Q3 2020 PAR Technology Corp Earnings Call

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Ladies and gentlemen, established by your conference will begin shortly I can't be standby you conference will begin shortly thank you.

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Good afternoon, ladies and gentlemen, and welcome to the fiscal year Twentytwenty third quarter financial results Conference call. At this time all participants are you listen only mode later.

We will conduct a question and answer session and instructions will follow at that time if anyone.

Anyone should require assistance during the conference. Please press star zero on your Touchtone telephone.

Mine. During this conference call is being recorded I'd like to turn the conference over to your host Mr., Chris Barry White, Vice President of business development, Sir you may begin.

Thank you Sarah and good morning, everyone. I'd also like to welcome you today to the call for Par's 2023rd quarter financial results review.

A complete disclosure of our results can be found in our press release issued this morning.

As well as in our related form 8-K furnished to the U.S. in shape.

To access the press release and the financial details. Please see the Investor Relations or news section of our website at Www Dot part Chegg Dot com.

I also want to be sure all participants today have access to our business review slide deck that Willy we will use later in the call to better communicate the momentum in our software business and.

Individuals on the webcast should have access to the deck when they log onto the call. This morning for.

Are those just dialing in on the conference call of the <unk>. This morning, the presentation can be accessed on the investor page of our web sites and we also included as an attachment on the 8-K, we filed this morning.

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

Participants on today's call should be aware that we're recording the call. This morning, and it will be available for playback also.

Also we are broadcasting the conference call via the World wide web. So please be advised if you ask a quick.

It will be included in both our live conference and any future use of the recording.

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

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

The information on this conference call related to projections or other forward looking statements may be relied upon in subject to the safe Harbor statement included in our earnings release, this morning, and in our annual and quarterly filings with the EPS you say.

Joining me on the call today as part of a CEO and President said need, saying and Brian Minnaar Par's Chief Financial Officer.

I'd now like to turn the call over to 70 for the formal remarks portion of the call, which will be followed by general Q1 day 70.

Thank you, Chris and good morning to everyone on the call today I Hope you and your families are well in sales as they communicating to you last quarter. The last several months have presented incredible challenges for our company and the global economy, the hole and our thoughts go out to all those impacted by the global pandemic.

I continue to be incredibly proud of par and our employee commitment to helping our customers drive during these challenging times.

Under the cover of a challenged economic environment part recorded one of the strongest quarters in history with near record bookings record backlog and a strong rebound in hardware sales.

Q3, we do have revenues, 21% compared to last years third quarter, and I'm happy to Ritchie <unk> points, you'd actually extremely confident about the future of our company.

A notable highlight in a third quarter and I want to mention it made the top was our more than $131 million equity offering that closed just this past week, a very important step for us that provides ample capacity continue to drive our growth in revenue restaurant technology business. This offering was a milestone for us as it was our first straight equity offerings since 19.

Thanks [noise] this.

This capital raise provides the liquidity and flexibility necessary to accelerate our growth initiatives, both through acquisition and specific internal investments.

COVID-19 is showing the value of our current solutions, but also highlighted a dramatic need for new product, we intend to be active in M&A space as we continue to build out our software platform.

We believe each additional product category will provide more incremental value to our customers, thereby making our platform stickier.

Before Brian gives details surrounding our Q3 numbers I went to review with you. Our notable progress we've made in the software business.

Did you jump to slide three independent station.

The snapshot brinks performance in Q3.

I'm really pleased to report that we had 1100 81, new store bookings in the quarter, a 45% improvement from the previous sequential quarter and 23% increase from Q3 last year.

I think this metric more than any other truly demonstrates the momentum and velocity of our cloud point of sale suffering.

Q3, brink bookings were the most we've seen in years and how it how quickly enterprise restaurants are reacting to the company and then.

Our customers have rushed to lock brink and as they continue to address their operations with technology first world.

The slide shows we appointed air are at $22.8 million and 27% increase from the same quarter last year.

As we accelerate activations coming out of Q3, we should continue to see an expansion in air or.

If you identified four you can see that Weve crossed the 11000 store threshold in boy stores in our reported backlog at the end of Q3 was 977 stores yet to be installed.

We installed 761, new brink stores in Q3 up 300 sites from Q2, and 18% increase from Q3 19 remarkable accomplishment during pandemic.

As our concepts continue to ease restrictions within their stores, we believe we'll be able to accelerate activations.

This is all of course dependent on each concept comfort in local geographic restrictions.

On slide five you can see our waterfall of the last five quarters as we continue to grow at or.

I'm proud of our incredibly low churn rate of 4.5% in Q3. This is the fourth consecutive quarter that our annualized churn rate is below 5%.

Any testing the stickiness of our software offerings and the strength of our enterprise customers.

Slide six shows the improvement in coping related churn and prove that the minimal impact. They could have it has had on store closures in our Tam and the expiring strength of our customers in Q3 325 bring customers came back online from temporary churn.

Not shown here, but important to note that restaurant Magic also saw 174 customers come back online in Q3, those metrics are very positive signs for our business.

Slide seven shows restaurant magic delivering a solid rebound from a challenging Q2 with bookings reported 506 more than doubling the booking out putting Q2 well.

Well restaurant Magic was impacted more from temporary closures the business. The business has certainly come that's starting to come back the average MSR for new concepts nine was 103 to $330 and air reported was $8.7 million, an 18% increase from the prior sequential quarter. This.

<unk> Air figure includes waivers for temporary closed stores come.

Combined they are with brink and restaurant Magic is now 31, and a half million at the end of Q3.

Slide eight gives a current site count for rest of magic wouldn't stop stores now totaling 150 700 restaurants as we went live with the kind of new sites in Q3.

On slide nine we played an approximate $3 million, increasing brinkley that hardware revenues from the end of Q2, a 76% increase we continue to see robust demand for the complete power solution and the capabilities provides our customers our customers continue to rationalize vendors and we stand to benefit.

Not to quickly review, our product and hardware business in the quarter that is our point of sale platforms and attract new communication systems business.

Product revenue in the quarter increased by 29% from Q3, 19 and recovered nicely with the 66% sequential decrease increase from the cobot impacted Q2 EPS.

As mentioned earlier, our integrated offerings and complete solution continued to be adopted by our customers.

I'm pleased to see a rebound in product sales from a Q2 number and to deliver performance and it's scary challenge capital environment is nothing short of remarkable [noise].

Now to review our government segment, our government business again delivered a solid quarter evidenced by the nearly 13% increase in revenues compared to Q3 19, our contract backlog at the end of Q2 was $162 million increasing 25% in the last three months oriented solutions business was the driving force behind the growth in the corner as I started revenues decreased 27% from last year.

Q3, we continue to seek out contract opportunities, where we can leverage our decade long experience and performance excellence.

Typically in value added revenue contracts that include more directly from high Tech contract work with our IND within our Intel solutions business line now some key take away from our company coming out of the corner [noise].

We've made faster progress implementing our strategic initiatives that will drive improved execution accountability across our company. This is no more evident than our approach to the restaurant technology business and that was previously cited between hardware and software business line.

Because of this segment and we cannot drive the benefit or best practices that clearly exist across our product portfolio no could we love nor can we leverage customer insights and data across markets and products.

Now we now have one business the restaurant solutions group and are already benefiting from the sync up Weve reorganized our brand marketing and marketing operations functions deliver more impactful marketing claims utilizing common processes technology and data well, allowing us to deliver more quantifiable value out of our marketing spend.

We've also begun the reorganization of our sales teams to focus on specific end markets. These new structures include specific roles for me development account management and customer success.

So I suppose it both of these initiatives improved deeper understanding of our customer behaviors and designing ways to provide them value and engaged with them year round. I believe this will provide us with greater insight to what our customers care about and insert requirements, which will allow us to be more targeted how we market Intel solutions to them and more effectively manage them year round.

Second I'm, if I didn't tell you that we received recently relaunched <unk> recently lead released our transaction processing product par payment services part part payment milestone data can become a large contributor to our growth in 2021.

Park in it services is an all in one payment processing solution restaurant operators have long been misled to Sino pay can complicated payment partnerships pit part payment services or it was created to become the transparent and fair solution. Our transaction services will give our operators the opportunity to take advantage of fantastic rates, a streamline process and the ability to offset hardware costs.

[noise] third party market position has never been stronger while our income then focus on keeping their concepts. We worked hard to extend ours carbonite team has dramatically increased our sales pipeline and we expect this momentum to continue through 2021, while the virus may create hiccup. We believe the cases a need for our solutions, we're very far from a long term goal, but we are seeing.

Progress across all product lines.

In summary, I personally witnessed the strength of our restaurant customers and I'm confident that the portion of the restaurant technology. We serve is strong and resilient during covered our.

Our customers are forward looking and are utilization of technology and are looking to drive efficiency and to their in store operations.

