PAR Technology Corporation Stock

All right. We're going to start with the next session. Next up, pleased to have Savneet Singh, President and CEO of PAR Technologies. Savneet, thanks for joining us again. It's a pleasure to have you yet again at this conference.

Thanks for having me.

So before we get into details, I think let's level set for the room, anyone maybe newer to the name, PAR been on a 40-year old journey to kind of reinvent themselves from a hardware company to a software company.

Can you give us a snapshot of who PAR is today and what the platform does across restaurant, front of house and back of house?

Sure. PAR is a platform to run enterprise restaurants and convenience stores. We are everything from loyalty and online ordering, all the way to point of sale in back office. Our platform really sort of starts with plant the flag with point of sale, and then we look to upsell you back of house, online ordering and loyalty -- we've been sort of deep in software for 6, 7 years now, expanded rapidly. Today, we cover over 100,000 restaurants and 25,000 convenience stores.

Got it. Okay. And then on second quarter numbers, you reported last month you raised full year on both the top and bottom line. And this is -- it's not -- you haven't been giving guidance for a while, so I think that's notable. What's it out to you in the quarter? Anything you'd like the script to focus on?

I think our second -- we start guidance this year is our second time giving guidance I think probably the biggest takeaway, we continue to sort of significantly outperform our EBITDA targets -- and I think -- I hope that continues for some time. So I think that there's a really strong operating leverage story here. Alongside really durable growth. So I think probably the biggest takeaway was that we are over earning. I don't think it's over. I think we're earning continual growth.

So I think every dollar of future revenue will come out of substantially higher margin than where we started. And so I think as our -- and that is really a real platform strategy, whereas when we're now selling 2 to 4 products per customer, the incremental margin per customer is much, much higher than it was in the past. And so I think there's a little bit of underappreciation of how much that is flowing through the bottom line.

And I think the second thing that's interesting to take away is we crossed over 20,000 restaurants that now have our sorry, 20,000 sites that have our PAR Intelligence platform on it now. And I think that's really exciting for us because we're selling to enterprises. It's not like a tool we can just flip on and say surprise you have it, we do get approval, we got to get it signed up. And I think gets us really excited about the potential future monetization of what we're doing there.

Yes. I want to come back to that in a second. But maybe talk for a second about the decision to give guidance. What was the thought process? What changed in terms of visibility. And then secondly, how are you thinking about the philosophy around guidance go forward about how you set the bar and evaluate over the course of the year?

Yes. I think guidance for us was probably twofold. One, when we took over the company, we were like less than $10 million of ARR. And we used to get asked to give guidance, and I'm like, how many Series A companies give guidance. We just happen to be public. So I think it was always hard. And I think when we were building up our platform, part through acquisition, part organically, it was very hard to kind of give guidance that I think was instructive. I think we got to a point now where the business is mature enough where we felt comfortable giving guidance.

And I think the second part was we had a lot of visibility coming this year. And so we didn't want to come out with guidance and be wrong. And so we always get a lot of visibility this year and I thought it was a good time to kick things off.

Okay. That makes sense. And just philosophy going forward on how you set that bar?

Yes. I mean, I think we try to sort of put a bar we can hit and hopefully exceed -- the first 2 quarters, we beat pretty substantially. I think we'll eventually narrow it in to be -- I don't think we want to beat by that much all the time, but I think we're -- our goal is to kind of put numbers we can achieve and give like reasonable expectations.

Yes. Got it. Okay. All right. So let's talk a little about AI and how that's impacting the business. Can you talk through how AI is actually changing how PAR operates internally and how you're kind of separating like structural cost out, cost takeouts from what I think you call like AI washing cost savings programs?

Yes. I think we went about AI, really like department by department, job by job. And I think -- it took a little bit longer, but I think it really worked in our favor. So as we -- our -- if you exclude our -- the 1 sort of the set of assets that we acquired in Q1 of this year, our organic OpEx is down something like $15 million or $20 million. And a substantial portion of that came from cost takeout leveraging AI. I think an example is probably helpful.

Our finance department today is down 25%, maybe 30% from where it started this year. And our goal is to take it down to from 40% by Q1 next year. And so we've been able to take out a huge portion of our finance costs because we've been able to leverage AI in areas that we were manually doing stuff. So a couple of good examples are things like internal audit, where an agent can pull sort of things that look fishy or needs to reconcile stuff, areas of billing where we were doing a ton of stuff manually, collections, really aggressively put AI to work, and it's dramatically helped us cut costs.

Same thing within HR. All the queries that you send to HR, we've now made agentic with in our operations. Our hardware team now has something called HyPar like literally any question they have about a product, whether it's from 1985 or 1995 or now they're able to query it. And so that allows us to cut the team now, but also get rid of all the old software we had. We got rid of Smartsheet with some of our demand plan because we're able to use the tool we build on Cloud.

And so I think we've been constantly going function by function to see what we can potentially automate away.

Got it. Makes sense. And then just on the product side, you mentioned the 20,000 live sites on PAR Intelligence. Maybe talk about that product, what it actually is, what are customers doing with it today and how you think about kind of road map for that product?

Yes. So it's real exciting for us. PAR Intelligence is a single dashboard for all of your PAR products. And hopefully, your third-party products as well. But what I think is unique about it is, today, what we're doing is what I expect every company in the world will do in software, which is it's like ChatGPT for your restaurant. You can say, what are today's sales like, how did they compare to last week, last year, do that promotion work? What store's working? How's my inventory looking, your ability to just run reports.

And that is actually really valuable today, and we're not charging that idea. So he just we can call it Assist. We had a really good example where one of our customers shows a screenshot his CEO had asked, "Can you tell me the percentage of transaction between 0 and 10, 10 and 20, 20 and 30. And normally, he's like and I would have to download some stuff, run some stuff because you want to see how that trended over the last period of time.

It's actually kind of complicated right because you're like, okay, how does that bucket of 0 to 10 compared to last year or whatever. And you literally just copied it, put it into our PAR Assist and send it to the CEO within like 10 minutes or whatever. And so that we call Assist. The next step in our evolution is advice, which is instead of you prompting it, it starts prompting you. And so it says, "Hey, Will, did you know that drive-thru sales are down, sorry, the drive-thru's backed up 30 seconds, FYI." It's sort of giving you, hey, there's too much inventory, hey, this labor schedule doesn't seem to be working for you. And so it's actually predicting stuff for you for you to go take actions.

So more valuable new prompting there. And then our third our next third generation of product, which is coming out early next year is the ability to take action. And so that example about the drive-thru, hey, the drive-thru's backed up 30 seconds, do you want to shut off DoorDash so that the store can funnel the drive-thru faster. And you press the button and it takes the action.

And the idea is that over time, we just automate that. So hey, the drive-thru is backed up by 30 seconds, let's shut off DoorDash so we can add staff there or whatever it may be. And so when we get to that last point, we're going to take actions to help you optimize your store where you really don't have to do anything, press a button, that's when we intend to start monetizing it. So our goal is to get 50,000 stores on Assist by the end of this year where they have this beautiful experience to kind of pull the data, pull the information, get a bunch of customers on sort of advice and then we'll look to start monetizing it.

Yes. Okay. And talk about where you are currently and just when you get to the -- like that advice state, how long does that take? And how -- what should we be thinking about for a time line to monetization?

So our goal is by the end of this year to have 50,000 stores on Assist the sort of first version they're using it pretty extensively. And then through '27, our goals is then get to this last point of action. So hopefully, we'll have real revenues in 2027 that we can tie back to this product.

And we think over time, this product becomes tines for everything. There's no more point of sale login here back up, it's all just in this 1 place. And that's really the major vision that we're pushing towards.

And how does this -- we've seen similar products across our coverage, most of them in the SMB space. What's different about rolling out AI-enabled products into the enterprise ecosystem. You've got corporate approvals, cyber reviews, longer cycles. I would imagine, though, that the focus on finding efficiencies and running businesses more efficiently that there's more of a focus on that I mean some of the bigger enterprise organizations?

It's wildly different. Like I think when I look at the SMB, a lot of the SMB AI stuff is like, hey, I'm going to grow your sales 10% to 40%. Imagine going to like McDonald's say, I'm going to use AI to increase your sales 10% to 40%. It just sound silly. It's just -- it's not -- no one is going to go get a multi-thousand store restaurant chain and grow their sales by 40%.

And so they are -- and that's just to give you a perspective like how different the SMB is from the enterprise because SMB will say, I can grow my sales 25% by using AI, whereas that's just not reasonable to assume in any large business.

The other part of it is kind of what you talked about, which is, okay, so what can you figure out in the enterprise where there's massive focus is on the back of house. How do I optimize the inventory, my labor, my schedule, food cost, all that. And then it's on the loyalty side, which is how do I segment it. So how do I actually say, Will is a father of two that every week this week comes home, super exhausted and needs like a Big Mac or whatever.

How do I segment down to you as an individual. And so those are the two areas you see in enterprise, whereas the SMB is all about at the moment, like customer acquisition and juicing your business pretty quickly. Structurally, it's also very different where when we go sell something to enterprise, we've got to actually commit the CIO that to use the product. We've got to get it tested with a bunch of the brands in the stores. All the cyber stuff. It's a pretty robust process. But once you go through that, it is a huge moat between you and the next person because how many you want to go to that again and again and again. And so I think us being first is really important.

And then how does the AI strategy extend to the C-Store side?

So the C-store side, we're actually a little bit further ahead. We are in 15,000 C-stores already leveraging PAR Assist. And so we're seeing tremendous use cases. As an example, one of our customers -- our first customer actually is a beta customer was actually able to use PAR Assist to realize they had, I think, a $1 million ad buy being funded by one of their suppliers that they didn't use.

And so when you think about $1 million ad buy, what's your, that's a huge amount of -- we paid for the product for years that way. And so they're using it to predominantly engage on the marketing side. They're trying to figure out how do I segment, how do I target. And so we've got a lot of traction there. We're going to test out a ton of other stuff.

So as an example, we're testing with the customer, how do they use voice to interact with PAR Assist. So instead of you typing it, can it be in the headset and you could say, "Hey, like how are we looking at the kitchen like whatever of a C-store. So C-store, we've had a lot more engagement and a lot faster.

Yes. Why is that? Why are they so much more willing to engage?

I think it's our standing in the category. We are very dominant loyalty provider, but we've created a ton of value back to our customers. And so when we bring them something, they don't really have a strong competitive alternative, and then we kind of have this relationship whereas in restaurant, we've done a great job, but there's competitive alternatives. It's -- they're being called on all the time. In C-store, you don't really have a lot of nearly the innovation and or VC dollars that have flown into it like restaurant has.

Got it. Okay. All right. Let's pivot over to Bridg. You closed earlier on this acquisition. Maybe you can provide an overview of the deal and the acquisition and how it fits into the better-together thesis?

Yes. We closed on Bridg in Q1 of this year. Bridg is an IDR solution. Essentially, it's a tool that allows you to identify who a guest is whether they're in your loyalty program or not. And so it sort of takes matching data and figures out, okay, that's Will. He lives in this ZIP code. He's got this demographic data. And then obviously, over time, the goal is to sort of target those customers.

It is an incredibly powerful tool that historically was sold to the largest Walmart down, like it is the biggest, the biggest. And -- and it was -- Bridg was originally acquired for $350 million in 2021 by a company called Cardlytics. Post earn-out, Cardlytics paid almost $0.5 billion for the business. And then we bought it for like $20 million in Q1. And so we thought we got a steal.

And the real -- the idea was can we take this Bridg product and combine it with our loyalty solutions. So we go to our customers and say, "Hey, not only do we have all your loyalty customers and every transaction that are done and how they think about you, we have your non-loyal guests alongside that, so we can then find ways to bring those guests to loyal or vice versa, but also figure out how much of our spend -- how much of spend is happening outside.

So if we're a loyal customer of XYZ restaurant, like how much are you spending on ABC restaurant anywhere else. And so it is a really, really fascinating tool for our customer to demo because they're like, "Oh cra*, like I don't have any of this information. And so -- we have a ton of interest. We signed our largest restaurant loyalty customer on to it just a couple of months after we bought it. We have a pretty strong pipeline of new deals coming through. So Bridg is pretty exciting, and I think will be the crux of our AI monetization going forward in that we can create really unique outcomes of stuff they couldn't do before.

And what's the sales process or upsell motion look like on that?

So it's very much pushed in conjunction with those that have our loyalty product. So when you're selling loyalty, it's so much about data, data to data. And an incredibly powerful data product that they didn't have before. It's also very unique and hard to get to. And so we sort of sell it within that core buyer persona.

Have you talked about pricing relative to the base of what used to be Punchh?

We haven't yet. And pricing does vary pretty significantly, and we're going to narrow in on this, but you should expect a doubling of ARR in a loyalty customer when we turn this on, but it does vary depending on what you're buying.

All right. Let's talk Papa John's, this was a major win for this year. Can you talk just a little bit about how that came together, how competitive was the process, and what role did the Burger King win as a reference customer play in achieving that outcome?

Papa John's is a big deal for us for a couple reasons. One, it's our first pizza chain, so we've never done pizza before. And pizza is a little different than our traditional QSR business in that you've got modifiers, you've got this pizza going through the oven stuff that Domino's pioneered, and it's heavily delivery, heavily third party, heavily promotional base. So there are core product differentiators versus quick service and fast casual.

So it was a big deal for us to move into a new vertical -- kind of like an adjacent vertical and then do it super fast time. I think the core reason we won the deal is that Papa John's is, from a tech perspective, is run by a really innovative team that came out of Domino's. It was the team that sort of did a lot of the really cool stuff that Domino's is known for.

And so they want to be viewed as tech forward. They want to be viewed as cutting edge. And so they wanted a partner and a vendor that matched their values and their goals. And so I think they took a huge leap of faith on us because we've never done what they're looking for them to do so they're literally betting on us to do something we've never done before. But I think they felt it from our culture. They felt it from our roadmap. They saw the results. And then I do think a huge part of it was the success we had at Burger King gave them massive confidence we could scale and handle the volumes and quantity of stores that they have today. So I think that was a huge part of it.

Yes. So then I guess talked about pizza as a new vertical. You talked about how it's first major win in that category. Any changes to the product that will come from being in that vertical?

Yes, absolutely. I mean, we've had to build a lot of that pizza functionality for Papa John's, but what we've been lucky about is then we were able to go monetize that into other customers. So in Q2, we announced we want a business called Pizza Factory. And then we want a third chain, a small chain after that. And so we've been making great progress. And pizza's kind of interesting in that there isn't an enterprise vendor that has serviced it before.

So most of these pizza chains have actually custom-built software from a decade or sometimes decades ago that they've been trying to figure out how to work.

And so there's an incredible amount of excitement in the category because no one's ever gone after that category before. And so we think it could be a nice -- a place for us to expand. We've got 3 customers on a standing start. And a lot of that functionality we can now use over and over again. And I think that a lot of it, too, is just stuff where I suspect pizza is always an innovator. And as far as first to delivery, first to do DoorDash, first to do Uber Eats, there'll probably be stuff that comes out of that are relevant to the rest of our base over time.

Yes. During the Burger King process, there was a period of upsell where you end up winning additional products. Do you see similar opportunities here? And what can make sense over time?

Well, yes, and we already did. So we sold them on 2 products at the time we won the deal. So again, I think that was because they saw what happened over there and said, okay, why don't we do that now? So that was kind of exciting because we were able to launch with 2 products, not 1, and not have to pause and restart. So I think that they saw the value add there.

That it also started becoming the norm, in Q2 every single deal we did was multi-product, literally every deal. And then the prior 4 quarters or 3 or 4 quarters, it's sort of been 70%, 80% of our deals were multi-product. And so I think we've been able to convince more and more customers to go that way. And I absolutely think it's tied to the success of us working from these bigger, more complex brands.

And just remind us where you are in the implementation of that. I think you sized it in the past as kind of like mid-teens millions of ARR once it's fully rolled out?

Papa Johns? Yes. And we'll hopefully kick off the very end of this year, but it's really majorly a 2027 event for us.

Got it. Do you think you can get it done in 2027?

That's the hope.

That's the hope. Got it. Similar question on Burger King. I know that one's farther along. Where are you in the Burger King rollout? You've been running north of 400 stores a month. How should we think about the remaining contribution into next year?

I think we'd be pretty much done by the end of this year. I don't think -- there'll be a small contribution for next year. Maybe some laggards, but for the most part it'll be done. And so '27 will be a lot more about upselling the back office product and getting that going in the rest of the chain. So it's been super focus -- super successful, ahead of schedule. We suspect that no one's ever launched this many sites in a single year. So it's going really, really well.

