10-Q 1 olo-20220331.htm 10-Q olo-20220331
0001431695false2022--12-31Q100014316952022-01-012022-03-310001431695us-gaap:CommonClassAMember2022-05-06xbrli:shares0001431695us-gaap:CommonClassBMember2022-05-0600014316952022-03-31iso4217:USD00014316952021-12-310001431695us-gaap:CommonClassAMember2022-03-31iso4217:USDxbrli:shares0001431695us-gaap:CommonClassAMember2021-12-310001431695us-gaap:CommonClassBMember2021-12-310001431695us-gaap:CommonClassBMember2022-03-310001431695olo:PlatformMember2022-01-012022-03-310001431695olo:PlatformMember2021-01-012021-03-310001431695olo:ProfessionalServicesAndOtherMember2022-01-012022-03-310001431695olo:ProfessionalServicesAndOtherMember2021-01-012021-03-3100014316952021-01-012021-03-310001431695us-gaap:CommonStockMember2021-12-310001431695us-gaap:AdditionalPaidInCapitalMember2021-12-310001431695us-gaap:RetainedEarningsMember2021-12-310001431695us-gaap:CommonStockMember2022-01-012022-03-310001431695us-gaap:AdditionalPaidInCapitalMember2022-01-012022-03-310001431695us-gaap:RetainedEarningsMember2022-01-012022-03-310001431695us-gaap:CommonStockMember2022-03-310001431695us-gaap:AdditionalPaidInCapitalMember2022-03-310001431695us-gaap:RetainedEarningsMember2022-03-3100014316952020-12-310001431695us-gaap:CommonStockMember2020-12-310001431695us-gaap:AdditionalPaidInCapitalMember2020-12-310001431695us-gaap:RetainedEarningsMember2020-12-310001431695us-gaap:CommonStockMember2021-01-012021-03-310001431695us-gaap:AdditionalPaidInCapitalMember2021-01-012021-03-310001431695us-gaap:RetainedEarningsMember2021-01-012021-03-3100014316952021-03-310001431695us-gaap:CommonStockMember2021-03-310001431695us-gaap:AdditionalPaidInCapitalMember2021-03-310001431695us-gaap:RetainedEarningsMember2021-03-310001431695us-gaap:CommonClassAMemberus-gaap:IPOMember2021-03-192021-03-190001431695us-gaap:CommonClassAMemberus-gaap:IPOMember2021-03-190001431695us-gaap:IPOMember2021-03-192021-03-190001431695us-gaap:RedeemableConvertiblePreferredStockMember2021-03-182021-03-180001431695us-gaap:CommonClassBMember2021-03-182021-03-180001431695us-gaap:StockAppreciationRightsSARSMemberus-gaap:CommonClassBMember2021-03-182021-03-180001431695us-gaap:CustomerConcentrationRiskMemberus-gaap:AccountsReceivableMemberolo:LargestCustomerMember2022-01-012022-03-31xbrli:pure0001431695us-gaap:CustomerConcentrationRiskMemberus-gaap:AccountsReceivableMemberolo:LargestCustomerMember2021-01-012021-12-310001431695us-gaap:CustomerConcentrationRiskMemberolo:LargestCustomerMemberus-gaap:SalesRevenueNetMember2022-01-012022-03-310001431695us-gaap:CustomerConcentrationRiskMemberolo:LargestCustomerMemberus-gaap:SalesRevenueNetMember2021-01-012021-03-310001431695us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel1Member2022-03-310001431695us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel2Member2022-03-310001431695us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel3Member2022-03-310001431695us-gaap:FairValueInputsLevel1Member2022-03-310001431695us-gaap:FairValueInputsLevel2Member2022-03-310001431695us-gaap:FairValueInputsLevel3Member2022-03-310001431695us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel1Member2021-12-310001431695us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel2Member2021-12-310001431695us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel3Member2021-12-310001431695us-gaap:FairValueInputsLevel1Member2021-12-310001431695us-gaap:FairValueInputsLevel2Member2021-12-310001431695us-gaap:FairValueInputsLevel3Member2021-12-3100014316952022-01-010001431695us-gaap:TransferredOverTimeMemberolo:PlatformMember2022-01-012022-03-310001431695us-gaap:TransferredOverTimeMemberolo:ProfessionalServicesAndOtherMember2022-01-012022-03-310001431695us-gaap:TransferredOverTimeMember2022-01-012022-03-310001431695us-gaap:TransferredAtPointInTimeMemberolo:PlatformMember2022-01-012022-03-310001431695us-gaap:TransferredAtPointInTimeMemberolo:ProfessionalServicesAndOtherMember2022-01-012022-03-310001431695us-gaap:TransferredAtPointInTimeMember2022-01-012022-03-310001431695us-gaap:TransferredOverTimeMemberolo:PlatformMember2021-01-012021-03-310001431695us-gaap:TransferredOverTimeMemberolo:ProfessionalServicesAndOtherMember2021-01-012021-03-310001431695us-gaap:TransferredOverTimeMember2021-01-012021-03-310001431695us-gaap:TransferredAtPointInTimeMemberolo:PlatformMember2021-01-012021-03-310001431695us-gaap:TransferredAtPointInTimeMemberolo:ProfessionalServicesAndOtherMember2021-01-012021-03-310001431695us-gaap:TransferredAtPointInTimeMember2021-01-012021-03-3100014316952022-04-012022-03-3100014316952023-04-01srt:MinimumMember2022-03-3100014316952023-04-01srt:MaximumMember2022-03-310001431695srt:MinimumMemberolo:ComputerAndOfficeEquipmentMember2022-01-012022-03-310001431695olo:ComputerAndOfficeEquipmentMembersrt:MaximumMember2022-01-012022-03-310001431695olo:ComputerAndOfficeEquipmentMember2022-03-310001431695olo:ComputerAndOfficeEquipmentMember2021-12-310001431695us-gaap:SoftwareDevelopmentMember2022-01-012022-03-310001431695us-gaap:SoftwareDevelopmentMember2022-03-310001431695us-gaap:SoftwareDevelopmentMember2021-12-310001431695us-gaap:FurnitureAndFixturesMember2022-01-012022-03-310001431695us-gaap:FurnitureAndFixturesMember2022-03-310001431695us-gaap:FurnitureAndFixturesMember2021-12-310001431695us-gaap:LeaseholdImprovementsMember2022-03-310001431695us-gaap:LeaseholdImprovementsMember2021-12-310001431695olo:OmnivoreTechnologiesIncMember2022-03-042022-03-040001431695olo:OmnivoreTechnologiesIncMember2022-03-040001431695us-gaap:CustomerRelationshipsMemberolo:OmnivoreTechnologiesIncMember2022-03-040001431695us-gaap:DevelopedTechnologyRightsMemberolo:OmnivoreTechnologiesIncMember2022-03-040001431695us-gaap:TrademarksMemberolo:OmnivoreTechnologiesIncMember2022-03-040001431695us-gaap:CustomerRelationshipsMemberolo:OmnivoreTechnologiesIncMemberus-gaap:MeasurementInputDiscountRateMember2022-03-040001431695us-gaap:DevelopedTechnologyRightsMemberolo:OmnivoreTechnologiesIncMemberolo:MeasurementInputPreTaxRoyaltyRateMember2022-03-040001431695us-gaap:DevelopedTechnologyRightsMemberolo:OmnivoreTechnologiesIncMemberus-gaap:MeasurementInputDiscountRateMember2022-03-040001431695us-gaap:TrademarksMemberolo:OmnivoreTechnologiesIncMemberolo:MeasurementInputPreTaxRoyaltyRateMember2022-03-040001431695us-gaap:TrademarksMemberolo:OmnivoreTechnologiesIncMemberus-gaap:MeasurementInputDiscountRateMember2022-03-040001431695olo:OmnivoreTechnologiesIncMember2022-01-012022-03-310001431695olo:WiselyIncMember2021-11-042021-11-040001431695olo:WiselyIncMember2021-11-040001431695olo:WiselyIncMember2022-01-012022-03-310001431695us-gaap:DevelopedTechnologyRightsMember2022-01-012022-03-310001431695us-gaap:DevelopedTechnologyRightsMember2022-03-310001431695us-gaap:CustomerRelationshipsMember2022-01-012022-03-310001431695us-gaap:CustomerRelationshipsMember2022-03-310001431695us-gaap:TrademarksMember2022-01-012022-03-310001431695us-gaap:TrademarksMember2022-03-310001431695us-gaap:RevolvingCreditFacilityMemberus-gaap:PrimeRateMemberus-gaap:LineOfCreditMemberolo:FormulaLineMember2022-01-012022-03-310001431695us-gaap:RevolvingCreditFacilityMemberus-gaap:LineOfCreditMemberolo:FormulaLineMember2022-03-310001431695olo:NonFormulaLineMemberus-gaap:RevolvingCreditFacilityMemberus-gaap:PrimeRateMemberus-gaap:LineOfCreditMember2022-01-012022-03-310001431695olo:NonFormulaLineMemberus-gaap:RevolvingCreditFacilityMemberus-gaap:LineOfCreditMember2022-03-310001431695us-gaap:RevolvingCreditFacilityMemberus-gaap:LineOfCreditMember2021-03-310001431695us-gaap:RevolvingCreditFacilityMemberus-gaap:LineOfCreditMember2021-04-300001431695us-gaap:LetterOfCreditMemberolo:DoorDashAgreementMember2021-05-060001431695us-gaap:RevolvingCreditFacilityMemberus-gaap:LineOfCreditMember2021-08-010001431695us-gaap:RevolvingCreditFacilityMemberus-gaap:LineOfCreditMember2022-03-310001431695us-gaap:LetterOfCreditMemberolo:DoorDashAgreementMember2022-03-310001431695us-gaap:RevolvingCreditFacilityMemberus-gaap:LetterOfCreditMember2022-03-3100014316952021-03-052021-03-050001431695us-gaap:CommonClassAMember2021-03-050001431695us-gaap:CommonClassBMember2021-03-05olo:vote00014316952021-03-050001431695us-gaap:EmployeeStockMember2022-03-310001431695us-gaap:EmployeeStockMember2021-12-310001431695us-gaap:EmployeeStockOptionMember2022-03-310001431695us-gaap:EmployeeStockOptionMember2021-12-310001431695us-gaap:RestrictedStockUnitsRSUMember2022-03-310001431695us-gaap:RestrictedStockUnitsRSUMember2021-12-310001431695us-gaap:StockCompensationPlanMember2022-03-310001431695us-gaap:StockCompensationPlanMember2021-12-310001431695us-gaap:CommonClassAMember2021-03-012021-03-310001431695us-gaap:CommonClassAMember2021-01-012021-03-310001431695us-gaap:EmployeeStockOptionMember2022-01-012022-03-310001431695olo:A10PercentStockholderMemberus-gaap:EmployeeStockOptionMember2022-01-012022-03-310001431695olo:IncentiveStockOptionISOAndNonqualifiedStockOptionNSOMembersrt:MinimumMember2022-01-012022-03-310001431695olo:IncentiveStockOptionISOAndNonqualifiedStockOptionNSOMemberolo:A10PercentStockholderMember2022-01-012022-03-310001431695olo:BoardOfDirectorsMemberus-gaap:RestrictedStockUnitsRSUMember2021-03-132021-03-130001431695olo:BoardOfDirectorsMemberus-gaap:RestrictedStockUnitsRSUMember2021-03-172021-03-170001431695us-gaap:RestrictedStockUnitsRSUMember2021-03-172021-03-170001431695us-gaap:EmployeeStockOptionMember2022-03-310001431695us-gaap:EmployeeStockOptionMember2021-12-310001431695us-gaap:StockAppreciationRightsSARSMember2022-01-012022-03-310001431695us-gaap:StockAppreciationRightsSARSMember2021-01-012021-03-310001431695us-gaap:RestrictedStockUnitsRSUMember2021-12-310001431695us-gaap:RestrictedStockUnitsRSUMember2022-01-012022-03-310001431695us-gaap:RestrictedStockUnitsRSUMember2022-03-3100014316952021-01-012021-12-310001431695srt:MinimumMemberus-gaap:EmployeeStockOptionMember2021-01-012021-03-310001431695us-gaap:EmployeeStockOptionMembersrt:MaximumMember2021-01-012021-03-310001431695us-gaap:EmployeeStockOptionMember2021-01-012021-03-310001431695srt:MinimumMemberus-gaap:EmployeeStockOptionMember2021-03-310001431695us-gaap:EmployeeStockOptionMembersrt:MaximumMember2021-03-310001431695us-gaap:EmployeeStockMemberus-gaap:CommonClassAMember2021-03-050001431695us-gaap:EmployeeStockMemberus-gaap:CommonClassAMember2021-03-052021-03-050001431695us-gaap:EmployeeStockMember2022-01-012022-03-310001431695us-gaap:CostOfSalesMemberolo:PlatformMember2022-01-012022-03-310001431695us-gaap:CostOfSalesMemberolo:PlatformMember2021-01-012021-03-310001431695us-gaap:CostOfSalesMemberolo:ProfessionalServicesAndOtherMember2022-01-012022-03-310001431695us-gaap:CostOfSalesMemberolo:ProfessionalServicesAndOtherMember2021-01-012021-03-310001431695us-gaap:ResearchAndDevelopmentExpenseMember2022-01-012022-03-310001431695us-gaap:ResearchAndDevelopmentExpenseMember2021-01-012021-03-310001431695us-gaap:GeneralAndAdministrativeExpenseMember2022-01-012022-03-310001431695us-gaap:GeneralAndAdministrativeExpenseMember2021-01-012021-03-310001431695us-gaap:SellingAndMarketingExpenseMember2022-01-012022-03-310001431695us-gaap:SellingAndMarketingExpenseMember2021-01-012021-03-310001431695olo:RedeemableConvertiblePreferredStockWarrantsMember2021-01-012021-03-310001431695us-gaap:EmployeeStockOptionMember2022-01-012022-03-310001431695us-gaap:EmployeeStockOptionMember2021-01-012021-03-310001431695us-gaap:RestrictedStockUnitsRSUMember2022-01-012022-03-310001431695us-gaap:RestrictedStockUnitsRSUMember2021-01-012021-03-310001431695us-gaap:EmployeeStockMember2022-01-012022-03-310001431695us-gaap:EmployeeStockMember2021-01-012021-03-31