By Fortune and by design, our concentration and quick service and fast casual restaurants has served us well as our customers are mature operating models strong brand recognition and financial backing to expand the incredibly different difficult situation to condemn because car.

<unk> restaurants, and milk multiple customer service point in counter service drive through and delivery. Many if not all of our customers have been able to return to their business returned the business to almost pre pandemic level and we are inspired by helping them navigate this difficult time.

With our recent capital raise we now have the currency to act quickly on strategic opportunity [laughter] typically act on acquisitions and invest in organic growth as well.

As always I would I wish to thank all of our employees for their tireless work and dedication during such a challenging time and we remain committed to the health and safety of our staff and customers and with that I'll turn the call over to Brian for a more for more details on Q3 numbers and then to take your questions.

Thank you Stephanie and good morning, everyone.

Now I'd like to take this opportunity to provide some additional details surrounding our third quarter results.

Reported revenues of 54.8 million for the quarter up 20.7% in the 45.4 million reported for Q3 2019.

Our net loss was $3.7 million or four a 20 cents loss per share for the quarter versus a net loss of 5.9 million or 36 cents loss per share for Q3 2019.

Favorable year over year results from operations was driven by a 2.3% reduction in the earn out liability associated with the restaurant Magic acquisition and in inorganic growth, resulting from the drive through and restaurant magic acquisitions, which absorbed our increased development technology costs associated with our restaurant retail segment software.

Hi forms and an increase in interest expense attributable to 2026 minutes.

Restaurant retail segment revenues for the three months ended.

Member Thirtyth 2020.

37.4 million, an increase of 25% from 29.8 million reported for Q3 2019.

The year over year increase was driven by inorganic growth, resulting from drive through and restaurant Magic acquisitions. In addition to come continued growth in.

And our brink business line.

Restaurant retail revenue for Q3 2020 by business line consisted of 21 billion for core which included 5.7 million for drive through fixed.

16.4 million for brain, which included 2.2 million for restaurant Magic Russia.

Restaurant retail revenue for Q3, 2019 was 18.2 million for core 10.9 million for brink import.

1.7 million for sure.

Government segment revenues for the three months ended September Thirtyth 2020 were 17.5 million, an increase of 13% and 15.5 million reported for Q3 2019.

Driven by continued growth in our eyes to our business line doesn't.

Government revenues for Q3 2020 by business line consisted of 8.9 million for Eyesore 8.1 million from mission systems and point $5 million for products services compared to Q3 2019 revenue of 7.1 million Tri Starr and 8.4 million for mission systems.

Product revenue for the quarter was 20.5 million.

4.6 million or 29% compared to Q3 2019.

The increase was driven by drive future sales and hardware sales related to brink installs.

Product revenue related to grants for the quarter ended September Thirtyth 2020 was 6.7 million an increase of 31% from 5.1 billion recorded for the quarter ended September Thirtyth 2019.

Drive through product revenue for the quarter ended September Thirtyth 2020 was 5.3 million.

Service revenue for the quarter was 16.9 million up 3 million or 21.5% compared to Q3 2019.

The increase was primarily due to the restaurant metric acquisition and growth and bring recurring software revenues.

Service revenue associated with brink includes recurring software revenue.

5.6 million, an increase of 30% from 4.3 million for the quarter ended September 32019 risk.

Restaurant Magic service revenue includes recurring software revenue of 2.2 million.

Contract revenue from our government operating segment was 17.5 million up 2 million or 21.5% as compared to Q3 2019. The favorable increase was driven by contracts entered into during the first half of 2020 relating to <unk> SAR contract backlog totaled $162 million.

As of September Thirtyth 2020 on a trailing 12 month 12 month book to Bill of Onex.

In regards to get margin performance for the quarter.

Product margin for the quarter was 21.9, 0.9% compared to 22.9% in Q3 2019.

The reduction in product margins, primarily due to unfavorable product mix.

Service margin for the quarter was 33.3% compared to 32% in Q2.

Q3, 2019 improvement in service margin was primarily due to a shift in mix that resulted from the restaurant Magic acquisition.

Government contract margins for the quarter was 9% compared to 5.8% in Q3 2019.

Increase in margin was primarily due to higher product service business line revenue and increased profitability across several contracts and mission systems compared to the quarter ended September 32019.

Now to operating expenses.

GAAP SDMA was 10.5 million up $1 million versus Q3, 2019 increase was primarily driven by an additional point $9 million as jumei expense from recent restaurant magic and drive through acquisitions.

Research and development expenses were $4.2 million <unk> point $8 million versus Q3 2019.

Driven by increased investment and bring development of 1.5 million and point Sixmillion for restaurant that restaurant Magic development part.

Partially offset by the sure check divestiture and an increase in capitalization of developed technology.

Now to provide information on the company's cash flow and balance sheet position for the nine months ended September Thirtyth 2020.

Cash used in operations was $14.4 million versus cash use of $9.9 million for the nine months ended September 32019.

The variance was driven by an increase in strategic procurement of inventory and a decrease in customer deposits.

Inventory levels were strategically increased earlier in the year to support the rollout of projects for brink and to mitigate potential risk of supply chain disruption due to cope with 19 pandemic.

Cash used in investing activities was 6.9 million for the nine months ended September 32020.

Versus cash use of 11.6 million for the nine months ended September Thirtyth 2019 door.

During the nine months ended September Thirtyth 2020, we capitalized 6.4 million for developed technology costs associated with a restaurant retail segment software platforms.

Compared to 2.3 million for the same period in 2019.

Software Capex cost for the nine months ended September 32020 were down $8.9 million versus 2019 at the nine months ended September 32019 included $7 million investment for the drive through acquisition and also cost associated with I T infrastructure.

Cash provided by financing activities for the continuing operations was 48.7 million for the nine months ended September Thirtyth 2020.

Versus $65 million in the same period in 2019 nine.

The nine months ended September Thirtyth 2020 included the $120 million issuance of a 2026 notes, partially offset by the repurchase of a majority of the 2024 notes.

The nine months ended September 32019 included the 80 million the issuance of the 2024 notes.

As of September Thirtyth 2020.

Inventory balance was 27.1 million an increase of 7.8 million from December 30, Onest 2019.

Inventory turns were three X for domestic and international operations.

Accounts receivable of 40.1 million decreased 1.7 million compared to December 30, Onest 2019.

Receivable balance is broken down between the government segment of 7.9 million and the restaurant retail segment 32.2 million.

I will now turn the call back to the operator for today.

Ladies and gentlemen, if we have a question at this time, please braskem bar and then a number one key on your cash down telephone. If your question I think that's fair you wish to move yourself from Vicky These spreads the parrot key.

Again, ladies and gentlemen, if you have a question at this time piece, perhaps bar and they didn't number one key on your Touchtone telephone.

Your first question comes from to line up some had some minor southern Jefferies. You May ask your question.

Hi, good morning, Thanks for taking my questions and good to see that the solid trends continue in that in a tougher environment 70, maybe maybe first question just on brink of bookings was again better than our expectations I know that this time last year the company tied to that maybe a thousand plus units for core.

Hi, there I know that were there so a lot of uncertainty, but how should we think about maybe what's been driving some of that strong bookings performance and and do you think that didn't you run rate going forward he couldn't be above that thousand level as the world Normalizes, maybe just a little color there.

It's a good question, so I think and the growth in bookings is on you know partially tied to us getting our product can order and a lot of the investments we made over the last you know 12 to 16 months, where we've dramatically increased R&D efforts to.

To retail or product you know in many ways. We are servicing the demand. That's existed you know when I came to the company, we cut down our sales growth almost by half the focus on product in so many ways, we're sort of getting the benefit of having pulled it held off on taking some of that demand is to focus on product.

The second part of it is very clear, which is covering a coveted absolutely made an impact on our customers first those customers that we've already signed that are still rolling out have accelerated their desires for to book with US and then second potentially new customers. So I think it's twofold. One is I'm starting to be more agile and get in front of things as opposed to holding off on sales and then to its co.

Good.

As far as you know what a new current run rate could be I think we still need another quarter to see how things shake up with the virus I do believe very confident it will accelerate beyond what we suggested in the past over next year and in the years to come on but I think you know where we're cautious in Q4.

Cautious with the virus, but I wouldn't be surprised if we didn't clear that hurdle at the very least and I do think you know we're getting at the point now where I think we can start thinking well beyond that.

Great. That's helpful. And then you know I know that there were well over a year and get it through an acquisition and the restaurant Magic acquisition, and then I guess one of things I Wonder is three and I think Brian you. Some some larger logos any proof points on maybe being able to capture.

Any customers within that installed base. There and then same question the restaurant Magic side, maybe had the other cross selling machine and marketing sure [noise].

