220630_g1.jpg
Olo Inc.
(Exact name of registrant as specified in its charter)
______________________________________________________________________________
Delaware20-2971562
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification Number)
285 Fulton Street
One World Trade Center, 82nd Floor
New York, NY 10007
(Address of principal executive offices) (Zip Code)
(212) 260-0895
(Registrant’s telephone number, including area code)
_______________________________________________________________
Securities registered pursuant to Section 12(b) of the act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A Common Stock, par value $0.001 per shareOLOThe New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes x  No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes x  No ¨
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 filerxSmaller reporting company¨
 Emerging growth companyx
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 13(a) of the Exchange Act.    ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨  No x
As of August 8, 2022, 102,296,240 shares of the registrant’s Class A common stock and 59,363,960 shares of registrant’s Class B common stock were outstanding.



OLO INC.
TABLE OF CONTENTS
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains express or implied forward-looking statements that are based on our management’s belief and assumptions and on information currently available to our management. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, 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:
our expectations regarding our revenue, expenses, and other operating results, including overall transaction volumes, average revenue per unit, or ARPU, ending active locations and dollar-based net revenue retention, or NRR;
the durability of the growth we have experienced in the recent past due to the COVID-19 pandemic and the associated government-imposed restrictions on consumer preferences for digital ordering and customer adoption of multi-modules;
our ability to acquire new customers and successfully retain existing customers;
our ability to develop and release new products and services;
our ability to develop and release successful enhancements, features, and modifications to our existing products and services;
our ability to increase usage of our platform and upsell and cross sell additional modules;
our ability to attain or sustain our profitability;
the effects of the COVID-19 pandemic or other public health crises, macroeconomic conditions, such as inflation, interest rates, or overall market uncertainty;
future investments in our business, our anticipated capital expenditures, and our estimates regarding our capital requirements;
the loss or decline in revenue from any of our largest customers and our resulting financial condition;
our ability to compete effectively with existing competitors and new market entrants;
the costs and success of our sales and marketing efforts, and our ability to promote our brand;
our reliance on key personnel and our ability to identify, recruit, and retain skilled personnel;
our ability to effectively manage our growth, including any international expansion;
our ability to realize the anticipated benefits of past or future investments, strategic transactions, or acquisitions, and risk that the integration of these acquisitions may disrupt our business and management;
our ability to protect our intellectual property rights and any costs associated therewith;
the growth rates of the markets in which we compete;
our expectations regarding the period during which we qualify as an emerging growth company under the Jumpstart Our Business Startups Act of 2012, or the JOBS Act; and
other risks and uncertainties, including those listed under the caption “Risk Factors.”
You should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q 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, assumptions, uncertainties, and other factors described elsewhere in this Quarterly Report on Form 10-Q and those listed in the section entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021. 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 Quarterly Report on Form 10-Q. 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 Quarterly Report on Form 10-Q. 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 Quarterly Report on Form 10-Q 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 Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q 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.
Unless the context otherwise indicates, references in this report to the terms “Olo,” “the Company,” “we,” “our,” and “us” refer to Olo Inc.

“Olo” and other trade names and trademarks of ours appearing in this Quarterly Report on Form 10-Q are our property. This Quarterly Report on Form 10-Q contains trade names and trademarks of other companies, which are the property of their respective owners. We do not intend our use or display of other companies’ trade names or trademarks to imply an endorsement or sponsorship of us by such companies, or any relationship with any of these companies.


PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
OLO INC.
Condensed Consolidated Balance Sheets (Unaudited)
(in thousands, except share and per share amounts)
As of
 June 30,
2022
As of
December 31,
2021
ASSETS  
Current assets:  
Cash and cash equivalents$386,670 $514,445 
Short-term investments73,535  
Accounts receivable, net of allowances of $656 and $657, respectively
41,649 42,319 
Contract assets435 568 
Deferred contract costs2,642 2,567 
Prepaid expenses and other current assets8,281 5,718 
Total current assets513,212 565,617 
Property and equipment, net8,992 3,304 
Intangible assets, net23,678 19,635 
Goodwill207,540 162,956 
Contract assets, noncurrent619 387 
Deferred contract costs, noncurrent4,003 3,616 
Operating lease right-of-use assets17,347  
Long-term investments4,476  
Other assets, noncurrent395 361 
Total assets$780,262 $755,876 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$2,098 $2,184 
Accrued expenses and other current liabilities44,689 45,395 
Unearned revenue3,231 1,190 
Operating lease liabilities, current2,630  
Total current liabilities52,648 48,769 
Unearned revenue, noncurrent1,618 3,014 
Operating lease liabilities, noncurrent17,009  
Other liabilities, noncurrent69 2,343 
Total liabilities71,344 54,126 
Commitments and contingencies (Note 16)
Stockholders’ equity:
Class A common stock, $0.001 par value; 1,700,000,000 shares authorized at June 30, 2022 and December 31, 2021; 97,645,289 and 78,550,530 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively. Class B common stock, $0.001 par value; 185,000,000 shares authorized at June 30, 2022 and December 31, 2021; 63,554,232 and 79,149,659 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively
161 158 
Preferred stock, $0.001 par value; 20,000,000 shares authorized at June 30, 2022 and December 31, 2021
  
Additional paid-in capital843,764 813,166 
Accumulated deficit(134,756)(111,574)
Accumulated other comprehensive loss(251) 
Total stockholders’ equity708,918 701,750 
Total liabilities and stockholders’ equity$780,262 $755,876 
The accompanying notes are an integral part of these financial statements.

