Q1 2025 PAR Technology Corp Earnings Call
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Okay.
Good day, and thank you for standing by welcome.
Welcome to the par technology 2025 first quarter financial results Conference call.
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Now I'd like to hand, the conference over to your Speaker today, Christopher Byrnes Senior Vice President of Investor Relations and business development. Please go ahead.
Speaker Change: Thank you Daniel and good morning, everyone and thank you for joining us today for par technology's first quarter financial results call.
Speaker Change: Earlier. This morning, we released our Q1 financial results. The earnings release is available on the Investor Relations page of our website at <unk> Dot Com, where you can also find the Q1 financials presentation as well as in our related form 8-K furnished to the SEC.
Speaker Change: During our call today, we will reference non-GAAP financial measures, which we believe to be useful to investors and exclude the impact of certain items.
Speaker Change: A description of the timing of these items along with a reconciliation of non-GAAP measures to the most comparable GAAP measures can be found in our earnings release.
Speaker Change: I'd also like to remind participants that this conference call may include forward looking statements that reflect management's expectations based on currently available data. However, actual results are subject to future events and uncertainties.
Speaker Change: The information on this conference call related to projections or other forward looking statements may be relied upon and subject to the safe Harbor statement included in our earnings release, this morning, and in our annual and quarterly filings with the SEC.
Speaker Change: Joining me on the call today as far as CEO, and President 70, Tim and Brian <unk>, Our Chief Financial Officer.
Speaker Change: I would now like to turn the call over to <unk> for the formal remarks portion of the call, which will be followed by general Q&A.
Speaker Change: 70.
Speaker Change: Thanks, Chris and good morning, everyone, we reported $104 million in revenues in Q1, an increase of more than 48% year over year.
Speaker Change: Services revenue increased by 78% in the quarter to $68 $4 million from last year, and 20% organic growth as compared to Q1 2024.
Speaker Change: Total ore was reported at $282 million and grew 52%, including 18% organic from Q1 last year accounting for constant currency sequential air AOR grew $10 million from Q4.
Speaker Change: Alongside this revenue growth our non-GAAP gross profit grew organically by nearly 35% year over year, and we ended the quarter with subscription service gross margins of over 69%.
Speaker Change: Adjusted EBITDA came in at $4 $5 million for the quarter and nearly $15 million improvement from Q1 last year. This is primarily driven by organic improvements excluding M&A showing the tremendous operating leverage we've demonstrated in our core assets.
Speaker Change: Our commitment to investing in long term duration of profit dollars continues to really play out.
Speaker Change: Now, let's dig into our business with further detail.
Speaker Change: Total operator solutions <unk> grew 49% in the quarter with organic growth at 18% when compared to the same period last year.
Speaker Change: <unk> for this business unit now totaled $117 million.
Speaker Change: As you message on last quarter's call in Q1, we pause the PARP Pos implementation of Burger King in order to recalibrate for dual Park pass plus data central implementation with the customer.
Speaker Change: I'm happy to report that the rollout has since restarted and we are receiving highly positive feedback from corporate and franchisee stakeholders alike.
Speaker Change: We're forecasting a strong ramp up in the second half with install velocity expected to peak in Q3, and Q4 for both product offerings crucially. The BK slowdown this quarter was offset by strong performance on other initiatives within our operator business.
Speaker Change: We continue to see a broader and healthy operational buying environment in a marketplace demonstrated by the signing of five New Park pass customers in Q1, continuing the trend from last quarter, all deals were multi product in nature the.
Speaker Change: The impact of these multi product rollouts has yet to flow into our P&L and will provide a strong will provide strong revenue opportunities in the second half of this year and well into 2026 as.
Speaker Change: As you have mentioned before these multi product deals increased LTV meaningfully without an additional dollar of acquisition costs are better together thesis is working.
Speaker Change: Further our task platform is seeing continued traction under the part umbrella we have been successful in positioning this product align alongside park pass domestically as well as Standalone to global minded prospects. The task platform pipeline is at a record high and.
Speaker Change: And we believe pars total pls offering now ensure full coverage of the enterprise hospitality Pos market.
Speaker Change: Outside of POS our operator solutions business unit continues to scale via our back office catalog.
Speaker Change: In March we successfully launched our new <unk> product line at a large industry conference.
Speaker Change: Our ops includes data central and the newly acquired delegate and delivered an enhanced and feature rich back office offering that is calibrated to meet both corporate and franchisee needs.
Speaker Change: The new and combined <unk> pipeline is showing strong and consistent growth as enterprise foodservice businesses emphasize back office initiatives.
Speaker Change: Operational efficiencies that ensure favorable and improved operating margins and labor productivity.
Speaker Change: More specifically, we have been successful in positioning delegate related functionality with our existing customers. While similarly cross positioning the existing park catalog with a large delegate customer base.
Speaker Change: Validating this rising importance of back office in today's business environment.
Speaker Change: Excited to announce that we were we were recently selected by Popeye's, Louisiana kitchen as the preferred back of house vendor for their network of 3500 plus stores.
Speaker Change: This news along with the previously reported back office partnership with Burger King underscores our valued and strategic partnership with RBI and validates our investment thesis into operator products.
Speaker Change: <unk> has the largest weighted pipeline we have seen to date, we anticipate macroeconomic pressure to continue the ongoing drive of concepts to upgrade their back office technology and optimize efficiency.
Speaker Change: Now on to payments in Q1 par payment services continued to drive high transaction counts and processing volumes across our customer base.
Speaker Change: Despite being a seasonally slower period for our payments continued to grow and added five new concepts to its base in the quarter, we rolled out <unk> grills and sub Rocky Mountain Chocolate factory centers of America, and <unk>, Canada.
Additionally, we saw continued multi product adoption with the signing of Mr. Pickles and cargo coffee on both our wallet and ordering solutions.
Speaker Change: Answer part gift card offering further enabled our customers to benefit of increased customer engagement operational efficiencies and cost savings.
Speaker Change: In short <unk> is uniquely positioned and hedged in the market to service both the dual need of revenue maximization and cost control.
Moving to the engagement cloud.
Speaker Change: In today's environment, where consumers are more wallet conscious than ever digital engagement is no longer a luxury it's a necessity loyalty.
Speaker Change: <unk> programs and personalized digital offers are now central to driving traffic and frequency.