So I'd say the cross our machine is working extremely well on the restaurant magic side more so because that is it.

It's a software product that we can bundle or quickly add on to new customers I'm wondering when restaurant is upgrading its point of sale. It tends to look I'd break many other aspects of its its restaurant you know sort of saying hey, if we're going to upgrade the most the biggest most important product we might as well take the time to upgrade other products and so we've seen tremendous and pipeline synergy.

But loved by bringing restaurant magic into the brink sales process and as I mentioned in my remarks, as we continue to sort of come under one roof and roof silos between organization I think that will continue and you'll see it you'll see that habit for a long time. So we're seeing really really strong I would suspect well over 50% of the of the pipeline.

And probably bookings of restaurant Magic are a direct result of the of of the brink sales team and so I think the affinity there. It's really clear. It's also getting a lot of confidence to look at other acquisitions and follow the same playbook on the drive thru side I think we are still we see I would say we've seen good.

Great synergy from customers that we had signed on different sides of the fence. So if we had signed a large logo on our points. The hardware business, we would quickly get to drive their business improved over there to cross sell.

By first that's a little bit harder and so I think what we've seen is we've seen absolutely the pipeline grow through the addition of resellers that sell other products plus logos that we have in the hardware side, but when it's not nearly as strong as the as the restaurant magic side basically primarily because we can almost stable on the back office product at the time of sale, whereas the drive to your <unk>.

This isn't there's less than an RFP process is more of a consumable business.

Great and then maybe just one last one for me I before I turn it over to my peers like I'm just on payments I know, it's early days, but yeah. We've been asked a lot by investors or how we think about what the economic Tonight. Thanks. So.

If you could just maybe dig into how you can pass it we see the publish rates for some of your peers are your competitors that so maybe just help us understand what pars economic opportunities areas and then realistically what percentage of the base do you think may one day, when a used car prepayments too.

So I think the way that you know we my we've modeled it so far if you sort of take what could be an average cross section of customers I believe it will double the ARPU.

That of that client so as we are in the enterprise and it's not so much a basis point discussion, we're not charging 3% anymore and you know, we're not getting charged 2.5%, marking up 3% and where we are in the enterprise we are a much.

Per transaction basis, which is pretty standard in our area and so if we look at the average cross section of customer base volume size.

And concept, it's about doubling a little more than doubling our ARPU. So if the average ARPU. Today is 2000 2100, I think we can we'll double that for a concept that take on payments on so I think that the simplest way of thinking about our what we can drive from it and it and obviously very nice margin coming off of that as far as you know what percentage of our base.

We are still figuring that out and it wouldn't surprise me. If it's you know one day, you know half our new bookings to payment.

Surprise me if that number goes as low as 20% I think we're testing in and and you know if there isn't a great analog because most of our competitors.

Ah you haven't historically haven't sold payments aggressively to this market. So we're we feel encouraged by what we've seen so far but I think it's too early to give you any thought of you know they're gonna be 20%, 50%. We just don't quite know, but what we are seeing is that could that should also help drive this because.

To offset that capital that capital expenses hardware.

Is is important in a world like today, so well I think we'll have a little bit. After Q Q4, we'll have a lot of data for Q1, and we can probably give you. Some some attachment rate on new bookings and then an attachment rate on you know already installed source.

Great. Thanks for taking all my questions and hope all of you every hour it's great to see the good results. Thank you.

Thanks, a lot.

Again, ladies and gentlemen, if we have a question at this time. Please press Star then the number one key on your Touchtone telephone.

Your next question comes from the line of torture sector from Craig Hallum. Your.

Your line is open.

Good morning. This is Adam on for George Thanks for taking the questions 70, I I am particularly interested in your statement in the script. While income it's focused on there are keeping their contracts were focused on keeping ours I was hoping you could provide a little more detail in terms of what you're seeing from the incumbents in how the end market is reacting to that those mills.

Sure. So I think or seeing from incumbents is a lot of the a level. We expect that you know they have very big established and fun moving products that are are incredibly hard to move now. These are good stable high quality products, but they are tough products to convert to become agile and.

It enables and so well we've seen or a couple of things one we've seen a lot of branding and hey, we we've got a cloud product to its really great. Oftentimes. We think that is a masking that actually whats in the product because again like I said moving at such an enormous product. That's got 20 years of coating. It to a modern architecture is very very hard on and so we see a lot of masking the second thing we see.

Is that a lot of the entrenchment with the existing customers is trying to is trying to come up price and what we've noticed is that that you know if the incumbent gives like their their at risk. They the first thing. They do is cut price now we have not actually seen that work and most of the large contract they've gone to and in fact, I think it highlights the quality of our product.

So those are the two things if you have any comments are reacting on outside of that you know we see you know some comments thinking about things that saying Hey, Let me go buy up channel partners as a way to stay fresh in the market and others. I think are looking at things how they can bundle payment to keep the customer sticky but.

But in general you know I don't see a tremendous investment into product and that's what would scare me. Most in the end you know a product that company will win because in a world where technology. The driving force of change that you need you need great product and I think that's the lead that we hope to expand and build on.

Great and in terms of the the beta test for par payments is there any feedback you can share with us from what you've heard from customers so far.

It's it's very early I mean were three or four weeks into the first customer maybe somewhat nine into the first couple first set of stores is gone great. Yeah, I think it's sort of proving out our belief that we can we can execute on this business and get it out there and now we're sort of refining the sales motion you know, we'll expand the beta interferon beta but it's.

Probably it's just way too early given how small but the sample that is.

And then last question for me I know you've spent a lot of time in terms of trying to be thoughtful about how you build out the sales organization I any detail around you know exactly what you think you're going to be doing that's going to make a large impact would be helpful.

Sure. So the first thing is we are you know using one sales force to sell our products and.

And I think what we've seen you know clearly from they did I just gave on restaurant magic and elsewhere that we believe there would be great synergy there because now our customers have one point of contact instead of three or four and our ability to make make deals as far improved because you don't have to go to four different people to figure out what you should prices a bundle or a product that it. So the first thing is I think coming with that.

On voice under what we call one park.

The second thing we've done is dramatically changed our brand marketing and I think I guess I think I think any you'll start to see that in the next few.

Few weeks or months here as we completely redo would parse branding externally that branding has done I think a lot with our customers to change how they perceive us how they look at us and so we reach we retooled our brand messaging our brand promise and I think I think near par as the software first company has done done a lot [noise] third is around how.

We compensate and train our team we take you know each are really serious but we do it in a very data driven way and so.

Every sales and play every employee is marked on office of attributes and we look to you know really reward top performers.

And really encouraged that behavior and so we spent a lot of time thinking about how compensation can create the right behaviors across the organization and then you know last is I think we are.

Nobody is allowed us to acquire some great talent that you know fell out of a job and the heat of coverage that we think are with great talent and so we picked up some talent that that you know I think ahead of schedule, which we're seeing the benefit though.

Again, ladies and gentlemen, if he has a question at this time. Please press star and then number one key on your Touchstone telephone.

Your next question comes from the line of Adam Leight from ADW Capital. Your line is open.

Hey, guys I think I've I think on the waiting three years for a quarter like this I I didn't think I'd get into in the middle of a global pandemic, but I'm not surprised you know it's when you study businesses you know.

Businesses tend to take off when they're on their satisfying them and clearly this is a need and your hardware sales are clearly there and people are I mean, our buying hardware and they recognize they needed to stay stay fit and they clearly need hsas and that's reflected in new bookings. So just a couple of questions here or.

On the deal front, you know Ah you guys raised all this money you just saw lightspeed take a huge by they bought something for gotten this $400 million or something like that in the 115 cash and significant amount in Stockton and that certainly move the needle and that's certainly not the last deal they are low.

First feel they've only done a number of other deals how do you think about kind of the universe of deals pricing and what they can do the business because to me it kind of feels like you know when you run the math on bookings you're kind of getting close to 49 and they are ended the year and there's some pretty chunky assets out there. There's punch there's compete there's a lot of stuff and loyal.

Where you know these are nice businesses, but they don't have the gravity costs or the brand that you guys have to land, the dairy queen or Dunkin' and so like it almost kind of feels like the marriage. You have this restaurant magic is templates and our marriage with like a punch or compete or something larger that's 30 40, not an area where you can do the same thing you did.

Which is you know take their business take their technology and plug in your sales team and relationships and and brand to kind of you know take this thing to the next level can you talk a little bit about pricing types of targets. You know you know order of magnitude types of deals you're looking because the company had cash you might be able to take down or something equal to brink restaurant Madden.

Sure, let me first actually going to hang out which is product I think we look at our first lenses product, which as you know by by adding on new product every.

Every creating something better for the customer I think that that's where we start because in the end no. We could finish engineering I may transaction, but it doesn't do a lot of drive value to the customer from a product perspective, it'll get a short term church and spectrum I feel good long term hold pain I think the product part of that excites us. The most it is no doubt that restaurants.