1

OLO INC.
Condensed Consolidated Statements of Operations (Unaudited)
(in thousands, except share and per share amounts)

Three Months Ended
June 30,
Six Months Ended
June 30,
2022202120222021
Revenue:
Platform$44,538 $34,526 $86,004 $69,449 
Professional services and other1,063 1,370 2,353 2,570 
Total revenue45,601 35,896 88,357 72,019 
Cost of revenue:
Platform12,749 6,180 23,773 11,787 
Professional services and other1,419 1,183 3,197 2,426 
Total cost of revenue14,168 7,363 26,970 14,213 
Gross Profit31,433 28,533 61,387 57,806 
Operating expenses:
Research and development17,233 13,931 34,058 28,387 
General and administrative17,235 13,310 35,196 31,764 
Sales and marketing8,897 3,701 16,967 7,537 
Total operating expenses43,365 30,942 86,221 67,688 
Loss from operations(11,932)(2,409)(24,834)(9,882)
Other income (expenses), net:
Interest income533  585  
Interest expense(46) (46) 
Other income (expense)7 10 13 (8)
Change in fair value of warrant liability   (18,930)
Total other income (expenses), net494 10 552 (18,938)
Loss before income taxes(11,438)(2,399)(24,282)(28,820)
Provision (benefit) for income taxes235 38 (1,100)74 
Net loss$(11,673)$(2,437)$(23,182)$(28,894)
Accretion of redeemable convertible preferred stock to redemption value   (14)
Net loss attributable to Class A and Class B common stockholders$(11,673)$(2,437)$(23,182)$(28,908)
Net loss per share attributable to Class A and Class B common stockholders:
Basic$(0.07)$(0.02)$(0.15)$(0.30)
Diluted$(0.07)$(0.02)$(0.15)$(0.30)
Weighted-average Class A and Class B common shares outstanding:
Basic160,429,125 147,510,963 159,813,053 95,690,520 
Diluted160,429,125 147,510,963 159,813,053 95,690,520 
The accompanying notes are an integral part of these financial statements.

2

OLO INC.
Condensed Consolidated Statements of Comprehensive Loss (Unaudited)
(in thousands)

Three Months Ended
June 30,
Six Months Ended
June 30,
2022202120222021
Net loss$(11,673)$(2,437)$(23,182)$(28,894)
Other comprehensive loss:
Unrealized loss on investments(251) (251) 
Total other comprehensive loss(251) (251) 
Comprehensive loss$(11,924)$(2,437)$(23,433)$(28,894)
The accompanying notes are an integral part of these financial statements.

3

OLO INC.
Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit) (Unaudited)
(in thousands, except share data)
Class A and Class B Common StockAdditional
Paid In
Capital
Accumulated
Deficit
Accumulated Other Comprehensive LossTotal
Stockholders’ Equity (Deficit)
SharesAmount
Balance as of December 31, 2021157,700,189 $158 $813,166 $(111,574)$— $701,750 
Issuance of common stock on exercise of stock options1,851,334 2 2,305 — — 2,307 
Vesting of restricted stock units136,662 — — — — — 
Stock-based compensation— — 12,457 — — 12,457 
Net loss— — — (11,509)— (11,509)
Balance as of March 31, 2022159,688,185 $160 $827,928 $(123,083)$— $705,005 
Issuance of common stock under the Employee Stock Purchase Plan193,267 — 1,764 — — 1,764 
Issuance of common stock on exercise of stock options1,118,331 1 2,322 — — 2,323 
Vesting of restricted stock units199,738 — — — — — 
Stock-based compensation— — 11,750 — — 11,750 
Other comprehensive loss— — — — (251)(251)
Net loss— — — (11,673)— (11,673)
Balance as of June 30, 2022161,199,521 $161 $843,764 $(134,756)$(251)$708,918 
Redeemable Convertible
Preferred Stock
Class A and Class B Common StockAdditional
Paid In
Capital
Accumulated
Deficit
Total
Stockholders' Equity (Deficit)
SharesAmountSharesAmount
Balance as of December 31, 202058,962,749 $111,737 22,320,286 $22 $16,798 $(69,301)$(52,481)
Initial public offering, net of underwriting discount and deferred offering costs— — 20,700,000 21 477,805 — 477,826 
Accretion of redeemable convertible preferred stock to redemption value— 14 — — (14)— (14)
Issuance of preferred stock on exercise of warrants1,681,848 2 — — 39,056 — 39,056 
Conversion of redeemable convertible preferred stock to common stock upon initial public offering(60,644,597)(111,753)100,196,780 100 111,653 — 111,753 
Issuance of common stock upon settlement of Share Appreciation Rights— — 1,642,570 2 2,845 — 2,847 
Issuance of common stock in connection with charitable donation— — 172,918 — 5,125 — 5,125 
Issuance of common stock on exercise of stock options— — 1,965,824 2 2,155 — 2,157 
Stock-based compensation— — — — 5,426 — 5,426 
Net loss— — — — — (26,457)(26,457)
Balance as of March 31, 2021 $ 146,998,378 $147 $660,849 $(95,758)$565,238 
Reversal of deferred offering costs— — — — 1,145 — 1,145 
Issuance of common stock on exercise of stock options— — 698,453 1 949 — 950 
Stock-based compensation— — — — 8,198 — 8,198 
Net loss— — — — — (2,437)(2,437)
Balance as of June 30, 2021 $ 147,696,831 $148 $671,141 $(98,195)$573,094 
The accompanying notes are an integral part of these financial statements.