Speaker Change: We're seeing the shift play out across our platforms with record growth in engagement and usage brands are doubling down on guest engagement and our tools are making measurable impact the number of digital offer distributed and loyalty programs users reached reached record highs in Q1 fueling growth at scale in both restaurant and retail.
Speaker Change: We believe this trend will accelerate as more business has moved beyond just getting online to investing in infrastructure that provides ROI operational leverage and actionable guest insights winners in the market are embracing seamless identification Atlas loyalty gamification AI and connected technology.
Speaker Change: This is where integrated platforms like ours offering a better together approach drive superior outcomes our.
Speaker Change: Our engagement cloud business delivered standout financial performance in Q1, we exceeded internal targets with <unk>, increasing 54%, including 18% organic growth when compared to Q1 last year.
Speaker Change: This was driven by our excellent gross retention of over 95% and the addition of a multi product tier one Burger brand.
Speaker Change: This reflects our ability to execute consistently offering best in class product with better together functionality.
Speaker Change: Our flywheel, Israel, and gaining momentum across all sectors of PARP, which positions us for continued success.
Speaker Change: We are winning multi product deals at an impressive rate in Q1, 57% of new signed engagement deals were multi product, including punch ordering and payments.
Speaker Change: This is a major leap from just 16% in Q1 2024.
Speaker Change: Much of this is driven by ordering in.
Speaker Change: In Q1, we soft launched ordering to point out marking our best sales quarter in online ordering over two years.
Speaker Change: After a year of deep market analysis and product enhancements bordering too pointed out now offers true enterprise menu management and features like order throttling to help kitchens manage high volumes.
Our latest version of ordering also provides for AI driven upsells seamlessly leveraging punches guests cohort data that enables more personalized upselling and higher check sizes.
Speaker Change: With over 200 million guests on punch.
Speaker Change: We are positioned to build one of the most powerful upsell models in the restaurant industry. Additionally, our new Pos import future insurance realtime menu management across all ordering channels streamlining operations for customers. This.
Speaker Change: This is a powerful set of features that we don't believe any point to point integration can solve proving our better together model.
Speaker Change: And our C store and field business, we're laying the groundwork for our flywheel.
Speaker Change: The highlight in Q1 was EG group's launch of smart rewards across 500 plus sites EG.
Speaker Change: <unk> anticipates, a 275% lifted engagement sign ups this year, which is an outstanding expectation even before their full marketing marketing strategy kicks in.
Speaker Change: In Q1, we also made our first retail acquisition with the Aqua hire of <unk>.
Speaker Change: <unk> provide self checkout kiosk and scanning solutions.
Speaker Change: Integrating <unk> into our platform isn't just about adding a feature it's about bringing our technology in the store.
Speaker Change: We have seen in our restaurant business that are connected full stack solution in store and above store truly unlock the power of data and the business flywheel.
Speaker Change: <unk> enhances the utility and stickiness of our digital loyalty solutions, delivering more data more engagement and the opportunity to attack the growing retail media network.
Speaker Change: This acquisition is a great way to grow our retail we see immediate runway to drive incremental revenue within our existing customers and we will continue to be acquisitive in our convenience retail industry.
Speaker Change: Before taking into Q1 hardware numbers I want to briefly comment on the tariffs.
The uncertainty around these actions along with <unk> tariffs imposed by other countries have introduced increased volatility in global trade policies and supply chain.
Speaker Change: <unk> after the Covid supply chain disruptions, we purposely reduced our reliance on China and distributed our sourcing to other countries in southeast Asia on.
Speaker Change: On average, we import less than $1 million of peripheral devices per quarter from China.
Speaker Change: We're continuing to evaluate the current environment and we will take the necessary steps to mitigate the impacts on our business to the best of our ability.
Speaker Change: <unk> hardware now only comprises 21% of our revenues and so our confidence is high that we can manage and mitigate any negative impacts resulting from the tariffs.
Speaker Change: In regards to our hardware business in Q1, we reported improved performance and increased fiber revenues by 20% in Q1 versus the same quarter last year.
Speaker Change: In the quarter, we saw good demand for our newest platform the par wave and we are seeing increases in both domestic and global sales.
Also contributing to the turnaround with the new part clear drive their solution that is setting the standard for drive telecommunications and is positioned to be the industry leader in <unk> drive through systems.
Speaker Change: In summary, we continue to deliver on our better together philosophy of multi product innovation, which is core to our go to market flywheel are.
Speaker Change: A great example of this came in Q1 with the completion of park pass powered in store loyalty sign up and intelligent upsell.
Speaker Change: By leveraging punch code within park pass our customers are able to instantly acquired loyalty customers within the four walls of our restaurants.
Speaker Change: And the insights upsell personalized product offerings dysfunctionality.
Speaker Change: This functionality is keenly desired by our largest customers and recently drove a loyalty upsell into a SaaS growth tier one pass concept <unk>.
Speaker Change: Separately, our work on the par data platform continues at full speed.
Speaker Change: Core is multi faceted product portfolio affords an unmatched breadth and depth of data that when connected unlocks powerful proactive analytics.
Speaker Change: Not only are we able to leverage AI to produce comparative performance insights. We're also delivering proactive analytics that prompt operators for example to sell expiring inventory, the especially designed incentives that maximize profits and minimize operational costs and.
Speaker Change: In an uncertain future leading brands want an edge, we utilize smart data to give this edge to them.
Speaker Change: Our three tier strategy of best in class better together and open continues to be validated by the market. We believe we are only scratching the surface with our product lead cross sell initiatives.
Speaker Change: Our cross sell must also be matched by new logo adoption.
Speaker Change: A little over a year ago post our Burger King when we had communicated that we had an additional seven tier ones in our pipeline.
Speaker Change: I am happy to report that since that time, we have now won four of those seven deals in our pipeline has since then <unk> been replenished.
Speaker Change: We think this dynamic will continue creating a deeper opportunity set to go multi product over time.
Speaker Change: This holistic approach is key as a key validation of our platform thesis in the long run platforms not point solutions will dominate.
Brian: Brian will now review the numbers in more detail Brian.
Brian: Thank you <unk> and good morning, everyone.
Brian: We started 2025 with the same successful execution of our strategy as we displayed exiting 2024.
Brian: Subscription services continue to fuel, our organic and our organic growth and represented 66% of total Q1 revenue.