Have made technology their party going forward and then it just excited that hit the levels, we've been except for a couple of years and so here and so when I think about it I think about what are the products that we have that accelerates that future. How do we make every restaurant like an Amazon ghost or how do we make every restaurant feel like the technologies ambient and and just in the background.

But that you can build a connection between you and your guest and so if you think about things like online ordering loyalty I think over time, they all become one and I think we want to be at the forefront of that and so we first look at it from a product like a pay as it can and can't do this product actually create that value for the customer to building a platform. We talk about that gives the guest experience and the customer experience and in the end makes us to have a very.

Sticky high quality product second Tierpoint, absolutely I think the transactions. We've done have highlighted that there's great synergy in acquiring something in selling into the same vertical we've seen that happened twice now and I think it's given us a lot of confidence we can do it again and prove to our customers that just makes sense.

It's absolutely we feel encouraged that in partly that's why we get our equity offering was to support that initiative because it feels it we've seen it work you know twice now and then lastly, I think you know from a a bit as expected I think we can do making it and make it do accretive for shareholders, but you know really build that vertical South company fourth port for the hospitality interest.

I don't think anyone has done that quite yet and so we're looking for those assets that give us that product edge that I talked about but also you know add to our growth add to our product initiatives and financially make us hopefully more attractive.

Yeah, I mean look I mean from our perspective, you know you guys are basically on the precipice I mean, when I look at your size and scale do you guys are close to 40 at the end of this year and you grow another 50 to 100 next year kind of next year, you're looking at something that looks like 60 to 80 and probably without payments payments gets you know its upside, but like you get over 100 million and they are I mean.

This your peer group in that vertical and in that kind of L.R. threshold are trading with your level of low and your level of product differentiation are trained 30 times revenue I mean this is a 3 billion dollar company next year potentially you know and that's and that's without a deal. So I mean with the deal I think you really are kind of at the point now where you've got you know you.

Could have the scale to really be a vertical you know kind of a true best in class vertical SaaS player in the restaurant space because it looks like at least with lightspeed, they're acquiring companies, but they're not they don't really have a vertical right. It's a little bit a restaurant, a little better retail a little bit of CRM, but it it's kind of flying around whereas you know in the in the restaurant space specifically QSR.

Are there so much there's so much wallet share that can that come along and I think when I look at some of these smaller players. They don't have 40 years of serving these customers, they're not going to land the bunk and don't think Atlanta, 100, or 200 unit customer, but they're not going only into 14000 and you know the combination of our expertise with customer service and hardware and then you know.

Brain you know it it you know toss it super exciting as it relates to building the mode of the business. So I'm very excited about the fuel component this business.

Going back to somebody's question on you know kind of install cadence you know when we first got involved in this company you know Karen Sammon was talking about 2500 units a quarter now we both know that there was significant tech debt and that you know that we were kind of slapping things together and it wasn't you know a recipe for for kind of long term success. So we.

Took the short term pain to kind of resolve our R&D issues capital issues and give customers what they want now when I think about it were kind of two years, you know kind of you know when I say you know precisely co 70 were kind of two years into post SAB need and obviously, we're starting to see the real traction which is super exciting, but when I think about you know the cap.

But all the L. our base the successful acquisitions I mean is there any reason why you like at some point next year, we can't see that 2500 unit quarter. I mean, we weren't stuff, we got bookings of 1200 and from what I understand you know some chains are still not letting us even in so I mean is it is it unrealistic to think that you know we could get to the 2000.

Sales in 2500 number at some point next year, especially considering the vaccine is going to be here in the next kind of four to six weeks hopefully.

You know I don't know I think it were clique recovery directories that way I think we see these bookings accelerating nicely, but you know if you said it the vaccine is here and and the concern around Cogut is concise I definitely feel that there's there's a chance we could we can make that happen you know with the vaccine I think.

In a probably taking a little bit longer because there's no doubt that you know we feel the direct result, but in the end I think that we are well on the path to getting to those numbers and like I said on the call a lot of the growth is coming but it's also because we had held back on our sales and marketing initiatives and we haven't added to our sales force you know until the last quarter or two.

You know in the two years you referenced I mean, our sales head count has been down not up yet we've continue to grow nicely. So as we pull pull on the sales and marketing lever I think it seems very feasible. We can we can we can stretch our numbers.

Also in R&D and integration bottleneck to we Didnt have we had to deploy our old engineers can be easily become agile and basically do I forget what the things calls I'm forgetting my my mind blanking, but we basically had to repair the infrastructure. So we can do updates more quickly the and so now you know now that we're kind of on the tail end of that we have the R&D resources to.

To kind of integrate multiple change at the same time, which we didnt, we werent before right I mean, that's that's a major change as well I mean that that's I mean, the reality. This isn't a sales driven culture might mean that the sales are being driven by the fact that we have the brand right like no. One else is is integrating enterprise successfully so I mean, the reality is we don't need it you know 10000.

<unk> sales force on the street given people free hockey tickets, because there's only one place to go we just have to have the resources to do it right. I mean, this is less about sales and more about you know having engineering resources to to basically support all the different chains at the same time right.

Yeah, absolutely I mean engineering is where our spend is gone and will continue to go it's where we were as you know we made a lot of you know short cuts that we had to pay the price price War.

As we come out of that and and continue to invest it builds our remote because as.

As I mentioned I think our market position has never been stronger because we're not competing against.

Silicon Valley and you know there's no arrogance the hubris, but we're competing against you know the old version in Silicon Valley, and I think Thats just that it's a great space for us to be and if we can continue that investment in product R&D that increases because we're not again, we're not competing as the next Stanford grad to disrupt the and because I think as we can we will continue to make.

Our product investment and to your point, absolutely us, becoming agile and starting to get product out the door has changed the tone with our customers and our potential potential future customers.

Right, it's a nice balance because basically the CTO is a lot of the people that are doing technology. It's a it's a long sales cycle. They want to get to know the technology. They want to do business with someone like bring but you know are parked car, but you know unlike Microsoft Aloha rehab product. So we basically married the customer service and hardware culture with the product, which to me as an exit.

One recipe so its super exciting I mean, I think I I'm happy I waited three years, because I think the best is yet to come last question. So I'm I'm not sure. If you saw the press release about checkmate, but you know a inspired brands many investment in checkmate <unk>, which is an online ordering platform that we integrate with and it's.

It looks like they're going to be implementing in RMBS Sonic Jimmy Johns and basically all of the inspired brands.

And so that's interesting because that's us a fledgling little company that doesn't have a lot of of kind of resources at least compared to brand I mean, it's a great technology and obviously, we will share in that revenue share so that should be lucrative pest, but I mean now you are seeing worked by Dunkin' I mean can you talk a little bit about you know not to.

Mentioned in order to use checkmate you need to have cloud software I'm not sure that Sonic in Jimmy John's or on the cloud yet can you talk a little bit about Sonic Jimmy John's does the prospect for Dunkin', maybe down the road because you know this partnership with worked is pretty nice and then we've got Arby's, We've got C. K E. I mean, you know we're we're working towards you know hopefully getting some of those other brands can you talk a little.

Little bit about kind of the prospects there because I think that's that's a partnership that we've been working on for many years and there's some pretty big logos there.

[laughter], Yeah, we can't comment on potential future logos, and so I can't really comment on it too much all I can say is.

Our ability to execute for the customers. We have allows us to expand our footprint within these customers and as we continue to get better. There's no reason for that not to happen because I you know I think any multi brand operator would suggest that having one technology stack and then there's your operation is better than two better than three but in the quarter and five and so.

Well, we can execute on the promises weve given a there's no reason, we can't expand our footprint and it's just to me. It's just a matter of of when not if and all predicated on our ability to execute.

Yeah, I mean, I think what's most interesting to us and you know I think we someone sent us a picture or something but that looks like you guys might even be piloting with Taco Bell on Brinker restaurant Magic. So think someone saw the the hardware there. So that's super exciting on our fun I mean, what's interesting to us is that like normally in a normal competitive landscape right. There someone else right. It's like you can buy.

Hi, Mac you can buy B P. C. I mean, there really isn't a real another cloud fully cloud product why didn't you know Aloha has kind of a hybrid cloud, but there's there really is not a fully cloud alternative.

That's basically PC base right I mean, you have told us what the landlord based but like they haven't really integrated in one of these big chain. So like to me. It. It's it's really exciting to be in business with with kind of the the company that is the only one integrating it and it's not for lack of dollars I mean toasters spend thousands of dollars on enterprise and I don't know.

Microcyn and NCR doing but it's certainly not for lack of dollars. So that's really great them a product that is kind of in a league of its own. So a great quarter really really a you know it's been <unk> been a bumpy journey, but I think that the the trajectory is up into the right from here. So I appreciate all your hard work and I'll get back in the queue.