4

OLO INC.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
Six Months Ended
June 30, 2022
Six Months Ended
June 30, 2021
Operating activities  
Net loss$(23,182)$(28,894)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization2,624 527 
Stock-based compensation23,185 13,550 
Stock-based compensation in connection with vesting of Stock Appreciation Rights 2,847 
Charitable donation of Class A common stock 5,125 
Bad debt expense276 238 
Change in fair value of warrants 18,930 
Non-cash lease expense1,125  
Deferred income tax benefit(1,421) 
Impairment of internal-use software475  
Changes in operating assets and liabilities:
Accounts receivable911 5,701 
Contract assets(99)(537)
Prepaid expenses and other current assets(2,016)(4,848)
Deferred contract costs(462)(330)
Accounts payable(286)(7,225)
Accrued expenses and other current liabilities(1,103)9,726 
Operating lease liabilities(1,248) 
Unearned revenue561 663 
Other liabilities, noncurrent(36)(2)
Other non-cash loss, net(174) 
Net cash (used in) provided by operating activities(870)15,471 
Investing activities
Purchases of property and equipment(409)(271)
Capitalized internal-use software(5,125)(389)
Acquisitions, net of cash acquired(49,308) 
Purchases of investments(82,394) 
Sales and maturities of investments4,306  
Net cash used in investing activities(132,930)(660)
Financing activities
Proceeds from issuance of common stock upon initial public offering, net of underwriting discounts 485,541 
Cash received for employee payroll tax withholdings 3,033 18,691 
Cash paid for employee payroll tax withholdings(2,866)(18,691)
Proceeds from exercise of warrants 392 
Payment of deferred finance costs (136)
Payment of deferred offering costs(420)(4,118)
Proceeds from exercise of stock options and purchases under employee stock purchase plan6,278 2,990 
Net cash provided by financing activities6,025 484,669 
Net (decrease) increase in cash and cash equivalents(127,775)499,480 
Cash and cash equivalents, beginning of period514,445 75,756 
Cash and cash equivalents, end of period$386,670 $575,236 
Supplemental disclosure of non-cash investing and financing activities
Accrued offering costs$ $339 
Vesting of early exercised stock options$116 $116 
Accretion of redeemable convertible preferred stock to redemption value$ $14 
Purchase of property and equipment on account$3 $7 
Capitalization of stock-based compensation for internal-use software$1,418 $104 
The accompanying notes are an integral part of these financial statements.

5

OLO INC.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)