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 March 31, 2022
¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 001-40213
olo-20220331_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 May 6, 2022, 91,145,552 shares of the registrant’s Class A common stock and 69,027,693 shares of registrant’s Class B common stock were outstanding.



OLO INC.
TABLE OF CONTENTS
Page
Item 1.
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.



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, 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, 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
 March 31,
2022
As of
December 31,
2021
ASSETS  
Current assets:  
Cash and cash equivalents$463,733 $514,445 
Accounts receivable, net of allowances of $677 and $657, respectively
47,410 42,319 
Contract assets474 568 
Deferred contract costs2,551 2,567 
Prepaid expenses and other current assets9,763 5,718 
Total current assets523,931 565,617 
Property and equipment, net5,873 3,304 
Intangible assets, net24,713 19,635 
Goodwill207,607 162,956 
Contract assets, noncurrent521 387 
Deferred contract costs, noncurrent3,390 3,616 
Operating lease right-of-use assets17,920  
Other assets, noncurrent356 361 
Total assets$784,311 $755,876 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$3,360 $2,184 
Accrued expenses and other current liabilities49,572 45,395 
Unearned revenue3,924 1,190 
Operating lease liabilities, current2,594  
Total current liabilities59,450 48,769 
Unearned revenue, noncurrent2,050 3,014 
Operating lease liabilities, noncurrent17,680  
Other liabilities, noncurrent126 2,343 
Total liabilities79,306 54,126 
Commitments and contingencies (Note 15)
Stockholders’ equity:
Class A common stock, $0.001 par value; 1,700,000,000 shares authorized at March 31, 2022 and December 31, 2021; 89,660,186 and 78,550,530 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively. Class B common stock, $0.001 par value; 185,000,000 shares authorized at March 31, 2022 and December 31, 2021; 70,027,999 and 79,149,659 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively
160 158 
Preferred stock, $0.001 par value; 20,000,000 shares authorized at March 31, 2022 and December 31, 2021
  
Additional paid-in capital827,928 813,166 
Accumulated deficit(123,083)(111,574)
Total stockholders’ equity705,005 701,750 
Total liabilities and stockholders’ equity$784,311 $755,876 
The accompanying notes are an integral part of these financial statements.
1

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

Three Months Ended
March 31,
20222021
Revenue:
Platform$41,466 $34,923 
Professional services and other1,290 1,200 
Total revenue42,756 36,123 
Cost of revenue:
Platform11,024 5,607 
Professional services and other1,778 1,243 
Total cost of revenue12,802 6,850 
Gross Profit29,954 29,273 
Operating expenses:
Research and development16,825 14,456 
General and administrative17,961 18,454 
Sales and marketing8,070 3,836 
Total operating expenses42,856 36,746 
Loss from operations(12,902)(7,473)
Other income (expenses), net:
Other income (expense), net58 (18)
Change in fair value of warrant liability (18,930)
Total other income (expenses), net58 (18,948)
Loss before income taxes(12,844)(26,421)
(Benefit) provision for income taxes(1,335)36 
Net loss and comprehensive loss$(11,509)$(26,457)
Accretion of redeemable convertible preferred stock to redemption value (14)
Net loss attributable to Class A and Class B common stockholders$(11,509)$(26,471)
Net loss per share attributable to Class A and Class B common stockholders:
Basic$(0.07)$(0.63)
Diluted$(0.07)$(0.63)
Weighted-average Class A and Class B common shares outstanding:
Basic159,190,371 41,855,757 
Diluted159,190,371 41,855,757 
The accompanying notes are an integral part of these financial statements.
2