Thanks, Chad.

I am showing no further question at this time I would now like to turn the conference back to C.L. something its team.

Thanks, everybody for joining us look forward to updating you on our Q4 results in a few months.

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

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Good afternoon, ladies and gentlemen, and welcome to the fiscal year blended rent D. third quarter financial results Conference call.

Sorry, Oh, I guess, if that's starting it's an old remote.

It comes down to a question and answer session and instructions will follow at that time, if anyone should require assistance. During the conference. Please press star zero on your Touchtone telephone.

Everyone. During this conference call is being recorded although I could turn to costs and so my guess is the crack spread wise Vice president of business development, Sir you may begin.

Thank you Sarah and good morning, everyone.

So what you're welcome you today to the call for Par's, 2023rd quarter financial results review.

A complete disclosure of our results can be found in our press release issued this morning as well as in our related form 8-K furnished to the upstream shape.

To access the press release and the financial details. Please see the Investor Relations. The news section of our website at Www Dot part Chegg Dot com.

I also want to be sure all participants today have access to our business review slide deck that Willy we will use later in the call to better communicate the momentum in our software business.

Individuals on the webcast you have access to the deck when they logged onto the call. This morning.

Well it always just dialing in on the conference call. All the press. This morning, the presentation can be accessed on the Investor page of our web site and we also included as an attachment on the 8-K, we filed this morning.

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

Participants on today's call should be aware that we're recording the call. This morning, and it will be available for playback also.

Also we are broadcasting the conference call via the World wide web. So please be advised if you ask <unk>.

It will be included in both our life conference and any future years, so the recording.

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

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

The information on this conference call related to projections or other forward looking statements may be relied upon in subject to the safe Harbor statement included in our earnings release, this morning, and in our annual and quarterly filings with the EPS you say.

Joining me on the call today as far as CEO, and President said need sales and Brian Minnaar Par's Chief Financial Officer.

I'd now like to turn the call over to 70 for the formal remarks portion of the call, which will be followed by general tier one day seven eight.

Thank you, Chris and good morning to everyone on the call today I Hope you and your families are well in sales as I communicated to you last quarter. The last several months have presented incredible challenges for our company in the global economy as a whole and our thoughts go out to all those impacted by the doublet pandemic.

I continue to be incredibly proud of par and our employee commitment to helping our customers drive during these challenging times.

Under the cover of a challenged economic environment KAR recorded one of the strongest quarters in history with near record bookings record backlog and a strong rebound in hardware sales.

Q3, we do have revenues, 21% compared to last years third quarter and I'm happy to what you report you that's extremely confident about the future of our company.

A notable highlight in our third quarter and I want to mention it right. The top was our more than $131 million equity offering that closed just this past week, a very important step for us that provides ample capacity continue to drive our growth rather than your restaurant technology business.

This offering was a milestone for us as it was at first straight equity offerings in 1996 [noise].

This capital raise provide the liquidity and flexibility necessary to accelerate our growth initiatives, both through acquisition and specific internal investments.

19 is showing the value of our current solutions, but also highlighting the genetic need for new product, we intend to be active in M&A space as we continue to build out our software platform. We believe each additional product out of the well provide more incremental value to our customers, thereby making our platform stickier.

Before Brian gives details surrounding our Q3 numbers I want to review with you. Our notable progress we've made in the software business.

Jump to slide three of the presentation. This is a snapshot brinks performance in Q3.

I'm really pleased to report that we had 1100 81, new store bookings in the quarter, a 45% improvement from the previous sequential quarter and 23% increase from Q3 last year I.

I think this metric more than any other truly demonstrate mentally velocity of our cloud pointed south offerings.

Q3, brink bookings were the most we've seen in years and how it how quickly enterprise restaurants are reacting to the club intend them.

Our customers have rushed to lock brink and as they continue to address the operation Chip technology first world.

This slide shows we appointed air are at $22.8 million, a 27% increase from the same quarter last year.

As we accelerate activations coming out of Q3, we should continue to see an expansion in air are.

You identified four you can see that we have crossed the 11000 starts threshold invoice stores in our reported backlog at the end of Q3 was 977 stores yet to be installed.

We installed 761, new bring stores in Q3 up 300 insights from Q2, and 18% increase from Q3 19 remarkable accomplishment during pandemic.

As our concepts continue to ease restrictions within their stores, we believe we'll be able to accelerate activation.

This is all of course dependent on each concepts comfort and local geographic restrictions.

On slide five you can see our waterfall the last five quarters as we continue to grow a R.

I'm proud of our incredibly low churn rate at 4.5% in Q3. This is the fourth consecutive quarter that our annualized churn rate is below 5%.

In testing the stickiness of our software offerings and the strength of our enterprise customers.

Slide six shows the improvement in covering related churn proves out the minimal impact the coveted had on store closures in our Tam and the expiring and strength of our customers in.

In Q3, 325 bring customers came back online from temporary churn not.

Not shown here, but important to note that restaurant Magic also saw 174 customers come back online in Q3, those metrics are very positive signs for our business.

Slide seven shows restaurant magic delivering a solid rebound from a challenging Q2 with bookings reported at 506 more than doubling the booking out putting Q2, while restaurant magic was impacted more from temporary closures business. The business has certainly come that's starting to come back the average MSR on new concept design was 130 to $330.

And our reported was $8.7 million, an 18% increase from the prior sequential quarter.

This figure includes waivers were temporary closed stores [noise] combi.

Combined they are with brink and restaurant Magic is now 31, and a half million at the end of Q3.

Slide eight gives a current site count for restaurant magic with install stores now totaling 150 700 restaurants as we went live it's exciting new sites in Q3.

On slide nine we appointed an approximate $3 million increasing brinkley at harbor revenues from the end of Q2, a 76% increase we continue to see robust demand for the complete power solution and the capabilities provides our customers our customers continue to rationalize vendors and we stand to benefit.

Not to quickly review, our product and hardware business in the quarter that is our point of sale platforms and attract your communication system.

Product revenue in the quarter increased by 29% from Q3, 90 and recovered nicely with a 66% sequential decrease increase from the cobot impacted Q2.

As mentioned earlier, our integrated offering to complete solution continues to be adopted by our customers.

Im pleased to see the rebound in product sales from a Q2 number and to deliver performance in its very challenged capital spend environment is nothing short of remarkable.

Now to review our government segment, our government business again delivered a solid quarter evidenced by the nearly 13% increase in revenues compared to Q3 19, our contract backlog at the end of Q2 was $162 million increasing 25% in the last three months our in house solutions business was the driving force behind the growth in the quarter as ISI revenues decreased 27% from last year.

Q3, we continue to seek out contract opportunities, where we can leverage our decade long experience and performance excellence specifically in value added revenue contracts that include more direct labor in high Tech contract work with our IND within our Intel solutions business line now some key takeaways and our company coming out of the quarter.

We've made fast progress implementing our strategic initiatives that will drive improved execution and accountability across our company. This is no more evident than our approach to the restaurant technology business and that was previously cited between hardware and software business line.

Because of this segment and we cannot drive the benefit or best practices that clearly exist across our product portfolio, notably level, nor can we leverage customer insights and data across markets and products.

Now we now have one business the restaurant solutions group and are already benefiting from the sync up we have reorganized our brand marketing and marketing operations functions deliver more impactful marketing plans utilizing common processes technology and data, while allowing us to deliver more quantifiable value out of our marketing spend.

We've also begun the reorganization of our sales teams to focus on specific end markets. These new structures include specific roles for lead development account management and customer success.

That sounds to both of these initiatives improved deeper understanding of our customer behaviors and designing ways to provide them value and engaged with them year round.

I believe this will provide us with greater insight to what our customers care about and their install requirements, which will allow us to be more targeted how we market, it's always solutions to them and more effectively manage them year round.

Second if I didn't tell you that we received recently relaunched recently released our transaction processing product par payment services.

Par payment, while still in beta can become a large contributor to our growth in 2021.

Parts and services is an all in one payment processing solution.

Restaurant operators have long been misled the final taken complicated payment partnerships pardon.

Our payment services are creative to become the transparent and fair submission our transaction services will give our operators the opportunity to take advantage of fantastic rates, a streamline process and the ability to offset hardware costs.

Third party market position has never been stronger while our incumbent focus on keeping their concepts, we worked hard to extend ours.

19 has dramatically increased our sales pipeline and we expect this momentum to continue through 2021, while the virus may create hiccup.

We believe the cases in made for our solutions, we're very far from our long term goals, but we are seeing progress across all product lines.

In summary, I have personally witnessed the strength of our restaurant customers and I'm confident that the portion of the restaurant technology. We serve is strong and resilient during covert.