1.Business
Olo Inc. was formed on June 1, 2005 in Delaware and is headquartered in New York City. On January 14, 2020, our Board of Directors and stockholders approved our name change from Mobo Systems, Inc. to Olo Inc. Unless the context otherwise indicates or requires, references to “we,” “us,” “our,” and “the Company” shall refer to Olo Inc.
We are an open SaaS platform for restaurants powering the industry’s digital transformation. Our platform powers restaurant brands’ on-demand digital commerce operations, enabling digital ordering, delivery, front-of-house management, and payments, while further strengthening and enhancing restaurants’ direct consumer relationships. We provide 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 guests. Our platform and application programming interfaces seamlessly integrate with a wide range of solutions, unifying disparate technologies across the restaurant ecosystem. Restaurant brands rely on us to increase their digital omni-channel sales, maximize profitability, establish and maintain direct guest relationships, and collect, protect, and leverage valuable customer data.
Emerging Growth Company Status
We currently qualify as an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act, until such time as those standards apply to private companies.
We have elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies. As a result, our financial statements may not be comparable to financial statements of issuers that are required to comply with the effective dates for new or revised accounting standards based on public company effective dates.
However, as of the last business day of our second fiscal quarter of 2022, the market value of our Class A common stock that was held by non-affiliates exceeded $700 million, and as a result, we will no longer qualify as an emerging growth company as of the end of the current fiscal year ending December 31, 2022, and we will be subject to certain requirements that apply to other public companies but did not previously apply to us due to our status as an emerging growth company, including the provisions of Section 404(b) of the Sarbanes-Oxley Act of 2002, which require that our independent registered public accounting firm provide an attestation report on the effectiveness of our internal control over financial reporting. In addition, we will no longer be able to take advantage of the extended transition period as of the end of the current fiscal year ending December 31, 2022, and we will be required to adopt new or revised accounting standards when they are applicable to public companies that are not emerging growth companies.
Initial Public Offering
On March 19, 2021, we completed our IPO in which we issued and sold 20,700,000 shares of our Class A common stock at the public offering price of $25.00 per share. We received net proceeds of approximately $485.5 million after deducting underwriting discounts and commissions. Upon completion of the IPO, $6.6 million of deferred offering costs, which consisted primarily of accounting, legal, and other fees related to our IPO, were reclassified into stockholders’ deficit as a reduction of the IPO proceeds.
Prior to the IPO, warrants to purchase 1,682,847 shares of our outstanding redeemable convertible preferred stock warrants were exercised and converted into redeemable convertible preferred stock. Upon completion of the IPO, all shares of our outstanding redeemable convertible preferred stock, inclusive of the shares issued pursuant to these warrant exercises, converted into 100,196,780 shares of Class B common stock. Additionally, upon completion of the IPO, stock appreciation rights (“SARs”) granted to employees vested and settled, resulting in the issuance of 1,642,570 shares of Class B common stock.

6

OLO INC.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
2.Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements and accompanying notes were prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and in accordance with the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been omitted pursuant to such rules and regulations. The December 31, 2021 condensed consolidated balance sheet was derived from the audited financial statements as of that date, but may not include all disclosures including certain footnotes required by U.S. GAAP on an annual reporting basis.
These unaudited condensed consolidated financial statements have been prepared on a basis consistent with our annual financial statements and, in the opinion of management, reflect all adjustments, which include all normal recurring adjustments necessary to fairly state our financial position as of June 30, 2022, our results of operations and comprehensive loss for the three and six months ended June 30, 2022 and 2021 and our cash flows for the six months ended June 30, 2022 and 2021, respectively. The results of operations for the three and six months ended June 30, 2022 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2022 or for any other future annual or interim period.
The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the consolidated financial statements and related notes included in our Annual Report on Form 10-K filed with the SEC on February 25, 2022. All intercompany balances and transactions have been eliminated in consolidation.
Certain prior period amounts have been reclassified to conform to the current period presentation.
Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period.
We regularly assess these estimates, including but not limited to, stock-based compensation including the determination of the fair value of our stock-based awards, realization of deferred tax assets, estimated life of our long-lived assets, purchase price allocations for business combinations, valuation of the acquired intangibles purchased in a business combination, valuation of goodwill, estimated standalone selling price of our performance obligations, and estimated consideration for implementation services and transactional revenue in certain arrangements. We base these estimates on historical experience and on various other market-specific and relevant assumptions that we believe to be reasonable under the circumstances. Actual results could differ from these estimates and such differences could be material to our financial position and results of operations.
Significant Accounting Policies
Our significant accounting policies are outlined in Note 2, “Significant Accounting Policies” in the Notes to Consolidated Financial Statements included in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2021. During the six months ended June 30, 2022, there were no material changes to our critical accounting policies from those described in our Annual Report on Form 10-K for the year ended December 31, 2021, except as described below.
Concentrations of Business and Credit Risk
We are exposed to concentrations of credit risk primarily through our cash and short- and long-term investments held by financial institutions. We primarily deposit our cash with two financial institutions and the amount on deposit exceeds federally insured limits. We reduce our credit risk by placing our cash and investments with major financial institutions with high credit ratings. As of June 30, 2022 and December 31, 2021, no customer had a balance over 10% of our accounts receivable. For the three months ended June 30, 2022 and 2021, one customer accounted for 12% and 16% of our revenue,