OLO INC.
Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders' Equity (Deficit) (Unaudited)
(in thousands, except share and share data)

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, 2021 $ 157,700,189 $158 $813,166 $(111,574)$701,750 
Issuance of common stock on exercise of stock options— — 1,851,334 2 2,305 — 2,307 
Vesting of restricted stock units— — 136,662 — — — — 
Stock-based compensation— — — — 12,457 — 12,457 
Net loss— — — — — (11,509)(11,509)
Balance as of March 31, 2022 $ 159,688,185 $160 $827,928 $(123,083)$705,005 
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 
The accompanying notes are an integral part of these financial statements.
3

OLO INC.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(in thousands)

Three Months Ended
March 31, 2022
Three Months Ended
March 31, 2021
Operating activities  
Net loss$(11,509)$(26,457)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization1,109 260 
Stock-based compensation11,708 5,402 
Stock-based compensation in connection with vesting of Stock Appreciation Rights 2,847 
Charitable donation of Class A common stock 5,125 
Bad debt expense248 88 
Change in fair value of warrants 18,930 
Amortization of operating lease right-of-use assets552  
Deferred income tax benefit(1,421) 
Impairment of internal-use software475  
Changes in operating assets and liabilities:
Accounts receivable(4,888)(2,390)
Contract assets(40)(425)
Prepaid expenses and other current assets(3,515)(1,014)
Deferred contract costs242 (222)
Accounts payable909 (6,772)
Accrued expenses and other current liabilities4,186 8,524 
Operating lease liabilities(613) 
Unearned revenue1,687 371 
Other liabilities, noncurrent(19)(58)
Net cash (used in) provided by operating activities(889)4,209 
Investing activities
Purchases of property and equipment(76)(106)
Capitalized internal-use software(2,462)(72)
Acquisitions, net of cash acquired(49,308) 
Net cash used in investing activities(51,846)(178)
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 845 19,195 
Cash paid for employee payroll tax withholdings(845) 
Proceeds from exercise of warrants 392 
Payment of deferred offering costs(226)(448)
Proceeds from exercise of stock options2,249 2,099 
Net cash provided by financing activities2,023 506,779 
Net (decrease) increase in cash and cash equivalents(50,712)510,810 
Cash and cash equivalents, beginning of period514,445 75,756 
Cash and cash equivalents, end of period$463,733 $586,566 
Supplemental disclosure of non-cash investing and financing activities
Accrued offering costs$140 $4,476 
Vesting of early exercised stock options$58 $58 
Accretion of redeemable convertible preferred stock to redemption value$ $14 
Purchase of property and equipment on account$70 $24 
Capitalization of stock-based compensation for internal-use software$749 $24 
The accompanying notes are an integral part of these financial statements.
4

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 consumers. 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 customer relationships, and collect, protect, and leverage valuable customer data.
Emerging Growth Company Status
We are 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 until the earlier of the date that we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our financial statements may not be comparable to financial statements of issuers who are required to comply with the effective dates for new or revised accounting standards based on public company effective dates.
We will remain an emerging growth company until the earliest of: (1) the last day of the fiscal year following the fifth anniversary of the completion of our initial public offering of Class A common stock (“IPO”); (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 date on which we are deemed to be a large accelerated filer.
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.
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
5

OLO INC.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
“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 March 31, 2022 and our results of operations and comprehensive loss, our stockholders’ equity, and our cash flows for the three months ended March 31, 2022 and 2021. The results of operations for the three months ended March 31, 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-year amounts have been reclassified to conform to the current year 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, allowance for doubtful accounts, 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 quarter ended March 31, 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 held by financial institutions. We primarily deposit our cash with two financial institutions and the amount on deposit exceeds federally insured limits. As of March 31, 2022, 14% of our accounts receivable were due from one customer. As of December 31, 2021, no customer had a balance over 10% of our accounts receivable. For the three months ended March 31, 2022 and 2021, one customer accounted for 13% and 25% of our revenue, respectively.
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
6

OLO INC.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
days. The accounts receivable balance at March 31, 2022 and December 31, 2021 included unbilled receivables of $0.3 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):
Balance at December 31, 2021$657 
Provision for expected credit losses248 
Writeoffs(228)
Balance at March 31, 2022$677 
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 acquisition date. The results of businesses acquired in a business combination are included in our 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 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
7

OLO INC.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
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.
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.
The following summarizes assets and liabilities as of March 31, 2022 and December 31, 2021 that are measured at fair value on a recurring basis, by level, within the fair value hierarchy (in thousands):
March 31, 2022
Level 1Level 2Level 3
Cash and cash equivalents:
Money market funds$295,152 $ $ 
Total$295,152 $ $ 
December 31, 2021
Level 1Level 2Level 3
Cash and cash equivalents:
Money market funds$295,101 $ $ 
Total$295,101 $ $ 
There were no transfers of financial instruments between Level 1, Level 2, and Level 3 during the periods presented.
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 three months ended March 31, 2021, 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 4—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.

