Q4 2019 Earnings Call

Good day, ladies and gentlemen, and welcome to the S. Why 2009, P. fourth quarter and yes.

Actual results.

Okay.

Right.

Later, we will conduct a question and answer session and instructions will follow.

Hi.

If anyone should require assistance during the conference. Please press Star then zero on your Touchtone telephone as a reminder, this conference call is being recorded.

I would now like to try to conference over to your host Chris is very well.

Vice President of business development. Please go ahead Sir.

Thank you Laurie and good afternoon.

Well like the woken me today to the call for partners 2019 fourth quarter financial results review.

The complete disclosure of our results can be found in our press release issued this afternoon. It's what was going to related form 8-K furnished to the FCC.

To access the press release from the financial details. Please see the Investor Relations and news section of our website at Www dot protect dot com.

At this time I'd like to take care of certain details in regards to the call today.

Participants on the call should be aware that we're recording the call. This afternoon and it will be available for playback.

Also we are broadcasting the conference call via the worldwide web. So please be advised if you ask the question. It will be included in both our lives conference and any future you sort of reporting.

I'd like to remind participants at this conference call includes forward looking statements reflect management's expectations based on currently available data.

However, actual results are subject to future events and uncertainties.

Information on this conference call related to projections or other forward looking statements may be relied upon and subject to the safe Harbor statement included in our earnings release, this afternoon and in our annual and quarterly filings with the FCC.

Joining me on the call today as part of CEO, and President said, each thing and Brian our parts Chief Financial Officer.

Now I'd like to turn the call over to 78 for the formal remarks portion of the call, which will be followed by general <unk>.

70.

Thanks, Chris and good afternoon to everyone and thank you for joining us today to discuss our fourth quarter 2019 results.

To begin with I want to take admitted interest concerns trying to kinda virus outbreak. We like everyone are closely monitoring to spread the virus in the potential impact on our business in supply chain.

Early in the virus is trajectory part took a proactive step it accelerate inventory purchases and pulled forward previously ordered equipment in the that there is the supply disruption.

We continue to push vendors to accelerate their timeline and hope to build the strong safety stock. We believe building inventory to smart use of capital need enter the potential longer term disruption.

Second we have not experienced any material customer impact to date. This could change at any time, but our customers are not express any change in their plans yet we will continue tomorrow. This closely.

Finally, we are monitoring all potential areas of impact on our business under an indoor in close contact with our suppliers and partners. We continue to invest in the safety of employees and have strengthened our oversight given the current concern.

Now to focus on our Q4 operation.

To begin with I'm pleased to report that we completed the acquisition of restaurant Magic at the end of the fourth quarter and we're now better position to continue to expand our wall in the restaurant software space.

We've been Pressers restaurant Magic with restaurant Magic team and are excited about their pipeline and with both organizations can bring to each other.

Now to review the fourth quarter. This afternoon, the company reported fourth quarter revenues of $52.9 million compared to $46.7 million in the fourth quarter last year, 13.4% increase.

Increase is primarily due to an increase to the an increase of 25% product revenues and a 9% increase in revenues associated with our government segment.

We reported a GAAP net loss of $5.8 million and a loss per share at 35 cents in the quarter compared to a GAAP net loss of $6.2 million lots of 33 cents per share in last year's fourth quarter.

On a non-GAAP basis reported net loss of $4.1 million and a loss per share of 25 cents in the quarter. This compares to a non-GAAP net loss of $3.7 million in a 23 set percent 23 cents loss per share last year.

Non-GAAP adjustments are detailed in our press release.

Now trip your segment performance.

<unk> for brink at the end of Q4 was $19.2 million, an increase of $4.7 million in a 33% growth from a year ago.

In a 1.3 million dollar increase from the sequential third quarter.

There are number is built off restaurants being invoiced as of December 15th 2019 in the quarter, we completed implementation of 622 new stores.

New bookings in the quarter totaled 913 sites in are open order backlog now stands at 1300 90 stores.

We continue to win those competitive enterprise restaurant opportunities and are outpacing our competitors where reputation in commitment to innovation.

The dramatic increase in the open orders open order store count is due to correcting the previous accounting procedure. We had been using this correction gives a completely accurate number of stores book and yet to be installed.