7

OLO INC.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
respectively. For the six months ended June 30, 2022 and 2021, one customer accounted for 13% and 20% of our revenue, respectively.
Investments
Management determines the appropriate classification of investments at the time of purchase based upon management’s intent with regard to such investments. Our investments are classified as available-for-sale at the time of purchase, and we reevaluate such classification as of each balance sheet date. We consider all highly liquid investments with an original maturity of 90 days or less when purchased to be cash equivalents. Investments with remaining contractual maturities of one year or less from the balance sheet date, which are not considered cash equivalents, are classified as short-term investments, and those with remaining contractual maturities greater than one year from the balance sheet date are classified as long-term investments. All investments are recorded at their estimated fair value, and any unrealized gains and losses are recorded in accumulated other comprehensive loss. Realized gains and losses on sales and maturities of investments are determined based on the specific identification method and are recognized in the condensed consolidated statements of operations in interest income.
We perform periodic evaluations to determine whether any declines in the fair value of investments below cost are other-than-temporary. The evaluation consists of qualitative and quantitative factors regarding the severity and duration of the unrealized loss, as well as our ability and intent to hold the investments until a forecasted recovery occurs. The impairments are considered to be other-than-temporary if they are related to deterioration in credit risk or if it is likely that the underlying securities will be sold prior to a full recovery of their cost basis. Other-than-temporary fair value impairments, if any, are determined based on the specific identification method and are reported in interest income in the condensed consolidated statements of operations.
Accounts Receivable, Net
Accounts receivable, net are stated at net realizable value and include unbilled receivables. Unbilled receivables arise primarily from transactional services provided in advance of billing. Accounts receivable are net of an allowance for credit losses, are not collateralized, and do not bear interest. Payment terms vary by contract type but are generally due within 30 days. The accounts receivable balance at June 30, 2022 and December 31, 2021 included unbilled receivables of $0.4 million and $4.1 million, respectively.
We assess the collectability of outstanding accounts receivable on an ongoing basis and maintain an allowance for credit losses for accounts receivable deemed uncollectible. Upon adoption of Accounting Standards Update (“ASU”) 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, we analyzed our accounts receivable portfolio for significant risks, historical activity, and an estimate of future collectability to determine the amount that will ultimately be collected. This estimate is analyzed annually and adjusted as necessary or upon certain triggering events. Identified risks pertaining to our accounts receivable include the delinquency level, customer type, and current economic environment. Due to the short-term nature of such receivables, the estimate of the amount of accounts receivable that may not be collected is based on aging of the accounts receivable balances and the financial condition of customers.
The following summarizes our allowance for doubtful accounts activity (in thousands):
Six Months Ended June 30,
20222021
Beginning balance$657 $631 
Provision for expected credit losses276 238 
Writeoffs(277)(212)
Ending balance$656 $657 
Business Combinations
We account for acquisitions using the acquisition method of accounting and determine whether a transaction constitutes a business and is treated as a business combination or if the transaction does not constitute a business and is treated as an asset acquisition. The acquisition method of accounting requires, among other things, allocation of the fair value of purchase consideration to the tangible and intangible assets acquired and liabilities assumed at their estimated fair values on the

8

OLO INC.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
acquisition date. The results of businesses acquired in a business combination are included in our condensed consolidated financial statements from the date of acquisition.
Determining the fair value of assets acquired and liabilities assumed requires management to use significant judgment and estimates, including estimates of future revenue and adjusted earnings before interest and taxes and discount rates. Our estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ materially from estimates. Our estimates associated with the accounting for business combinations may change as additional information becomes available regarding the assets acquired and liabilities assumed. Any change in facts and circumstances that existed as of the acquisition date and impacts our estimates is recorded to goodwill if identified within the measurement period. Subsequent to the measurement period or our final determination of fair value of assets and liabilities, whichever is earlier, the adjustments will affect our earnings.
Transaction related expenses incurred in a business combination are not included as a component of consideration transferred, but are accounted for as an expense in the period in which the costs are incurred.
Goodwill and Intangible Assets
Goodwill represents the excess of the aggregate of the consideration transferred and the amount recognized for non-controlling interest, if any, over the fair value of identifiable assets acquired and liabilities assumed in a business combination. We have no intangible assets, other than goodwill, with indefinite useful lives.
Intangible assets other than goodwill are comprised of acquired developed technology, customer relationships, and trademarks. At initial recognition, intangible assets acquired in a business combination or asset acquisition are recognized at their fair value as of the date of acquisition. Following initial recognition, intangible assets are carried at acquisition date fair value less accumulated amortization and impairment losses, if any, and are amortized on a straight-line basis over the estimated useful life of the asset.
We review goodwill for impairment annually on October 1st (beginning day of the fourth quarter) of each fiscal year or whenever events or changes in circumstances indicate that an impairment may exist. In the first six months of 2022, there were no events or changes in circumstances that would have required an interim impairment test. In conducting our annual impairment test, we review qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount. If factors indicate that the fair value of the reporting unit is less than its carrying amount, we perform a quantitative assessment and the fair value of the reporting unit is determined by analyzing the expected present value of future cash flows. If the carrying value of the reporting unit continues to exceed its fair value, the fair value of the reporting unit’s goodwill is calculated and an impairment loss equal to the excess is recorded.
We assess the impairment of intangible assets whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
Leases
Prior to the adoption of Accounting Standards Codification (“ASC”) 842, Leases, on January 1, 2022
We categorized leases at their inception as either operating or capital. In the ordinary course of business, we enter into non-cancelable operating leases for office space. We recognized lease costs on a straight-line basis and treated lease incentives as a reduction of rent expense over the term of the agreement. The difference between cash rent payments and rent expense was recorded as a deferred rent liability, with the amount expected to be amortized within the next twelve months classified as a current liability. We subleased a portion of our office space and recognize rental income on a straight-line basis as an offset to rent expense within general and administrative costs. The difference between cash rent payments received and rental income was recorded within prepaid expenses and other current assets.
Subsequent to the adoption of ASC 842 on January 1, 2022
We determine if an arrangement is a lease or contains a lease at inception. Our lease agreements are generally for office facilities, and the determination of whether such agreements contain leases generally does not require significant estimates or judgments. Our leases may also contain non-lease components such as payments of maintenance, utilities, and