8

OLO INC.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
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 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 10—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
9

OLO INC.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
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.
3.Revenue Recognition
The following table disaggregates revenue by type (in thousands):
Three Months Ended March 31, 2022
PlatformProfessional
Services and
Other
Total
Timing of revenue recognition
Transferred over time$20,801 $1,290 $22,091 
Transferred at a point in time20,665  20,665 
Total revenue$41,466 $1,290 $42,756 
Three Months Ended March 31, 2021
PlatformProfessional
Services and
Other
Total
Timing of revenue recognition
Transferred over time$14,543 $1,200 $15,743 
Transferred at a point in time20,380  20,380 
Total revenue$34,923 $1,200 $36,123 
Contract Balances
Contract Asset
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 $1.0 million for both periods ending March 31, 2022 and December 31, 2021.
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 three months ended March 31, 2022, we recognized $0.5 million of revenue related to contracts that were included in unearned revenue at December 31, 2021. During the three months ended March 31, 2021, we recognized $0.1 million of revenue related to contracts that were included in unearned revenue at December 31, 2020.
10

OLO INC.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
As of March 31, 2022, our remaining performance obligations were approximately $41.0 million, approximately 38% 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):
Balance at December 31, 2021$6,183 
Capitalization of deferred contract costs586 
Amortization of deferred contract costs(828)
Balance at March 31, 2022$5,941 
4.Property and Equipment
Property and equipment consisted of the following (in thousands):
Estimated Useful Life
(in Years)
As of
 March 31,
2022
As of
December 31,
2021
Computer and office equipment
3 - 5
$1,933 $1,800 
Capitalized internal-use software36,128 3,392 
Furniture and fixtures10413 386 
Leasehold improvementsShorter of estimated useful life or remaining term of lease384 374 
Total property and equipment8,858 5,952 
Less: accumulated depreciation and amortization of internal-use software(2,985)(2,648)
Total property and equipment, net$5,873 $3,304 
Depreciation and amortization expense from property and equipment was approximately $0.3 million for each of the three months ended March 31, 2022 and 2021. For the three months ended March 31, 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.
5.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.
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 March 31, 2022
11

OLO INC.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
and supplemental pro forma revenue and results of operations have not been presented because the effects were not material to the consolidated financial statements.
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$451 
Other current assets148 
Operating lease right-of-use asset236 
Property and equipment24 
Other assets, noncurrent9 
Customer relationships1,290 
Developed technology4,410 
Trademark150 
Goodwill44,745 
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 $1.0 million in transaction related expenses, primarily related to transaction related compensation, advisory, legal, valuation, and other professional fees, for the three months ended March 31, 2022. The transaction related
12

OLO INC.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
expenses are recorded within the consolidated statements of operations and comprehensive (loss) income as follows (in thousands):
Operating expenses:
Sales and marketing79 
General and administrative929 
Total transaction costs$1,008 
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 Customer 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 $177.8 million, consisting of $75.2 million in cash (net of cash acquired), $96.6 million of Class A common stock, and $5.9 million of substituted stock options granted in connection with the acquisition. The fair values of the Class A common stock and substituted stock options were based on a price per Class A common share of $27.93, which is equal to the closing price of our Class A common stock on the date of the transaction. As a result of the equity consideration component, we issued approximately 3.5 million shares of our Class A common stock and granted approximately 0.2 million fully vested stock options at the acquisition date. The fair value of the substituted options granted was based upon the estimated value of vested stock options held by Wisely employees immediately prior to the acquisition.
We recorded $0.1 million in transaction related expenses, primarily related to legal and insurance fees, for the three months ended March 31, 2022 in general and administrative expenses within the condensed consolidated statement of operations and comprehensive loss.
During the three months ended March 31, 2022, we decreased goodwill by $0.1 million as a result of finalizing our working capital acquired. 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.
6.Goodwill and Intangible Assets
The following table summarizes the changes in the carrying amount of goodwill (in thousands):
Balance at December 31, 2021$162,956 
Adjustment to Wisely acquisition(94)
Acquisition of Omnivore44,745 
Balance at March 31, 2022$207,607 
The gross book value and accumulated amortization of intangible assets, net, as of March 31, 2022 were as follows (in thousands):
Weighted-average Remaining Useful Life (in years)Gross Carrying ValueAccumulated AmortizationNet Carrying Value
Developed technology5.7$14,595 $(738)$13,857 
Customer relationships7.610,921 (502)10,419 
Trademark2.7486 (49)437 
Balance at March 31, 2022$26,002 $(1,289)$24,713 
13

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

Amortization expense associated with intangible assets was $0.8 million for the three months ended March 31, 2022. As of March 31, 2022, estimated amortization related to the identifiable acquisition-related intangible assets expected to be recognized in future periods was as follows (in thousands):
2022 (remaining)$2,975 
20233,967 
20243,949 
20253,813 
20263,804 
Thereafter6,205 
Total$24,713 
No goodwill or intangible asset impairment losses were recognized during the three months ended March 31, 2022. See “Note 5—Acquisitions” for additional information on the acquisitions of Omnivore and Wisely.
7.Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consist of the following (in thousands):
As of
 March 31,
2022
As of
December 31,
2021
Prepaid software licensing fees$2,894 $1,888 
Prepaid insurance3,365 1,298 
Other3,504 2,532 
Total prepaid expenses and other current assets$9,763 $5,718 
8.Accrued Expenses and Other Liabilities
Accrued expenses and other current liabilities consisted of the following (in thousands):
As of
 March 31,
2022
As of
December 31,
2021
Accrued delivery service partner fees40,124 35,441 
Accrued compensation and benefits3,565 4,189 
Other2,350 2,421 
Professional and consulting fees2,103 1,806 
Accrued taxes1,430 1,538 
Total accrued expenses and other current liabilities$49,572 $45,395 
9.Line of Credit
In May 2012, we entered into a Loan and Security Agreement with Pacific Western Bank for a revolving line of credit with a maturity date of May 15, 2013 (the “Loan Agreement”). Since the Loan Agreement, we amended and restated the agreement in February 2020, and have executed subsequent amendments to extend the maturity date until June 30, 2022. Advances under the Formula Line 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 Line bear interest equal to the greater of (i) 0.75% above Pacific Western Bank’s prime rate then in effect; or (ii) 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.
In April 2021, we amended the Loan Agreement and exercised our option to increase our available line of credit from $25.0 million to $35.0 million. Additionally, we amended our minimum EBITDA and minimum net revenue covenants,
14

OLO INC.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
which reset each annual period. In May 2021, we issued a letter of credit to DoorDash, Inc., or DoorDash, in the amount of $25.0 million in connection with our Restated Delivery Network Agreement.
In August 2021, we amended our Loan Agreement to maintain minimum cash deposits with Pacific Western Bank equal to the lesser of $75.0 million or an amount equal to 50% of all of our cash deposits with any bank, and to extend certain reporting requirements from 30 to 45 days after each quarter end.
In December 2021 and in connection with the Wisely Acquisition, we further amended our Loan Agreement to reflect Wisely LLC as an additional borrower.