During the previous quarter Q3, or open order count improved to 1009 stores at the end of September from the previously reported number of 682.

It's also very important to note that a significant number of stores that we get anticipating rolling out during Q4 delayed their bookings and some installed due to a hardware products sourced product sourcing issue during the fourth quarter, we had challenges acquiring a specific hardware component from supplier that negatively impacted our installed in bookings for the quarter I'm happy to report that we've resolved this issue.

And have engaged with additional suppliers to ensure a more consistent supply chain for our customers there will be signing up those affected customers. The next two quarters. We continue to experience high demand for our software solutions are expected to accelerate 2020 progressive.

Regarding churn we ended the quarter on a positive note when annualized rate of 4.7 per cent for the quarter in a 6.8%.

Right for all of 2019.

4.7% its lowest quarterly churn weve reported since 2016.

They don't on last quarter's call, we're introducing a table service modular break that won't mealy enhance our addressable market by two X traditional cable service restaurants nowhere acquire more detailed point of sale solution as their businesses are more complex that complexity will drive higher subscription fees for our software solutions and deliver higher ARPU rates.

Along with table service the introduction of par payment services will be challenging the payment processing status quo by taking a simple transparent and secure approached payment processing restaurants pay just one bill for multiple services impart easy easy to understand pricing model will eliminate the hidden fees common with other payment processor arrangements.

Unlike other vendors part will guarantee rates for the term of the contract ensuring restaurants have a clear picture of what is included in what is not.

I hope it it'd be to clean sheet in a market filled with many overcharging. We've been encouraged by our early customer feedback and expect payments to grow to be a substantial portion of parts business in the coming years.

Apart from company our business includes significant attachment of hardware in lifecycle support revenues hardware revenues associated with that brink deployments grew almost 90% from Q4 2018 as integrated part solution continues to be die by restaurant owners and operators.

Now, let's review, our hardware and services business I recently acquired drive to communication business performed better than expectations. Today, we built a strong and innovative team that is driving growth in the bid in the new business in product development areas.

In Q4, we hosted our kick off partner event and were able to ruin your strong relationships with our top resellers.

We've been successful early on is tiny businesses and extending services deals with large customers.

We have successfully transition manufacturing away from three M. and we're seeing solid progress in opportunities surrounding artificial intelligence and building out the drive through in the future in partnership with brink.

A relationship there tier one clients among larger organizations is strong and our core business and strategic account teams continued to be industry leaders into every hardware and critical services some of the world's largest restaurant companies.

Stepping out of quarter I feel confident that the continued indefinite R&D in our newly brink management, our newly built brink management team will lead to a strong acceleration of growth, but our team has not been together along every new member. The team has raised the bar for the rest of us and we're seeing significant improvement in product sales and operations.

Now to review our government segment.

Our government business delivered a solid quarter evidenced by the 9.1% increase in revenues compared to Q4 2018.

Our backlog at the end of Q4 is this all at $140 million are Intel solutions business was a driving force behind the growth in the quarter as I start revenues increased 52.2% from one year ago.

We have confidence not that we have confidence our backlog and provide a base for an improved 2020.

We continue to see contract opportunities, where we can leverage your expertise and usually known performance excellence specifically in value added revenue contracts that include more direct labor and high Tech contract work within our until solutions business line.

Before Brian reviews, our numbers in the quarter I thought it may be helpful. If I laid out a framework on why we believe car is potentially better position and others to withstand impacted the kinda virus outbreak.

First person market of customers has historically been unlikely we'll continue to be heavily weighted to the QSR fast casual market.

This market generally performs better installing economy as customers tend to shift towards these concepts.

In addition, these franchise based incentives tend to withstand crisis better as their business models tend to be more mature and they enjoy brand recognition.

Second there's the potential of the virus is spread will highlight the need for accelerated digital and drive through spend as restaurants rate as restaurants based for slowing table race excuse me for slowing table service traffic, we expect off premise dining online ordering and delivery to become a higher party all of which require more important sells product.

Restaurants, only to find ways to serve customers in this new environment, well managing labor costs and their own supply chains. We think this all highlights the continuing need for technology investing.