9

OLO INC.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
taxes, which we have elected to account for separately, as these amounts are readily determinable. At the commencement date of a lease, we recognize a liability to make lease payments and an asset representing the right to use the underlying asset during the lease term. The lease liability is measured at the present value of the minimum rental payments discounted using our incremental borrowing rate (“IBR”) over the lease term (or, if readily determinable, the rate implicit in the lease). The right-of-use (“ROU”) asset is measured at cost, which includes the initial measurement of the lease liability and initial direct costs incurred and excludes lease incentives. We subleased a portion of our office space and recognize rental income on a straight-line basis as an offset to other leases costs, net within general and administrative expenses.
The lease term used to measure ROU lease assets and lease liabilities may include renewal options which are deemed reasonably certain to be exercised. Operating lease costs are recognized on a straight-line basis over the lease term. Variable lease payments are expensed as incurred. Our leases do not contain any material residual value guarantees or material restrictive covenants.
Recently Adopted Accounting Pronouncements
In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02, Leases (Topic 842) (“ASC 842”), which requires lessees to recognize the following for all leases (with the exception of short-term leases) at the commencement date: (i) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (ii) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Additional disclosures are required to allow financial statement users to assess the amount, timing, and uncertainty of cash flows arising from leasing activities. A modified retrospective transition approach is required for leases existing at the time of adoption.
We adopted and began applying the standard on January 1, 2022 using the modified retrospective approach and applied it to all existing leases as of the adoption date. We will continue to present prior period amounts under ASC 840, Leases. In addition, we elected the package of practical expedients permitted under the transition guidance within the new standard which does not require us to reassess whether contracts that existed or expired prior to the adoption date contained an embedded lease, reassess historical lease classification, or evaluate initial direct costs for leases that were in effect at the adoption date. We did not elect the hindsight practical expedient related to determining the lease term.
As a result of implementing this guidance, we recognized $20.6 million in operating lease right-of-use assets as of January 1, 2022, and derecognized $2.4 million of previously recognized deferred rent. We also recorded $2.5 million in current operating lease liabilities and $18.1 million in operating lease liabilities, net of current portion in our condensed consolidated balance sheet as of January 1, 2022. The adoption of ASC 842 did not result in a cumulative-effect adjustment on retained earnings. See “Note 11—Leases” for additional details.
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires an entity to utilize the current expected credit loss (“CECL”) model to estimate its lifetime “expected credit loss” and record an allowance that, when deducted from the amortized cost basis of the financial asset, presents the net amount expected to be collected on the financial asset. The CECL model results in more timely recognition of credit losses. This guidance also requires new disclosures for financial assets measured at amortized cost, loans, and available-for-sale debt securities. We adopted this standard as of January 1, 2022. The adoption did not have a material impact on our condensed consolidated financial statements.
In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805)—Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires an acquirer to recognize and measure contract assets and contract liabilities in accordance with ASC Topic 606. Under prior guidance, an acquirer generally recognized assets acquired and liabilities assumed in a business combination, including contract assets and contract liabilities arising from revenue contracts with customers, at fair value on the acquisition date. ASU No. 2021-08 results in the acquirer recording acquired contract assets and liabilities on the same basis that would have been recorded by the acquiree before the acquisition under ASC Topic 606, Revenue from Contracts with Customers. ASU No. 2021-08 is effective for fiscal years beginning after December 15, 2022, with early adoption permitted. We early adopted ASU No 2021-08 as of January 1, 2022 on a prospective basis and the adoption impact of the new standard was not material to our condensed consolidated financial statements. The standard did not impact our contract assets or liabilities prior to the adoption date.