Brian: Important our consolidated non-GAAP gross margin continued to improve at 54% driven by improves the shrieking services non-GAAP gross margin of 69% all while continuing to drive efficient leverage over operating expenses.
Brian: As a result for the third quarter in a row, we reported positive adjusted EBITDA recording $4 5 million or $14 7 million improvement compared to Q1 prior year.
Brian: We are executing through our company plan, while also being aware of the ever changing macro environment analyzing and appropriately adjusting our execution, depending upon impacts of our vendors customers and ultimately to the consumers they surface.
Brian: Now to the financial details.
Brian: Total revenues were $104 million for Q1 2025.
Brian: An increase of 48% compared to the same period in 2024 driven.
Brian: Driven by subscription service revenue growth of 78%.
Brian: Inclusive of 20% organic growth.
Brian: Net loss from continuing operations for the first quarter of 2025 was $25 million or <unk> 61 loss per share compared to a net loss from continuing operations of $20 million or <unk> 69 loss per share reported for the same period in 2024.
Brian: non-GAAP net loss for the first quarter of 2025 was approximately 250000.
Brian: <unk> loss per share a significant improvement compared to a non-GAAP net loss of $14 million or <unk> 47 loss per share for the prior year.
Brian: Now for more details on revenue.
Brian: Subscription service revenue was reported at $68 million, an increase of $30 million or 78% from the 38 million reported in the prior year and now represents 66% of total power revenue.
Brian: Organic subscription service revenue grew 20% compared to prior year, when excluding revenue from a trailing 12 month acquisitions.
Brian: <unk> exiting the quarter was $282 million.
Brian: An increase of 52% from last year's Q1 with engagement cloud up 54% and operator cloud up 49%.
Brian: Total organic <unk> was up 18% year over year.
Brian: Accounting for constant currency sequential AOR grew $10 million or three 7% from Q4 2024.
Brian: Hardware revenue in the quarter was $22 million, an increase of $4 million or 20% from the $18 million reported in the prior year.
Brian: The increase was driven by both tier one enterprise customers and the continued penetration of the hardware and our expanding software customer base.
Brian: Professional service revenue was reported at $13 6 million relatively unchanged from the $13 5 million reported in the prior year.
Brian: Now turning to margins.
Brian: Gross margin was $48 million, an increase of $22 million or <unk>, 86% from the 26 million reported in the prior year.
Brian: Increase was driven by subscription services with gross margin of $40 million, an increase of $20 million, we're 100% in the $20 million reported in the prior year.
Brian: GAAP subscription service margin for the quarter was 57, 8% compared to 51, 6% reported in Q1 to the prior year.
Brian: The increase in margin was driven by our continued focus on efficiency improvements with our hosting and customer support contracts as well as accretive margin contributions from recent acquisitions.
Brian: Excluding the amortization of intangible assets stock based compensation and severance total non-GAAP subscription service margin for Q1, 2025 was 69, 1% compared to 65, 7% for Q1 2024.
Brian: Demonstrating strong margin growth from our core business.
Brian: Hardware margins for the quarter was 24, 6% versus 22, 3% in the prior year to.
Brian: The improvement in margin year over year was substantially driven by favorable product mix as well as year over year reduction in expense as we aligned our hardware related workforce with organizational priorities.
Brian: Professional service margin for the quarter was 25, 4% compared to 16, 5% reported in the prior year.
Brian: The increase primarily consist of margin improvement from field operations and repair services substantially driven by improved cost management and reductions in third party spending.
Brian: With regard to operating expenses.
Brian: GAAP sales and marketing was $12 million, an increase of $1 million from 11 million reported for the prior year.
Brian: The increase was primarily driven by inorganic increases related to our acquisitions.
Brian: While organic sales and marketing expenses decreased $1 4 million year over year.
Brian: GAAP G&A was $29 million, an increase of $4 million from the 25 million reported in the prior year to.
Brian: The increase was once again, primarily driven by inorganic increases while organic G&A expenses decreased by $1 $4 million year over year.
GAAP R&D was $20 million, an increase of $4 million from the $16 million recorded in the prior year.
Brian: The increase was primarily driven by inorganic expenses, while organic R&D expenses increased $4 million year over year.
Brian: Operating expenses, excluding non-GAAP adjustments was $52 million, an increase of $9 million or 22% versus Q1 2024.
Brian: And when excluding inorganic growth operating expenses actually decreased 3%.
Brian: The organic decrease was primarily driven by a reduction in sales and marketing expenses.
Brian: The acceleration of new multi product deals along with efficient execution of cross sell wins. This is enabling us to realize synergies in our sales operating model.
Brian: Exiting Q1, non-GAAP opex as a percent of total revenue was 49, 8%.
Brian: A 1060 basis point improvement from 64% in Q1 of the prior year as we continued to scale efficiently and demonstrate strong operating leverage.
Brian: Now to provide information on the company's cash flow and balance sheet position.
Brian: As of March 31, 2025, we had cash and cash equivalents of $92 million and short term investments of <unk> 5 million.
Brian: For the three months ended March 31.
Brian: Cash used in operating activities from continuing operations was $17 million versus 24 million for the prior year.
Brian: <unk> this quarter was primarily driven by seasonal net working capital needs, including annual variable compensation and an increase of accounts receivable primarily related to an annual contracts we have been collecting post Q1.
Brian: We expect operating cash flow to improve meaningfully back to positive for the remainder of the year.
Brian: Cash used in investing activities was $6 million for the three months ended March 31 versus $152 million for the prior year investing activities included $4 million of net cash consideration in connection with the tuck in asset acquisition of go skip and capital expenditures of $1 million for developed technology costs associated with our software platforms.
Brian: Cash provided by financing activities was $11 million for the three months ended March 31.
Brian: Versus the $191 million for the prior year financing activities, primarily consisted of the net proceeds from the 2030 notes of 111 million of which $94 million was utilized to repay the credit facility in full.
Brian: Before handing the call back over to <unk> I would like to provide some insights on how we are managing the fluid environment around tariffs international trade and the respective impact they're having on capital expenditure velocity.
Brian: As <unk> stated our direct tariff exposure, specifically tied to our hardware business. Our international vendor relationships are primarily with southeast Asia, and we strategically reduced our exposure to China. When we address the supply chain challenges, resulting from the COVID-19 pandemic.