Yes, that's great. I know there's been a lot of conversation around just the market opportunity of other brands, like the pizza industry, that ran a lot of in-house software and are looking to modernize. We've been talking a lot about potential Tier 1 RFPs out there. What's the level of confidence in PAR's positioning in some of those processes and any updates you can share?

We continue to make progress. We're careful not to give update on stuff that hasn't announced or signed yet, given our customers are -- this is kind of their private info. But the volume of RFPs has increased pretty significantly the last 12 months in our business. I think we are clearly in a replacement cycle of point of sale at least. And so I think, we should -- given our win rates, we should continue to see hopefully above average growth, given that just the quantity of RFPs has increased.

The only -- I believe the only department at our company that has grown headcount has been sales engineers, which are folks that do demos and architect around that. We're just seeing a lot of RFP volume there, too. So I think we continue to make inroads into these big deals, and as I said, our guidance is -- our business is -- the guidance doesn't assume any of that. So if it happens, it's just a great upside for us to have.

What is the process of pitching and winning such a large customer like that look like relative to your standard sales process?

Man, the big ones are just -- they're very idiosyncratic, it's just impossible to sort of like say the one is like this or not. Some firms run a super strict RFP process where they bring in Accenture, Deloitte, or something like that and say, blind RFP response, don't talk to us, just work with a consultant.

Other folks will sort of date you for a year or 2 and then sort of say, okay, let's do a quick abbreviated thing. Other times, honestly, with Burger King and Papa John's, we were the last to the party, but we'd won those very quickly because I think they'd kind of gone deep on -- with other vendors and just were like, this is not going to work, and then we came in and could solve all their problems very quickly.

So unfortunately it's not there, but again, there's a very small group of people that are in that, like very, very super, super large brands, whereas our traditional process is, you're obviously have account coverage across every restaurant chain in America, but by the time you get that RFP, it's like start to finish relatively smooth.

So just zooming out, I mean, there's a lot of, I think there's been a lot of focus on, particularly early in the year, that AI may make companies manage more of their own software in-house. And so it's interesting you're saying that you're seeing a lot more RFPs coming to market, people looking to move to out-of-house vendors. So what is the market like right now for some of these big opportunities? Are you seeing an acceleration in people looking to do kind of refreshes of their tech stack? And then how do you think AI plays into those decisions?

Well, I'll say like 99% of restaurant chains do not have their own tech stack now. So it's not so much a move to external, it's always been external. There are a couple, McDonald's, Subway, Yum!. There's a handful that have done stuff themselves, but everyone else has bought. And so I just think it's a continuation of that bought. And I think even more so what we're seeing is some of these firms that have built their own now look at AI as a way for them to get off their own. Where I think a lot of them are like, man, we're going to be stuck on our own clunky homegrown thing with AI. It's like, okay, now we can actually get off the thing we built that's [indiscernible] resources.

And so I'm not seeing any customer come to us and say, I want to go build a point of sale system. I don't think that's going to happen. And if you think about it, if I'm a -- almost all large restaurant brands are franchised. If I'm that franchisor, I'm not sure I want to build like the payment engine, the transaction engine, the point of sale system to my franchisee, it's just going to be a massive point of friction for saving how much? Point of sale you're paying $200 a month, it's like -- is the ROI really worth the headache of giving your franchisees another thing to complain to you about.

And so I'm not sure there's an ROI there given that. And I've always said this, but to me, it's like the equivalent of us saying, I want to go build my own CRM system, because I don't want to use, whatever, Gong or Salesforce.com or whatever we've developed. Why would I ever want to distract our team to build the best CRM system.

You'd only do that if you felt there was a massive competitive advantage. And I don't think that exists. And -- or if rarely, if you can build the best product for your store today, I doubt that will last because these technology changes, integrations change.

All of a sudden AI comes and you're like, I got to rebuild it. I just don't think you want to be in that business. So the main driver of the movement, of this aggressive sort of growth in -- of RFPs is I think is really just down to the same exact stuff, which is, holy c***, our customers are more digital. We got to meet them where they are, we got to manage our operations more dynamically, because all of a sudden, I got to deliver, I got to have Uber Eats, I got to have pick up, I got to be available on all these channels all these times, I got to manage labor. And I'm doing it from the exact same 4 walls that I did 20 years ago. And the only way to solve that is with technology.

Okay, let's maybe pivot to talk about the competitive landscape. I mean, you sit behind, or I guess between, a lot of legacy enterprise vendors, Oracle, Micros, NCR, Global Payments. There's also a lot of SMB players who are trying to move upmarket. What's kind of stayed the same? What's changed over time on the competitive landscape?

The biggest players in the enterprise are NCR, Oracle, and Global. That hasn't changed. I think they still have the most market share. Most of the customers we get are from those 3 or some other legacy provider. And I think that will continue for a long time. I don't think this is a priority business for any of them and for the one that is a priority business, I think they just have too heavy of a product to fix to really be competitive.

So I just think it's just -- it's hard even if they wanted to change, you're talking about products that are 15, 20 years old, millions of lines of code, that's really hard to do it. And even if you want to do it, it's like the innovator's dilemma. How do you tell your customers that, tell your employees that? I think it's tough.

From the competitors, from sort of outside enterprise, there's always been SMB people that wanted to come up market. It's never really worked successfully. I think it's really hard to take an SMB product and make it enterprise. I don't know if there's a good example. I don't know if I've ever seen that. There is Intuit and there is SAP. There is an SMB product and usually an enterprise product. And I think it's really hard to make that the same product.

And so you've got to almost completely change your stripes to go to that market. Specifically, we have incredible respect for Toast. I love those guys. I love those products. But I think the enterprise is still not -- I just don't think there's enough TAM and opportunity to make it worth their time. And so at some point, I suspect economic rationalization comes in and it's like, what are we doing here. I think there's a few startups here and there, but honestly, not a ton has changed since we spoke last year.

Yes. Does having more people at least looking at the space, does that change any of the dynamics in competitive situations?

Not really. It's funny, it's been almost exactly 4 years since GPT 2.0 came out. We have not seen one new company in an RFP since that time. So whether it's loyalty, online ordering, point of sale, really not one. And I just -- we have not seen like tremendous change on pricing or sales cycle, it's -- only thing that changed is the quantity of RFP has increased.

Got it. One thing I wanted to talk about, payments was something the company has been investing in, I think more so for the table service part of the business, but probably applicable across the business. Any updates on where that product stands and how you're thinking about roadmap?

Yes. Payments is still less than 10% of our net revenues, but it's growing. When we sell to the enterprise, it's tough to always have payments because they've got their own deals with Fiserv or whoever to -- but where I'm super excited about payments actually is leveraging payments in a CDP system like we've talked about.

So how do I take that, get you on our payment rails, then I can take that data, put it into our CDP and give you incredibly high fidelity information about Will Nance, so that I can target the hell out of you and make you a loyal customer. And so a lot of times I think about how do we not sell it as payments, but sell it as a robust CDP system. And that's where I think we'll do more and more with these larger brands.

And they look at it as, I'm not getting a payments product. I'm getting something else out of it. The place where I think we see pure payments growth is actually in online ordering. So one of the exciting parts of our business is we've kind of built an online ordering product that's going after our base customers. This year, 2026, it's got a 50% win rate. And that's nuts for us. Every quarter, we're winning 5 or 6 logos. About half of those come from the big legacy provider. And every single one of those deals has payments associated to it. And so that will be a nice driver because card-not-present transactions are very lucrative.

And I think because it's the assumption -- all those deals are like, they go hand-in-hand. The ARPU is very, very high so I think we'll continue to have good stable growth and payments but I think the online side is actually where we're going to have the opportunity to do more than in the in-store, can we build out the CDP idea, we'll see where that is in the year from now.

Got it. Makes sense. Maybe a couple more financial oriented questions. You've roughly doubled EBITDA year over year. We talked about you raised the guide. How are you thinking about margin expansion and the trajectory towards a kind of Rule of 40 model?

Yes, I mean, I think we've said, our goal was to go to kind of double EBITDA and double it again. And so last year we did $24 million, $25 million. This year we guided -- I guess now we're guiding above that. So we'll hopefully do that again this year. And then we think there's a potential path to do it again next year. A lot of that is coming from the stuff we talked about, continued growth and then holding OpEx and taking out OpEx. We're obviously ahead of our expectations on EBITDA.

And I think a lot of that is some of this AI work just became more lucrative to us than we expected, faster than we expected. And so to me, I don't think it takes a gigantic leap of faith to see how we can get to a really robust EBITDA number there. And then I think it's just about growth and getting us closer and closer to that Rule of 40.

The other one I had was just on capital allocation. You've got a buyback authorization. You've done a lot of M&A historically. You've done work on the capital structure to term that out. How are you thinking about capital return, M&A, versus reinvesting in the business?

I think we do not need to use cash on the balance sheet to reinvest in the business. The business is self-sustaining and operating leverage is growing. So we're going to be sending out more cash than we need. And today -- I mean, I think capital allocation is a dynamic question, it's not static. And so I think today, I would suspect the best use of our -- best return on our capital is our own shares. But that can change if a great unique acquisition comes up.

Like Bridg, I would do Bridg instead of buy back our shares, because we think Bridg will unlock a lot more over time.

So I think it's just where you are at the time and what generates the highest return. But we still don't want to be sitting on it, because I think our shares would provide a really substantial return. So we'd probably look to do something there.

Got it. OK. All right, just in the last minute or 2 here, how are you thinking about big picture, what is next for the company, specifically for PAR over the next 12 to 18 months?

For us, it's pretty simple. We want to drive the profitability we talked about and deliver that return to our shareholders and become a cash flow story. And then we want to prove the PAR Intelligence story. We've got to prove that AI is a growth accelerator for us. I think that if we can do that, I think we'll have a multiple re-rating that hopefully will reward the patience of what's going on now. But it's pretty simple. We've got to drive super high ROI on our AI spend, and then we've got to deliver on the cash flow numbers.

All right. Well, Savneet, thanks for joining us today.

Thanks, Will.

Really enjoyed the conversation.

Good day, and thank you for standing by. Welcome to the PAR Technology's Fiscal Year 2026 Second Quarter Financial Results Conference Call. [Operator Instructions] Please be advised that this call is being recorded. I would now like to hand the conference call over to your first speaker today. Please go ahead.

Thank you, Felicia, and good afternoon, everyone, and thank you for joining us today for PAR Technologies 2026 Second Quarter Financial Results Call. Earlier today, we released our financial results. The earnings release is available on the Investor Relations page of our website at partech.com, where you can also find the Q2 financial presentation as well as in our related Form 8-K furnished to the SEC.

Before we begin, please be advised that our remarks today will contain forward-looking statements. These forward-looking statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. For additional information on these factors, please refer to our earnings release and other reports filed with the SEC.

Also today, we'll be discussing or providing certain non-GAAP financial measures, which we believe will provide additional clarity regarding our ongoing performance. For a full reconciliation of the non-GAAP financial measures discussed in this call to the most comparable GAAP measure in accordance with SEC regulations, please see our press release furnished as an exhibit to our Form 8-K filed this afternoon and our supplemental materials available on our website.

Joining me on the call today is PAR's CEO, Savneet Singh; and Bryan Menar, PAR's Chief Financial Officer. I'd now like to turn the call over to Savneet for the formal remarks portion of the call, which will be followed by general Q&A. Savneet?

Thanks, Chris, and thank you all for joining us today. On our first quarter call, we established clear financial and AI adoption targets and laid out what success looks like for PAR in 2026. Since then, we've been heads down executing against our three-pronged growth strategy, namely to one extend our competitive platform advantages in [indiscernible] markets; two, reinvest in product efficacy via powerful AI functionality and three, aggressively expand our total addressable market in areas where we can continue to leverage our inherent platform advantage. As Ben [indiscernible] famously said, in the short run, the market is a voting machine. But in the long run, it's a weighing machine. We plan to continue to stack weights on the scale. At PAR, we're always on offense. This is evidenced by strong Q2 results and highlights, which I'll start with today before handing the call to Bryan to discuss our financial results in more detail and provide our outlook for the remainder of the year.

Q2 was a [indiscernible] shop in the [indiscernible] market. We delivered results ahead of expectations, expanded our platform footprint across both restaurant and retail, grew our PAR Intelligence user base to roughly 20,000 sites, [indiscernible] material TAM expansion initiatives in both restaurants and retail sectors, overhold our cost structure and strengthened our outlook for the remainder of the year. Most central to the PAR thesis, we continue to prove the value and [indiscernible] power of our platform strategy. Our customers are expanding their adoption across our portfolio, creating larger and more strategic partnerships. Our momentum is reflected in our ARR performance, our improving margin profile and our growing pipeline of enterprise opportunities across both restaurant and retail markets.

Let me start with a few highlights. We exited the quarter at approximately $338 million of ARR representing over 17% year-over-year growth and 12.3% organic growth and setting us up for a meaningful acceleration in the second half as communicated earlier this year. We generated adjusted EBITDA of $14.3 million in Q2, an improvement of nearly $9 million from Q2 last year. the $14.3 million of adjusted EBITDA includes $1.3 million of over-performance in the quarter, driven by a specific [indiscernible] initiative by a large legacy enterprise restaurant customer. Without this project, the Q2 normalized number is $13 million in adjusted EBITDA against the previously forecasted range of $9.5 million to $11.5 million.

Our profit acceleration was done the right way, by leveraging the fixed scale of our operations while continuing to improve the unit economics of each product. As an example of this, across our core product base, the 3-year blended ARPU CAGR sits at 8%, while the average platform deal term length is roughly double that of a point solution. These strong Q2 results reinforce our confidence that we can continue balancing growth and profitability while investing in the strategic opportunities in front of us.

Looking across the business, we're seeing encouraging momentum in nearly every major product categories. Our restaurant vertical delivered a strong second quarter, securing the pipeline and backlog for the back half acceleration we spoke about on our last call. What stands out most is the continuous success and durability of our platform strategy. Customers select PAR for its integrated solutions rather than purchasing individual products. An integrated product ecosystem is a perfect foundation to be the core restaurant AI partner of the future, as performance AI features require multiple systems working together in real time. A stand-alone AI wrapper or point solution cannot replicate a feature that bridges point-of-sale, inventory, labor and guest data. PAR's end-to-end fully connected stack is the clear gold standard.

Multiproduct attachment on Q2 new engagement sits at nearly 100%. Wins included Guthrie's Chicken, Sarku Japan, Nuke's, Burgerville, [indiscernible] Brady's and Bad A** Coffee, all included multi-products across point-of-sale, loyalty, ordering, payments and back office solutions. Operationally, our deployment teams executed at scale. On the PAR POS side, we remain ahead of plan Burger King activations and continue to see potential upside [indiscernible] our current year-end target. Additionally, we completed key development milestones at Papa John's upcoming platform deployment and are well positioned to kick off their implementation plan later this year. Separately, PAR Ops delivered its strongest quarter ever, activating nearly 700 locations.

Looking ahead, we end the back half of the year with substantial Operator Product backlog, identifiable expansion opportunities and a healthy pipeline. Combining these factors positions us to reach our ARR targets with additional upside if execution continues at the current pace.

Now to go over Engagement and Ordering. Within Punchh, growth remains solid despite the planned churn we experienced in Q1. The business continues to showcase strong margins, expanding customer utilization and generating opportunities through set expansion, pricing actions and new products. We are highly confident in the long-term value proposition of Punchh as loyalty programs remain central to guest engagement and personalization strategies.

With respect to PAR Ordering, we delivered our best ever quarter in Q2, closing 6 new deals. What's especially noteable is that 3 of those wins came from customers migrating off the market's largest legacy ordering provider, reinforcing the competitive strength of our offering. Customers increasingly want fewer vendors, tighter integrations in a simpler operating environment. Our single digital cockpit with PAR Ordering is exactly that, allowing you to manage all your digital menus in one place. Every Ordering deal this quarter include other PAR products, whether that was point-of-sale, Punchh, Payments or a combination of all 3.

A specific highlight this quarter was seeing growing traction from our Catering capabilities. Catering was a component of 2 of our 6 PAR Ordering wins, and that's particularly meaningful because Catering was our largest road map investment last year. We're now beginning to see those investments translate into customer [indiscernible] and commercial results. It's a great example of how disciplined product investment can create new growth vectors over time, not only increasing ARPU, but separately enhancing overall product competitiveness. The relative competitive [indiscernible] is evidenced by PAR Ordering, delivering win rates above 50%, the highest success rate of any major product in our portfolio.