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OLO INC.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
3.Revenue Recognition
The following table disaggregates revenue by type (in thousands):
Three Months Ended June 30, 2022
PlatformProfessional
Services and
Other
Total
Timing of revenue recognition
Transferred over time$22,990 $1,063 $24,053 
Transferred at a point in time21,548  21,548 
Total revenue$44,538 $1,063 $45,601 
Three Months Ended June 30, 2021
PlatformProfessional
Services and
Other
Total
Timing of revenue recognition
Transferred over time$16,313 $1,370 $17,683 
Transferred at a point in time18,213  18,213 
Total revenue$34,526 $1,370 $35,896 
Six Months Ended June 30, 2022
PlatformProfessional
Services and
Other
Total
Timing of revenue recognition
Transferred over time$43,791 $2,353 $46,144 
Transferred at a point in time42,213  42,213 
Total revenue$86,004 $2,353 $88,357 
Six Months Ended June 30, 2021
PlatformProfessional
Services and
Other
Total
Timing of revenue recognition
Transferred over time$30,856 $2,570 $33,426 
Transferred at a point in time38,593  38,593 
Total revenue$69,449 $2,570 $72,019 
Contract Balances
Contract Assets
Professional services revenue is generally recognized ratably over the implementation period, beginning on the commencement date of each contract. Platform revenue is recognized as the services are delivered. Under ASC Topic 606, Revenue from Contracts with Customers, we record a contract asset when revenue recognized on a contract exceeds the billings. Our standard billing terms are monthly; however, the billings may not be consistent with the pattern of recognition, based on when services are performed. Contract assets were $1.1 million and $1.0 million as of June 30, 2022 and December 31, 2021, respectively.

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OLO INC.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
Unearned Revenue
Unearned revenue primarily consists of billings or payments received in advance of revenue recognition from subscription services and is recognized as revenue when transfer of control to customers has occurred. During the six months ended June 30, 2022, we recognized $0.8 million of revenue related to contracts that were included in unearned revenue at December 31, 2021. During the six months ended June 30, 2021, we recognized $0.4 million of revenue related to contracts that were included in unearned revenue at December 31, 2020.
As of June 30, 2022, our remaining performance obligations were approximately $41.7 million, approximately 43% of which we expect to recognize as revenue over the next twelve months, and substantially all of the remaining revenue will be recognized thereafter over the next 24 to 48 months. These amounts only include contracts subject to a guaranteed fixed amount or the guaranteed minimum under variable contracts. Unrecognized revenues under contracts disclosed above do not include: (1) contracts with an original expected term of one year or less; (2) contracts for which variable consideration is determined based on the customer’s subsequent sale or usage; and (3) agreements for which our right to invoice corresponds with the value provided to the customer.
Deferred Contract Costs
The following table summarizes the activity of current and non-current deferred contract costs (in thousands):
Six Months Ended June 30,
20222021
Beginning balance$6,183 $5,176 
Capitalization of deferred contract costs2,099 1,644 
Amortization of deferred contract costs(1,637)(1,314)
Ending balance$6,645 $5,506 
4.Fair Value Measurement
Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. We apply the following fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:
Level 1 inputs: Based on unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2 inputs: Based on observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 inputs: Based on unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities, and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability.

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OLO INC.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
The following tables present the costs, net unrealized losses, and fair value by major security type for our investments as of June 30, 2022 and December 31, 2021 (in thousands):
As of June 30, 2022
CostNet Unrealized LossesFair ValueCash and cash equivalentsShort-term investmentsLong-term investments
Cash$236,312 $ $236,312 $236,312 $ $ 
Level 1:
Money market funds$140,301 $ $140,301 $140,301 $ $ 
Commercial paper18,214 (51)18,163 2,296 15,867  
Subtotal$158,515 $(51)$158,464 $142,597 $15,867 $ 
Level 2:
Certificates of deposit$32,326 $(69)$32,257 $7,761 $24,496 $ 
U.S. Government and agency securities15,361 (48)15,313  15,313  
Corporate bonds22,418 (83)22,335  17,859 4,476 
Subtotal$70,105 $(200)$69,905 $7,761 $57,668 $4,476 
Level 3:$ $ $ $ $ $ 
Total$464,932 $(251)$464,681 $386,670 $73,535 $4,476 
As of December 31, 2021
CostNet Unrealized LossesFair ValueCash and cash equivalentsShort-term investmentsLong-term investments
Cash$219,344 $ $219,344 $219,344 $ $ 
Level 1:
Money market funds295,101  295,101 295,101   
Total$514,445 $ $514,445 $514,445 $ $ 
Our assets measured at fair value on a nonrecurring basis include long-lived assets and finite-lived intangibles, which are considered to be Level 3 inputs. During the six months ended June 30, 2022, we determined that the estimated fair value of a portion of our internal-use software was non-recoverable, and we recorded a non-cash impairment charge of $0.5 million, as more fully described in “Note 5—Property and Equipment.”
Accounts receivable, accounts payable and accrued expenses are stated at their carrying value, which approximates fair value due to the short time to the expected receipt or payment date.
5.Property and Equipment
Property and equipment consisted of the following (in thousands):
Estimated Useful Life
(in Years)
As of
 June 30,
2022
As of
December 31,
2021
Computer and office equipment
3 - 5
$2,197 $1,800 
Capitalized internal-use software39,460 3,392 
Furniture and fixtures10413 386 
Leasehold improvementsShorter of estimated useful life or remaining term of lease386 374 
Total property and equipment12,456 5,952 
Less: accumulated depreciation and amortization of internal-use software(3,464)(2,648)
Total property and equipment, net$8,992 $3,304 