Brian: The go forward tariff baseline is still being negotiated with respective countries for considering our country allocation exposure. We are in a competitive position and can execute the appropriate supply chain adjustments, while minimizing price impact to our customers.
Brian: We also continue to analyze the potential impact of businesses waiting on the sideline to make capital expenditure decisions until a clear economic picture emerges as of now we have not seen a direct impact, but we will continue to monitor closely.
Speaker Change: I'll now turn the call back over to <unk> for closing remarks prior to move into Q&A.
Speaker Change: Thanks, Brian Let me wrap up with a few key messages before we open the call for Q&A.
Speaker Change: We had a strong Q1 with solid growth excellent gross margin expansion and adjusted EBITDA.
Speaker Change: While much of our focus on revenue, it's really worth highlighting their opex organically came down year over year today, our sales and marketing expense is 14% of sufficient service revenues and R&D is 26% of nutrition service revenues. Both are now are near our long term goals of 15% to 25% respectively.
Speaker Change: Continued to show success in cutting expenses, while growing at a rapid rate I believe this margin expansion will continue over time.
Speaker Change: Earlier, I talked about how our product flywheel is really working as we had more multi product deals this quarter than ever before repeating the trend from last quarter.
Speaker Change: While this is an incredible demonstration of our product muscle integrating our acquired products. It's also important to acknowledge the tremendous financial impacts that can come from integrated suite of products.
Speaker Change: And often misunderstood aspect of software M&A is that a rollout can create value and simply acquiring businesses.
Speaker Change: That model is flawed as disintegrated rollouts provide value as capital allocation vehicles, not operating vehicles to underwriting of those investments are really investments in an allocator first investing behind an operating strategy with defined allocation goals, what I've learned from par is that as we acquire new products, we're able to accelerate growth through technology.
Speaker Change: <unk> and consolidated sales and product teams.
Speaker Change: When we integrate an acquired product we make it easier to buy our product, but also prove that two products integrated contain new features features unavailable before an acquisition this leads to greater sales.
Speaker Change: As customers buying more products in par our products become far stickier.
Speaker Change: It's harder to rip out three integrated products and one Siloed module.
Speaker Change: This stickier base that has a longer and larger customer value with higher retention, thereby increasing the ROIC of each equity dollars invested and in my opinion suggests arguing for a higher and durable trading multiple and a disaggregated rollout.
Speaker Change: The key is that each new acquisition actually accelerates growth once integrated lowest churn and increasing duration of cost of the customer cash flow stream, hence expanding LTV and increasing the value of par far more than standard M&A.
Speaker Change: This is why we view, our M&A motion as both our product and financial initiatives.
Speaker Change: Today, it's clear that restaurants, and foodservice businesses are seeing a slowdown in traffic to combat. This they will need to embrace more technology those that lean in will be the winners the impact of the macro uncertainty it's hard to time today, while demand for our products continues to be strong we're fully prepared to deal with any potential slowdown.
Speaker Change: We operate in a market, where large deals can take multiple quarters or even years to execute where upfront R&D at times needed to win large deals and we're maximizing lifetime value of a customer can come at the expense of quarterly metrics, we will always choose the path of maximizing long term value.
Speaker Change: We are not a reactive organization, we have built an unparalleled in parallel sector flywheel. This will not change irrespective of short term macroeconomic gyrations tariffs or otherwise.
Speaker Change: The secret of our longevity and why our firewall is only in its infancy.
Speaker Change: But this is our time to be aggressive the fear in the market excites our team at par.
Speaker Change: As we know this is where we are at our best one while others are fearful will continue to make the investments organically and inorganically to expand and accelerate our flywheel.
Speaker Change: As always I want to thank my part teammates for their hard work in making these results possible at our company. It's our day, one mentality that drives our collective hunger and ambition. Thank.
Speaker Change: Thank you for your time this morning, and we will now open the call up for questions.
Speaker Change: As a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced.
Speaker Change: Withdraw your question. Please press star one again.
Speaker Change: In the interest of time, we ask that you. Please limit yourself to two questions to allow the opportunity for everyone to have a chance to ask please standby, while we compile the Q&A roster.
Tandon: Our first question comes from <unk> Tandon with Needham Your line is open.
Tandon: Thank you good morning, <unk> it sounds like with the <unk> rollout and these new deals that you won there might be a step function in growth in the back half to that extent could you speak to the cadence of the growth as we look across the next three quarters and as these go lives Dr impacted revenue and investments are you still looking at it.
Tandon: 20% IRR organic growth number for the year or do you think it could actually be better because now you have some of these new deals that could go live in the back half.
Tandon: We're still going to continue to target 20, plus percent organic growth for the year.
Tandon: What's been really exciting as I mentioned is we have seven tier one deal as we talked about a year a little over a year ago. We won four of them and I think the most exciting part about the company is at.
Tandon: Almost all of the deals we're signing now are multi product, which create far more revenue than an individual deal in our past.
As you suggested we will see more impact from these deals and our big Pos rollout in the second half of the year. So I think you'll see gradual.
Tandon: Q2s and Q1 to be relatively similar and then Youll see a nice pickup in Q3, and Q4 and I think what's going to be Super exciting is that you'll also see significant EBITDA expansion towards the towards the end of the year. Because we are now at a scale, where we're getting the operating leverage on the individual large customers. We launched in the last call. It 12 months.
Tandon: So it's really exciting second half of the year.
Tandon: And I think given the continually high win rates across these tier one deals. It also makes for a pretty strong 26%.
Speaker Change: <unk> then just as a quick follow up I would love to hear if you could provide more details on the five new logos with multi product wins I think you mentioned popeye's is one of them I'm, assuming thats one of the tier ones. You won this quarter, but if you could maybe reconcile the two new tier ones that I believe you won this quarter because you already had one or two last year and then the.
Tandon: Five new logos.
Tandon: Could you share any metrics around that and any other details you can provide on those wins.
Tandon: Yes of course, so let me just clarify the numbers. So we won five new pls deals in this quarter we won.
Tandon: I believe in Q4 so.
Tandon: <unk> deals that we've won on that side and then we've won similar amounts on the engagement cloud as well so that the number of deals is actually quite quite high.
Tandon: I Unfortunately can't talk about any deal size and logo together.
Tandon: Given contracts and stuff, but.
Tandon: Generally what we're finding is that.
Tandon: These larger deals we are really well situated to come in make an impactful.