Given the demand environment we're seeing, combined with the fact that Payments is attached to every Ordering deployment, we feel very confident in our ability to continue to grow this business consistently quarter after quarter. On the holistic product innovation front, we continue to meaningfully accelerate deployment across the organization. Compared to a year ago, we've increased delivery velocity threefold. Simply put, we're building and shipping products faster than ever before, which allows us to respond more quickly to customer needs and extend our leadership position in the market.

Another area where we are seeing progress is AI. Our strategy has always been to leverage the unique data, workflows and operational contacts that already exist across the PAR's platform. As customers adopt more of our products, the value of AI capabilities increases because they are trained in a richer and more connected view of restaurant operations. We're beginning to see that play out in the market. We're also preparing versus significant expansion regarding PAR Intelligence, with over 20,000 locations planned to go live in the third quarter. These [ deployments ] validate what we're hearing from our customers. They want practical AI that helps operators make faster decisions, improve guest engagement and drive measurable business outcomes.

As previously expressed in our Q1 earnings, we view 2026 as an option year for PAR Intelligence, and the focus remains on embedding AI in customer workflows, improving value at scale and expanding usage across our installed base. We're moving from a platform that reports what happens to one that optimizes in real time. As an example, customer loyalty initiatives can quietly leak money through promo abuse, mis-configured offers, unproven renewals, unclaimed [indiscernible], [indiscernible] customer drop off and operators usually find out weeks later or [indiscernible]. We're building a system that catches this continuously and delivers a fix, not just the finding. This works because the data already lives in PAR, growing sharply with every order, every loyalty event and every new site. The operator sets intent and improves the action, protecting margin and growing basket size, visits and upsells without growing the team. As adoption grows, we believe 2027 becomes the inflection point where AI contributes more meaningfully to revenue growth through premium capabilities, expanded product attach rates and deeper customer engagement. The combination of data, scale and workflow indications creates a long-term competitive advantage and further strengthens the value proposition of the PAR platform.

Now moving on to Retail. This segment also continues to perform exceptionally well. We are particularly encouraged by the scale of opportunities we are pursuing today. On the platform side, we launched [ Bola ] Energy as well as 2 other enterprise retailers during the quarter. The PAR Intelligent footprint expanded to roughly 17,000 PAR Retail sites in the quarter, surpassing our initial adoption goal and moving us rapidly into optimization ahead of future monetization PAR Intelligence. On the R&D front, PAR Retail completed a full rollout of Agenetic AI to all developers. This will improve engineering productivity and accelerate innovation.

Now turning to our newest product add to PAR Intelligence Bridg. We're encouraged by the progress we've made since closing the acquisition in late March. What we're seeing is a rapid transition from integration to execution with early proof that Bridg is not just another product in our portfolio, but an increasingly important part of the data intelligence foundation that will power PAR's long-term AI strategy. In just a few months since closing, Bridg has added more than $1.3 million in new committed ARR from 2 signed customers including an existing PAR restaurant customer. Importantly, both customers have signed agreements extending through 2029, demonstrating confidence in the value that Bridg delivers and underscoring the long-term opportunity we see ahead. These early results validate both customer demand and how Bridg will become a central [indiscernible] of future AI monetization. The story is not simply about Bridg itself. It's about the unique data foundation we're building across PAR that enables better insights, stronger customer outcomes and a differentiated AI platform for restaurants and retailers.

Turning now to PAR's TAM expansion efforts. Our business unit leaders are evaluated in part on their ability to place bets that increase our ARPU or bring us into new product categories entirely. I touched upon some of these initiatives already, including PAR Intelligence and Bridg, where we are seeing sizable cross-vertical potential and traction. In addition, on the [indiscernible] side, we are [indiscernible] both in native [ kitchen system ] as well as an AI-powered audio technology for drive-thru. On the retail side, we have existing customers engaging us on technology expansion initiatives across our [indiscernible] and back core systems as a system orchestrator rather than an integrator.

Before handing the call to Brian, I'd like to cover a few [indiscernible] points. One of the most encouraging developments in the first half of this year has been our ability to improve profitability while continuing to grow. Several operational initiatives driving that progress. First, our point-of-sale business is benefiting from ongoing support efficiency improvements and automation initiatives. Our agents are using intelligent tooling to handle more volume per person while putting the customer first with a focus on speedy resolution. Second, ordering is beginning to experience the benefits of scale as fixed costs are leveraged across a growing customer base. Here again, intelligent tooling has had a material impact in driving efficiencies. Third, we are pushing aggressively on AI investments in closely tracking and optimizing the relative spend to efficacy ratio. 100% of our full-time employees are enabled on and using AI tooling and we have recorded $14.9 million per year of estimated time savings and workflow optimization across our team, in functions, including sales, support, customer success, product, implementation, finance and engineering.

Our focus remains on converting efficiencies to realizable impact whether that be dollar savings, deployment speed and capacity or per person support coverage. These efforts are contributing to a meaningful operating leverage and helping create a clear path towards our long-term profitability objectives. Separately, the breadth of our pipeline and our TAM expansion initiatives gives us confidence in both our near-term outlook and our long-term growth trajectory. With that, I'll turn the call over to Bryan. Bryan?

Thank you, Savneet, and good afternoon, everyone. In Q2, we continue to execute to our 2026 operating plan. delivering both total revenue and adjusted EBITDA that exceeded the high end of the guidance we introduced last quarter. We continue to drive organic growth across our products and the verticals we serve, and our disciplined management of OpEx is allowing the incremental margin contribution to flow through to the bottom line.

For the sixth quarter in a row, adjusted EBITDA has grown sequentially, reaching $14.3 million in Q2 up 158% compared to Q2 prior year. Now to the financial details. Total revenues were $133 million for Q2 2026, an increase of 19% compared to the same period in 2025, inclusive of subscription service revenue growth of 16%. Net loss for the quarter -- second quarter of 2026, was $17 million or $0.41 loss per share compared to a net loss of $21 million or $0.52 loss per share reported for the same period in 2025. Non-GAAP net income for the second quarter of 2026 was $7.5 million or $0.18 diluted earnings per share, an improvement of $6.9 million compared to a non-GAAP net income of $0.6 million or $0.01 diluted earnings per share for the prior year.

Adjusted EBITDA for the second quarter of 2026, was $14.3 million, an improvement of $5.3 million sequentially from Q1 2026 and 8.7% when compared to the same period in 2025. Our sequential and annual improvement a result of our ability to drive both growth and profitability. Now for more details on revenue. Subscription service revenue was reported at $83 million, an increase of $11 million or 16% from the $72 million reported in the prior year and represents 63% of total PAR revenue. ARR exiting the quarter was $338 million, an increase of 17% from last year's Q2. Total organic ARR was up 12% year-over-year. We're entering the second half of the year with a large backlog of go-lives driven by both Burger King and Papa John's rollouts in addition to healthy pipeline across our products and verticals we serve.

As such, we expect second half ARR growth to be meaningfully larger than the first half, a growth phasing that is similar to what we experienced in 2025.

Hardware revenue in the quarter was $35 million, an increase of $8 million or 31% from the $27 million reported in the prior year. This was our strongest harvest sales quarter in at least 10 years. The volume was driven by both refresh activity and expansion of partnership with our legacy customer, as well as continued penetration of hardware attachment into our expanding software customer base. Professional service revenue was reported at $15 million, an increase of $1 million or 2% from the $14 million reported in the prior year. The increase was primarily driven by an increase in installation revenues associated with the rollout of Tier 1 customers.

Now turning to margins. Gross margin was $57 million, an increase of $6 million or 11% from the $51 million reported in the prior year. The increase was driven by subscription services with gross margin dollars of $46 million, an increase of $6 million or 60% from the $40 million reported in the prior year. GAAP subscription service margin for the quarter was 55.2% compared to 55.3% reported in the prior year. Excluding the amortization of intangible assets, stock-based compensation and severance, non-GAAP subscription service margin for Q2 2026 was 65.1% compared to 66.4% in Q2 2025, with a modest change reflecting a shift in product mix as Q2 included a full quarter of Bridg operations. We expect this baseline reset to reverse over the next few quarters as we execute the planned business model changes to Bridg post the acquisition.

Hardware margin for the quarter was 20% versus 27% in the prior year. This quarter's performance is in line with recent quarterly results, which reflect the current tariff and supply chain constraint environment. We expect Hardware margins to continue to be in the low 20s percent range moving forward. Professional Service margin for the quarter was 23% compared to 29% reported in the prior year. This quarter's result was negatively impacted by a timing of some of our hardware-related service contracts. Our outlook on go-forward Professional Service margins has not changed, and we expect the range of the mid- to upper 20s percent.

In regard to operating expenses, GAAP sales and marketing was $11.6 million, a decrease of $0.7 million from the $12.3 million reported for the prior year, driven by a reduction of organic sales and marketing expenses of $1.2 million, partially offset by $0.5 million of expenses from the recently acquired Bridg product line. GAAP G&A was $26.3 million, a decrease of $5.4 million from the $31.7 million reported in the prior year. The decrease was substantially driven by strategic reorg changes implemented earlier this year. GAAP R&D was $22.5 million, an increase of $1.6 million from the $20.9 million recorded in the prior year. The increase was [indiscernible] by R&D expense stemming from post-acquisition operations of the Bridg product line. as organic R&D expense was relatively flat year-over-year.

Operating expenses, excluding non-GAAP adjustments was $51 million, a decrease of $3 million or 5% versus Q2 2025. For Q2, non-GAAP OpEx as a percent of total revenue was 38%, a significant 1,000 basis point improvement from 48% in Q2 of the prior year, demonstrating our ability to scale efficiently and drive operating leverage. The realignment of operations into two verticals and the accelerated adoption of our AI tool set within our operations has enabled our teams to realize operational efficiencies and additional scale.

Now to provide information on the company's cash flow and balance sheet position. As of June 30, 2026, we had cash and cash equivalents of $77 million. Our cash balance was flat when compared to the prior quarter, with free cash flow of $3 million, offset by cash use of $3 million for the final payout of the 2026 notes. Free cash flow for the quarter improved $11.5 million when compared to Q2 2025. The outpacing adjusted EBITDA improvement of $8.7 million during the period. We expect free cash flow conversion to continue to improve meaningfully for the remainder of the year as we continue to drive additional adjusted EBITDA [indiscernible] mass and execute to additional working capital tailwinds.

To recap performance, Q2 marked another quarter of meaningful acceleration of profitability while continuing to grow the top line. This momentum is evident across the following key financial metrics. Revenue grew 19% year-over-year, with Subscription Service revenue up 16%. Non-GAAP OpEx as a percent of total revenue improved 1,000 basis points from Q2 2025, and adjusted EBITDA was $14.3 million for the quarter, an improvement of $8.7 million from Q2 2025, and a $5.3 million sequential improvement from Q1. Now let me share our expectations going forward.

When we introduced formal guidance last quarter, our goal was to give investors greater transparency into the business. This quarter, both total revenue and adjusted EBITDA came in above the high end of the outlook provided. We are raising our full year 2026 outlook for both metrics. These results reflect the visibility in our business while also driving operating leverage. For the third quarter of 2026, we expect total revenue in the range of $128 million to $132 million and adjusted EBITDA in the range of $13.5 million to $14.5 million.

For the full year 2026, we now expect total revenue in the range of $516 million to $523 million, up from the prior range of $500 million to $515 million and adjusted EBITDA in the range of $50 million to $53 million, up from our prior range of $44 million to $47 million. A few points of context on the outlook. We expect Subscription Service revenue growth to continue to strengthen in the back half of the year, as we continue to roll out multiple Tier 1 accounts go-live with recent Tier 2 and Tier 3 platform wins and continue to build momentum expanding our platform within our customer -- current customer base.

On Hardware, Q2 was a historic quarter and benefited from elevated Tier 1 [indiscernible] activity, and we expect Hardware revenue to begin to normalize in the second half. Additionally, we anticipate Hardware margins will stabilize in a low 20% range as our pricing actions continue to offset component cost pressures. On profitability, adjusted EBITDA of $14.3 million in the second quarter, combined with our outlook for the full year reflects substantial improvement over 2025, driven by both continued topline growth and a cost base we have structurally reset. Taking the elevated hardware revenue into consideration a more normalized Q2 adjusted EBITDA would be $13 million when considering an appropriate baseline to build out second half of the year expectations. The restructuring actions we executed earlier this year are driving a step down in our operating expense run rate with the second quarter reflecting the largest step change in that run rate.

Looking to the balance of the year, we expect OpEx to stay relatively flat to modest growth as we plan to drive additional operating efficiencies to help support reinvestments into our highest return opportunities, most notably PAR Intelligence and Agentic platform. That investment builds through the back half of the year within a disciplined framework that prioritizes durable and profitable growth.

I'll now turn the call back over to Savneet for closing remarks prior to moving to Q&A.

Thank you, Brian. Q2 was an aggressive starting shot. But we are far from done. First, we said that back half of the year to see continued movement up in growth. ARR growth accelerated from Q1 to Q2, and we expect it again to pick up in the second half of this year similar to 2025. This is driven by the backlog of large deals we've spoken about as well as a new influx of mid-tier wins. Second, our multiproduct model continues to expand. I'm very excited to see how nearly all new deals are platform based, and the resulting impact on ARR will give us strong growth in later years. As restaurants begin to adopt more and more AI solutions, I expect the need for an end-to-end vendor will only expand. Third, our profitability expansion. Our numbers reflect the incredibly strong unit economics we're seeing in our business model. We continue to be encouraged how efficient an incremental customer add can be and we will continue to [indiscernible] our business towards best class margins.

Our ARPU is up across all core products, our LTV to CAC ratio has more than doubled between platform versus point of solution deals, and our contract lengths are increasing throughout. OpEx efficiency remains a focus. In the quarter, non-GAAP R&D expense as a percentage of sales was 15%, sales and marketing expense was 8% and G&A was 14%. Fourth, our aggressive [indiscernible] on PAR Intelligence adoption. We rounded out Q2 with roughly 20,000 live sites and have another 20,000 sites set to go live in Q3. We remain firmly on track for our 50,000 live sites commitment for fiscal year 2026 and are developing additional functionality with clear commercialization potential.

Finally, our continued commitment to aggressively expanding our TAM. We have made investments to organically launch new products across restaurant and retail. Our intense focus on margin expansion has not come at the cost of investments in our core products. and we remain committed to getting more on product development than the bulk of our enterprise peers. I believe the ultimate key to a successful business is its ability to reinvest this capital at high rates of return while not sacrificing areas requiring innovation. The rush to AI will be no different. While AI is [indiscernible] technical work, we think there will be as much cultural. In a world where every company will ostensibly have the same or similar AI tooling, it will be a race to the average. The companies that have a culture that allows them to take the leap of faith on AI will gain the competitive advantage. Simply using tooling to optimize the way we worked in the past will not lend itself to a differentiated competitive position. Instead, it will reinforce the status quo.

We think you need to actually leverage AI in places that make you incredibly uncomfortable, where the power of intelligence leads to an enhanced judgment. Lastly, we think winners will be companies that enable their managers to be both ICs and managers. Such companies will expect the leaders to take on more teams and more projects, not to be stuck in the org design and best practices of the past. [indiscernible] will not only let AI fill the remedies, but actually trust AI to filter [indiscernible] and present final candidates. Or in the case of restaurants, I think winners will be the ones who let restaurant managers press autopilot and the AI order inventory, great labor scheduling and managed order flow, while allowing the operator focus on the highest-value customer touch points.

[indiscernible] willing to accept the risk to reinvent how it works, how it organizes and how it leads will be the one that achieves differentiated competitive positioning. As I said earlier, PAR is always on offense, always. That culture sets us up to win and adapt to today's opportunities. With that, operator, we can open the line up for Q&A.

[Operator Instructions] The first question comes from the line of George Sutton of Craig Hallum.

Nice results. So I was pleased to hear about the confidence in the second half ramp in ARR. I'm wondering if you could give us a little more of a picture. I understand much of this is driven by deals you've already won and have planned rolled out. When we talked a quarter ago, I think you had talked about 80% of your opportunity had been signed for the year. Can you give us an update there?

Yes. We feel very good from now at the end of the year, we've got good visibility on the Operators, Cloud side, the Retail side, and we're getting there on Engagement Ordering. So we feel pretty good where we are now. Visibility has increased, which is why we gave the commentary that we feel good about the second half ramp.

So on PAR Intelligence, so it sounds like you had 20,000 in Q2 and you're adding 20,000, I believe, in Q3 and 50,000 for the full year, up against, I think, a base of about 170-plus thousand locations. Can you give us a sense of the breadth of the wins that you're seeing relative to other competitors bringing their AI solutions in?