Moreover, as consumers avoid physical restaurants to drive there will likely received increased attention they should benefit pars suite of solutions.

Third we expect valuations the potential M&A targets it become more attractive in this market during the last year, we've seen several high quality businesses were living on the expectation or the next venture around.

If those around to materialize par isn't a very favorable position to sweep in on specific deals.

Moreover, price position <unk> position as a point of entry into the restaurant will become more more valuable.

In closing with all that is occurring on a macro basis remained focused on the opportunity that enable long term sustainable growth for a business.

We expect to accomplish this by delivering innovative technology solutions that create modern and exceptional experiences for our customers all feel by engaging happy team.

That concludes my formal remarks, and I'll now turn the call over to Brian for more detailed reporting on the quarter's financial and then we'll open the call Tonight Brian.

Thank you Stephanie and good afternoon, everyone I.

I would now like to take this opportunity to provide some additional details surrounding our fourth quarter results [noise].

As of the previously stated.

Reported revenues of 52.9 million for the quarter up 13% from 46.7 million reported in Q4 2018, our net loss was 5.8 million or lost 35 cents per diluted share for the quarter versus a net loss of 6.2 million or a loss of 38 cents per diluted share for Q4 2018.

Our quarter over quarter performance was primarily driven by continued growth and brink Pos revenue, including related SAS hardware and support services and the introduction of our recently acquired drive through product line.

Operating segment revenues for the year ended December 30, Onest 2019 were 35.6 million for the restaurant retail reporting segment, an increase of 16% from 30.8 million reported in Q4 2018.

And 17.3 million for the government reporting segment, an increase of 9% and 15.9 billion reported for Q4 2018.

Restaurant retail revenue for Q4 2019 by business line consisted of 23.4 million for core 11.7 million brink.

Partial period revenue point 3 million for restaurant Magic for the 12 days post close over a year on acquisition and point 3 million for the one month of revenue related to sure check prior to dies the divestiture at the up at the end of October 2019.

Restaurant retail revenue for Q4 2000 [noise].

And 18 by business line was 22.5 million for core 6.9 million for brink and 1.4 million for sure check.

Government revenue for Q4 2019 by business line consisted of 8.9 million for <unk> SAR 8.3 million for mission systems compared to Q4 2018 revenue by business line of 5.9 million <unk> SAR 9.8 million for mission systems and point 2 million for product sales.

Product revenue for the quarter was 20.2 million up 4.1 million were 25% compared to Q4 2018.

Our hardware sales in the restaurant retail reporting segment were up versus prior year, mainly driven by 2.7 million in sales of the recently acquired assets of three EMS drive through product line.

2.5 might increase in brink hardware as compared to Q4 2018.

Service revenue for the quarter was 15.5 9.8 million or 5% compared to Q4 2018 increase was primarily due to a 1.1 million or 41% increase in bring SAS. We finished the year was brink annual recurring revenue of 19.2 million as compared to 14.5 million in 2008.

<unk>.

Contract revenue from our government operating segment was 17.3 million up 1.4 million were 9% as compared to Q4 2018.

This increase was driven by 3.1 million increase in our is our business line.

Contract backlog is 70 said continues to be healthy.

Noting a total backlog of 148 million as of December 31st 2019, and a trailing 12 month book to Bill of 1.2.

In regards to GAAP margin performance for the core.

Product margin for the quarter was 19.5 per cent compared to 14.1% in Q4 2018.

Improvement in product margin was primarily due to a $1 million write off for sure check hardware in Q4 2018, partially offset by unfavorable offering makes has resulted in increased percentage of peripheral sales in Q4 2019.

Non-GAAP margin was 18.1% as compared with 20.5% in Q4 2018.

Service margin for the quarter was 33.9% compared to 17.5% than Q4 2018.

The improvement in service margin was primarily due to a 1.6 million dollar impairment for sure check software in Q4 2018.

In addition to favorable offering mix as result of the growth and bring SAS.

Non-GAAP margin was 33.4% as compared to 28.3% in Q4 2018.

Government contract margin for the quarter was 9.9% compared to 11.9% in Q4 2018.

Decrease in margin was primarily due to a strong margin quarter in Q4 2018 from our mission systems business line.