Tandon: Launch and then bring in the second product relatively quickly as we saw at Burger King and others.
Tandon: On the smaller deals are in call it the mid size deals.
Tandon: Where we can bundle multiple products at the time of the of the of the deal and so that's the other part of it which is we're kind of balancing these larger deals which are generally single product and you add in the second product within a year of launch the mid size deals you can sell multi product at the time of the initial sale.
Tandon: So unfortunately cant actually give sizes on these deals with specific logo.
Tandon: Private information, but.
Tandon: Like we said in the call what's exciting is even though we've won.
Tandon: The deals that we talked about a year ago.
Tandon: The pipeline has been replenished.
Tandon: Pretty meaningfully and so it sort of.
Tandon: The digital transformation within the underlying category continues to be there.
Tandon: Yes.
Speaker Change: Thank you. Our next question comes from Stephen Sheldon with William Blair. Your line is open.
Tandon: Okay.
Hey, good morning, Thanks for taking my questions and congrats a big congrats on the sales momentum.
Tandon: First it looks like reported <unk> for the third and fourth quarter were brought down just a touch while this quarter you reported last time can you give some detail on that.
Tandon: That has something to do with acquired <unk>, but just any additional context, there would be great. It's actually yes, it's actually FX. So.
Tandon: The business, we acquired in the second half of last year task is almost entirely revenue from outside of United States and so as the FX adjustments.
Speaker Change: And so when you count for the constant currency Steve.
Speaker Change: And that's where I kind of referenced in the earnings in going from Q4 to Q1, we saw the $10 million three 7% incremental growth in constant currency.
Speaker Change: Okay got it thanks, and then maybe following up on the last question I mean, you've got a lot of encouraging wins here and if were just assuming somewhat reasonable implementation schedules.
Speaker Change: I guess do you have any early read on what organic growth could potentially look like next year or just generally how much visibility do you have now, especially with.
Speaker Change: The core tier one wins.
Speaker Change: Talked about do you already have good line of sight to over 20% growth next year, given given what you've already won.
Speaker Change: We don't think we have enough visibility.
Speaker Change: Kind of beginning of May for 'twenty, six yet what I would say is we feel.
Speaker Change: Really good right now because not only are we winning these deals but we're also attaching multiple products right and so yes the.
The value of the deal is higher than we've been historically been used to where it was usually one deal one deal.
Speaker Change: It's sort of too.
Speaker Change: So right now I don't think we can sort of we can say hey, we are there, but I think we're certainly going to shoot for it given what's happened so far.
Speaker Change: Thank you. Our next question comes from will Nance with Goldman Sachs. Your line is open.
Will Nance: I appreciate you taking the question I appreciate that.
Will Nance: Detail on FX I think that May have got lost in some of the morning shortfall.
Will Nance: No.
Will Nance: I'm hearing that right. It sounds like a lot is it Australia dollar I mean, I think most currencies have weakened year to date, but I think the Aussie dollar is actually stronger year to date. So just wanted to confirm that that's the case and maybe you could give us an update on the current exposure. So we can think about constant currency going forward.
Will Nance: Yes, that's right.
Will Nance: In Australia, New Zealand actually bigger.
Will Nance: And so that's where the FX is there if you adjust for constant currency sequential growth.
Will Nance: $10 million.
Will Nance: So it does have an impact.
Will Nance: Going forward.
Will Nance: Yes that makes sense that makes sense, okay, sorry, what did you have a number on.
Will Nance: Just like the percentage of IRR that is outside of the U S.
Will Nance: 25% notes just under 20% so under 20%.
Will Nance: That's very helpful. I appreciate that Okay, and then just an update on the competitive environment, you're seeing some of the down market competitors, making some traction upmarket what are you seeing in the RFP processes.
Will Nance: Any notable changes.
Will Nance: In conversations.
Will Nance: Yeah.
Will Nance: I think we felt were really happy with our competitive position certainly.
Will Nance: Certainly on table service deals as we've talked about in the past.
Will Nance: And there and I think starting to make.
Will Nance: Real impact into those sales processes.
Will Nance: One is particularly very long sales processes.
Will Nance: That's where we see some competitive positioning but nothing that I think is worrying us in that one we're head to head in the lab with a customer.
Will Nance: Can't think of a time, where the customer said, we don't have the products right now that doesn't mean, we always when there might be economic things that change there there might be relationships, but generally from a product perspective, we feel really strong and I think in the end and enterprise software product wins. So we feel really really good and as I mentioned on these tier one deals where we're still waiting.
Will Nance: At a very high clip and so I.
Will Nance: I feel pretty good right now, but we obsess over every little competitor too so.
Will Nance: We're constantly kind of seeing how we stack up.
Speaker Change: Thank you. Our next question comes from Andrew Hart with BTG. Your line is open.
Andrew Hart: Okay. Thanks for the question.
Speaker Change: You talked a lot today, I think about multi product adoption I guess.
Speaker Change: Think about how the power platform as a whole has evolved over the past.
Speaker Change: Year, so with all these different solutions and different ways to serve customers.
Speaker Change: What is the cross sell opportunity our pipeline look like I guess.
Speaker Change: Like what would fully baked our pool look like for a customer versus what it's like today, just trying to get an idea of what the penetration of that cross sellers.
Speaker Change: How much room for growth there as going forward. Thanks.
Speaker Change: Yes, I think.
Speaker Change: Brian I've answered it before which is we get if every customer about every product at least to Forex from where we are today in our revenue. So it's really really meaningful.
Speaker Change: Now that won't happen near there are certain customers that that won't happen, but there is a lot of opportunity.
Speaker Change: And in the critical part Andrew why the last two quarters <unk> been talking about this is that there's two elements to this the first is our.
Speaker Change: Our products being integrated in a way that that makes it competitive dynamics to the last question incredibly favorable I referenced in the call, but we had a really unique customer win this quarter, where we one really really impressive large tier one chain because they realize that they can have their loyalty data.
Speaker Change: If you will at the Pos and so if you combine punch in park pass in store cashier can be prompted with AI suggested upsells. They can see the loyalty data loyalty points prompt you say.
Speaker Change: Same at the drive thru. So Thats. An example of what we May think of simplicity functionality that nobody else really has right now and I think that's just crazy powerful and so as we build these technical features that combine the products. It really makes the cross sell a lot easier. Because then it's almost like how can I not choose that because I can't get these sets of features and functions. So one is that sort of.