Yes. I think the scale of rollout is obviously going faster than we expected. I think that's partly -- obviously, there's a rush to try these tools, but also the early wins that our customers are getting are learning from it. We just won a retail deal where I think a core part of us winning was candidly what we showed them on PAR Intelligence. So I think we continue to be guided in the opportunities to put product in front of our customers, and then learn from that, iterate from that. And as I talked about, really monetize in [indiscernible] vis-a-vis our competitors, I haven't seen tremendous push from most of our competitors to sort of become the agentic [indiscernible] of the future. In fact, I'm not aware of somebody that's got sort of the installs that we have, the road map we have.

And I think that's partly because it's very hard to give something useful to a customer when you are only providing utility in one part of their operations, whether that be in the back office or loyalty or ordering, I think the AI values comes when you have it cross your products. And so there are only a few vendors that could potentially do that. So we've not seen a lot of momentum from our competitors here yet.

The next question comes from the line of Stephen Sheldon of William Blair.

First, I just wanted to clarify the ARR expectations in the back half. So you're saying that you'd expect it to get back to 2025 levels, which I believe was 15% organically, I guess, could you get there in 3Q? Or is that more like a 4Q expectation? And then Savneet I think you said that it PAR keeps executing the way it has been recently and it sounds like implementations are all going really well, there could be some upside to that. So I just wanted to -- am I kind of hearing it and thinking about that all correctly?

Yes. Steve, it's Brian. Good question. So the reference also [indiscernible] in the phasing, if you recall from 2025, we did a significant amount of our ARR increase in the second half, close to $30 million of incremental ARR, and so we know we're lapping that, but we actually have more momentum going into the second half than we did last year. So we'll be higher than we were last year. This is going to allow us then to go 12% or up to a higher percent in teens in regards to Q3 and Q4, but that will come steadily in Q3 and Q4.

And then to your second part of your question, the ability to exceed. I think if we continue at the fast pace [indiscernible] we're going now. That's always that potential. So we are feeling -- right now, things are going very well.

Got it. And then on PAR intelligence, I think you have a lot of options on ways to commercialize those capabilities. I think you talked about probably seeing more commercialization next year. So can you maybe just update us on how you think it will impact monetization. I'm sure it helps with retention might help with pricing. Could you sell some capabilities separately? Or are you on a subscription or usage based, I guess, just how you -- how should we think about the commercialization of that?

Yes. I think we're going to look at commercialization as a subscription-based product more than likely. We're going to test out a few models, but I think from the early goings, it looks like it will be subscription-based. I suspect it will be an add-on to what we do in the back office and/or the loyalty side of our business where we see the most actual insights -- where we see that customers have the most interest in paying and where we're driving the most ROI today.

But we're using this year to really figure out where do they -- where they spend most time? Where do they get the most value and then kind of coming back and put making a win-win for them and for us.

The next question comes from the line of Ella Smith of JPMorgan.

So first, I was hoping to ask about the EBITDA margin strength that you've experienced for the past few years. And as we look to 2027, how do you think about the sources of that expansion. Is there still meaningful room for cost cuts or operational efficiencies, particularly from past acquisitions? Or do you expect those as the forward expansion to come from operating leverage just as your existing cost base as revenue scales?

I think it will come from both. I think more it will come from operating leverage. We're -- we're growing, and we expect growth rates to accelerate in the second half of the year, as I mentioned. And we're not adding cost to the fixed cost of -- the operating cost structure. So I think it will come more from operating leverage, although we do think there's opportunities to continue to take out excess costs within the infrastructure of the business. And so I think we'll see it from both [indiscernible], but I think it will be more driven by what we're doing and from a growth perspective.

Very clear, Savneet. And for a follow-up, since you made the decision to stop aggregating ARR and active sites between Engagement Cloud and Operator Cloud, setting the growing prevalence of multiproduct arrangements. How should investors think about tracking your go-to-market progress and attach rates across the products going forward? And what metrics do you think best capture the health of that bundling strategy?

I think 2 metrics. So 1 is just ARR growth. I think as we have ARR growth, it's representative of that multiproduct growth. And the second is ARPU as we have, obviously, ARR and second -- so you can see the ARPU. And if you kind of look at it going backwards, you can see it continue to sign up, climb up, climb up and that's relative to the multiproduct attachment that you see. So we're trying to make it simpler. And as you said, with the platform strategy, breaking it up, it becomes too challenging or also think too complicated. And so having one metric or one site count allows us to [indiscernible] metrics, which we're excited about.

But I'll just add that, Ella, right, is the fact that it's actually clear now what our true ARPU is, right, because we now have all the unique sites in there. So there could have been at times where there were sites that were both in EC and OC, Engagement Cloud and Operator Cloud. And now hat they're kind of unique brought together, you actually get true ARPU of that and you get a better sense of what the white spaces in our existing customer base. right?

So for instance, in some of these multiple product deals are doing 10,000 ARPU in those sites, you can actually do the calculation and see where our ARPU was at total sites, and see the multiple above that in regards to white space just in our current customer base. So we want to be able to give you guys that kind of clarity to understand how to build out the modeling and understanding both from new logo growth and existing customer growth where the opportunities come.

[Operator Instructions] The next question comes from the line of Mayank Tandon of Needham.

Savneet, I wanted to just get an update on the Tier 1 RFPs. I know you've talked about several potential opportunities. I believe one is global and toward North America, I could be wrong on that. But if you could just give an update in terms of where you are on those RFPs and if there are going to be more that are in the pipeline that you think you could also potentially convert on?

We're making good progress. When we get -- we get a win as we've also got to wait for our customers to put out the release. So there's a lag effect from winning to the information getting out there. But the market is very [indiscernible] now. We continue to have growth in pipeline, as I said in the remarks. I think the difference from this year and maybe last year is it's a much more diversified pipeline, where we still have great momentum on the Tier 1s, but we're seeing more and more of these mid-tier customers like Pizza Factor we talked about on the last call and others like that, where you're able to do a multiproduct deal that would be the value of a Tier 1 point-of-sale deal as an example. So I think the difference from this year and last year. Tier 1 is still strong. It's the mid-tier deals that are -- we like because they are also a little bit [indiscernible] better sales cycle, and I think even stickier because of the multiproduct nature.

Got it. Just to clarify, are still 3 Tier 1s in the potential opportunity bag? Or would you say there are more at this point?

I'd say there's still there are 3. And I would say we've got more in early stage, but not yet where we put them in -- call them out.

Okay. And then just as a follow-up, I wanted to ask you more on the market. Are you sensing more of an urgency on the part of customers to modernize their tech stack? Just we've heard that from a couple of your peers that have recently reported, it seems like the backlog is converting a lot faster than it was maybe some months ago or some quarters ago. Just wondering if you're seeing that trend as well in back quarters that could have been maybe part of the reason you delivered a very strong quarter and obviously, you raised guidance as well. Just want to get a sense of the overall market urgency on the part of customer behavior that [indiscernible] to AI.

I think it continues -- I don't know if I'd say we felt something different this quarter to the last quarter. But I think it's a continued urgency. I think we certainly see a lot more focus on getting your infrastructure, your core foundation in place than we have in years past. But I think it's just a continued momentum from what we saw last quarter.

The next question comes from the line of Andrew Harte of U.S. Bancorp.

Savneet, multiproduct adoption, I think, keeps coming up in a lot of your answers, and I appreciate I think there's a comment about 100% of new customers were coming in with multiproduct adoption. I guess can you talk to us about a couple of things. Maybe one, if you look at your existing installed base, like what do you see that cross-sell opportunity as. I assume it's still really big. And then what products are you leading with and then eventually [indiscernible] on as well?

Yes. I think when we look at our base, the average customer probably has about 2 products, and that's grown from 1.5 products just a couple of years ago or not even that. And our expectation is that will continue to grow. If you look at the TAM, that would essentially say we've got, I don't know, 5x the size of the base. But if you go into detail, we look at it, there's probably about a 3x opportunity within the core base, if you think of it as a TAM SAM and some. And so I think if you look at it as [indiscernible], we think that there's probably 2x to 3x the core base that we still have to go in there.

To the second part of your question, we're usually always trying to lead with point-of-sale or loyalty as we think those are two [indiscernible] the flag type products. And then from there, we're upselling the rest of the suite. But if we land with point of sale, we have a tremendous opportunity to win the rest of the tech stack. And so we prefer to start there. But given the market today, particularly the [indiscernible] on AI, you are seeing that continued growth in loyalty. And so we'll work the other way on those leads.

Okay. And then just one more on PAR Intelligence. I guess what are you doing -- I appreciate that the monetization for at least a year out maybe. But I guess, what are you going to make sure the customers are actually utilizing it and like maximizing the value [indiscernible]. customer success team [indiscernible] like a human element where PAR is providing resources to make sure that the product maximizing its potential?

Yes, we do have a customer success team that's engaged and working on it. I think that -- the best way to answer your question is we're engaged with them. We put the product in their hands. We take a look at what's being used, what's not being used Who's using it, how they're using it. And then we've got to keep it [indiscernible]. [indiscernible] really we're using these fresh releases to really push that out and figure out what's adding value to the customers what's not. And if it's not, why not, why are they not using it. Th ereason they're not using it because it's [indiscernible] -- is it not giving them ROI. So it's a lot of variation right now. I think we feel pretty confident that [indiscernible] product to monetize in here. And so now we're trying to narrow where that is and where we spend our investment dollars to double down.

The next question comes from the line of Samad Samana of Jefferies.

This is [Ted Marley on for Samad. Congrats on a strong quarter. One more on PAR Intelligence. Can you talk a little bit about the customer demographics or characteristics among the cohorts that hasn't been using it? Anything to call out versus your overall customer base?

I think it's definitely been more from the engagement side of our suite. On retail, we certainly have a lot of early traction and adoption, very, very focused on -- I think the digital department is trying to figure out how to do one-to-one targeting personalization data integrity exercises. So I'd say it's heavily on the engagement side. And -- but I don't know if we're yet at a point where we can say something is [indiscernible]. I think we're still just getting the product in people's hands before we have any strong insights.

The next question comes from the line of Will Nance of Goldman Sachs.

I want to go back to the earlier question just on KPIs and consolidated reporting. And as you look out, talking about getting back to 20% ARR growth, any color you would share on just what the right mix between site count and ARPU lift is just kind of as you see it under the new reporting and how that could change over time as some of these deals get implemented?

I think historically, we were pretty much driven by site count where site count drove the vast [indiscernible] growth. I think it will be more balanced going future. I don't know if we have a perfect formula of -- it's going to be half from one part and half from the other. But I think what I'll say is, after the Q1 experience, site count is going to continue to grow. But given the multiproduct success we're having, ARPU will be a much bigger driver than it has been historically I think that's excellent because it provides a lot more TAM for us. It allows us to sell back into our base, not just depend on a net new logo. So I don't have the [indiscernible], but I think growth is going to have to come from both sides.

And what I would just add to that, Will, is also each -- the dollar value of each site growth is actually meaningfully higher now than it used to. It used to be 1 product for each site growth, right? So you worked really hard for each of those sites for the 1 product and try to cross-sell in. Obviously, still work hard each site right now, but now it's like 3x the value, right? So it's the metrics when you think about it to Savneet's point about the LTV to CAC ratio, can just [indiscernible] on those new logo deals.

Got it. That's really helpful. And then just given the focus on companies trying to get their data aligned, the focus on kind of making sure you've got a clean system of record, notoarness, some of the benefits of AI. How is that impacting your go-to-market or imagine Data Central is a big part of that. But what are you doing to kind of make sure that clients understand that working with the newer system will help them move faster and other aspects of trying to kind of move forward on AI adoption and things of that nature?

I mean you've got the pitch there. But I think without question, the back office side, clearly, Data Central is an awesome place to start kicking off those conversations, that understanding. A little bit too is just the maturity of our market as one of the funny things about software is as you buy software, you're end up buying more software to manage that software and obviously, AI is [indiscernible] on steroids. So I think the market is -- doesn't really need the pitch. It's more about who can implement it, who can scale with them and then who can bring in those AI solutions.

And [indiscernible] on a call, I think we're getting to the point where more and more organizations are realizing it only works if you've got the data across your systems. It's going to be very hard to create true utility, if you're just looking at one part of your system, i.e., if you're just looking at ordering or you're just looking at point of sale it's hard to get utility out of that.

Thank you. This concludes the question-and-answer session. I will now turn the call back over to Chris Byrnes for any closing remarks.

Thanks, Felicia, and thanks, everyone, for joining us today. We do look forward to updating you further in the coming weeks. Have a good evening.

This concludes the conference call. You may now disconnect.

All right. Let's hop right in, given we have a tight calendar here. So Savneet, thanks for joining us once again at the conference. Let's hop right into it.

So for those not familiar, can you just give a brief snapshot of PAR and what PAR is?

PAR is a platform to run your enterprise restaurant. We sell software and now AI-related products to enterprise restaurants. Think of that as restaurants greater than 50-plus units, and we cover everything from front of house, which is loyalty and online ordering to the back of house and point of sale. And so our goal for the last number of years has been to integrate these solutions to more of a unified platform as opposed to a bunch of disparate services.

Great. And we'll spend some more time on the strategy in a minute. But let's kind of talk about some current events. So you reported Q1 earnings last week. Anything you want to -- anything stood out that you want to talk about with the group here?

Yes. I mean I think we had a great quarter. We, I think, beat expectations pretty substantially and then gave guidance that was better than expectations. I think maybe the critical points to highlight in the quarter were, obviously, our guidance was very strong, sort of reiterating our belief that we are taking -- continue to take share and continue to move really rapidly to have more and more free cash flow over time. I think the second major takeaway is we've, I think, truly seen the ability for AI to take out some costs from the organization. So we talked about our OpEx coming down every quarter. where we are being pretty precise, not sort of AI washing everything, but actually finding areas where we can move that cost down over time.

So I think that will be a nice thing to see our revenue pick up and our costs come down. And then I think the third part is we are very rapidly evolving to deploying AI products with our customers. We announced we've got about a few thousand customers on them today. And we want to get to our free product in 50,000 customers by the end of the year and -- but really start monetizing as we get to Q4 of next year.

So let's unpack your guidance comment because you took the step of initiating guidance for the first time. So how do you think about that decision? Why was now the right moment to give guidance?

We wanted to make sure we had good visibility before we gave our first look at guidance. I think we wanted to feel that we had a strong backlog, but also really good immediate term -- immediate visibility. And we had that, and we felt very good about that. And then I think the second part was when you give guidance, I think you want to have a better chance of hitting it than missing it. And so we felt pretty good that we were in a good spot there. And so I think the last part was we have a tremendous confidence in what we're building and seeing in the market today. And so we wanted to also make sure the market saw that visibility from us, which is we wouldn't give guidance that was above what people expected if we were concerned about some of the stuff that people are concerned about.

Makes sense. And the second piece of what you said earlier was around AI. So can you spend a little bit of time about -- or on PAR Intelligence, what you're seeing in the market and customer uptake from that? And then separately, how AI is impacting you all internally and some of the cost saves you described?

Yes. First, on the customer side, which is the more exciting side, we released PAR Intelligence, which is sort of, in many ways, our AI orchestration layer across everything we do. And what we've found is that we sell to a customer base that is very, very ROI sensitive, meaning like if we can prove ROI, they'll pay for it. If we can't, they won't. There's not like a let me try this out kind of thing. It's a very, very exacting customer base. And I think that's actually great because we believe we can demonstrate ROI. And so a lot of what we do is we go to our customers, and we've seen really rapidly how interested they are in using our products.

Today, I'll give you an example in our in our engagement side of our house, which is our loyalty and online ordering side, we've got about 1,700 customers using our product. We could double that overnight, but we're slowly growing it and training it to removing hallucinations using our unique customer data so that our insights are real. But as an example, what that product has done for our customers is that historically, you have a loyalty software and you'd say you download a bunch of reports and sort of figure out what your campaign profitability was, what your repeat visitors were, did you increase frequency, did you increase LTV, lower CAC?

Now you just prompt it and you got all that and beautiful graphs and stuff, but you can go the step forward and start saying, "Hey, who should I segment this campaign to -- like and then, hey, can you build that segment for me? And then can you actually build that campaign, the copy, should it be an SMS, should it be an e-mail?" It does all that now through AI. That's a really, really unique tool. And so the time to build a campaign is not weeks or months, it's days. And so the way we've looked at that from a customer perspective is that version 1 of our AI products, which are out already is just giving that ChatGPT-like interface on everything we do. And that's table stakes. I think everyone will have -- everyone is calling the agent, but it's just prompting for the same information you already had, but a little bit more. Phase 2 will be the ability to have predictive insights, meaning instead of you prompting, it's coming to you and say, "Hey, there's a snowstorm next week. Do you want to order a bunch of hot chocolate and send a message to your labor that they should plan backup transportation."