Now to operating.

Matches gap SGN Nay was 9.9 million a point 5 million versus Q4 2018.

The increase is due to additional investments and brink, Pos sales and marketing and increased equity incentive compensation.

Partially offset by decreases in core sales and Mark.

Non-GAAP SG Nay was 8.8 million down point 1 million versus Q4 2018.

Non-GAAP SG any adjustments for Q4 2019 included point 2 million related to investigation of conduct entered China, Singapore offices.

<unk> point 9 million for equity based compensation as compared to point 2 million and point 3 million respectively. In Q4 2018.

Research and development expenses were 4.1 9.8 million versus Q4 2018, driven by increased investment in brink development 1.2 million.

Now to provide information on the company's cash flow and balance sheet position for the 12 months ended December 31st 2019.

Cash used in operations was 16.1 million, primarily driven by net operating loss. In addition to $5 million increase in net working capital needs, resulting from an increase the receivables late in the year tied to our ERP transition.

This compares with cash used in operating activities, a 3.8 million for the 12 months ended December 30, Onest 2018.

Cash used from investing activities was 24.5 million for the 12 months ended December 31st 2019.

Versus cash use of 6.7 billion for the 12 months ended December 30, Onest 2018.

During the 12 months ended December 31st 2019, we use 13 million of cash for the restaurant Magic acquisition.

7.5 million for the drive through acquisition and received 2.5 million for the divestiture of the sure check assets.

In the 12 months ended December 30, Onest 2019, we also capitalize 4.1 million and costs associated with investments in our restaurant retail segment software platforms in line with the same period in 2018.

Now on software Capex cost for 2.5 million for the 12 months ended December 30, Onest 2019 down 1.5 million versus 2018 due to a decrease in costs associated with the implementation of our new ERP system and I T infrastructure.

Cash provided by financing activities from continuing operations was 65.9 million for the year ended December 30, Onest 2019.

Versus 7.3 million for the year ended December 31st 2018.

Increase was primarily driven by proceeds from a 2024 notes net of issuance cost and repayment full of all amounts outstanding under the credit agreement.

Partially offset by the final payment related to the conclusion of the brink acquisition.

As of December 31st 2000.

19 inventory balance was 19.3 million a decrease of 3.4 million from December 31st 2018, and a decrease of point 2 million from September Thirtyth 2019 inventory turns were three times for our domestic and four times for international operations.

Accounts receivable of 41.8 million increased 15.5 million or 59% compared to December 31st 2018.

The receivable balance was broken down between government segment of 11 million and restaurant retail segment 30.8 million <unk>.

The increase in restaurant retail accounts, he was driven by invoice timing in Q4 weighted towards the second half for the quarter as result of the ERP migration in the beginning of the quarter. Additionally, both operating segments experienced increased revenue in Q4 2019 versus Q4 2018.

And the acquisition a restaurant magic increased receivables by 1 million.

Restaurant retail segment days sales outstanding increased from 52 days as of December 2018 to 77 days as December 2019, due to the ERP time.

Government days sales outstanding increased from 45 days as of December 2018 to 58 days as of December 2019.

That concludes remarks, I would now like to turn the call back over to Chris.

Thanks, Brian Laurie I think we're ready for Q1 I know.

Ladies and gentlemen.

At this time.

And then the number one.

Touchtone telephone if your question has been asked right.

Some of yourself from the Q. Please press the pound key.

[noise], we have a question from some Matt and I know from Jefferies. Please ask your question.

Great Hi, good evening and thanks for taking my question I guess, maybe you know I know you touched on kind of the broader environment during the call, but if I can maybe double click on that how should we think about maybe how your QSR customers are thinking about.

For opening store closings or prioritizing kind of technological advancements during a time like that's just help us maybe understand how we should think about customer behavior or a little bit better just during volatile times like this.

Sure I think Oh, we know we've been told so far in and what I can tell you are QSR customers have not yet pulled back on their plans with us and <unk> as you know their plans are well that's a very much tied to new store openings are rollout. So we haven't seen an impact quite yet.