Speaker Change: Technical integration Thats now coming out from par that is really exciting and leading to the cross sell so it's not that we've amped up sales in fact, our sales team has come down in size and gotten more efficient it's that technical side Thats actually winning the deals and same on the ordering side that I spent some time on today, which is really growing nicely. The second part of the month.
Speaker Change: Multi product side is the resulting financial impact now as I mentioned, we haven't seen that flow through the P&L, yes, that's why I'm really excited for the second half of the year in 2026, but when you sell two products for the price of one if you will on the acquisition costs. It really is highly highly profitable. So we still have that really interesting lever as it relates to our profitability.
Speaker Change: In the next couple of years here.
Speaker Change: Great. Thanks, and then maybe just following up on some of the questions have been asked on air growth. Obviously, I think a lot of puts and takes and just hoping you could maybe dissect that a little bit more I guess on the first part of the delayed Burger King to expand the relationship I think everyone's in agreement Thats, Great. I guess can you help us understand maybe what the headwind to growth.
Speaker Change: Ben.
<unk> <unk> from the pause on Burger King and nice to hear that it's turned back on and then the second half of it you talked about there is a lot of other areas, where the slack was made out part of it is like the southern tier ones in the pipeline a year ago pharma four of them have gone live.
Speaker Change: Can you just talk about the implementation timeline for those like does that give you do those four wins give you two years of solid air growth three years I'm, just trying to think about the durability of their R&R growth over beyond the next couple of quarters.
Speaker Change: Sure.
Speaker Change: Let me do the second first so those four that we've won they've been one not rolled out so theres still a lot of.
Speaker Change: Revenue to come so just quick correlation, which again is probably I think really exciting which as those deals.
Speaker Change: For the most part are not driving the growth that we saw in this quarter those are still to come.
Speaker Change: So that's really exciting and I think.
Speaker Change: As far as durability of revenue growth. That's why we feel really really strong today, because we see that we have these deals were up plus the other deals that I mentioned on the call that we've won so I think for the next couple of years, we see pretty strong strong revenue growth, where we've got a nice backlog.
Speaker Change: If you can call it backlog to get rolled out.
Speaker Change: The timeline to rollout a deal.
Speaker Change: Varies significantly from our engagement side of our business, it's about six months from signing to launch.
Speaker Change: To get get it live.
Speaker Change: And thats been pretty consistent since we've.
Speaker Change: Acquired and worked on a bunch of product line.
On the.
Speaker Change: Pos side.
Speaker Change: From the moment you sign the deal.
Speaker Change: We usually guide that if you're a 1000 store chain. It takes us about a year to get you live provided we have your commitment and support and for larger chains that can take two years.
Speaker Change: But.
Speaker Change: Those ones are a little harder to forecast because you're working in tandem with appropriate but those ones to give you a longer visibility because you're rolling out over time kind of like we're doing on <unk>.
Speaker Change: To your first question I feel really great without our biggest customer rolling out we still had 18% growth really really comfortably.
Speaker Change: Without any other big deals going and so I think that just shows we don't need to depend on large mega deals to still grow at pretty high rates. So I was really happy with the quarter I think I'll just add to what <unk> said there too is the fact that now we're seeing some acceleration on the flywheel for the cross sell as that becomes a bigger percent of our total growth that comes over.
That kind of fills in the gaps to make happen in between these large sales cycles in some of these larger logos. So it helps to smooth out the year our growth as we go forward.
Speaker Change: Thank you. Our next question comes from Samad Samana with Jefferies. Your line is open.
Samad Samana: Hey, Good morning. Appreciate you guys, taking the questions as always maybe first 70 and appreciate the commentary.
Speaker Change: And what differentiates your M&A strategy versus maybe some other companies that have a.
Samad Samana: Kind of a more of a financial sponsor type of view on M&A.
Samad Samana: And maybe if I build on the question just.
Samad Samana: Just as we think about all the transactions that you guys have done in the balance sheet, where it is today. If you think about future potential M&A, especially if you think about something transformative.
Samad Samana: One I guess are you thinking about an opportunity like that and if so should we think about it as studying peg how would you think about approaching the balance sheet just given.
Samad Samana: We've already spent capital recently, just maybe any color there and then I have a follow up as well.
Samad Samana: That's a great question.
Samad Samana: Short answer is we're going to be aggressive.
Samad Samana: I think some magic.
Samad Samana: Where.
Samad Samana: The company is constantly sort of assessing where we great and candidly where do we suck and one of the things that we learn in kind of that really.
Samad Samana: Transparent environment is how do we continue to make our M&A better and better and I think what I can say to you is because we're so obsessed on the products fitting within par we haven't made a lot of mistakes if I look at M&A deals I sort of think.
Samad Samana: We've really really got it right and a lot of that is the integration of the people. If I look at the acquisitions. We made last year, we retained well over 90% of those employees well over and that's kind of rare and thats allowed us to kind of build the momentum from the flywheel from the product side. So that foundational point is we're going to do it again and again and I think the transformative deals.
Samad Samana: <unk> are exciting to us if they fit our product rubric that allows us to create more value to the customer because in the end if we combine the products together and we create more valued customer. We can then take more value back to par and our shareholders. So we will absolutely do that how we fund that I think is really dependent upon a few things one what's our cost of capital of the levers that we have at the time that we're making the deal.
Samad Samana: And so if we're buying.
Samad Samana: Business at a multiple that's meaningfully discounted for equity we.
Samad Samana: Look to use equity.
Samad Samana: If it's a smaller transaction like we did with skip this quarter.
Samad Samana: We are comfortable using cash on the balance sheet and then I think given the success. We've had in the convert market. We can continue look at the convert in that market, but it really it really is depending on what's our cost of capital at that time.
Samad Samana: And then looking at that lens of what doesn't limit our flexibility going forward because I think have you seen with us and we've gone through a period of two years to do nothing and then one year doing two or three deals and so it's a combination of lowest cost of capital that doesn't mess up our flexibility for the future.
Samad Samana: Is kind of how I think about it.
Samad Samana: Okay. Appreciate that and also I appreciate that you use the industry standard of where do we stop to judge as well Sam here.
Samad Samana: Myself.
Speaker Change: And then maybe just a follow up for Brian If I think about the.
