OLO - Olo shares fall over 30% on earnings miss soft guidance

Olo Inc. ( NYSE: OLO ) shares crashed over 30% after posting a disappointing second quarter earnings result and reeling in full-year forecasts.

The New York-based restaurant software company missed top and bottom line expectations for the second quarter, while guiding well below sell-side estimates. The company cut full-year guidance by $12.5M due to deployment delays and elongating sales cycles coupled with expected loss of 15K Subway locations.

Shares fell 33.87% in Friday’s premarket trading, adding to an over 65% decline in the past year.

“Overall, while the restaurant industry will continue to move forward with digitization efforts, the

pace of these transitions are unlikely to look anything like what the segment has experienced

over the Covid years,” Stifel analyst Brad Reback commented on Friday. “We are uncertain how quickly the company will adjust to this new reality and downgrade the stock to Hold.”

Reback also trimmed his price target to $9 from a prior $12.

Piper Sandler also lowered its price target to $9, noting that visibility is lowered into the road ahead for the company after the surprisingly reduced targets. Likewise, the firm moved to Neutral from a previous Buy-equivalent rating, but remained optimistic on resilience in the long term.

“We are lowering our rating to Neutral and reduce our PT to $9 from $13 on lower estimates with limited visibility into the timing of a reacceleration,” a note to clients on Friday read. “That said, OLO maintains an excellent track record of profitable growth and has a strong balance sheet with $460M in net cash and investment.”

Read the earnings call transcript .

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