And I think you know they mentioned during the call and the promise of it being QSR, probably helped out there I think a good analog might be 2008, where you thought QSR fast casual be relatively resilient during a tough time, a if that happens again, which I think there's an argue that it could the pool that we fish and it is a little bit caught more shallow the than others. So we.

Could you help more resilient given that those are the customers we serve very well second I think.

Clearly the virus that traffic to table service restaurants to drop off significantly and that he would potentially be a booster QSR restaurants drive you forget focused restaurants, but I think air force. It every restaurant to have a robust plan around digital ordering online ordering third party delivery native delivery off premise eating a lever.

Inventory management, and all those initiatives or require modern point of sale system. So I think.

There's a global recession, nothing what's really upset that but I think that's definitely helps medic mitigated because I think that's been there'll be prototype.

Okay. That's helpful and then.

Yes that need I know during the quarter.

Our recently company filed that.

Yeah, It kind of <unk> that you permanent contract for you I know that's a question some investors it brought up to us.

I'm curious if you've noticed anything in terms of when you're dealing with larger enterprise customers if that I know it a little bit a weird question, but has that had any type of impact now that all right, especially I maybe on the employee side at the company itself as well now that.

You know they know that you're going to be there for for someone at the long haul and how has that had any type of impact.

Oh, no way back I think you know employees the team our customers new that I was sort of all in very committed to the journey.

I think you know it more t's and c's than anything else.

Okay, just an investor it's just that that would get we care we're [laughter].

The restaurant Magic acquisition, I know the company talked about.

The different customer base as last quarter did you give us maybe an update on the cross selling strategy, there and maybe initial customer feedback or not at the acquisition has been closed for about three months.

Sure. So <unk> de because if you back <unk> been fantastic I think a lot of distributing that restaurant organizations are continuing trying to find is trying to find ways to simplify their their organization.

They had a challenging time managing a so many vendors and so I think they like that there are the two most important products in the restaurant or or the back office and the point of sale and and having that under one roof I think simplify their experiences that we've we've had really strong reception from our customers as it relates to a sort of going in together, we had we have a nice.

A pipeline of a joint customers were going after a and I think the teams are working very well together.

And I look forward to sort of sharing some of those wind down the road, but without question. The number of customers are looking for us to work much closely together and and the bring team has really been able to increase the speed of referral. If you will today today the restaurant magic side.

Great and then maybe one last one for me and then I'll pass the Baton along I noted the company did.

A few acquisitions in 2019.

And obviously in times like this there's there's dislocations how should we think got maybe M&A opportunities.

With par being a publicly traded company with that with a healthy balance sheet. How should we think about your own maybe strategic M&A opportunities in this type of environment.

Sure. So I think from <unk> perspective.

I think we're in a fantastic place we completed our capital rate you know right at the close of the picking the market. So we extended our balance sheet, which gives us a lot of comfort to continue the investments, we're making and potentially be more aggressive on M&A type you know we've been really transparent that we think that there's a great opportunity for us to own more of the wallet.

Share of restaurants software spend and this should accelerate that they've been you know we looked at dozens of deals to be Frank that we'd love to guns. He bought in taking a swing at but are you know I think multiples weren't just never give us enough margin of safety to to really get into I really do you believe that's going to change with it would this be cycle, hopefully slowing down a bit gives us yeah.

But you need to be more aggressive and I think.

You know not all but some of our competitors will be even more challenging situation, which will probably move competition for some of these deals and so I think it can be very very beneficial for us.

Great. That's really helpful. I'll pass it along to my peers on the call. Thanks again for taking my question.

Your next question comes from the line.

Yes, sorry from Sidoti <unk> co. Please ask your question.

Hi, good <unk> Oh questions.

First of all for the.

I mean.

<unk> expense at around one causes so I think mark.

Going forward or do you think excellent United.

Need.

Oh due to the current situation.

Hey, if I get your cutting out I think I asked the question. So the question what do we still expect to hit around 1000 bookings per quarter. Yeah. I think we should be directionally. There are going forward you know as we said in a in the transcript or you know we had a hardware component.

Issue that you know, we wouldn't well past that number in Q4 and if not for hardware component issue. I think you know hopefully we're in there but much of our quarters, we determined by the last two weeks of the year and so well see how does the quarter shapes up but the macro environment, obviously has a big impact on us, but you know we feel like.