Speaker Change: This is more of a housekeeping question than anything else. It looks like in the slide deck may be the IRR was revised for some of the historical numbers I. Just wanted to know is there any kind of divestiture or is that being rebased because of currency just trying to understand what changed in the slide deck.
Speaker Change: For the historical numbers I am curious if Dan you off the top of your head.
Dan: Yes, it's purely related 100% to the FX currency and that's why we referenced the constant currency. So you saw that in Q3 Q4 post the acquisition of tests <unk>.
Thank you. Our next question comes from Charles Nathan with Stephens. Your line is open.
Charles Nathan: Good morning, and thank you for taking my question it sounds like Youre getting a lot of good traction in the payments business.
Speaker Change: My question there is I know a few quarters ago you had.
Speaker Change: You had mentioned that payments was still a bit dilutive to adjusted gross margin.
Speaker Change: I wanted to just get a sense for the impact on gross margin from the payments business as well as.
Speaker Change: Any color you could provide around the size of the size of payments relative to either subscription revenue our total revenue.
Speaker Change: Sure. So payments is still dilutive to gross margin going in the right direction. So you can see we've continued nice gross margin expansion and so even though payments is.
Speaker Change: Not yet at the company wide gross margins its working its way up there.
Speaker Change: In totality payments is still less than 10% of our net of our revenues and remember it's critical to us we collect payments or we report payments on a net basis. So.
Speaker Change: It's still small, but it's working its way there and I think once it gets to a meaningful size, we'll start breaking it out but we're not yet at 10% of total revenue, which is exciting because we have a lot of penetration still to go.
Speaker Change: Got it and as a follow up I appreciate the comments on tariff exposure and it sounds like you've made some actions over the past few years that.
Speaker Change: Help alleviate that headwind to some degree, but as we think about that exposure.
Speaker Change: Could you give us a little color around.
Speaker Change: How much how quickly that book the hardware book turns over I assume the exposure lies in your incremental deals as well as the contracts that are coming up for renewal. So any color around how that flows through would be helpful.
Yeah sure I'll answer that and then suddenly can fill in the blanks, but we can also make sure our contracts right that we have the ability to have flexibility in pricing. When there is exposure things such as tariffs, but at the same time, we also make sure, especially because of the heart the high hardware attachment rate to our to our software as well and we work with our customers comfort right.
Resolution so.
Speaker Change: I think we're feeling comfortable on where we are from a country exposure standpoint, we're being open with all our customers on where we're seeing this move and I think it's been good conversations we don't see there being an issue and then I think also from a supply chain standpoint, we make sure that we have able to kind of pull in as well and so we've been able to lock in some pricing and pull in some of our.
Speaker Change: So if we want a later in the year. So that we can actually service our customers and many of our customers remembered and we were able to supply them back from Covid, where others Couldnt and so we've also started seeing Pos come in from our customers to to help leverage that.
Speaker Change: Thank you. Our next question comes from Adam Wyden with Adwd capital. Your line is open.
Okay.
Speaker Change: So couple of things just to clarify you said this before out of the seven are not rolled out now can you can you clarify are you are you talking about new tier one logos that you haven't won I guess would you like so popeye's data central is not included in that but like for example, if you had one when these point of sale.
Speaker Change: Be that even though you have wendy's punch line I'm just trying to understand how you should think about the tier one logos are they brand new logos that you haven't penetrated at all at any capacity or is it like a knee could it be a major product like when these point of sale like that you don't already have.
Speaker Change: What I'm, saying.
Speaker Change: How do you sort of define tier one logo.
Speaker Change: So.
Speaker Change: The seven logos are ones, we referred to I think on a little over a year ago. After <unk> when we were talking with the pipeline.
Speaker Change: We were in the process.
RFP processes of seven.
Speaker Change: New customers, although as we won four.
Speaker Change: And we.
Speaker Change: We define tier one as 1000 stores and above.
Speaker Change: And.
Speaker Change: They would be of those seven.
Speaker Change: Six would be net new logos, one would be major upsell into an existing customer so.
Speaker Change: Six of the seven will be net new logos to par.
Speaker Change: And just to clarify and then I have one other question you were saying before the seven have not been rolled out. But then you also sort of said your pipeline has been replenished. So on top of that you would argue that even though you're one of those quarters. Then you have another four tier one logos that are in RFP is that sort of how you define it being replenished.
Speaker Change: Yes, so I'd say were those for one has been rolled out not entirely and then we've got three three coming and then as far as pipeline being replenished on a weighted average weighted dollar basis, which is the way that we look at pipeline. The dollar value of the pipeline is.
Speaker Change: More than it was when I made that comment over a year ago.
Speaker Change: Okay Amazing.
Speaker Change: And then a little bit more on on M&A.
Speaker Change: Obviously, you've done a really nice job on M&A obviously.
Speaker Change: You've sort of said you want to be the largest sort of player in restaurant Tech.
Speaker Change: Sure.
Speaker Change: I'm just curious like can you talk about sort of some of the things that you think might be coming to market and obviously I know it has to be product specific and it has to be sort of integrated but I mean, if you were to say.
Speaker Change: What would an ideal par look to you like in three to five years like what would sort of be the margin structure and growth rate and sort of scale I mean, I'm just curious sort of like if you had a Kansas and you can say hey, this is what the business could look like in five years, but what does that look like to you.
It's an impossible question because if you asked me five years ago I'm not sure I would have designed where we are today. It would have been wrong and happy with we have to date and where would I guess five years ago.
Speaker Change: I think it's going to happen what we're shooting for a part is we are really ambitious ambitious team and candidly. If we just stay in our swim Lane I think we'd all be disappointed about what we accomplished and so I think if you look at a three to five years from now I suspect that will be running the same playbook, we have done in restaurants and the retail space as we've just started there and other adjacent <unk>.
Speaker Change: <unk>, where we truly are not the restaurant leader, but the dominant foodservice leader across many categories and more and so you and I have talked about my my love of certain businesses like like <unk> and others. I think we want to do that but we wanted to do that in a more industry specific manner, because as I mentioned on the call I think what I've learned at par is that when you can integrate M&A in <unk>.
Speaker Change: True.
Speaker Change: Revenue growth plus stickier customers and that integration is really critical.
Speaker Change: We do actually deserve a higher multiple because essentially every acquisition actually makes your business better because it increases the lifetime value of an individual customer because whether they are more sticky or you can increase revenue so on and so forth and so I think that's the way that we think about it and so I would love to create the next version of one of those businesses, but it would be but each vertical will be very very integrated like we've done a park and I think that's it.
