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Olo Inc.
99 Hudson Street
10th Floor
New York, NY 10013
Via EDGAR
June 8, 2023
U.S. Securities and Exchange Commission
Division of Corporation Finance
Office of Trade & Services
100 F Street, N.E.
Washington, D.C. 20549
Attention: Scott Stringer
Adam Phippen
Re: | Olo Inc. |
Form 8-K dated February 22, 2023
Response dated May 10, 2023
File No. 001-40213
Ladies and Gentlemen:
On behalf of Olo Inc. (the “Company”), we are providing this letter in response to the comment (the “Comment”) received from the staff of the U.S. Securities and Exchange Commission’s Division of Corporation Finance (the “Staff”) by letter dated May 24, 2023 with respect to the Company’s Form 8-K dated February 22, 2023, filed on February 22, 2023.
Set forth below are the Company’s responses to the Comment. The numbering of the paragraph below corresponds to the numbering of the Comment, which for your convenience we have incorporated into this response letter in italics. The responses provided herein are based upon information provided to Goodwin Procter LLP by the Company. Text references in the Company’s responses correspond to the text in Exhibit 99.1 of the Form 8-K dated February 22, 2023, filed on February 22, 2023.
Form 8-K Filed February 22, 2023
Exhibit 99.1, page 1
1. | We note your response to comment 1. Please tell us the Net income, non-GAAP effective tax rate for each period presented and explain why it’s reasonable. Also, explain why it’s appropriate to use GAAP tax benefits considering your history of significant Net income, non-GAAP. In this regard, you should include current and deferred income tax expense commensurate with this non-GAAP measure of profitability. Refer to Question 102.11 of the Non-GAAP Financial Measures Compliance & Disclosure Interpretations. |
RESPONSE: The Company respectfully acknowledges the Staff’s Comment and the reference to the guidance set forth in Question 102.11 of the Compliance & Disclosure Interpretations on Non-GAAP Financial Measures.
In response to the Staff’s Comment, the Company will revise its non-GAAP net income measure in future filings (starting with the Form 8-K which will be filed to report our financial results for the quarter ended June 30, 2023) to reflect the current and deferred tax expense that is commensurate with the non-GAAP measure of profitability in accordance with Question 102.11 of the Compliance & Disclosure Interpretations on Non-GAAP Financial Measures. Historically, the Company has approximated the effective tax rate in each of the periods presented by taking into account the sizeable U.S. net operating loss carryforwards and tax credit carryforwards that have not been recorded where the Company does not expect to record or pay tax for the foreseeable future. Going forward, the Company will instead use a blended statutory tax rate for purposes of calculating the non-GAAP provision for income taxes. The information below illustrates what the Company’s non-GAAP net income reconciliation disclosure would have been if the changes were incorporated into Form 8-K dated February 22, 2023, filed on February 22, 2023. The Company will provide this similar disclosure on a go-forward basis.
Year Ended December 31, 2022 | Year Ended December 31, 2021 | |||||||
Net loss reconciliation: | ||||||||
Net loss, GAAP | $ | (45,968 | ) | $ | (42,273 | ) | ||
Plus: Stock-based compensation expense and related payroll tax expense | 46,865 | 34,269 | ||||||
Plus: Charitable donation of Class A common stock | 1,406 | 13,107 | ||||||
Plus: Costs and impairment charge associated with sublease of corporate headquarters | 3,272 | — | ||||||
Plus: Non-cash capitalized software impairment | 475 | — | ||||||
Plus: Capitalized internal-use software and intangible amortization | 5,446 | 579 | ||||||
Plus: Change in fair value of warrant liability | — | 18,930 | ||||||
Plus: Severance costs | 2,359 | — | ||||||
Plus: Transaction costs | 1,600 | 2,834 | ||||||
Less: GAAP acquisition-related deferred income tax benefit (1) | (1,519 | ) | (4,896 | ) | ||||
Less: Tax impact of non-GAAP adjustments (2) | (3,486 | ) | (5,735 | ) | ||||
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Net income, non-GAAP | $ | 10,450 | $ | 16,815 | ||||
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(1) | As a result of its acquisitions, the Company recognized deferred tax liabilities relating to the basis differences for acquired intangible assets. The recording of these deferred tax liabilities resulted in a reversal of its valuation allowance which is included in the GAAP provision for income taxes. |
(2) | The Company utilized a federal rate plus a net state rate that excluded the impact of NOLs and valuation allowances to calculate its non-GAAP blended statutory rate of 26.27% and 26.54% for 2022 and 2021, respectively. |
Please contact me at (212) 813-8853 with any questions or further comments regarding our responses to the Staff’s Comment.
Sincerely, |
/s/ Edwin O’Connor |
Edwin O’Connor |
cc: | Noah Glass, Olo Inc. |
Peter Benevides, Olo Inc.
Robert Morvillo, Olo Inc.
John J. Egan, III, Goodwin Procter LLP
Andrew R. Pusar, Goodwin Procter LLP