And that's sort of Phase 2 where how are you predicting what's going to happen. And then Phase 3 is running that actual action where it's like, yes, order the hot chocolate and message our labor pool to make sure they show up. And at that point of action is where we want to start monetizing and our goal is to get that going this year. So that's the customer-facing stuff. I can give you 1 million examples, but it's really need to already see how much efficiency we've gotten from labor. Just again, I think that maybe the meta is we've really lowered the bar to be an expert in running a restaurant.

Now anybody can go talk and figure out -- learn about marketing or operations of restaurant. Internally, I think we've been equally excited. I think we -- in many ways, we've been playing around AI for a very long time. I look back, we did our first ChatGPT demo to the whole company in October of 2022. And I think like everybody else, we were like it was fun to play, but we're trying to figure out how the hell do we like actually cut costs. And we really started to get escape velocity from that end of last year, beginning of this year, where we truly were replacing things that we did with bodies or with vendors with actual agents or AI tools. So a couple of great examples are a lot of our cyber analyst work now is agents, not bodies that were going through logs and stuff like that.

Our HR team is down 20% because we were able to remove all the query stuff at the front line. And then we built tools to pull the information from our HRIS or the other tools. And so our HR spend is down 20%. Our finance team is down 25%. And a lot of that is, again, so we shipped our collections team to India last year. And now that team will be down a meaningful percentage because now we don't -- we realize we should've never shipped to India. We should just started moving it this way. So we've actually been able to find jobs that we can potentially remove or vendors. Our CPQ tool, we no longer pay for. On our hardware side, we built that ourselves. We had a tool that manages all the manuals we sell. Part of our product is selling hardware and services all these big brands. We had, I don't know, a couple of hundred thousand dollar tool for manuals and images, and now that's all an agent that we built. called Hi Tim. And so we've been able to continue to find these areas of products. Our procurement tool was something we built internally ourselves. So we've been really precise about measuring what is actually a cost cutting just to restructure and look good and what is actually something that was actually AI creating a better experience or a lower cost.

And then one more question on AI. And you touched on this a little bit, but how is deploying AI and utilizing AI with enterprise restaurants different than you think for SMB restaurants?

Well, I think the -- the biggest difference, I don't think it's challenged. I think over time, it's an opportunity, but is that in an SMB product, you can just push the product and the customer takes the product. It's not like you got a small business, you can tell Jack Dorsey, hey, don't put that feature in my product. You just -- you get it and you're stuck with it. At the enterprise level, everything needs to be approved by the corporate. And so obviously, it can be slower going. We haven't seen that yet. But I think it's actually a better opportunity because you can then partner with that institution to create enablement, prove ROI and actually sell more stuff.

An SMB has a limited amount of stuff they can spend money on. But the enterprise restaurant is we sell 5 products today. If customer bought all of our products, it's $8,000, $9,000, $10,000, maybe $11,000, that's less than 1% of the average QSR restaurants total revenues when the retail chains are 8%. And so the way I look at that is like we just have a long way to go. And so we feel pretty confident we're like stumbling in that right direction. And that -- but that enterprise market is still so, so early. Like we're still dealing with customers that one of our newest customers still has a backup data center in the headquarters they're building. And so there's that aspect of it. But the other part of it is because they don't -- they didn't develop any bad habits because they didn't have modern tools now, some of them is actually faster to move to this agentic world because you're not disrupting -- you're going from like analog to AI.

So we spent a lot of time on the restaurant side. Let's also talk about the C-store side. So you recently announced PAR Drive is in 1,700-plus C-stores. So talk a little bit about that product and also just in general, what you're seeing on the C-store side?

Yes. C-store has been an amazing category for us, and I expect it will grow faster than our base, and it's our most profitable side of our business. It's been a fast grower, highest margin product. And I think it's -- a lot of that is driven by the end market. It's an end market that is not nearly as competitive as restaurants. So you don't have tons of start-ups trying to build software for gas stations. And so you can occupy a unique mind share of the customer because they don't have 0 people telling them, "Hey, I can be your AI partner, I can be your AI partner." We're really there.

The other part is that these are brands that have avoided technology for an incredibly long time. And if you think about it, most of us don't have our gas stations loyalty app still. And so as these businesses have evolved and they started to see disruption coming from electric charging, see disruption coming in food, they've all expanded their offering to be more like a retail store, more like a restaurant and still be a gas station. And they realize that they can't still sit still acting like you're just going to come into gas because you have to get it. And so they started investing in loyalty tools to make us all come back and say, get a [indiscernible], get this or that.

And then as we started realizing, we were like, wow, these are higher-margin businesses, much simpler to run, like we can give them the tools and they will actually pay for that ROI. And so that made it super exciting for us to launch PAR Drive. So PAR Drive is -- it's really a PAR Intelligence product that literally lets the C-store query any bits of information they have. But what's been exciting about it is that in a C-store, unlike a restaurant, you essentially can sell anything. You can sell toilet paper, you can sell gas, you can sell alcohol, you can sell legal drugs, like there's like literally anything you can sell versus a restaurant, it's a pretty defined set of stuff. And as a result, you can actually create more ROI because there's only so many times in to go in and get my whatever salad that I love from that restaurant a week. But I could infinitely go to a gas station and get everything I need for my life.

And so what's neat about that is you can constantly keep querying the agent and say, how do I optimize to sell to Neil this, this and this. But in reality, what you're doing is figuring out, hey, help me organize and segment my customer base so that I can maximize LTV and maximize all the stuff in front of me. And so one of the really fun examples we had early on was in that space, CPG companies are constantly giving you marketing spend for other products. And so one of our first customers, I think, had spend from Altria, one of the big tobacco companies that they hadn't used. And so the AI prompt them and said, "Hey, you've got these millions of dollars you haven't used yet," and they're like, oh c***, that would have just gone out the door if we didn't know that.

And so it's an amazing tool because it lets you say, you've got expiring inventory over here, run a promotion there or it will say, "Hey, this customer used to be an active customer, active loyal member, now they're not. Let's go target them." And so those customers are getting a ton of value, and we are more restrict the governor on growth there because we are training on all their proprietary data. We're working very hard to remove all the hallucinations and so that we can actually then take that into a much larger audience.

Let's transition a little bit to your recent M&A. So you announced the acquisition of Bridg earlier this year. Just talk about what Bridg does and how it fits into PAR's. platform.

Yes, Bridg is critical to our intelligence. We would have never done it if it didn't fit into sort of this AI vision we have. But Bridg is an identity resolution product, meaning it has the ability to identify users no matter if in a loyalty program or not by using the publicly available data that exists within your credit card companies and other data sources. So why is that valuable? Well, instead of you going in there and being some anonymous customer, we can now say, "Hey, that's Neil. He's married. He's got 2 kids. His average basket size as our competitor is $100, but he's only spending $50 less," and it allows us to then target him more holistically. Why we bought it was originally our view was if we're the largest loyalty company in restaurants, we only have a view of your loyal customer base, which is, call it, 20% of your customers.

Now we give you a view of those 80% that you didn't know. That's super powerful because now you can market those 80%, but you can also then optimize your menus to target them. You can figure out how to have a better operation schedule. But at the same time, we're then enriching the data of those loyal customers. So if you're a loyalty customer, we know your spend at our restaurant. We know how often you're there. We probably know if you have got kids and all that stuff. But we don't know what your spend is outside of our restaurant. And now we can use Bridg to figure out, okay, "man, we thought you're loyal, but you're way more loyal to our peer down the street. Let's figure out why that is and target." And so one, it really solidifies our loyal business like it's going to be really tough to compete with us now. And then two, in an AI world, all that data is so much more powerful because now we can literally charge you for those conversions, charge you for a lot more. And so Bridg will be the first part that I think we start to monetize within PAR Intelligence.

Got it. I think there's some pretty obvious cross-selling opportunities there, but just talk about the opportunity for Bridg within your installed base and any early signals you're seeing from your customers.

So Bridg actually started out as -- early on, had a lot of restaurant customers. And then it was acquired in '21, had some challenges after it was acquired. And so it sort of lost its way, I think, is probably the easiest way to explain it. And as soon as we announced the acquisition, I -- we've done a number of acquisitions over time. We've never been -- like I never had customers call me and say, "Hey, can I be -- can I get the product?" -- and I probably had a dozen real serious restaurant chains come to us, "Hey, can I be the first one to use the product once you close?" That was kind of interesting. And when I would ask them, a lot of them had heard the product from years ago or used to have the product, but they just didn't get -- have the right customer setup or just had a bad experience with the prior way the business was run.

And so that was kind of interesting because I did not expect that. The second thing that kind of happened was one of our largest loyalty customers in restaurant signed up for a pilot right away and now it signed up as a customer. And that was like, wow, this is like really interesting. And so we thought we would have to first integrate these products, make it one dashboard. And so we've already started to kind of sell a little bit of it to see how are they using it. And so I think we're way ahead of schedule. I kept saying it will be accretive to our growth in '27, I think -- and our profitability in '27. I think it could potentially be accretive to our growth in '26, way ahead of schedule given how much organic demand there is for a product like this. Also, this kind of choppier economic environment, while it's generally good for QSR restaurants, there is more pressure to increase traffic. There's more pressure on that revenue side. And so this is an area they're going to want to put more money in. And so we might be a beneficiary of that as well.

So that's a good segue. Can you spend just a minute on what you're hearing from your customers in the macro environment, traffic trends, softness they're seeing?

So QSR had a tough run in 2025. I think it's one of the first years that traffic was down. And ironically, it was our biggest bookings year ever. And I think many of our peers had good years, too. And so in these kind of challenging years, they actually invest in technology because, again, restaurants don't buy tech for fun. It's got to bring down costs or increase revenue. There's like literally -- there's no fun spend. And there is no like let me go play with some tokens, like it is, you're making money or not. And so in those choppy environments, it's been there.

At the end of Q4, we saw a stabilization. We saw the decline start to stabilize. That continued through Q1, a little bit of a bump for the tax refund, but not really. And so it's just -- it's been stable. It's -- it's still not at the point where historically, traffic was growing 1%, 2% a year. It's roughly -- I think I just look at the data this morning, it's like up 0.5%, which is perfect because it's an environment where they're going to be spending a lot more on tech to kind of juice that up. So that's the QSR side.

My guess is the sort of full-service dining side is going to have some challenges this year. Whereas last year, full-service dining was a share gainer versus QSR, which historically makes no sense because last year was a more challenged economic year, you'd expect QSR to do well. But what happened was that the full-service dining chains have lowered their price point to be competitive or near competitive with quick service. And so you go to Chili's instead of going to your favorite burger chain. The QSR chains then got very aggressive on their value meals, very aggressive on their loyalty, and they're kind of starting to pull that share back. And so full-service dining could have a more challenging year because they did have a natural big year last year.

So keeping on the customer theme, you had a recent large win with Papa John's, which sounds like a great win. So can you talk a little bit about the process to win that deal? And also in that answer, just talk about your go-to-market in general and how processes look?

Our sales cycle in enterprise deals is a year, 18 months. It's a traditional enterprise cycle. It's an RFP. There's half the time a big consultant like an Accenture, someone in the mix, half the time, a smaller consultant that's sort of restaurant focused. Very similar on the C-store side where it's sort of a year-ish long sales cycles. What was unique about this one was that we historically have not been in the pizza category. It probably sounds silly, but pizza is actually a little more complicated or different than QSR. There's all sorts of modifiers and changes. And most of our traditional peers, Oracle, NCR Voyix, Global Payments didn't really have a pizza solution. And so most of the big pizza chains had their own custom technology.

So Domino's is obviously a very famous example, but Papa John's is another example. And they basically had saw the success we had at Burger King and said, we want to replicate that. We sort of said, listen, we think we can do it. We haven't done it in pizza before. And you'll have to wait for us to get all this product out the door so we can -- we can actually build pizza functionality for you. And I think they did a bunch of reference checks, talked to our customers, talked a lot to Burger King and in fact, eventually brought over some people from Burger King to do this. And I think it was a testament to, if we say we're going to do it, we're going to do it. And I think that's a hard thing in any enterprise software business, but we are really, really built on that.

I think second, it also shows just -- I say the bar is kind of low, like when would a big enterprise take a leap of faith on a vendor that has never done that before to say, "hey, we'll wait for you to build it and take it." But the third part, I think the most important part of this was Papa John's CIO is an incredible visionary. Kevin Vasconi, he was the CIO of Domino's in their heyday. He's on stage with like the Google Cloud guys all the time. He's got his put edge compute in the restaurant before anybody else. He's a real like visionary. And he chose to partner with us. And I think that's important because it sort of shows how much investment we have in sort of the AI capabilities of our product so that we can help make his vision come true. So it was a shorter sales process, but also they were in an acute need. They had lost a ton of share. And so we will start rolling them out at the end of this year. We'll hopefully be fully done by the end of next year.

Does that entry into enterprise pizza, if you will, does that spell some other opportunities for you?

Yes. We announced 2 more pizza chains on our call, smaller ones, &pizza and Pizza Factory. And I think we'll have more to come. And again, we -- nobody ever thought of calling us for pizza until February or whatever we put out a press release. And so hopefully, in year to 18 months, we'll have more of these. But absolutely, the pipeline is building in pizza, very fun and cool to see that. And again, it's just not nearly as competitive as the spaces we play in today.

Any commentary you can give on just the size of the Papa John's deal and also the cross-sell opportunities that it provides?

It's about mid-teens of revenue when fully rolled out annually. We sold 2 products, loyalty and -- excuse me, POS and back office. So it's a combination deal. Again, one of the most interesting things about our business is the last 3 quarters that we reported, the vast majority of deals have been multiproduct. I think this quarter it was 90%. Last quarter, it was maybe 80%. And so they were another testament to that. You get so much value when you have your products under one roof as opposed to a bunch of disjointed products. And so I think we continue to see these enterprise brands do that.

So moving on to the next customer question, Shake Shack. So a great signing with Shake Shack for loyalty. Similar question, just talk about that deal and what it implies for the overall business.

Yes. I mean I'll answer categorically in the sense that loyalty is so important to a restaurant. It is like -- it is 80-20 or close to 80-20 in the sense that your loyal customers drive so much of your success. And it is also one of those tools where if you don't have it, you are at a competitive disadvantage versus your peers. If you kids are hungry, you put a rest stop, the average American family is going to figure out which one they have their loyal to and shop there. And as, I guess, tech has evolved, what you can do with loyalty has changed dramatically. Back in the day, it was basically a discounting tool. It's almost cheapening your brand. It was not a good way to build affinity to what your brand promise was trying to deliver.

But recent technology has really changed that in the sense that you can now build these programs that are so -- look like they are built exactly for that human being. You can change -- the app can look different for you than it looks for me. You can have loyalty sign up at the register. You can have secret menus. You can have experiences, you can have games. So the breadth of these products has gotten insane. That really helps the largest company in the space because if we have a large company, then we have the best R&D budget, we can kind of do everything out of the sun and more. And so in the loyalty space, what we've observed actually, our win rates have gone up.

So in this last quarter, our win rates were 50%, which is insane for an enterprise product, but they've moved up considerably. And a lot of that is that the -- at the enterprise level where we play, there's just a lot less people than they used to be competing with us. And the ones that still compete with us have really kind of moved down. Now Shake Shack isn't a 10,000 store chain anything like that, but they have visions to be large. And I think they needed a partner that could kind of scale with them as they went. And so I think there's a no-brainer, obviously, super biased there. They're an incredible brand. They have done super creative stuff. And I think in many ways, have been hamstrung by the tech stack that they've had. And so hopefully, this allows us to partner with super innovative brand, but also, I think, kind of continue to prove that we are both really great for like the super -- really good for an enormous chain like Wendy's, but also really great for a hyper-growth smaller chain like Shake Shack.

So one more on customers. Just Burger King, obviously, gets a lot of focus from investors. Just give us an update on the rollout of POS with Burger King and back office.

Yes. So POS has gone incredibly well. We talked about on our last call, we're averaging about 400 stores a month right now, which is in our little part of the world, like a crazy accomplishment. We expect to be down with the majority of the chain by the end of this year. So everything has kind of gone as planned and as hoped. And they continue to be the best reference customer we have, which is amazing to have them be the one getting on the phone with Papa John's as an example. So it's been awesome.