In January 2022, we further amended our Loan Agreement (the “Fourth Amendment”) to extend the maturity date to May 12, 2022. In March 2022, we further amended our Loan Agreement (the “Fifth Amendment”) to provide consent for our acquisition of Omnivore and to set compliance thresholds for 2022. In May 2022, we further amended our Loan Agreement (the “Sixth Amendment”) to extend the maturity date to June 30, 2022. The foregoing description of the material terms of the Fourth Amendment, the Fifth Amendment, and Sixth Amendment does not purport to be complete and is subject to, and is qualified in its entirety by, reference to the full terms of the Fourth Amendment and the Fifth Amendment, which we have filed as exhibits to this Quarterly Report on Form 10-Q, and with respect to the Sixth Amendment, which we intend to file as an exhibit to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2022. We refer to the Loan Agreement, as amended, as the “Amended Loan Agreement.”
As of March 31, 2022, we had $8.6 million available under the Amended Loan Agreement, after consideration of $25.0 million in our letter of credit to DoorDash and $1.4 million in our letter of credit on the lease of our headquarters. As of March 31, 2022, we had no outstanding borrowings under the line of credit, and no amounts have been drawn against any of our letters of credit. Our obligations under the Amended Loan Agreement are secured by substantially all of our assets.
The Amended Loan Agreement 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, make investments, incur additional indebtedness or guarantee indebtedness of others, pay dividends or redeem or repurchase any 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. We were in compliance with these covenants as of March 31, 2022.
The Amended Loan Agreement 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. 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.
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 Line or the Non-Formula 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 Agreement, including any unpaid interest thereon, will accelerate and become immediately due and payable.
There was no interest expense related to the Amended Loan Agreement for each of the three months ended March 31, 2022 and 2021. Deferred financing costs related to the Loan Agreement and amendments thereto were capitalized and are included within other current and non-current assets as of March 31, 2022.
10.Leases
We have non-cancelable operating leases for our headquarters in New York City (“Headquarters Lease”) that expires in May 2030 and for our former office that expires in September 2023. We sublease a portion of our former office space, which we ceased using in connection with the signing of the Headquarters Lease. The sublease expires in March 2023. As a result of the acquisition of Omnivore, we have a non-cancelable operating lease in Clearwater, Florida that expires in
15

OLO INC.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
January 2025. Our lease terms include periods under options to extend or terminate the leases. Currently, there are no operating leases where we believe it is reasonably certain that we will exercise any option to extend the initial term.
As disclosed in “Note 2—Significant Accounting Policies,” we adopted ASC 842 on January 1, 2022. We have elected the “package of practical expedients,” which permits us not to reassess under ASC 842 our prior conclusions on expired or existing leases about lease identification, lease classification, and initial direct costs. Payments of maintenance, utilities, and taxes, are expensed as incurred and excluded from right-of-use assets and lease liabilities, and were immaterial for the three months ended March 31, 2022. Furthermore, we elected to not capitalize leases with a term of 12 months or less and recognize the lease expense for such leases on a straight-line basis over the lease term.
The IBR is the rate of interest that we would have to pay to borrow on a collateralized basis over a similar term and amount equal to the lease payments in a similar economic environment. We determined our IBR by obtaining interest rates from various external financing sources and made certain adjustments to reflect the terms of the lease and type of the asset leased.
The elements of lease expense were as follows (in thousands):
Three Months Ended
March 31,
2022
Operating lease costs$828 
Other lease income(87)
Total lease costs$741 
Rent expense, excluding sublease income, under ASC 840, Leases, was $0.8 million for the three months ended March 31, 2021 and rental income was $0.1 million for the three months ended March 31, 2021.
Cash paid for amounts included in the initial measurement of lease liabilities were $0.9 million for the three months ended March 31, 2022.
As of March 31, 2022, the total remaining operating lease payments included in the measurement of lease liabilities are as follows (in thousands):
2022 (remaining)$2,717 
20233,444 
20242,877 
20252,893 
20262,960 
Thereafter10,114 
Total future minimum lease payments25,005 
Less: imputed interest(4,731)
Total$20,274 
The weighted average remaining lease term and discount rate for the operating leases were as follows:
As of March 31,
2022
Weighted average remaining lease term (years)7.7 years
Weighted average discount rate5.37%

16

OLO INC.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
As of December 31, 2021, our future minimum payments under non-cancelable leases for operating facilities as determined prior to the adoption of ASC 842 were as follows (in thousands):
2022$3,559 
20233,352 
20242,780 
20252,885 
20262,960 
Thereafter10,113 
Total$25,649 
11.Stockholders’ Equity
Changes in Capital Structure
On March 5, 2021, our Board of Directors and stockholders approved an amended and restated certificate of incorporation effecting a 17-for-1 forward stock split of our issued and outstanding shares of common stock and Series A, A-1, B, C, D, E preferred stock. Additionally, all outstanding equity instruments, including our time-based stock options, performance-based SARs, and preferred stock warrants, were adjusted to reflect the 17-for-1 forward stock split. The stock split was effected on March 5, 2021. The par value of the Class B common stock and redeemable convertible preferred stock was not adjusted as a result of the stock split. All issued and outstanding Class B common stock, redeemable convertible preferred stock, warrants to purchase shares of redeemable convertible preferred stock, and stock options, as well as the per share amounts, included in the accompanying financial statements have been adjusted to reflect this stock split for all periods presented.
On March 5, 2021, our Board of Directors and stockholders approved and we implemented a dual class common stock structure where all existing shares of common stock converted to Class B common stock and we authorized a new class of common stock, Class A common stock. The authorized share capital for Class A common stock is 1,700,000,000 and the authorized share capital for Class B common stock is 185,000,000. The Class A common stock is entitled to one vote per share and the Class B common stock is entitled to ten votes per share. The Class A and Class B common stock have the same rights and privileges and rank equally, share ratably, and are identical in all respects and for all matters except for voting, conversion, and transfer rights. The Class B common stock converts to Class A common stock at any time at the option of the holder. References in the accompanying financial statements have been adjusted to reflect the dual class common stock structure and the changes in the number of authorized shares of common stock. We also authorized a total of 20,000,000 shares of undesignated preferred stock, par value $0.001 per share. Effective March 5, 2021, 124,012,926 outstanding shares of common stock were converted into an equivalent number of shares of our Class B common stock.
Class A common stock and Class B common stock reserved for future issuance consisted of the following:
As of March 31,
2022
As of December 31,
2021
Shares available for grant under employee stock purchase plan3,760,115 3,760,115 
Shares available for grant under stock option plan19,714,647 18,994,572 
Restricted stock units3,573,464 1,082,980 
Options issued and outstanding under stock option plan35,445,788 36,716,816 
Total common stock reserved for future issuance62,494,014 60,554,483 
Charitable Contributions