Very confident well, we think for <unk> for the year, what we can we can hit but short term, we don't know, but I'd say you know probably it will we continue to sort of.

Chug, along as even doing I feel confident and as I said, all along I really feel extremely confident about the back half of the or.

<unk>.

Hi, its pockets somebody's, we're having a hard time hearing you, but is the question timing of table service.

Got it so we're still probably a couple one say from a bottom rollout we've gotten to the point where that we feel comment about the product the team and so you can think of it as we've got early customer traction we're going to work work it out with them Yeah, we've been selling table service for four years and years.

Hi, this is sort of a revamp product that we feel extremely confident about and so we're you know we're in conversations with a mix of small already this isn't that a couple of every large organization. So it's still very early it what we're doing and but we feel really confident the quality product and as we've mentioned before a lot of our our entry the table service was driven by either large customers requesting that's it.

To do that or our channel partners really pushing us. So we feel it's very very exciting business right.

We're just at the beginning of it in and hopefully next quarter, we can talk about traction.

Thank you.

And ladies and gentlemen, if you have a question at this time. Please press the star and then to number one key on your Touchtone telephone.

Your next question comes from the line of Adam Wyden from 80 double your capital. Please ask your question.

Hey, a sub me.

So Ah yes.

It's an interesting time that we're all in I think people are asking a lot of questions. I think it's it's been a pretty long journey Oh. The last couple of years here feels like China, We're where we are what we started but we're not so I.

I guess my my question to you is you know a lot of short sellers are out there, saying that no. One is going to install any software if restaurants are not open they're not making any money in the past you talked about you know given people hardware in exchange for Hsas and payments you know in some of our channel checks.

It became evident that you might assigned a couple of these contracts recently, you've got this robust balance sheet. I mean can you talk a little bit about how you can kind of you know accelerate deployment I mean, because it seems at some level that the bottleneck spend that people you said you couldn't get the hardware, but you got the hardware and sometimes the bottleneck is <unk>.

The guy to pay for it I mean can you talk about you know the initiatives that you're doing in terms of I'm, giving you know, giving people the hardware discount the hardware in exchange for for payments and and sounds like your peers of doing it you know maybe talk a little bit about how that gives you confidence in your backlog a relative to kind of what other people are saying.

Sure I personally that.

You know, we usually get to see sort of pull back from from from the industry. Yeah. Obviously, if it habit that happen and that's how about you know we feel theres. Some reasons that there's an element to protect it.

But specifically to the hardware question absolutely you know we've we've we've built out a payment business and one of the advantage that having a a payment module. It allows you to be more creative on how you structure deal to your tier two to two you're right customers and so by building on a new recurring revenue stream, we can be more flexible and how we price out our hardware.

And and so it is it's a tool that we'd be Frank we've needed in our back pocket to a two to accelerate growth, particularly in the table service market and I think what we've been encouraged by early on in our conversations I payments is that.

Some of our larger customers that we just you know never would've expected even have a conversation had been the ones actually.

A very excited by it.

Well, let me ask the question I mean in this world, where you have everybody Shorting Sea world at six flags and people, saying you never can go to a restaurant again, and we know and we know that people go to restaurants, even if they don't go what they go less you know people are going to eat people are not going to sit in their homes I mean.

Even if even if your restaurant sales are down your crops are down I mean, why on Earth would you not take this opportunity when business is slower to take this software that's going to allow you to be more efficient cut costs and get delivery and <unk> and it doesn't cost you anything because I mean, it's at the other day, if you're taking brink <unk>.

The cost do you effectively is the fast, but it's really the hardware and so my question. She was like you know you've heard a situation, where you're getting a hardware heavily discounted or free like why why would you not pick a product in a down economy, it's only going to bolster efficiency and potential sales I mean, I just I'm just trying to understand that I mean that seems like a sold.

The bullet on some level.

I think ROI for Brent is always high I think the ROI now if I was a restaurant operator is even higher not having online ordering not having you know if they're quite delivery across all accounts not having you know for on premise dining not having to create a wasted manager drive through I find it hard to think that they wouldn't want to continue to make that investment they haven't done that.