Speaker Change: Really served us well.
George Sutton: Thank you. Our next question comes from George Sutton with Craig Hallum. Your line is open.
George Sutton: Thank you our particular congratulations on the Mr. Pickles steel so.
George Sutton: So I'll need I'm curious when we talked about the better together in the context of how the Rfps are coming into my assumption that the rfps are typically around one specific area and then through that process you try to cross sell our after that process you try to cross sell and do you see a scenario where the Rfp's graduate.
To a more mature thought around.
George Sutton: <unk> technology suite that really limits the potential to you as the provider.
George Sutton: That's an amazing question. The short answer is yes, and yes, so rfps come in and they're generally single product in nature, and then we work to sort of introduce the other products and hopefully then convincing to do that.
George Sutton: But the reason why is that your question is fantastic as what you. Just described is what we're seeing happen today.
George Sutton: Historically.
George Sutton: The deals were here's an engagement deal here.
George Sutton: And today those those are colliding into one we extra seeing more and more customers collapsed, the digital which would be the digital side of the restaurants historically has been call it the marketing and it world.
George Sutton: And the operational side would be the operators in the world kind of merge into one one buyer and that has been really really instructive and how we think about our own business and continuing to collapse and consolidate we do internally and so the short answer is.
George Sutton: We push it the way you described I believe the market is moving to the way where it will be combined offerings and actually saying, Hey, I want these outcomes.
George Sutton: Show me, how your products get to these outcomes versus give me just a back office solution.
Gotcha and just one question for clarity.
Speaker Change: You mentioned that 57% of your deals.
Speaker Change: Our multi product this quarter versus I believe you said, 16% just a year ago I just want make sure I heard those numbers.
Speaker Change: To me, that's an amazing message if thats the case.
Speaker Change: So, it's even better than that so in the operator solution side. So we run the two separate business units as you know the operation side, 100% of deals are have been multi product the last two quarters.
Speaker Change: That's just really off the charts on the engagement side, we're up to 57% of new deals are multi product up from 14%. So it's really really been exciting a lot of that's been driven by we rebuilt the par ordering product and that is now being attached into a meaningful amount of deals.
Speaker Change: So yes, it's that's why I sort of talked about a lot on this call.
Speaker Change: And again, it's apropos to your prior question right, which is that the market is kind of coming in that direction.
Speaker Change: Perfect. Thank you.
Speaker Change: Thank you. Our next question comes from Eric Martin Newsy with Lake Street Capital markets. Your line is open.
Yes, I was curious to know on the par ops product, which is the automation of data central and delegate.
Speaker Change: It was prior to the acquisition of delegates.
Speaker Change: For a typical data central.
Speaker Change: Location.
Speaker Change: About 1500 Bucks a year.
Speaker Change: Okay, and then what's the what does that expand to if someone add delegate or is it just bundled in now.
Speaker Change: To delegate has a couple different module. So it's anywhere from call. It 500 Bucks up to 13 1400 bucks depending on by all three modules or just one.
Speaker Change: Got it.
Speaker Change: And then.
Speaker Change: A question regarding the hardware was there any evidence of people pulling ahead orders in Q1 in anticipation of potential tariff related inflation.
Speaker Change: We see that in Q2, so we did see some of that happened in Q2.
Speaker Change: So we think Q2 will be strong from a hardware perspective, but.
Speaker Change: Yes.
Speaker Change: It's hardware as Brian mentioned is 20 ish percent of our business now and so we don't look at that as having tremendous impact quarter to quarter I think thats. The beauty of it which is the tariffs well scary for some we feel are going to manage it really well.
Speaker Change: Real.
Speaker Change: I think the team did such a good job during COVID-19 that we've really got redundant supply chains very little exposure to China, and so we have seen some of that.
Speaker Change: We will see maybe a little more throughout this quarter, but.
Speaker Change: I think.
Speaker Change: We expect the hardware.
Speaker Change: Yes.
Speaker Change: To continue to be strong for at least Q2 and hopefully for US there, but we havent I don't think we and Brian have yet seen.
Speaker Change: Orders getting pushed out because of hardware cost.
Speaker Change: And I think that the result of that is because we've been able to avoid the China the China tariff.
Speaker Change: Got it thank you.
Speaker Change: Thank you as a reminder to ask a question. Please press star one on your telephone again that is star one to ask a question.
Speaker Change: Okay.
Speaker Change: Our next question is a follow up.
Speaker Change: From Adam Wyden with Adwd capital Your line is open.
Adam Wyden: Hey, Thanks, guys for taking my question.
Adam Wyden: I know you guys talked about the re basing of the IRR of about I guess, it looks like $3 5 million for constant currency can you talk about what the effect on EBITDA was in the quarter and what the actual effect on revenue was it looks like you would you would have made a lot more EBITDA than a lot more revenue on a constant currency basis, and then as you.
Adam Wyden: Sort of expect.
Adam Wyden: Higher incremental margins going forward as the other businesses are sort of growing sort of going forward can you just talk a little bit about that.
Adam Wyden: Yes. Good question, Adam I think from a from an EBIT or from a revenue standpoint would have impacted probably by about $1 million with FX exposure standpoint.
Adam Wyden: Below that call 700000 and change from.
Adam Wyden: From an EBITDA there.
Adam Wyden: Alright, Okay got it.
Adam Wyden: Great that's it.
Adam Wyden: Thank you.
Adam Wyden: I am showing no further questions at this time.
Christopher Burns: I'd now like to turn it back to Christopher Burns for closing remarks.
Christopher Burns: Well, thank you Daniel and thank you to everyone for joining US today, we look forward to updating you further in the coming weeks and days. Please.
Christopher Burns: Please have a great weekend and have a nice day.
Christopher Burns: This concludes today's conference call. Thank you for participating you may now disconnect.
Christopher Burns: Okay.
Okay.
Christopher Burns: Yes.
Christopher Burns: Okay.
Christopher Burns: Okay.
Christopher Burns: Okay.
Christopher Burns: Okay.
Christopher Burns: Yes.
Christopher Burns: Yes.
Christopher Burns: Okay.
Christopher Burns: Yeah.
Christopher Burns: [music].
Christopher Burns: [music].
Christopher Burns: [music].