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OLO INC.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
Depreciation and amortization expense from property and equipment was approximately $0.5 million and $0.3 million for the three months ended June 30, 2022 and 2021, respectively. Depreciation and amortization expense from property and equipment was approximately $0.8 million and $0.5 million for the six months ended June 30, 2022 and 2021, respectively.
For the six months ended June 30, 2022, we recorded a non-cash impairment charge of $0.5 million related to a portion of our internal-use software that was abandoned. This amount was recorded in research and development expenses within the condensed consolidated statement of operations and comprehensive loss.
6.Acquisitions
Omnivore Acquisition
On February 20, 2022, we signed a definitive agreement to acquire Omnivore Technologies, Inc., (“Omnivore”) a restaurant technology provider that connects restaurants’ Point of Sale systems with technologies that improve efficiency and increase profitability. We closed the acquisition on March 4, 2022 for total consideration of approximately $49.4 million in cash, net of cash acquired. During the three months ended June 30, 2022, we determined that we are owed an amount of $0.1 million as a result of updating the working capital acquired, which related to additional accrued expenses identified as of the acquisition date.
The operating results of Omnivore have been included in our consolidated statement of operations and comprehensive loss since the acquisition date. Actual results of operations from the date of acquisition through June 30, 2022 and supplemental pro forma revenue and results of operations have not been presented because the effects were not material to the consolidated financial statements.


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OLO INC.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
Purchase Price Allocation
The acquisition was accounted for under the acquisition method in accordance with ASC 805, Business Combinations. We recognized and measured the identifiable assets acquired and liabilities assumed at their estimated fair values on the date of acquisition. The following table summarizes the preliminary allocation of the purchase price to the fair value of the assets acquired and liabilities assumed of Omnivore as of March 4, 2022 (in thousands):
Initial Fair Value Estimate
Accounts receivable$518 
Other current assets148 
Operating lease right-of-use asset236 
Property and equipment24 
Other assets, noncurrent9 
Customer relationships1,290 
Developed technology4,410 
Trademark150 
Goodwill44,678 
Accounts payable(198)
Accrued expenses and other current liabilities(101)
Unearned revenue(83)
Operating lease liability, current(81)
Operating lease liability, noncurrent(177)
Deferred tax liability, net(1,421)
Total purchase price, net of cash acquired$49,402 
Customer relationships were measured at fair value using the multiple-period excess earnings method under the income approach. Significant inputs used to measure the fair value include an estimate of projected revenue and costs associated with existing customers, and a discount rate of 11.0%.
Developed technology was measured at fair value using the relief-from-royalty method of the income approach. Significant inputs used to measure the fair value include an estimate of projected revenue from existing technology, a pre-tax royalty rate of 20.0% and a discount rate of 11.0%.

Trademark was measured at fair value using the relief-from-royalty method under the income approach. Significant inputs used to measure the fair value include an estimate of projected revenue from the trademark, a pre-tax royalty rate of 1.0% and a discount rate of 11.0%.

The preliminary purchase price allocation resulted in the recognition of $44.7 million of goodwill. Goodwill represents the future economic benefits expected to arise from other intangible assets acquired that do not qualify for separate recognition, including an experienced workforce that will help accelerate product development and go to market strategy, as well as expected future synergies generated by integrating Omnivore’s products with those in our existing platform. Accordingly, Omnivore will be reported along with our historical solutions under the same operating segment. None of the goodwill is expected to be deductible for tax purposes.

We recorded $1.2 million in transaction related expenses, primarily related to transaction related compensation, advisory, legal, valuation, and other professional fees, for the six months ended June 30, 2022. The transaction related expenses are recorded within the consolidated statements of operations and comprehensive (loss) income as follows (in thousands):

Operating expenses:
Sales and marketing$79 
General and administrative1,117 
Total transaction costs$1,196 

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OLO INC.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
We expect to finalize the purchase price allocation after management has further analyzed and assessed a number of the factors used in establishing the fair values of assets acquired and liabilities assumed as of the acquisition date, including, but not limited to, the working capital acquired.
Wisely Acquisition
On October 21, 2021, we signed a definitive agreement to acquire all of the outstanding shares of Wisely Inc. (“Wisely”), a customer intelligence and engagement platform for restaurants. We believe Wisely’s Guest Engagement and Front-of-House solutions complement our existing solution suite and enhance our value to our customers. We closed the acquisition on November 4, 2021 for total consideration of approximately $