Olo, New The York-based fintech startup that provides order processing software to restaurants shared its initial IPO price range this morning. Comes forward at the beginning of the company Toast’s expected IPO, A Boston-based unicorn with a similar market remit.
Targeting $ 16 to $ 18 per share, Olo could raise as much as $ 372.6 million in its public offering.
Unlike most companies known publicly in recent quarters, Olo has a history of growth and profitability, making its imminent price all the more interesting. If Toast is profitable, then it is unknown, but most enterprises are not IPO-backed, we are assuming it is not.
This morning, we are doing our usual work: Parsing the company’s pricing gaps to get an evaluation range for Olo. We will calculate both simple and fully diluted pricing and then do some quick work on the revenue level to get to grips with our overall scale.
Are investors willing to pay more for profits? And if so, how much? This is a niche question, as most IPOs look a bit more like Courcera than Olo, but it’s still worth answering.
OLO’s IPO Valuation Range
The company is aiming for $ 16 to $ 18 per share with expected sales of 18 million shares. The company is also accumulating 2.7 million shares for its underwriters. At the upper end of its range, Olo was able to raise $ 324 million in its debut, while not counting the shares reserved for its bankers.
According to the company, we calculate the total number of Class A and B shares outstanding after its IPO to be 142,012,926 or 144,712,926 shares including its underwriters option. Using the latter we look towards the valuation extremes, the Olo would be $ 2.32 billion to $ 2.60 billion.
But what about its fully diluted assessment? Adding in such shares, which are currently linked to the practice of the United Nations, but vested stock options bring about 188,085,714 shares to Olo. Add to the underwriter’s option and rises to a total of 190,785,714 shares.
Using the latter figure, $ 16 and $ 18 Olo per share could range from $ 3.05 billion to $ 3.43 billion on a fully diluted basis.
Is it expensive?
let’s find out! Digging back into the development of OLO, we can see a business with rapidly growing software income. And the same software revenues are improving in quality over time. For example, from 2019 to 2020, Olo’s “platform” revenue – a mix of subscriptions from software and the top line of transactions – increased from $ 45.1 million to $ 92.8 million. At the same time, the company’s platform revenue improved its gross margin from 73.6% to 84.6%.