In March 2021, our Board of Directors approved the issuance of 1,729,189 shares of our Class A common stock to an independent donor-advised fund sponsor, Tides Foundation, in conjunction with our Olo for Good initiative. We donated 172,918 shares of our Class A common stock to Tides Foundation and recognized $5.1 million as a non-cash general and
17

OLO INC.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
administrative expense in our consolidated statement of operations for the three months ended March 31, 2021. We did not donate any shares during the three months ended March 31, 2022. Through March 31, 2022, we have donated a total of 345,836 shares of our Class A common stock. We expect to donate 1/10th of the total remaining approved shares into the fund annually.
12.Stock-Based Compensation
Equity Incentive Plans
On March 5, 2021, our Board of Directors adopted our 2021 Equity Incentive Plan (“2021 Plan”). Prior to that date, we had established our 2015 Equity Incentive Plan (“2015 Plan”) and 2005 Equity Incentive Plan (“2005 Plan” and collectively with the 2021 Plan and 2015 Plan, the “Plans”). The 2021 Plan serves as the successor to the 2015 Plan and 2005 Plan and provides for the issuance of incentive and nonqualified stock options, SARs, restricted stock, and RSUs, to employees, directors, consultants, and advisors.
Stock options under the Plans may be granted with contractual terms of up to ten years (or five years if granted to a greater than 10.0% stockholder) and at prices no less than 100.0% of the estimated fair value of the shares on the date of grant as determined by our Board of Directors; provided, however, that the exercise price of an incentive stock option (“ISO”) and nonqualified stock option (“NSO”) granted to a greater than 10.0% stockholder shall not be less than 110.0% of the estimated fair value of the shares on the date of grant. Awards granted under the Plans generally vest over four years.
Certain stock options have an early exercise feature. Shares purchased pursuant to the early exercise of stock options are subject to repurchase until those shares vest; therefore, cash received in exchange for unvested shares exercised is recorded as a liability on the accompanying condensed balance sheets, and is reclassified to Class B common stock and additional paid-in capital as the shares vest. There were 98,889 and 120,088 early exercised shares outstanding as of March 31, 2022 and December 31, 2021, respectively. As of March 31, 2022, there is a liability in the amount of $0.3 million, of which $0.2 million was recorded in accrued expenses and other current liabilities in our balance sheet because vesting is within the next 12 months, and $0.1 million was recorded in other liabilities, non-current, because vesting is beyond the next 12 months.

On March 13, 2021, our Board of Directors adopted a non-employee director compensation policy that became effective upon our IPO. The policy provides for annual cash retainers for non-employee directors and an additional cash retainer for those non-employee directors that serve as chairpersons or members of our audit, compensation, and nominating and corporate governance committees. Additionally, directors will have the option to receive their annual retainer amounts in cash or equity. Each new non-employee director appointed to the Board of Directors after the IPO date will be granted an initial RSU award with a value of $0.3 million subject to vesting over a three-year period. Certain non-employee directors who had served for at least six months prior to the IPO effective date and did not have unvested equity awards were granted 39,870 RSU awards on March 17, 2021 with a total value of approximately $1.0 million, which will fully vest on the day immediately prior to our 2022 annual meeting of stockholders.
As of March 31, 2022 and December 31, 2021 the maximum number of shares authorized for issuance to participants under the Plans was 24,817,791 and 20,615,612, respectively. As of March 31, 2022 and December 31, 2021, the number of shares available for issuance to participants under the Plans was 19,714,647 and 18,994,572, respectively.
During the three months ended March 31, 2022 and 2021, no SARs were granted to employees. The SARs outstanding as of the time of the IPO were equity-classified and were measured at the grant date fair value. The SARs were vested and settled upon completion of the IPO and 1,642,570 shares of Class B common stock were issued in connection with this event. Compensation expense of $2.8 million was recognized for the three months ended March 31, 2021.

18

OLO INC.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
Restricted Stock Units
The following summarizes the activity for the unvested RSUs during the three months ended March 31, 2022:
SharesWeighted-
Average
Grant Date Fair Value
Unvested at December 31, 20211,082,980 $27.70 
Granted2,740,027 18.78 
Vested(136,662)20.32 
Forfeited and canceled(112,881)23.25 
Unvested at March 31, 20223,573,464 $21.28 
The total fair value of RSUs vested during the three months ended March 31, 2022 was $1.7 million. Future stock-based compensation for unvested RSUs awarded as of March 31, 2022 was approximately $71.3 million and is expected to be recognized over a weighted-average period of 3.66 years.
Stock Options
The following summarizes our stock option activity for the three months ended March 31, 2022 (in thousands, except share and per share amounts):
Number of
options
outstanding
Weighted-
average
exercise
price
Weighted-
average
remaining
contractual
term
(In years)
Aggregate
intrinsic
value
As of December 31, 202136,716,816 $3.55 5.76$633,730 
Granted859,038 15.75 
Exercised(1,851,334)1.25 
Forfeited(278,732)7.16 
Vested and expected to vest as of March 31, 202235,445,788 $3.94 5.71$330,083 
Exercisable as of March 31, 202225,631,502 $2.29 4.61$280,924 
The following table summarizes the weighted-average grant date fair value of options granted, intrinsic value of options exercised, and grant date fair value of options vested for the three months ended March 31, 2022 and 2021 (in thousands, except per share amounts):
Three Months Ended
March 31,
20222021
Weighted-average grant date fair value of options granted$15.75 $10.50 
Intrinsic value of options exercised$30,849 $53,411 
Total grant date fair value of options vested$13,699 $5,950 
Future stock-based compensation for unvested employee options granted and outstanding as of March 31, 2022 was $65.3 million and is expected to be recognized over a weighted-average period of 2.39 years.
19