Yet given what you talked about which as you know maybe not everyone will go to a restaurant until they want pick up they want their delivery I think that you know in all down down economies. There's a pullback in spend are there certain areas that you'd invest into hopefully offset some of the revenue losses are going through as a small business. This is one of those areas I expect them to go after it as you suggested if we can mitigate some of that.

Hardware cost or all that at times. It I think it's a no brainer, which is why I think today, we haven't had lots of customers pulling back from us yet, but I think we'll see as this wrote at this.

A virus continues its trajectory.

Yeah, I mean look.

Yes at the end of the day like even if the even if the government were to mandate restaurant closures right. That's still wouldn't preclude you guys from doing from doing implementations and stuff like that I mean, I just come back to the same point, which is it like if it doesn't cost them anything to do what you know I guess it really just comes down to like counterparty risk on your part like your get you're making investment and then.

You're going to give them the hardware that they're going to stay in business and get the revenue, but I mean, you've heard it you're doing business with big chains right like you know it it or it seems like a pretty good risk adjusted return, which which comes to my next question, which is you know we talked about M&A I mean, the stock here is $15 you know I'm just going to do what I call a convenient.

Sure, Matt 15 type 17.2, the 258 million the converts at 43 million you know I don't know what your net debt is I haven't checked your balance sheet, but it's it's probably on the measure of around 30 million. If you've got if you've got government worth at least 100 and hardware at least.

The hundred you know that's $80 million and.

You know at least you know kinda by my back of the obligate math with restaurant magic in kind of the previous thing you were supposed to kinda exit the year around 50 around they are which means you're basically paying you know less than two times. They are for brink now we can play with the numbers around a little bed in the snap I mean, it seems unlikely that there's anything that you can buy.

Two times. They are so maybe this is a little bit like Lee cooperman on the Wyndham called like.

This is getting kind of outrageous and the short sellers are kind of getting a costs and other long term shareholder I mean, I want to be rewarded for taking the pain and taking the journey with you I mean, what type of initiatives I mean, let's say tomorrow the stock market down 10%. This thing trades 10 Bucks I mean, we're going down 25% <unk> every day I mean, you didn't 25% a day for four days bucket zero.

I mean, what are you going to do for our shareholders to make sure that were being compensated for the journey because I know you lose your family up there you got this call package you want to make money like the rest of US I mean, how I mean, what kind of confidence can you get to investors that you're not to protect us and really reward us for being you know are going on the journey with you.

So it wasn't I think the deal the best thing we can do since you guys get her plan, which is to make our investment in brink's that we can continue to the extent reacceleration of brink organic growth and as I suggested you know obviously, we're very active and looking at M&A opportunities right now.

So I just think it's like I said, I think we feel stronger than our competitors. This moment in time, which weeks. So we want to take advantage that it'd be aggressive during this time of here. So well I think I'm talking about I was talking about like share repurchase so right now the stocks at 15 or say them. All the trade that 10, I think I mean, you raised the tone of money you could do it accelerates Sherry.

I would tell I'm sure. It by the third I mean, you almost you almost couple of moral obligation to do it right I mean right now the stock market is basically put it put a double barrel soc onto your head into your debt you're dead restaurants, or does that mean, saying part technology restaurants are dead and that you guys aren't worth paper that printed on and my question to you is.

Fortunately <unk> made by fear and so if you have if you out of the confidence in this business and this stock is $10 tomorrow, which is totally could be like.

What are you going to do to protect the shareholders because he just raised $120 million 43, we're at 10, why you're not doing an accelerated share repurchase you know putting $30 million socket, Ted do you ever really concerts in the backlog grew up an obligation to do it.

I I think we would look at it doesn't always happen to look at all opportunities to create value and we would it make make the argument a you know how we look our evaluation lots at the turn of buying back shares versus doing an acquisition are staying the course, and we will constitute keep doing that now.

And and making sure that we're maximizing every dollar investment.

Look I know you've got it but like I guess my question to you is like if you're going to do M&A, you need to cost of capital and right now it seems it seems very hard at today I mean, I guess, what I'm going with this is at these prices. It doesn't feel like you can do any M&A when you're trading at two times you know when wouldn't break is trading at two times revenue. So my question I do see understand.