Our customers are forward looking and are utilization of technology and are looking to drive efficiency and to their in store operations.

Fortune and by design, our concentration and quick service and fast casual restaurants, as well as our customers have mature operating models strong brand recognition and financial backing to expand the incredibly difficult situation dependent because car.

Our customers are restaurants, and milk multiple customer service point.

Counter service strike, there and delivery many if not all of our customers have been able to return to their business. We're trying to balance the almost pre pandemic level and we are inspired by helping them navigate this difficult time.

With our recent capital raise we now have the currency to accurately and strategic opportunity [laughter] likely add on acquisitions and invest in organic growth as well.

As always I want I wish to thank all of our employees for their tireless work and dedication during such a challenging time and we remain committed to the health and safety of our staff and customers and with that I'll turn the call over to Brian for a more for more details on Q3 numbers and then to take your questions.

Thank you Stephanie and good morning, everyone.

Now I'd like to take this opportunity to provide some additional details surrounding our third quarter results.

Reported revenues of 54.8 million for the quarter up 20.7%.

45.4 million reported for Q3 2019.

Our net loss was $3.7 million or four a 20 cents loss per share for the quarter versus a net loss of 5.9 million or 36 cents loss per share for Q3 2019.

Favorable year over year results from operations was driven by a 2.3% reduction in the earn out liability associated with the restaurant Magic acquisition and inorganic growth, resulting from the drive through and restaurant magic acquisitions, which absorbed our increased development technology costs associated with our restaurant retail segment software.

Outflows and an increase in interest expense attributable to 2026 notes.

Restaurant retail segment revenues for the three months ended.

The Thirtyth 2020.

37.4 million.

Increased 25% from 29.8 million reported for Q3 2019.

Year over year increase was driven by inorganic growth, resulting from drive through and restaurant Magic acquisitions. In addition to continued growth.

Our brake business line rest.

Restaurant retail revenue for Q3 2020 by business line consisted of 21 billion for core which included 5.7 million for drive through.

$10.4 million or break which included $2.2 million restaurant magic.

Restaurant retail revenue for Q3, 2019 was 18.2 million for core 10.9 million for brink.

10.7 million for sure.

Government segment revenues for the three months ended September Thirtyth 2020 were 17.5 million.

An increase of 13% and $15.5 million reported for Q3 2019.

Driven by continued growth in our eyes to our business line.

Government revenues for Q3 2020 by business line consisted of $8.9 million for Eyesore 8.1 million from mission systems and point 5 million for products services.

Q3, 2019 revenue, a 7.1 million Tri Starr and $8.4 million for mission systems.

Product revenue for the quarter was 20.5 million.

4.6 million or 29% compared to Q3 2019.

The increase was driven by a drive through sales and hardware sales related to brink installs product.

Product revenue related to grade for the quarter ended September Thirtyth 2020 was $6.7 million increase of 31% from 5.1 billion recorded for the quarter ended September Thirtyth 2019.

Drive through product revenue for the quarter ended September Thirtyth 2020 was 5.3 million.

Service revenues for the quarter was 16.9 million up $3 million or 21.5% compared to Q3 2019.

The increase was primarily due to the restaurant magic acquisition and growth and brings recurring software revenues.

Service revenue associated with brink includes recurring software revenue.

<unk> point 6 million, an increase of 30% from 4.3 million for the quarter ended September 32019.

Restaurant Magic service revenue includes recurring software revenue of 2.2 million.

Contract revenue from our government operating segment was 17.5 million up 2 million or 21.5% as compared to Q3 2019. The favorable increase was driven by contracts entered into during the first half of 2020 relating to I am sorry.

Contract backlog totaled $162 million as of September Thirtyth 2020 on a trailing 12 month 12 month book to Bill of Onex.

In regards to GOP margin performance for the quarter product margin for the quarter was 21.9, 0.9% compared to 22.9% in Q3 2019.

The reduction in product margins, primarily due to unfavorable product mix.

Service margin for the quarter was 33.3% compared to 32% in Q2.

Q3, 2019 improvement in service margin was primarily due to a shift in mix that resulted from the restaurant Magic acquisition.

Government contract margins for the quarter was 9% compared to 5.8% in Q3 2019.

The increase in margin was primarily due to higher product shows business line revenue and increased profitability across several contracts in mission systems compared to the quarter ended September 32019.

Now to operating expenses.

GAAP SDMA was 10.5 million up $1 million versus Q3 2019.

Trees was primarily driven by an additional point $9 million as Jimmy expense from recent restaurant magic and drive through acquisitions.

Research and development expenses were $4.2 million <unk> point $8 million versus Q3 2019.

Driven by increased investment and blame development of $1.5 million and point Sixmillion for restaurant that restaurant Magic development path.

Partially offset by the shirt chek divestiture.

And an increase from capitalization of developed technology.

Now to provide information on the company's cash flow and balance sheet position for the nine months ended September Thirtyth 2020.

Cash used in operations was $14.4 million versus cash use of $9.9 million for the nine months ended September 32019.

The variance was driven by an increase in strategic procurement of inventory and a decrease in customer deposits.

Inventory levels were strategically increase earlier in the year to support the rollout of projects for brink mitigate potential risk of supply chain disruption due to COVID-19 pandemic.

Cash used in investing activities was 6.9 million for the nine months ended September 32020.

Versus cash used of 11.6 million for the nine months ended September Thirtyth 2019.

During the nine months ended September Thirtyth 2020, we capitalized 6.4 million for developed technology cost associated with a restaurant retail segment software platforms.

Compared to 2.3 million for the same period in 2019.

Non software Capex cost for the nine months ended September 32020 were down $8.9 million versus 2019 at the nine months ended September 32019 included $7 million investment for the drive through acquisition and also cost associated with infrastructure.

Cash provided by financing activities for the continuing operations was 48.7 million for the nine months ended September Thirtyth 2020 versus.

Versus $65 million for the same period in 2019 nine.

The nine months ended September Thirtyth 2020 included the $120 million issuance of the 2026 notes.

Partially offset by the repurchase of a majority of the 2024 notes and.

The nine months ended September 32019 included the 80 million the issuance of the 2024 notes.

As of September Thirtyth 2020 inventory.

The inventory balance was 27.1 million an increase of 7.8 million from December 30, Onest 2019.

Inventory turns were three extra domestic and international operations.

Accounts receivable of $40.1 million decreased 1.7 million compared to December 31, 2019.

Receivable balances broken down between the government segment of $7.9 million in the restaurant retail segment 32.2 million.

I will now turn the call back to the operator for today.

Ladies and gentlemen, if we have a question at this time, please braskem bar and then a number one key on your cash down telephone. If your question has been answered you wish to move yourself from Vicky These spreads the bankey yes.

Again, ladies and gentlemen, if you have a question at this time, Please press star and the number one key on your cash stone telephone.

Your first question comes from the line of Semerad Savannah from Jefferies. You May ask your question.

Hi, Good morning, guys are taking my questions and good to see the solid trends continue in that in a tougher environment.

Maybe first question just on brink bookings.

Bookings was again better than our expectations I know that this time last year the company tied to that maybe a thousand plus units per quarter. I know that were there. So I have got certainty, but how should we think about maybe what's been driving some of that strong bookings performance and and do you think that didn't your run rate going forward can be above that.

The level at the World Normalizes, maybe just a little color there.

It's a good question. So I think the big growth in bookings is.

Partially tied to us getting our product can order and a lot of the investments we made over the last.

12 to 16 months, where we've dramatically increased R&D efforts to to retail or product and in many ways. We are servicing the demand that existed.

When I came to the company, we cut down our sales growth almost by half the focus on product in so many ways, where it sort of getting the benefit of having holed held off on taking some of that demand and focused on product. The second part of it is very clear which is covet a.

Coveted absolutely made an impact on our customers first those customers that we've already signed that are still rolling out have accelerated their desires for Ted to book with US and then second potentially new customers. So I think it's twofold one is.

Starting to be more agile and get in front of things as opposed to holding off on sales and into its coded.

As far as what a new.

Hi, I'm wondering could be I think we still need another quarter to see how things shake up with the virus I do believe I'm very confident that we'll accelerate beyond what we suggested in the past over next year and in the years to come.

But I think you know where we're cautious in Q4 were cautious with the virus, but I wouldn't be surprised if we didn't clear that hurdle at the rarely and I do think we're getting to the point now where I think we can start thinking well beyond that.

Great. That's helpful and then I know that.

It was over a year and get it through an acquisition and divestiture of Magic acquisition.

Yes.

One of things I Wonder is three and I Didnt write you some some larger logos.

Proof points on maybe being able to capture any customers within that installed base. There and then same question to that is that magic side, maybe how the other cross selling machine marketing sure [noise]. So.

So I think across our machine is working extremely well on the restaurant magic side more so because that is.

