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Olo Inc.

Case Details

Class Period: August 11, 2021 - August 11, 2022
Date Filed: September 26, 2022
Case Number: 1:22-cv-08228
Jurisdiction: New York Southern District Court
icon-casetype Case Type: Securities Case

Case Summary

Olo Inc. provides software to restaurants to assist with online ordering and food-delivery coordination. During the Class Period, the Company’s key business metric demonstrating its growth was its “active locations,” with each active location representing a unique restaurant location using an Olo product.

In February 2020, the Company announced a partnership with Subway® restaurants (“Subway”) to enable Subway’s more than 20,000 U.S.-based restaurants to handle digital orders from third-party “marketplaces” such as Uber Eats or DoorDash. Throughout the Class Period, Olo touted the growth of its active locations, with Subway accounting for approximately 20% of those locations. By the first quarter of 2022, the Company’s active locations had grown to approximately 82,000 – a 19% increase over the prior year.

The Class Action alleges that, during the Class Period, Defendants misled investors and/or failed to disclose that (1) Subway was ending its contract with Olo; (2) Olo’s key business metric – active locations – could not continue to grow as Defendants touted due to the loss of Subway’s business; and (3) that, as a result of the above, Defendants’ statements about Olo’s business, operations, and prospects were false and misleading and/or lacked a reasonable basis.

The truth emerged on August 11, 2022, when the Company announced disappointing results for the second quarter of 2022, lowering revenue guidance and reporting that its active location count remained flat at 82,000. The Company explained that it was impacted by the loss of 2,500 Subway locations, due to Subway choosing to implement direct integration with marketplaces, and that the Company expected the remaining Subway locations would also end their contracts with Olo by the fourth quarter of 2022 or first quarter of 2023 – facts Defendants claimed to have incorporated into Olo’s guidance months earlier without informing the market. In response to this news, the price of Olo common stock declined approximately 36%, from a closing price of $12.99 per share on August 11, 2022, to a closing price of $8.26 per share on August 12, 2022.