OLO INC.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
Valuation Assumptions
We estimated the fair value of stock options granted using the Black-Scholes option pricing model with the following weighted-average assumptions:
Three Months Ended
March 31,
20222021
Expected term (in years)5.24
5.48 - 6.07
Volatility32%52%
Risk-free interest rate1.62%
0.50% - 0.67%
Dividend yield0%0%
Fair value of underlying common stock$15.75
$16.78 - $18.09
We elected to use the midpoint practical expedient to calculate the expected term.
2021 Employee Stock Purchase Plan
On March 5, 2021, our Board of Directors and stockholders adopted our ESPP. The ESPP became effective immediately prior to the IPO. The ESPP authorized the issuance of 3,900,000 shares of our Class A common stock pursuant to purchase rights granted to our employees or to employees of any of our designated affiliates. The number of shares of our Class A common stock reserved for issuance will automatically increase on January 1 of each calendar year, commencing on January 1, 2022 through January 1, 2031, by the lesser of (1) 1.0% of the total number of shares of our Class A common stock outstanding on December 31 of the preceding calendar year, or (2) 11,700,000 Class A common shares; provided, that prior to the date of any such increase, our Board of Directors may determine that such increase will be less than the amount set forth in clauses (1) and (2). Employees may contribute, normally through payroll deductions, up to 15% of their earnings for the purchase of our Class A common stock under the ESPP. Our Class A common stock will be purchased for the accounts of employees participating in the ESPP at a price per Class A common share equal to the lower of (a) 85% of the fair market value of our Class A common stock on the first trading date of an offering, or (b) 85% of the fair market value of our Class A common stock on the date of purchase. The current offering period began in December 2021 and ends in June 2022. For the three months ended March 31, 2022, we recorded approximately $0.4 million of compensation expense associated with our ESPP.
Stock-Based Compensation Expense
The classification of stock-based compensation expense, which includes expense for stock options, RSUs, SARs, and ESPP charges, by line item within the consolidated statements of operations and comprehensive (loss) income was as follows (in thousands):
Three Months Ended
March 31,
20222021
Cost of revenue - platform$1,470 $436 
Cost of revenue - professional services and other210 115 
Research and development3,398 3,452 
General and administrative5,038 3,858 
Sales and marketing1,592 388 
Total stock-based compensation expense$11,708 $8,249 
13.Warrants 
Redeemable Convertible Preferred Stock Warrants
Prior to the IPO, warrants to purchase 1,682,847 shares of our outstanding redeemable convertible preferred stock were exercised and converted into redeemable convertible preferred stock. Upon completion of the IPO, all shares of our
20

OLO INC.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
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. The redeemable convertible preferred stock warrant liability was reclassified to additional paid-in capital in connection with the IPO. For the three months ended March 31, 2021, we recorded a fair value adjustment of approximately $18.9 million using the intrinsic value of each warrant on the date of the conversion immediately prior to the IPO, as the warrants were significantly in-the-money and the Black-Scholes inputs have a de minimis impact on their value.
14.Income Taxes
We had an effective tax rate of 10.39% and (0.14)% for the three months ended March 31, 2022 and 2021, respectively. The effective tax rate for the three months ended March 31, 2022 is driven primarily by the release of a portion of our valuation allowance for deferred tax assets following the recording of a deferred income tax liability as part of our accounting for the acquisition of Omnivore and adjustments to the full valuation allowance on our deferred tax assets, partially offset by state taxes. We maintain a full valuation allowance on our net federal and state deferred tax assets as we have concluded that it is more likely than not that the deferred tax assets will not be realized.
We evaluated the available evidence supporting the realization of our deferred tax assets, including the amount and timing of future taxable income, and have determined that it is more likely than not that our net deferred tax assets will not be realized. Due to uncertainties surrounding the realization of the deferred tax assets, we maintain a full valuation allowance against substantially all of our net deferred tax assets. When we determine that we will be able to realize some portion or all of our deferred tax assets, an adjustment to our valuation allowance on our deferred tax assets would have the effect of increasing net income in the period such determination is made.
We applied ASC 740, Income Taxes, and determined that we do not have any uncertain positions that would result in a tax reserve for each of the three months ended March 31, 2022 and 2021. Our policy is to recognize interest and penalties related to uncertain tax positions in income tax expense. We are subject to U.S. federal tax authority and state tax authority examinations.
15.Commitments and Contingencies
Contingencies
Liabilities for loss contingencies arising from claims, assessments, litigation, fines, and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. If we determine that a loss is reasonably possible, and the loss or range of loss can be estimated, we will disclose the possible loss in the notes to our financial statements. Accounting for contingencies requires us to use judgment related to both the likelihood of a loss and the estimate of the amount or range of loss. Legal costs incurred in connection with loss contingencies are expensed as incurred.
We have also received, and may in the future continue to receive, claims from third parties asserting, among other things, infringement of their intellectual property rights. Future litigation may be necessary to defend ourselves or our customers by determining the scope, enforceability, and validity of third-party proprietary rights or to establish our proprietary rights. Defending such proceedings is costly and can impose a significant burden on management and employees. The results of any current or future litigation cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors.
21