I totally agree with you in and we understand the dynamic of.

Sure price is many ways part of our cost of capital and so you know that's where we are you know you know a weaker doing to the steep decline into we're you know what can evaluate what's the best way to create shareholder value. We are obsessed with it the team has invested behind it and you know stock under $10 I think it or whatever price is talk as we would take it incredibly seriously but.

You crazy or we need to.

Weigh that against the other options that we had out there.

And and and we will constantly do that.

Yeah, I mean look it's at 15 today, I mean, I don't know where it is tomorrow, but I mean, even up $15 like I'm look I'm thinking about it and I'm, saying the myself you know it's you know it's two time you know you're paying like two times revenue for Brian and I think on some level right. I think you know like we had the tech debt, we had issues with the engineers I mean look all the types of thing.

You can do to drive organic growth like the payments like the Hardwares meal solution. All these things where things that kind of took time to school luck and so now it's kinda spooled up growth should accelerate and I guess my question is your you.

Never wish bodily harm and on humanity. This virus is terrible, but like it's presenting an opportunity where people are saying look I can just shoot any hospitality <unk> no stock in the world right there shouldn't be ball and the question is definitely.

Yeah, Hey, listen I think Oh, we look it we have the exact same perspective, you as if theres an opportunity will be aggressive taking I think we've shown we've done that a lot in the last year and we'll continue to do that.

Yeah, I mean look you know honestly and isn't it is obviously limits on what we can say publicly we can't say publicly in.

And so you know that's all I can really say about that.

Okay. That's fine I will look I think you're doing a great job.

Happy with the initiatives I just it's a it's kinda like are you know there's just so it's kinda like we're in the Twilight Zone I, just think it's kind of in saying that over the last three years. You know we made all this progress but it's just it's just not reflected so you know I tell all Ceos you know when the market gives you. These opportunities are you know your.

Kind of have an obligation to shareholders right and if you can take the share count from 17 to 10, you know, we're all going to make a lot of money on the other side of this but like you can't squandered those types of opportunities.

Okay. Thanks, Adam we got another color and then we can.

Yeah Yeah.

Ladies and gentlemen, if you have a question at this time, please press star and the number one key touchtone telephone.

Next question is from James.

Your line is now open.

Thank you could you give a little color about par pay because it's my understanding there's a lot at low hanging fruit that could make a lot of money for us quickly.

Sure So al just like a terminology.

It's more par payment services par pay is a module of par payment services, but in general the idea is for park provide.

Payment services to restaurants, such that when the transaction is swyft at the restaurant that runs through our own payment facilitator as opposed to refrain that business to a third party and it's a it's a model that tried and tested by essentially every one of our competitors for par and well I believe we believe this could be city of here. A addition to our revenue is that.

We're not requiring the wheel here, we're very much leveraging the work has been done by every other from out here and I think our are sort of unique I hear that we've made incredibly seen seamless with the customer we made incredibly transparent no hidden fees, none of the sort of could be a for a potential behavior that it scared away from party payment.

And most importantly, as we've gone out to our customers. We continue to be excited about their interest in the product and so the way to think about it is every time you cite that car that restaurant part will make a fixed fee on every single one of those swipes in return for doing the prosody that transaction and that sort of revenue. We expect is that in certain restaurants, and maybe a small if it's a very large concept.

As you know call, increasing a recurring revenue by 10%, but other restaurants, it could increase our revenue up well over 100% and so.

It's it's a big <unk> range of what we can make on to stay on it on it on it and we had to have the data source a guy do with here's how we didn't look at it going forward, but as we get out there. This next quarter. If you will have some good data this year.

So so so you're basically zero traction right now when it comes to assign customer.

I can't comment on that.

I I can say that we would not have made the investment into the product in the partnership we did not believe there was customer demand.

Thank you.

Sometimes there are no further questions at this time I will turn the call over back to Mr. team for his closing remarks.

Thank you everyone for joining we look forward to updating you in the coming weeks.

Ladies and gentlemen. This concludes today's conference. Thank you for your participation and have a wonderful day you may all disconnect.

[music].

[noise].