Back office, we'll start to see the pickup in the second half of this year. It's been a ton of work for us to figure out how to map all the different store varieties, the menu varieties, also how everything is done differently. Burger King is an older chain. So you got a lot more stuff you've got to learn, but that will be a nice revenue addition for end of '26, '27. So I kind of like it because you have these layers of growth. And again, I think it's an amazing proof point that our back-office product is not in 100,000 restaurants. It's in 10,000, 15000 -- 12,000, 13,000 or 15,000 restaurants. And Burger King chose to use our product versus a stand-alone back office-only product because they saw the value of the combined solution, giving them everything from single sign-on, but one database, giving them such ease of use and as a result, a bunch of cost savings. And I think that will be the kind of playbook going forward, which is anyone buying POS probably should buy our back office because reduction of systems. And in an AI world, I would argue, having those 2 places and having 1 agent across both of those is probably the way to go.

All right. I'll do one more question before I turn to the audience. Just zooming out a little bit, pipeline, particularly amongst Tier 1 restaurants or -- and also pipeline on the C-store side. Any comments you'd make?

The pipeline is really strong. On the restaurant side, it's very diverse. We've got a lot in the small and medium size, and then we have 2 or 3 very large deals, and I'm hopeful we'll hear for a couple of them by the end of this year. So the pipeline continues to grow. And it's interesting. We used to hope for like one of these Tier 1 like deals every year to get in the pipeline. And I think we're going to see multiples of that every year now. I think it's just because people have gotten comfortable with this idea of let me go build a modern restaurant as opposed to let me wait a few years, let me wit a years.

I don't think you can wait anymore. And again, I think AI is making it so hard to wait. And so the pipeline is very strong, but what's been kind of fun is this sort of medium enterprise area has become super lucrative for us because we can now sign a 100-store chain, sell them 4 products, and we're making the same money we make on an enterprise chain that was just doing POS. And so it's really, really lucrative for us to sell into that market. And so it's good to see a very balanced pipeline there.

On the retail side, it is equally very strong. And I think what's exciting there is we've got 1 or 2 very large deals that we want to get done, lock in our growth for the year and more. But what's exciting on that side is I think we'll see more rapid adoption on the AI side there. That's where we've got customers banging the doors, wanting the products. Again, we are first trying to minimize hallucinations, train on real data. But I think that could be a potential added lever of growth for us. On the PAR Intelligence side within that part, I think we could be surprised.

All right. Anything from the audience? Yes.

I'm just curious, like longer term strategically, it seems like you described kind of the competitive landscape is like the smaller one-off solutions. And then on the other side, you have like the big fintech platforms, the Oracles, the legacy solution. You guys kind of sit in the middle a little bit. I mean, like how do you think about the competitive landscape evolving? I mean, do you think you're kind of playing both sides of that? Or where do you win typically in these RFPs?

I mean our competitive landscape is predominantly dominated by Voyix, Oracles, Microsoft or Symphony product and Global Payments. I would say none of them would describe themselves as a sort of a payment company that most -- the majority of the revenue they get from the enterprise restaurant space is software. Global, we displaced at Burger King. That was a software deal that may have had some processing but that was a software deal. And in the enterprise side of restaurants, payments is not a guarantee versus you're selling POS to your random local restaurant, you're guaranteed to get the payment revenue.

In most enterprise deals, you're not. And so in that business, I look at us as the more modern version of what those guys have built, which is they were a cool product 10, 20 years ago. We're the modern version of what it should look like, and we're the way to bring you into this AI future. And so we are probably taking share from those firms. And I can't think of a time we've lost. We've churned a customer to them. So it's been a really nice kind of worthy insurgent in that kind of established, call it, brownfield market. On the other side, though, I think you've got all sorts of SMB players that will try to come upward. You've got Toast, which I think will win an enterprise deal a year or 2, 1 or 2 a year maybe. But again, like harder for them to figure out how to go from SMB to enterprise. You've got Shift4, you've got a few others out there, some start-ups. And so I think we kind of straddle the line between the sort of the emerging potential emerging competitors and then like the big established people that have all the market share today and everything to lose.

Other questions? All right. So maybe I'll do a couple more on my side. So talk a little bit about the global opportunity in international, your progress since the acquisition you guys made and what you see.

Yes. I think there's clearly a need for a global enterprise solution in the category we serve. There's not really a Toast. There's not really an Oracle and NCR out there that has true global services. And we -- I think we have the ability to become that over time. We have a nice burgeoning business in Australia and New Zealand that's on POS and back office called TASK, continues to grow. We've even had to slow down growth as we've worked on some very, very large opportunities. And so I think that opportunity will be there. The challenge globally is that you need to pick your spots, meaning you can't -- you don't want to win with the winning you want to in the U.K.

You need volume of stores. And so one of the things I'm excited about is I think AI, though, will potentially change that, which is Back in the day, if we were going to go win a deal and be a global provider, we would be so excited to have U.K. and Germany and France, and then it'd like, Oh c*** how are we going to Estonia and all these smaller countries that are amazing places to be, but like not a lot of Burger Kings there. And so AI potentially makes a lot easier to do all the stuff like languages and fiscal calculations and taxes and all the stuff, you can potentially go there faster.

So long answer, but we are growing there. We see a ton of opportunity. Like if I went to our U.S. customers and said, "Hey, we got a global presence," more than half would say, "yes, please, like let's go," because they just don't have a solution there. The other part of our global business is we provide McDonald's loyalty in 68, 69 or 70 different jurisdictions. The business grew really nicely. I think we're one of the vendors they're probably most happy with. We've grown really nicely and really hopeful that, that relationship expands, hopefully, beyond loyalty and other stuff over time. But it's been -- international has been like a growth opportunity. But I think we just had so much opportunity right now in front of us in the United States that we have never yet fully gone. And so I think it will grow at company rates. We'll keep it. There won't be a -- probably -- we can push that growth up. But there's just so much opportunity right now that we -- I don't -- I think we got to nail what's in front of us.

And then you touched on this a little bit, but talk about product development. What gets you most excited? Where do you see the solution set expanding in the near term?

Listen, I think it's really, really exciting to be at a software company today. Obviously, provided you're not looking at your stock price. And I think that if you are actually into the idea of software and AI, you're excited at this moment. You're like, "oh my gosh, how do I convince people to buy my stock." You're focused on "holy c***, I can change everything we do." And we at PAR very much in that latter camp, which is like "holy cow, let's change everything we do." So I'll give you an example. In one of our product groups, we've taken a scrum team of, call it, 8 to 10 people and cut it to 2 people. And it's a test, but it's working, which is we have what we would once call a product manager using AI to build the PRD, then to architect the product as an agent, then to build the product as an agent, then to curate a product as an agent and at the very end is not a human.

And so we took those 8 to 10 people down to 2, and they're shipping products super fast, and it's working. And so it's really cool to be like, one, we can build all these fun cool products for our customers. But actually, what if we change the way that the organization runs? I'm a big fan of talking about CEOs about what's the organizatioal design, what -- how do you compound value over time. And AI is like kind of transforming how we look at product development. The other part that I think is super interesting is I do think a large part over time of feature development will be completely automated, meaning today, you get customer tickets for all sorts of issues if you're a software company, and those get trigger a Jira ticket.

But like let's just say you have -- it's a tiny company's 100 Jira tickets and there's 40 for the first and 30 for the second. The agent can just grab those tickets, deploy without you ever knowing like because we're working 24/7 and you don't -- it's like that's where we're trying to get PAR to, which is the sort of maintenance stuff is completely automated. There's no human in the loop. It's just done. And then the core kind of visionary product, we're still there. So I'm really excited about this idea of rethinking how we build the software factory because we went from this sort of waterfall development to agile to the next thing and the next thing. I think this is the next wave, and this could be a cool way, but also how we design humans. And I think it's also making us a question how we run our management teams. The number of people that can report into an executive has definitely gone up.

I don't think it's like NVIDIA where it's like 60, but like you can see just how much has changed. I built an AI agent for myself that literally tells me what is the most active Slack channel? Who is an employee that was super active on Slack? That's not anymore. I call it my employee churn alert. So I can say, hey, like, Neil, what's going on, but, how are you doing because if that person is important, they're not typing -- sending messages and I know what's going on. I get all of my e-mails prioritized and then drafted responses within Claude, not within that. And so all of these ideas came out of just seeing how we automate all the stuff on the product development side is also helping us automate like just the boring life of a nontechnical person.

Awesome. I think we're out of time. So I appreciate your time, Savneet. Thanks for coming.

Thanks, Neil.

Good day, and thank you for standing by. Welcome to the PAR Technology first quarter financial results. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your first speaker today, Chris Byrnes, Senior Vice President, Investor Relations and Business Development. Please go ahead.

Thanks, Antoine. Good afternoon, everyone, and thank you for joining us today for PAR Technology's 2026 First Quarter Financial Results Call. Earlier today, we released our financial results. The earnings release is available on the Investor Relations page of our website at partech.com, where you can also find the Q1 financials presentation as well as in our related Form 8-K furnished to the SEC.

Before we begin, please be advised that our remarks today will contain forward-looking statements. These forward-looking statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. For additional information on these factors, again, please refer to our earnings release and our other reports filed with the SEC.

In addition, we will be discussing or providing certain non-GAAP financial measures today, which we believe will provide additional clarity regarding our ongoing performance. For a full reconciliation of the non-GAAP financial measures discussed in this call to the most comparable GAAP measure in accordance with SEC regulations, again, see our press release furnished as an exhibit to our Form 8-K filed this afternoon in our supplemental materials available on our website.

Joining me on the call today is PAR's CEO, Savneet Singh; and Bryan Menar, PAR's Chief Financial Officer. I'd now like to turn the call over to Savneet for the formal remarks portion of the call, which will be followed by general Q&A. Savneet?

Thank you, Mr. Byrnes. I'd like to start today with a core conviction. PAR fundamentally been miscast in the public markets. Historically, we've been heads down, but starting today, for the first time, we'll be providing additional forward-looking financial guidance along with our previously stated mid-teens ARR growth target because we believe in the power of what we've built and how we are building to drive true shareholder value.

Today, you'll see that we're not focused on site of hand announcements, financial engineering or AI washing results. We're focused on execution, and we're focused on the dollars and cents that are going to drive real value to our investors and to our customers. We fundamentally believe that our business is in an amazing position to capitalize on our future AI vision of PAR Intelligence, that we have a strong foundation shielded from perceived AI market incursions and that the pipeline we have ahead of us is going to drive material upside to our financials.

Now turning to our Q1 performance. Q1 marks a good start to the year and a purposeful shift in PAR's operating strategy and execution. Our goals are clear: one, materially improve PAR's profitability via sustained operating leverage; and two, utilize PAR Intelligence to expand TAM and long-term growth.

In Q1, we scaled our AI-first restaurant retail platform, eliminated structural cost and inefficiency, expanded recurring revenue and delivered meaningful year-over-year improvement in profitability. Total revenue for the quarter was $124 million, representing 19% year-over-year growth, driven primarily by strength across subscription services and hardware. Importantly, we improved adjusted EBITDA by nearly 2x year-over-year, reflecting tighter cost discipline and stronger operating leverage.

This theme will continue throughout the year. OpEx will decline sequentially every quarter in 2026, while ARR, gross profit and EBITDA all continue to grow simultaneously. In Q1, ARR reached $330 million, up 16% year-over-year with organic growth of over 11%. This performance reinforces the durability of our SaaS-based model and the increasing strategic value customers place on our omnichannel data-driven platform. Importantly, we continue to grow year-over-year while managing out the low-price customers we referenced last quarter.

While gross margin was impacted by hardware-related tariffs and cost pressure, we're making real progress expanding profitability. Further, we are seeing improved success of deploying AI across G&A functions. OpEx as a percentage of revenue declined from 50% to 43% year-over-year with sales and marketing at 9%, R&D at 16% and G&A at 18%, respectively. As we scale and improve our fundamentals, our progress with AI has become an increasingly important driver of momentum, especially on the product side.

PAR serves multi-unit restaurant and retail operators competing in a complex, margin-sensitive environments, and that's exactly where our Better Together and PAR Intelligence strategy is focused. What's driving our competitive wins is not any single feature. It's the combined value of a core platform with expanded feature depth via Better Together integrations as well as the premise of PAR Intelligence functioning as an agent harness that drives profitable actions.

Together, we see our PAR Intelligence AI vision as an amplifier of our platform and future growth. In particular, we are more bullish than ever in our ability to drive sustained profitable growth through AI. Brands moving away from legacy solutions consistently tell us the same thing. Fragmented technology stacks slow them down. When your core data lives in one platform like ours, you unlock the ability to deploy agents across the entire tech stack, not just with a single siloed product.

Our multiproduct enterprise deals are precisely possible because of the binding power of a modern point of sale tying together all the facets of the data tech stack. That's a structural advantage. Context equity is the cornerstone of winning in the AI era. Customers are signing near decade-long multiproduct deals with PAR precisely because they know the difference between an agentic platform based on deep workflows and shallow dashboarding. We believe these long-term contracts are a key proof point that we are becoming the trusted AI partner for our category.

Let's dig into the Q1 performance in detail. On the Operator Cloud side, momentum was led by PAR POS and Data Central with continued execution against the Burger King rollout and wins such as An Pizza, Tijuana Flats, Sarku Japan and Pizza Factory. The PAR POS Burger King implementation is running at a sustained pace of over 400 sites per month, and we have a strong plan into more than 3,000 additional sites that will go live this year.

We continue to work and lockstep with our most recent Tier 1 win, Papa John's, as we kick off their dual POS and data center implementation plan late this year for all of their U.S.-based restaurants, and the full system will be live by the end of 2027. We are seeing exciting pipeline traction in pizza vertical with this sector poised to be disrupted as the market is fragmented, lacking new entrants and primarily run off legacy custom-built tech stacks.

PAR POS is the foundation of our platform, and we are quickly progressing with agentic OS capabilities. Across the portfolio, attach rates are the story as nearly 90% of new operator deals in Q1 were multiproduct, yet the average customer still uses fewer than 2 of our core software solutions. PAR is not reliant on home run Tier 1 deals to meaningfully drive growth. The continued expansion of multiproduct cross-sell into existing accounts by itself provides meaningful runway.

On the engagement side, ARR growth is driven by cross-sell, upsells and pricing actions as well as the initial contribution from Bridg. In the quarter, Punchh had a onetime strategic contraction that we previously called on last quarter's call. This offboarding of customers was necessary due to the materially unfavorable legacy pricing deals in place and the lack of pricing flexibility amongst a very small set of customers. In most cases, the pricing was an 80% discount from our standard subscription pricing. The proof point is that our organic ARPU and engagement increased by 27% year-over-year.

Another long-term benefit will be the reduced OpEx and more efficient gross margins over time. This represents another shift in our mentality from revenue at any cost to profitable growth. Excluding this, Punchh had a solid growth quarter with a greater than 50% win rate on competitive deals. More than 80% of engagement deals this quarter were multiproduct, and the exciting thing is that is becoming the norm. In Q1, PAR Ordering closed 3 brand new deals, all including multiproduct attachment. The quality and scale of these wins matter.

One of these wins is particularly notable. This was a competitive win taking share directly from the largest legacy ordering provider. It's a 70-plus unit brand driving meaningful ARR. That's exactly the profile we want: scale, intentional platform selection with the ability to sell an additional functionality and meaningful economics.

Another important example is the selection by Pizza Factory. This is an all-powerful platform deal across 100-plus locations. Adding Ordering to our bag gives a strategic weapon versus POS or loyalty-only players. Full platform plus pizza is a powerful combination, and it's a strong validation of how well our solutions work together in a highly complex environments. We continue to see strong demand from brands migrating off legacy online ordering to providers and standardizing on PAR Ordering.

Moving to retail. We continue to see strong momentum in our retail business and the fuel and convenience space most notably with the success of Q1 launches of Stinker Stores, HNS Energy and Parker's. Our pipeline for the remainder of the year remains strong with several Tier 1 enterprise brands in active negotiations. In Q1, we released our touchpoint self-checkout including loyalty expansion, and we're excited about the market opportunities as we expand our footprint inside the four walls of a C-store.

On the AI front, PAR Intelligence is now alive across nearly 1,700 retail sites, including enterprise scale deployments at Parker's Kitchen and Cumberland Farms. We are currently in discovery mode using real-world operator data to refine our models and eliminate hallucinations. Our road map is aggressive. Following this initial scale-up, we will move into the action phase, introducing agentic program management and automated campaign creation, combining the agentic insights with the autonomous ability to act instantly, showcasing the power of AI orchestration, the agentic operating system and our vertical software.