Thats a software product that we can bundle.

Bundle or quickly add on to new customers I'm wondering when a restaurant is upgrading it to point of sale. It tends to look to upgrade many other aspects of its its restaurant you know sort of saying hey, if we're going to upgrade the most the biggest most important product we might take the time to upgrade other products and so we've seen tremendous pipeline synergy.

Well by bringing restaurant magic into the brink sales process.

I've mentioned in my remarks, as we continue to sort of come under one roof and ROIC silos chain organization I think that will continue on and.

And you'll see it.

You'll see that Havent for a long time, so we think really really strong I would suspect well over 50% of the of the pipeline and and probably bookings of restaurant Magic are a direct result of the of of the brink sales team and so I think the synergy that's really clear, which also gives us a lot of confidence to look at other acquisitions and follow the same playbook.

On the drive thru side and I think we are still we see I would say we've seen great synergy from customers that we had signed on different sides of the fence. So if we had signed a large logo on our point, it's a hardware business, we would quickly get to drive their business approved over there to cross sell.

Vice versa, that's a little bit harder and so I think what we've seen is we've seen absolutely the pipeline grow through the addition of resellers that sell other products plus logos that we haven't hardware side.

But when it's not nearly as strong as the as the restaurant magic side basically primarily because we can almost stable on the back office product as a tenant sales, whereas the drive to process. It is less of an RFP process and more of a consumable business.

Great and then maybe just one last one for me before I turn it over to my peers, but I'm just on payments I know, it's early days, but yes, we've been asked a lot by investors, how we think about what the economics today. So if.

If you could just maybe dig into how you can pass it we see the published rates for some of your peers.

Your competitors that so maybe just help their sales ours economic opportunity here. There is and then realistically what percentage of the base do you think may one day, one to use bar prepayments do.

So I think.

The way that we move we've modeled so far if you sort of take what could be an average cross section of customers I.

I believe it will double the ARPU.

That of that client so as we are in the enterprise, it's not so much a basis point discussion, we're not charging 3% anymore, and we're not getting charged 2.5% marking up 3% and.

Where we are in the enterprise we are a much.

Per transaction basis, which is pretty standard in our area and so if we look at the average cross section of the customer base volume size.

Hi concept, it's about doubling a little more than doubling our ARPU. The average ARPU. Today is 2000 2100, I think we will double extra content that takes on payment.

I think that's a simple way of thinking about our what we can drive from it and it and obviously very nice margin coming off of that as far as you know what percentage of our base.

We are still figuring that out and it wouldn't surprise me. If it's you know one day, you know half our new bookings to payment.

Didn't surprise me if that number goes as low as 20% I think we are testing it and and there isn't a great analog because most of our competitors.

You know historically havent sold payments aggressively to this market. So we're we feel encouraged by what we've seen so far but I think it's too early to give you any thought of maybe 20%, 50%. We just don't quite know.

What we are seeing is that it should also help drive this because they to offset that capital that capital expenses hardware.

Is is important in a world like today, so well.

Well I think we'll have a little bit after Q Q4 on a lot of data after Q1, and we can probably give you some some attachment rate on new bookings.

And attachment rate on.

Already installed source.

Great. Thanks for taking all my questions and towable RV around where it's great to see the good results. Thank you.

Thanks, a lot.

Again, ladies and gentlemen, if we have a question at this time, please BRAF bar and then a number one key on your Touchtone telephone.

Your next question comes from the line of George et cetera from Craig Hallum.

Your line is open.

Good morning. This is Adam on for George Thanks for taking the questions 70, I, if I'm, particularly interested in your statement on the script while in comments focused on they're keeping their contracts were focused on keeping ours. I was hoping you could provide a little more detail in terms of what you're seeing from the incumbents and how the end market is reacting to that those those.

Sure. So I think what we're seeing from incumbents is a lot of the on a level we expect that.

They have very big established in southern living products that are are incredibly hard to move now. These are good stable high quality products, but they are tough products to convert to become agile and cloud enabled and so what we've seen or a couple of things one we've seen a lot of branding and pay we we've got a cloud product to its really great oftentimes, we think that is.

Masking that actually was in the product because again like I said moving at such an enormous product. That's got 20 years of coating. It to a modern architecture is very very hard.

And so we see a lot of masking. The second thing we see is that a lot of being transparent with the existing customers in China is trying to kind of price and what we've noticed is that.

Incumbent or given that there are risks they the first thing. They do is cut price now we have not actually seen that work and most of the large concept they've gone to and in fact, I think it highlights the quality of our product. So those two things. If you have any comments are reacting on outside of that.

We see some comments thinking about things that are saying, Hey, let me go buy up channel partners that the way to stay fresh in the market and others. I think are looking at saying, how they can bundle payments to keep the customer sticky but.

But in general.

I don't see a tremendous investment into product and that's what would scare me most.

In the end a product that company will win because in a world where technology. The driving force of change you need you need great product and I think thats the belief that we hope to expand and build on.

Great and in terms of the beta test for par payments is there any feedback you can share with us from what you've heard from customers so far.

It's very early I mean were three or four weeks into the first customer maybe more than that and so the first come first set of stores is going great.

I think it's are proving out our belief that we can we can execute on this business and get out there and now we're sort of refining the sales motion.

Expand the beta and then beta.

It's probably it's just way too early given how small the sample that is.

And then last question for me I know you spent a lot of time in terms of trying to be thoughtful about how you build out the sales organization any detail around exactly what you think you're going to be doing that's going to make a large impact that would be helpful.

Sure. So the first thing is we are.

In one salesforce to sell our products.

And I think what we've seen clearly from the big guys, just given us or magic and elsewhere that we believe there would be great synergy there because now our customers have one point of contact instead of three or four and our ability to make make deals as far improved because you don't have to go to four different people to figure out what you should prices bundle or a product that is so the first thing is I think coming with that.

One voice under what we call one park the.

The second thing we've done is dramatically changed our brand marketing and I think I.

I guess I think I think any you'll start to see that in the next few.

Few weeks or months here as weak completely read you parse branding.

Externally that branding has done I think a lot with our customers to change how they perceive us how they look at us and so we feel our brand messaging our brand promise and.

And I think I think near par as the software first company has done done a lot [noise] third.

Third is around how we compensate and train our team.

We take you know each are really serious but we do it in a very data driven way and so every sales and for every employee is marked on office of attributes and we look to you know really reward top performers.

And really encouraged that behavior and so we spent a lot of time thinking about how compensation can create the right behaviors across the organization.

And then last is I think we are probably has allowed us to acquire some great talent.

That you know.

Fell out of a job and he'd have covered that we think are with great talent and so we think that's an talent that that.

I think ahead of schedule, which we're seeing the benefits out.

Again, ladies and gentlemen, if we have a question at this time, Please press star and the number one key on your Touchtone, California.

Your next question comes from the line of Adam Wyden from ADW Capital. Your line is open.

Hey, guys I think guys are they on the waiting three years for a quarter like this I I didn't think I'd get it out in the middle of a global pandemic, but I'm not surprised.

You know when you study businesses you know it.

Businesses tend to take off when they're when they are satisfying and clearly this is a need in hardware sales are clearly there and people are I mean, our buying hardware and they recognize they need it to stay stay fit and they clearly need hsas and that's reflected in your bookings. So just a couple of questions here.

On the deal front you know.

You guys raised all this money you just saw lightspeed take a huge by they bought some forgotten this $400 million or something like that and the 115 cash and.

A significant amount in Stockton and it certainly move the needle and that's certainly not the last deal that lower personal they've only done a number of other deals.

How do you think about kind of the universe of deals pricing and what they can do the business because to me it kind of feels like when you run the math on bookings you're kind of getting close to 49 and they are ended the year and there's some pretty chunky assets out there that caused us compete there's a lot of stuff and loyalty where you know these are nice businesses, but.

They don't have the gravitas or the brand that you guys have to land the dairy Queen Dunkin and so like it almost kind of feels like the marriage, you had with restaurant magic templates and a marriage with like a punch or compete or something larger that's 30 40, not an era, where you can do the same thing you did which as you know take their business take their technology and plug in years.

Sales team and relationships and and brand to kind of take this thing to the next level can you talk a little bit about pricing types of targets. You know order of magnitude types of deals youre looking because once the cash you might be able to take down or something equal to brink restaurant imagine.

Sure. Let me for is actually going to hang out with just product I think we look at our first one is product, which as you know by by adding on a new product.

Creating something better for the customer and I think that that's where we start because in the end.

Like Ascension engineer, an M&A transaction, but it doesn't do a lot of drive value to the customer from a product perspective, it will get a short term church and checking with they'll good long term hold pain I think the product part of what excites us. The most is no doubt that restaurants have may technology their priority going forward and academic just accelerate that hit the levels. We can expect for a couple of years.

