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Olo's (NYSE:OLO) Earnings Are Of Questionable Quality

Simply Wall St · 05/15 10:45

Olo Inc.'s (NYSE:OLO) stock was strong after they recently reported robust earnings. We did some analysis and think that investors are missing some details hidden beneath the profit numbers.

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earnings-and-revenue-history
NYSE:OLO Earnings and Revenue History May 15th 2025

How Do Unusual Items Influence Profit?

To properly understand Olo's profit results, we need to consider the US$7.9m gain attributed to unusual items. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. We ran the numbers on most publicly listed companies worldwide, and it's very common for unusual items to be once-off in nature. Which is hardly surprising, given the name. We can see that Olo's positive unusual items were quite significant relative to its profit in the year to March 2025. As a result, we can surmise that the unusual items are making its statutory profit significantly stronger than it would otherwise be.

That might leave you wondering what analysts are forecasting in terms of future profitability. Luckily, you can click here to see an interactive graph depicting future profitability, based on their estimates.

Our Take On Olo's Profit Performance

As we discussed above, we think the significant positive unusual item makes Olo's earnings a poor guide to its underlying profitability. For this reason, we think that Olo's statutory profits may be a bad guide to its underlying earnings power, and might give investors an overly positive impression of the company. On the bright side, the company showed enough improvement to book a profit this year, after losing money last year. The goal of this article has been to assess how well we can rely on the statutory earnings to reflect the company's potential, but there is plenty more to consider. Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. For example - Olo has 2 warning signs we think you should be aware of.

This note has only looked at a single factor that sheds light on the nature of Olo's profit. But there are plenty of other ways to inform your opinion of a company. For example, many people consider a high return on equity as an indication of favorable business economics, while others like to 'follow the money' and search out stocks that insiders are buying. While it might take a little research on your behalf, you may find this free collection of companies boasting high return on equity, or this list of stocks with significant insider holdings to be useful.