Looking further ahead, we'll add a strategy layer, incorporating external signals like weather and market conditions to guide site level management automatically. We are exceedingly confident that we'll be the AI partner for our customers in this vertical. Overall, Q1 reflects continued progress in retail as we scale our customers, extend our product capabilities and embed intelligence to the platform in ways that support AR expansion and long-term value creation.

Briefly on hardware. Q1 was a remarkably strong quarter. We're ahead of plan and the full year is tracking nicely. While tariffs continue to pressure margins at the edges, demand remains strong, and our PAR terminal continues to serve as the enterprise standard during a major refresh cycle. Crucially, we're seeing continued partnership velocity with McDonald's across both hardware and services sales.

I also want to update you on our acquisition of Bridg, which is an integral part of the PAR Intelligence platform. Bridg is an identity resolution platform that enables multiunit operators to unlock the value of first-party data by resolving identity across their entire transaction base, not just loyalty members. Today, most retailers only see a fraction of transactions through their loyalty programs, which limits measurement, personalization and, ultimately, monetization to a fraction of a retailer's customer base.

The value Bridg delivers to customers is best evidenced by our work with a large national retailer with over 15,000 sites, where our identity resolution supports a marketable base of 100 million customers and contributed to a reported 44% sales lift. Even in the brief time since we closed on the deal, we now have a strong pipeline across Tier 1 restaurants and other national retailers and existing PAR customers. Bridg is crucial in our ability to drive AI outcomes for customers that we can monetize versus the basic dashboarding of our peers.

Before turning the call over to Bryan for a deeper dive into the numbers, I want to emphasize the importance of PAR Intelligence for our customers. PAR Intelligence is not a new point solution and it's not a generic AI tool. It is a harness that sits across and above the PAR platform, unifying data, reasoning on real operator economics and orchestrating outcomes across the business without adding additional headcount, hours or manual effort.

Where traditional platforms stop at dashboards and alerts, PAR Intelligence moves from data to outcomes. PAR Intelligence unites data across point-of-sale, ordering, loyalty, payments, back office, retail and third-party systems. All of this is powered by something incredibly hard to replicate: PAR's ability to process more than 12 billion annual transactions, 640 million guest profiles in over 20 years as a data backbone of the largest restaurant and reco operators in the world.

PAR Intelligence leverages enterprise-level context versus reasoning, unit P&Ls, labor concentrates, menu performance and guest interactions. It executes actions for AI agents always within the defined rules of the operator. Adoption of PAR Intelligence is accelerating because the use cases are clear. The platform is going from reporting what happened to recommending and, in some cases, automating what to do next. Customers like Parker's Kitchen, 100-plus unit C-store chain are seeing immediate ROI with Parker's CEO highlighting, "Better outcomes are being driven by PAR's agentic operating system."

Because PAR Intelligence sits across and above the PAR platform it's ultimately enhancing value, thereby, the stickiness of our beachhead products. Importantly, PAR does not have the same pricing exposure as some of our SaaS peers, who have a per seat monetization construct that can be undercut by AI and its potential impact on customer team sizes. PAR overwhelming contracts on a per store basis. The viability of this model is tied to enterprise site counts, which remain stable versus customer staffing levels.

AI is not a separate initiative for PAR. It's an embedded capability that extends our platform value and supports long-term profitable growth. PAR Intelligence will not cannibalize existing PAR software revenue, rather, the continued introduction of intelligence-driven capabilities serves as a fully incremental revenue stream. Our confidence here comes strictly from the deep engagement we have with our customers and their rapid earlier adoption of our first set of tools.

With that, Bryan will dive into the numbers in greater detail.

Thank you, Savneet, and good afternoon, everyone. Q1 marked a strong start executing to our 2026 operating plan. We continue to drive organic growth across our products and the verticals we serve, and our disciplined management of OpEx allowed the margin contribution to flow through to the bottom line. For the fifth quarter in a row, adjusted EBITDA has grown sequentially with reported Q1 adjusted EBITDA of $8.9 million a $4.4 million improvement compared to Q1 for the prior year. And we are well positioned for accelerated trajectory as we continue to refine our operating model.

Now to the financial details. Total revenues were $124 million for Q1 2026, an increase of 19% compared to the same period in 2025, including 15% subscription service revenue growth. Net loss from continuing operations for the first quarter of 2026 was $16 million or $0.39 loss per share compared to a net loss from continuing operations of $25 million or $0.61 loss per share reported for the same period in '25.

Non-GAAP net income for the first quarter of 2026 was $3.9 million or $0.10 earnings per share, an improvement of $4.2 million compared to a non-GAAP net loss of $0.2 million or $0.01 loss per share for the prior year. Adjusted EBITDA for the first quarter of 2026 was $8.9 million, an improvement of $1.9 million sequentially from Q4 2025 and $4.4 million compared to Q1 2025.

Now for more details on revenue. Subscription service revenue was reported at $79 million, an increase of $10 million or 15% from the $68 million reported in the prior year and represents 63% of total par revenue. ARR exiting the quarter was $330 million, an increase of 16% from last year's Q1 with Engagement Cloud up 20% and Operator Cloud up 12%. Total organic ARR was up 11% year-over-year. Sequentially, Q1 organic ARR was flat versus Q4 2025.

The incremental ARR from our continued successful rollouts of Tier 1 Operator Cloud customers was offset by planned exits in Engagement Cloud. As we previously messaged, this quarter, we managed planned exits for select legacy Engagement Cloud customers who are using a portion of our Engagement platform as a component of their solution. This has enabled us to increase ARPU and derisk forward churn by exiting these low-priced non-platform customers. As a result, organic Engagement Cloud ARPU increased 27% year-over-year. To connect overall ARR, please note at the end of Q1, we completed the acquisition of Bridg, which includes approximately $14 million of ARR.

Hardware revenue in the quarter was $29 million, an increase of $7 million or 34% from the $22 million reported in the prior year. The increase was driven by both client refresh programs and partnership expansion with our legacy customer as well as additional penetration of hardware attachment into our expanding software customer base. Professional service revenue was reported at $16 million, an increase of $3 million or 19% from the $14 million reported in the prior year. The increase was primarily driven by an increase in installation revenue associated with the rollouts of Tier 1 Operator Cloud customers.

Now turning to margins. GAAP gross margin was $54.5 million, an increase of $6.2 million or 13% from the $48.3 million reported in the prior year. The increase was driven by subscription service with gross margin dollars of $44 million, an increase of $4 million or 11% from the $40 million reported in the prior year. GAAP subscription service margin for the quarter was 56% compared to 58% reported Q1 of the prior year. Excluding the amortization of intangible assets, stock-based compensation and severance, non-GAAP subscription services margin for Q1 2026 was 66% compared to 69% in Q1 2025.

As we've discussed previously, our subscription service margin continues to reflect the impact of the fixed profit contract we acquired from one of our 2024 acquisitions. The year-over-year decrease in margins reflects a shift in revenue mix driven by growth in this contract in 2025. Excluding margin related to this contract, which is not reflective of core operational performance, non-GAAP subscription service margin was 71% for the quarter, in line with what we've seen consistently in recent quarters.

Hardware margin for the quarter was 22% versus 25% in the prior year. The decrease was driven by a shift in hardware product mix and higher costs related to the tariffs and increased demand in processor chips. Pricing enhancement plans initiated in the back half of 2025 have partially mitigated these cost increases. We continue to expand the pricing plans in Q1, and we'll continue to evaluate our pricing strategy on a quarterly basis. We expect hardware margin percent to stabilize in the lower 20s moving forward.

Professional service margin for the quarter was 28% compared to 25% reported in the prior year. The increase in margin year-over-year was primarily driven by improved margins as a result of reduced third-party spending and improved cost management.

In regard to operating expenses, GAAP sales and marketing was $12 million, relatively flat from the $12 million reported in the prior year as the benefits of cost reduction actions implemented during the quarter were largely offset by nonrecurring severance costs related to the restructuring events. GAAP G&A was $30.7 million, an increase of $1.4 million from the $29.3 million reported the prior year. The Increase was substantially driven by nonrecurring severance costs.

GAAP R&D was $22 million, an increase of $2 million from the $20 million reported in the prior year. The increase reflects continuing investment in product development, including acceleration of PAR Intelligence innovation. Operating expenses excluding non-GAAP adjustments was $54 million, a modest increase of $2 million or 4% versus Q1 2025. Exiting Q1, non-GAAP OpEx as a percent of total revenue was 43.3%, a 650 basis point improvement from 49.8% in Q1 of the prior year, demonstrating our ability to scale efficiently and drive operating leverage.

As mentioned in our prior earnings call, the realignment of our business teams into two verticals and the accelerated adoption of our operating AI tool set across our organization has enabled us to resync the operating model within our OpEx teams. The realignment plan is two-pillared: simplify the organization and simplify the operations. We finalized the realignment plan at the beginning of Q2. The phasing of this plan will predominantly be in Q2 with the remaining transitions in Q3. Operational efficiencies and additional scale already being realized. As such, we expect operating leverage to continue to improve throughout this year, driving continued expansion of adjusted EBITDA trajectory.

Now to provide information on the company's cash flow and balance sheet position. As of March 31, 2026, we had cash and cash equivalents of $77 million. For the 3 months ended March 31, cash used in operating activities from continuing operations was $17 million, unchanged from the prior year.

Cash usage this quarter was primarily driven by seasonal net working capital needs, which included annual variable compensation of $13 million and a sequential increase in current receivables driven by an $8 million increase in March billings versus December. In addition, as in prior demanding macroeconomic climate, we have strategically increased inventory $4 million to lock in pricing of chips and stabilized hardware margins for the year.

As previously estimated, our DSO stabilized in Q1 and we are seeing meaningful improvement in Q2 as we execute our working capital improvement plan. We expect operating cash flow to improve meaningfully with positive quarterly operating cash flow for the remainder of the year driven by continued profitability and the benefit from working capital with improved DSO and modest improvement in DIO. Said differently, our cash flow will receive a tailwind from working capital and continued profitability.

Cash used in investing activities was $3 million for the 3 months ended March 31 versus $6 million for the prior year. Investing activities primarily included capital expenditures of $2 million for developed technology associated with our software platforms. Cash provided by financing activities was $18 million for the 3 months ended March 31 versus $11 million for the prior year. Financing activities primarily consisted of net proceeds in the 2031 notes of $257 million, of which $206 million was used to repurchase a portion of the 2027 notes and $33 million was used to repurchase shares of the company's common stock.

To recap our performance, Q1 marked meaningful profit improvement while continuing to grow the top line. This momentum is evident across the following key financial metrics. Revenue grew 19.4% year-over-year with subscription services revenue up 15%. Non-GAAP OpEx as a percent of total revenue improved 650 basis points from Q1 2025. And adjusted EBITDA was $8.9 million for the quarter, an improvement of $4.4 million from Q1 2025.

Now let me share our expectations going forward. As I mentioned, we are initiating formal financial guidance for the second quarter and full year of 2026. This reflects the increasing visibility we have into our business, the durability of recurring revenue base and our confidence in the operating model we have built. We are committed to providing guidance that reflects both our visibility into the business and the discipline we apply to our operating plan.

For the second quarter of 2026, we expect total revenue in the range of $122.5 million to $127.5 million and adjusted EBITDA in the range of $9.5 million to $11.5 million. For the full year 2026, we expect total revenue in the range of $500 million to $515 million and adjusted EBITDA in the range of $44 million to $47 million.

A few points of context on our outlook. Our healthy backlog and pipeline provides us with strong visibility into revenue growth. On hardware, we expect continued momentum from Tier 1 rollouts and refresh activity with margins stabilizing in the low 20s as our price actions continue to offset tariffs and component cost pressures. On profitability, our adjusted EBITDA outlook reflects a meaningful step-up from 2025, driven by both continued top line growth and a structurally lower cost base.

The reorganization we executed at the end of Q1 and early Q2, together with a simpler AI-enabled operating model, are expected to get a step down in our organic operating expense run rate beginning in Q2 and continuing through the back half of the year. As a result, we expect adjusted EBITDA margins to expand sequentially from the Q1 starting point with the full impact of our cost actions more meaningfully reflected in the second half. At the same time, we continue to invest in our highest return opportunities, most notably PAR Intelligence and our agentic platform but we are doing so within a disciplined framework that prioritizes durable, profitable growth.

Our full year 2026 guidance also includes approximately $10 million in subscription service revenue from the recently completed acquisition of Bridg. The acquisition will have minimal impact on adjusted EBITDA.

I will now turn the call back over to Savneet for closing remarks prior to moving to Q&A.

Thanks, Bryan Menar. In PAR, AI is not just a customer-facing strategy. Internally, AI is fundamentally transforming everything we do as a company. One example is our ability to rapidly enhance our procurement function and pinpoint areas of vendor waste with millions of in-year savings. Crucially, AI is also enhancing our development velocity, and we're now seeing this translate into tangible output across the business.

In our engagement platform alone, the road map we committed this year is 5x larger than last year, and we're delivering roughly twice as many incremental noncommitted features quarter-over-quarter, capacity that simply didn't exist before. At the same time, speed and productivity are improving. Time to ship is down more than 25%.

In parallel, we are investing what we call an agentic software factory, an internal platform designed to orchestrate planning, development and testing through autonomous agents, effectively enabling end-to-end backlog execution and improving daily developer output by 20% without sacrificing quality. So this isn't just about adopting AI tools faster than others. It's about building a fundamentally different development engine, one that we believe will become a durable competitive advantage over time.

PAR's strategic value lies in the fact that we power some of the most complex, high-volume restaurant and retail operations in the world with technology that is both mission-critical and deeply embedded. As the industry continues to consolidate around fewer, more capable platforms, we believe PAR is uniquely positioned to be a long-term system of record for our customers. PAR Intelligence unlocks a fully agentic operating model for every multi-unit operator. Our in-year adoption target for PAR Intelligence is greater than 50,000 sites.

Aligned to this is our progress towards the Rule of 40. This is the clearest external measure that we're building a business that can both grow and compound value over time. For us, it's not about optimizing a single quarter or choosing growth at an expense of profitability or vice versa. It's about steadily improving the underlying economics of the model. The progress you're seeing today reflects deliberate execution, not financial engineering, and we believe sustained improvement in Rule of 40 performance is a strong indicator that PAR is becoming a more durable and higher-quality software company.

This quarter doesn't mark the finish line, but it does mark progress. We believe the market has us miscast to date, and we intend to let consistent execution quarter by quarter correct that. Over the coming quarters and years, we will prove that PAR offers an irreplaceable solution to brands, PAR is adapting to the times of AI and PAR will deliver transformative results.

With that, operator, we can open up the call for questions.

[Operator Instructions] Our first question comes from Mayank Tandon from Needham.

Savneet, Bryan and Chris, congrats on the print and also the guidance framework. I think that's very helpful. So Savneet, let me just start with your expectations on ARR. Could you just unpack the various levers you have? So when I'm thinking about ARR, how should we think about pricing, location growth? And then also, have you reflected any Tier 1 wins in your expectations of the reacceleration in ARR growth over the balance of 2026?

Great question. So we continue to sort of target mid-teens area growth without the inclusion of any of large mega deals in there. So we continue to be conservative. Until those happen, we don't want to throw it into that target. In terms of levers of driving our growth, we really have two levers today, new site count and upsell into the base, i.e., ARPU. Where we're seeing really strong success is now being able to sell multiproduct at the time of the initial sale. So more growth is being driven by the new customer motion, but that is primarily driven the success of the co-sell or cross-sell motion that we have. At the same time, we are still upselling into our existing base. But I think it shows just how early we are in our TAM that new sales is still the majority of our revenue growth. .

Got it. And then I have to get an AI question in. So let me ask you. You talked about the efficiencies with AI. But on the revenue side, as you launched PAR Intelligence, which I know is very recent, I'm just curious, have you gotten any feedback from clients, what the interest level is? And is there a way to monetize this? Is that something we'll see potentially in 2026? Or is this more of a longer-term initiative to be able to drive revenue off this?

Yes. Let me answer the second part because I think it's the more important one. We wouldn't be doing it, putting so much emphasis on it if we didn't think we can monetize it. I think what we feel far more convicted this quarter than we did last quarter or the quarter before is that given our engagement with customers, we think not only enjoy the product, but they'll pay for them. And so the way we kind of think about it is today's products give them, call it, AI discovery, the ability to interact, chat, pull reports. But tomorrow's products will give them predictions, and then the future products will give them automated actions, meaning can you run your store on autopilot.

And I think as we get to that point, we'll absolutely get to monetize it. And so we look at AI as an incremental revenue stream that will happen in this year. And again, we don't sort of assume massive assumptions within our guidance, but the mandate to our product teams, the mandate to our general managers is that, that revenue must come this year. So the reason we're so excited about it is we believe it's going to be an incremental level of revenue growth, not replacement and certainly not something that will cannibalize the value of the core products we have today.