And so if you and so when I think about it I think about what are the products that we have that accelerates that future. How do we make every restaurant like Amazon ghost or how do we make every restaurant feel like the technologies ambience and and just in the background that you can build that connection between you and your guess is as we think about things like online ordering loyalty I think over time.

They all become one and I think we want to be at the forefront of that and so we first look at it from a product for second hey, as it can can does this product actually create that value for the customer to building a platform. We talk about that gives the guest experience and the customer experience and.

And in the end make us to have a very sticky high quality product.

Second on to your point, absolutely I think the transactions. We've done have highlighted that there's great synergy in acquiring something in selling into the same vertical we've seen that happened twice now and I think it's given us a lot of confidence we can do it again and prove to our customers that just makes sense.

Absolutely we feel encouraged that in partly that's why we did our equity offering with the support that initiative because it feels it we've seen it work twice now.

And then lastly, I think.

From Oh. This is my perspective, I think we can do make it make it accretive for shareholders, but you know really build that vertical fast company fourth port for the hospitality industry. I don't think anyone has done that quite yet and so we're looking for those assets that give us that product edge that I talked about but also you know.

Add to our growth add to our product initiatives and financially make us hopefully more attractive.

Yeah, I mean look I mean from our perspective, you know you guys are basically on the precipice I mean, when I look at your size and scale you guys are close to 40 at the end of this year and to grow another 50 to 100 next year kind of next year, you're looking at something that looks like 60 to 80 and probably without payments payments gets you know its upside, but like you get over 100 million and they are I mean.

This your peer group in that vertical in that kind of a our threshold are trading with your level of Mo and your level of product differentiation or trading 30 times revenue. I mean, this is a $3 billion company next year potentially you know enough and that's without a deal. So I mean, what's the deal I think you really are kind of at the point now where you've got you.

You know you could have the scale to really be a vertical you know kind of a true best in class vertical SaaS player in the restaurant space because it looks like at least with lightspeed, they're acquiring companies, but they're not they don't really have a vertical rate is a little bit a restaurant a little bit a retail a little bit of CRM, but it it's kind of flying around whereas.

In the restaurant space, specifically QSR. There's so much there is so much wallet share that can that come along and I think when I look at some of these smaller players. They don't have 40 years of serving these customers, they're not going to land. The Bunking don't think Atlanta, 100, or 200 unit customer, but they're not going only into 14000 and you know the combination of our expertise with customer serve.

Miss in hardware and then bring it a toss it super exciting as it relates to building a mode of the business. So I'm very excited about the deal component this business.

Going back to some odds question on you know kind of install cadence you know when we first got involved in this company you know Karen Sammon was talking about 2500 units a quarter now we both know that there was significant tech debt and that we were kind of slapping things together and it wasn't a recipe for for kind of long term success.

So we took the short term pain to kind of resolve our R&D issues capital issues and give customers what they want now when I think about it were kind of two years, you know kind of you know.

When I say you know precisely co 70 were kind of two years into post 70, and obviously, we're starting to see the real traction which is super exciting, but when I think about you know the capital the our base. The successful acquisitions I mean is there any reason why like at some point next year, we can't see that 2500.

Unit quarter, I mean, once we got bookings a 1200 and from what I understand you know some chains are still not letting us even in so I mean is it is it unrealistic to think that we could get to the 2000 2500 number at some point next year, especially considering the vaccine is going to be here in the next kind of four to six weeks hopefully.

You don't I.

No no I think it works really well to the directory is that way I think we see these bookings accelerating nicely.

But you know you said if the vaccine is here and and the concern around Covent inside I definitely feel theres a chance we could we can make that happen.

With the vaccine I think it'll probably take a little bit longer because there.

There's no doubt that we feel the direct result, but in the end I think that we are well on the path to getting to those numbers and like I said on the call a lot of the growth is coming but it's also because we had held back on our sales and marketing initiatives and we haven't added to our sales force you know.

Well the last quarter or two.

In the two years you referenced I mean, our sales head count has been down not up yet we've continue to grow nicely so as.

As we pull pull on the sales and marketing lever I think it seems very feasible. We can we can we can stretch our numbers.

It was also an R&D and integration bottleneck to we Didnt have we had to deploy our old engineers can basically become agile as basically do I forget what the things cost I'm forgetting my mind blanking, but we basically had to repair the infrastructure. So we could do updates more quickly the.

And so now you know now that we're kind of on the tail end of that we have the R&D resources to to kind of integrate multiple change at the same time, which we didnt, we werent before right I mean, that's that's a major change as well I mean that that's I mean, the reality. This isn't a sales driven culture might mean that the sales are being driven by the fact that we have the brand right like no one else is integrating enterprise.

Successfully so I mean, the reality is we don't need it you know 10000 unit sales force on the street given people three hockey tickets because there's only one place to go we just have to have the resources to do it right. I mean, this is less about sales and more about you know having engineering resources to to basically support all the different chains at the same time right.

Yeah, absolutely I mean, I imagined areas, where our spend is gone and will continue to go it's where we were.

We made a lot of you know short questions that we had to pay the price price for as we come out of that in and continue to invest it builds our remote because.

As I mentioned I think our market position has never been stronger because we're.

We're not competing against.

Silicon Valley and you know there's no arrogance the hubris, but we're competing against the old version in Silicon Valley, and I think that says that that's a great space for us to be and if we can continue that investment in product R&D that merit increases and because we're not again, we're not competing as the next Stanford Grad to disrupt that and said I think as we can we will continue to make.

Our product investment and to your point, absolutely us, becoming agile and starting to get product out the door has changed the tone with our customers and our potential potential future customers.

Right, it's a nice balanced because basically the CTO isn't a lot of the people that are doing technology. It's a it's a long sales cycle. They want to get to know the technology. They want to do business with someone like brain, but were parked car, but you know I'm like Microsoft Aloha, we have the products. So we basically marry the customer service and hardware culture with the product, which to me as an exit.

One recipe so its super exciting I mean, I think I I'm happy I waited three years, because I think the best is yet to come last question. So I I'm not sure. If you saw the press release about checkmate, but you know a inspired brands many investment in checkmate <unk>, which is an online ordering platform that we integrate with and it's.

It looks like they're going to be implementing an arby's Sonic Jimmy John's and basically all of the inspired brands.

And so that's interesting because that's a flood that little company that doesn't have a lot of of kind of resources at least compared to brand I mean, it's a great technology and obviously, we'll share in that revenue share so that should be lucrative to us, but I mean now you are seeing work by Dunkin' I mean can you talk a little bit about nothing.

I mentioned in order to use checkmate you need to have cloud software I'm not sure that Sonic and Jimmy John's or on the cloud yet can you talk a little bit about Sonic Jimmy John's the prospect for Dunkin', maybe down the road because you know this partnership with worked is pretty nice and Weve got RBC Gutsy Cagy I mean, you know we're we're working towards you know hopefully getting some of those other brands can you talk a little.

Little bit about kind of the prospects there because I think that's that's a partnership that we've been working on for many years and there's some pretty big logos there.

Yeah, we can't comment on potential future logos.

And so I can't really comment on it too much to all I can say is.

Our ability to execute for the customers. We have allows us to expand our footprint within these customers and as we continue to get better. There is no reason not to happen because you.

You know I think any multi brand operator would suggest that having one technology stack furniture operation is better than two better than three but in the quarter and five and so we can execute on the promises weve given.

There's no reason, we can't expand our footprint and it's just to me, it's just a matter of.

Of when not if and all predicated on our ability to execute.

Yeah, I mean, I think what's most interesting to us.

I think we someone sent us a picture or something but it looks like you guys might even be piloting with Taco Bell on Brinker restaurant Magic. So think someone saw the hardware there. So that's super exciting on our part I mean, what's interesting to us is that like normally in a normal competitive landscape right. There someone else right. It's like you can buy a Mac you combine PC I mean, there were.

Really isn't a real another cloud fully cloud product lighting, and Aloha has kind of a hybrid cloud, but there is there really is not a fully cloud alternative you know that's basically PC base right. I mean, you have told US was an Android based but like they haven't really integrated in one of these big change so like to.

Me, it's a it's really exciting to be in business with with kind of the the company that is the only one integrating it and it's not for lack of dollars I mean toasters spend thousands of dollars on enterprise I don't know, what Microcyn and NCR doing but it's certainly not for lack of dollar. So that's really great to have a product that is kind of in a.

League of its own so a great quarter really really Oh, it's been <unk> been a bumpy journey, but I think that the the trajectory is up into the right from here. So I appreciate all your hard work and I'll get back in the queue.

Thanks, Ed.

I am showing no further question at this time I would now like to turn the conference back to C O seven yet seen.

Thanks, everybody for joining we look forward to updating you on our Q4 results in a few months.

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