So I think that confidence, candidly, just comes with the fact that we launched our retail product as an example this quarter, and we had 1,700 stores already up and running on it. When we launch a product, it's adopted so much faster and it makes the entire base sticker. So long answer, but it's something we'll monetize and something we expect to start monetizing this year.

Our next question comes from George Sutton from Craig-Hallum.

Savneet, you talked about an upcoming strategy layer. I wondered if you could just walk through what that might mean for you.

Yes. As related to what we're doing on PAR Drive, which is in our retail suite, but we'll eventually -- I think strategy will expect everything we do. When you sort of think about AI today, as I mentioned, is you have sort of the first wave of AI tools within enterprise software, which is ostensibly giving you that ChatGPT-like experience on the front of the product. I think it moves from there to, call it, the predictability of your business. Hey, this is going to happen. Do you want to do this? And then it moves to these actions and sort of autopilot, hey, hot dogs are running out. Why don't I order all those hot dogs for you?

But where I think it's really exciting is this idea down the road where it becomes more of a strategic partner for you where it says, hey, there's a snowstorm coming next week. Do you want to load up on hot chocolate? Where it takes into account weather, traffic patterns, competitive dynamics and promotions to build that strategy layer. And so we're building that out today. As I mentioned, we're still testing out the models. We're still working through hallucinations. But we will be in market this year with a strategy component to our customers. So it's really becoming a partner to our customers that will live every single day in that store.

Could you give us an update on the Tier 1 opportunities in your pipeline in terms of your level of confidence? Any sense of timing or move forward from the prior quarter?

Well, we continue to make tremendous progress there. There's been some good movements as it relates to personnel. These organizations, I think, look favorably upon PAR. We expect to sort of have the outcomes in the second half of this year and we continue to feel pretty good about it. Tier 1 deals are always 50-50 in my experience. And what I think I'm excited about is we feel very confident about the movement in those organizations.

But as I said, what I think we're even feeling more confident about is the ability to drive more growth through pushing multiproduct to the customer base outside of that. So the revenue growth side of PAR, I think, is what's exciting us as we turn the first quarter here.

Our next question comes from Stephen Sheldon from William Blair.

And very good to see some formal guidance now. First is, as we think about -- I guess just any rough sense you can provide on the drag to ARR this quarter from offboarding those customers you mentioned? Was that predominantly around Punchh? Or was there any notable offboarding efforts around other solutions? And then are you effectively through that process? Or is there kind of more to go in the coming quarters as we think about the ARR trajectory?

Yes. So we're through it. So think about it as deals that were lapsing at the very end of last year, call it, or at the beginning of this year, Jan 1-ish or February. So we're through it. You won't see that impact again. It was heavily levered towards Punchh, one particularly large customer. And as you can see, ARPU jumped 27%. That's not because we repriced the base to 20% increase. It's because we removed multiple customers that were at 80% discounts.

So we're through it. And I think it's amazing we still grew in double digits given the impact of that. But what's great is we don't have any more of that. And as I said, the growth motion is still moving forward really nicely.

Steve, I'll just add to that too, right, is that this was active like a pull-in of churn for us for this year, right? So over 60% of our churn for this year was like in Q1. And so we were able to manage that out effectively. But we do not expect to have a higher rate of churn this year than we recently typically have.

Okay. Got it. That's good to hear. And then just as a follow-up, it would be great to get an update on your overall traction and monetization with convenience stores on the retail side. It sounds like you have multiple Tier 1 opportunities there that you're going after. So curious how convenience store revenue has been trending and the outlook for expanding that monetization beyond the primary source right now, which I think is still just predominantly loyalty.

Yes. It's a phenomenal question. I would say we're very bullish on what's happening in C-stores. So our loyalty product continues to grow. We've got a strong Tier 1 pipeline, as I mentioned, multiple deals in negotiation, including within the major oil base. And that's a business that I think we are, similar to Punchh, the 800-pound gorilla, where we've got the best product, best team and the best outcomes. And so I think that will continue to grow at or above company rates.

What's exciting is, for the first time, we've now expanded beyond that. So we launched our touchpoint product in Q1. Touchpoint, if you recall, we carved out the assets of a kiosk-like product about a year ago. And so that brings loyalty in the store. Think of a screen in the store where you can engage with loyalty, upsell promotions, so and so forth. And so we'll hopefully have our first customers on that this year. That will be an extension of loyalty but more in the sense that it can also provide self-checkout.

The really exciting part that I think we've discovered within retail is on the AI front, where PAR Drive, our first product that is sort of the agentic layer across store, already has 1,700 stores on it. And we are using real data to refine that model. And I think we're going to have tremendous success pushing that through the retail side of the business. Our retail leadership is all in on AI. We've rebuilt our product teams, engineering teams to be focused on it. So I think you'll see the retail side, if we're successful on the endeavor, grow at faster rates of the restaurant side.

[Operator Instructions] Our next question comes from Maxwell Michaelis from Lake Street Capital Markets.

A few for me. First, can we go to Punchh? 50% win rate, I think you mentioned in the quarter. I mean what's sort of resonating with the customer base right now when you go to market? And then also, can you share historically what the Punchh win rate is that?

Yes, certainly. So I think the core reason we're winning is certainly always been Punchh is the best product in the market. Obviously, I'm subjective there. But I think objectively, through data, we are the largest product and continue to grow faster than the market. And so that is not only the depth of the product, but the breadth of the product and what we can do with that product across. Loyalty is a very, very robust initiatives. It's millions and millions of profiles. And so if you're a large restaurant organization or a retail organization, you're not going to go with something you've vibe coded or a start-up. You need something that has reliability, stability and, obviously, the security that you need for that.

And so we think we're the best in the market and we continue to take share.. But the other part is, as mentioned in the call, this ability to sell ordering and payments alongside of it. It makes the product far more seamless for our customers and gives them a single digital cockpit to manage their menus. It is a real unlock for our customers. And so what's been exciting about that is I think the ability to have a real e-commerce or online ordering product alongside Punchh will help increase the win rates from both because it simplifies the journey for our customers.

And again, in an AI world, I think you want your data for both those products in one place so that you can let agents on wild. So I'm pretty excited by the continued success there. To our historical win rates, they're historically, I'd say, 35%, 40%. So this is definitely a step-up and hopefully that continues.

Perfect. And then last one for me. Obviously, you're going to be monetizing PAR Intelligence. But curious to know how you plan on pricing that when you go to your customers. So that can be subscription-based? Or do you plan on instituting sort of a usage-based model?

It's a great question. One of the cool things that I mentioned on our call that we realized is we, at PAR, price on a per site basis. So we aren't sort of tied to the amount of humans using a product. In fact, it's one of the reasons I think our AI products could be even higher margin than our core products because as we deploy AI at the corporate level, you need less and less people to engage with it.

Specifically, the first product you're thinking will be a SaaS-like billing because that's what our customers are used to, that's how we can upsell and bundle it into the existing contracts that we have. So the customers that we are engaging with today, the customers that were letting us test their data on, we have communicated that, that's helping with the pricing. But I think as we move to this world, as I mentioned, of where we are the strategic recommendation items to them or running their stores in autopilot, we could explore other forms, also as we figure out what the cost model will be.

But right now, we're thinking about it as a SaaS model.

Our next question comes from Andrew Harte from BTIG.

Can you hear me?

Yes.

Just one from my end. Savneet, if you could just kind of talk about how you just feel the business is standing on better ground today than it was a few quarters ago and what really gave you the confidence to provide quarterly guidance and annual guidance.

I think we feel incredibly confident about our market position today. We are, I think, without question, the furthest ahead when it comes to AI within the restaurant, within the C-store. We printed a $9 million EBITDA quarter and, as Bryan mentioned, we think that's going to expand meaningfully for the rest of the year. As Bryan mentioned, we're going to be generating operating cash flow for the rest of the year. And that puts us in a position that we've never been before, where our products are winning at rates they've never before, our agentic capabilities are far ahead of our peers and we've got the cash flow engine that we can use to leverage to find ways to create shareholder value.

And so as we sit today, I think that confidence comes from market positioning, but also the scale of the business in which we generate cash. And nothing feels better than sort of winning. And so I think winning begets winning in our category. So we're incredibly strong where we are today and it's all going to amount to our ability to deliver products to our customers in this sort of AI world that we can monetize and show the value there. And that's why we feel so confident.

This concludes the question-and-answer session. I will now turn it over to Chris Byrnes for closing remarks.

Thanks, Antoine, and thanks to everyone for joining us this afternoon. We look forward to updating you and speaking with you further in the coming weeks. Have a good night.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

All right. Great. Good morning, everyone, and thanks for joining us here at the 2026 Wolfe Research FinTech Forum. My name is Paul Obrecht, and I'm on the fintech team here at Wolfe. And today, I'm happy to be joined by Savneet Singh, CEO of PAR for a fireside chat here. So Savneet, thanks for being here and joining us at the FinTech Forum again this year.

To start, there may be some in the room who may be less familiar with the PAR story. Can you just give an overview of the company?

Sure. PAR provides a platform to run your restaurant and retail business. We sort of think of ourselves as the core platform, the core mission-critical systems to operate enterprise restaurants or convenience stores. So that includes everything from point of sale and back office to loyalty and online ordering.

In the restaurant space, we cover over 100,000 restaurants. We're probably one of the largest providers there. We've got the largest loyalty solution, fast-growing point of sale. But the critical element that we provide is an integrated solution. So historically, the enterprise has been one of a best-of-breed where you've got a bunch of different products trying to work together. Ours is an integrated solution that seems to really resonate with our customers. And on the convenience store side, we are the largest provider of loyalty software and soon to be a lot more.

Great. Can we start higher level with where you see the restaurant industry from a tech perspective? Historically, we saw a very large share, especially in the enterprise segment, using legacy solutions, often on-prem. But there has been a continued shift towards cloud-based platforms over the years. So just curious what inning you see we're at from a modern platform adoption standpoint?

I think AI actually changes that a lot. So historically, I would say it was on a very gradual but accelerating pace in the enterprise. 5, 6 years ago, you still had CIOs questioning if the cloud was where they wanted, it was a safe place to go. The pandemic, the push to digital has forced a lot of restaurant chains to start going into that digital adoption. With the crux being the point of sale, that really is a limiting factor of their ability to be digital.

We're still really, really early. The vast majority of enterprise restaurants are on legacy solutions. In the enterprise, I still think we're probably 80% to 80-plus percent are still on legacy solutions. We've got a long way to go in the enterprise over there. And historically, I think restaurants have been a laggard because they're one of the few businesses that hadn't really been disrupted. Really up until the pandemic, the vast majority of QSR and Fast Casual chains didn't have a website or didn't have anything other than a marketing website. They didn't have online ordering. They really hadn't been disrupted. So the push to become digital really wasn't there. It wasn't like a shoe retailer or a clothing retailer. And so they've been historically a laggard.

I think what's interesting today, though is, I'd mentioned a guess that AI, they might be earlier adopters of AI than they have been historically of other technologies, primarily because they are in this really challenging world where their businesses are becoming digital very rapidly, where most enterprise chains are anywhere from 5% to 40% digital sales.

They've got incredible pressure from the cost side, whether it's labor, whether it's food, whether it's real estate. And they have this real complexity of orders coming from all these different channels, whether it's from DoorDash, Uber Eats, their direct website, their mobile, their [ loyalty plus ], TikTok. And so they're going to need more and more technology to kind of handle this new world they're in. And so we're seeing quite rapid adoption of AI tools to help them simplify the job that they have today. So historically a laggard, so second inning, third inning, but AI, they might actually catch up because I think they need it more than the traditional category.

Great. We'll certainly hit on AI to a great degree in a bit. I'd love to start with earnings. You reported 4Q results a few weeks ago, which were quite healthy with 15% year-over-year organic ARR growth, strong sequential ARR growth in the fourth quarter. And then you also saw the third consecutive quarter of non-GAAP net income profitability. Can you just touch on the key highlights of the quarter in review and as you move into 2026, where you're seeing the most momentum?

Yes. I think the single biggest highlight is we grew -- we added $17 million of ARR in the quarter, which is a really large amount for a company of our size and I think beyond what most people expected. So the growth engine is working. And so I think that's probably the biggest takeaway, which is the growth engines really there.

I think the second part that's very interesting is in 2025, 70%, 80-plus percent of our customers bought multiple products. And so we've gone from a land and then try to expand over time to buying multi-products day 1. That is a huge shift in our category, but also for us as a company where ARPUs are going to grow really nicely because you're landing on multiple products at the same time, really proving the thesis we've had for a long time, which is the integrated solution is really the winner, not a point solution. So I think that's the second big takeaway from the year, not just the quarter.

I think the third one that I tried to lean into was we launched our first AI products in the quarter, and we're really shocked how fast they sold. And that doesn't ever happen in our category. These are our categories, year long sales cycles. That's why they're so durable. That's why there's such a low churn. But with AI, we sort of released our first product called Coach AI. We had 1,000 stores adopt it, roughly 1,000 stores adopt it and almost all of those are daily active users now. And so it's kind of a really, really shocking insight to us as my comments on the previous question was that there's a clear interest from the category to spend there.

And maybe the last thing is I think we continue to expand our profitability, and we announced intention to take out $15 million of OpEx costs this year, leveraging AI. So we're really kind of leaning in to sort of make sure we end on a lower cost base than we started.

Okay. Great. And shares on earnings underperformed. They're down quite a bit year-to-date. And we understand some of it is related to these AI fears, which we'll touch on in a minute. But more broadly, what would you say are the most underappreciated aspects of the PAR story today in the market?

I'd say there's probably two things. So obviously, the AI thing has been a huge drag. And I think it will actually be a great tailwind for us. Like as I mentioned, we serve a category that is not digitally native. When you go to a large -- you go to a restaurant chain that has 1,000 stores, their entire corporate team is maybe 100 people. And of that, maybe 10 people work in IT and half of them are responsible for corporate IT and e-mail.

And so the idea that they will take their most mission-critical tools vibe code themselves and displace existing vendors. I think it's just really hard to ever fathom that because that's just not the DNA they're in. And it's just the risk of -- we're like the tax engine. We're like the pay -- these are like really sensitive systems that we -- I'd argue, we're not charging enough for. And so I think that sort of fear will become our biggest tailwind because, one, I don't see them doing a lot of this themselves, and that's at least especially the narrative coming out of them. But two, we'll be able to provide a lot of this tooling for them as the most mission-critical product they have.

So I think that's really, really misunderstood and I think a really nice tailwind. I think the second part that's quite misunderstood is, we think we'll have really strong durable growth. Oftentimes, in vertical markets, you see a rapid deceleration. We don't think that's going to happen because our TAM is ironically expanding as we add these new products and as we sort of expand some of the verticals we serve, like we announced our moving into pizza category, we announced moving into this entertainment category. And so I think that we'll be able to have durable growth for a longer period of time than maybe an average SaaS company.

And the last one, which is I do think as we get to scale, we'll be able to sort of exceed most people's expectations on margin because we do have a culture that is very, very thrifty and keen on when we see something from an engineering perspective, it's how do we design it for scale. And so we spend that money upfront, but so that when it scales, we can get the benefit of that over time.

Right. That makes a lot of sense. On the topic of AI risks, you certainly hit -- I think they're twofold really in the market. One of them is the merchants bringing in-house, utilizing AI tools themselves. There is also the notion of AI-led software development, allowing for new entrants to come to market sooner, reach feature parity, start to disrupt the incumbents. How do you perceive that risk? And how relevant should that be for investors?

To me, I look at it as -- the competitive risk is always high of a start-up coming in. We sort of view ourselves as that insurgent versus the incumbent. And so it's sort of critical. I think it's -- the entire company needs to sort of rally behind this idea that we need to disrupt ourselves. Now whether it's by design or luck, we're also in a category that has not yet had that influx of point-of-sale vendors that use AI or other parts of the area.

So we haven't -- so one is I haven't observed it. But two, I think that it's just incumbent upon us to be the most -- best competitive alternative to everything that exists. And so if we can do that ourselves, I think there's no reason to try to go to something that's new. And again, our products are just so, so mission-critical that I've said this to many people, we use, I think, ADP for payroll. I'm sure we could build a payroll system with AI today. We're not going to do that because I don't want to take the risk of the tax calculations and messing on people's pay for something that costs us $1, whatever payroll. So I think that's -- now if we were building mobile apps, yes, I'd be super, super nervous about that. But I think we feel pretty good that if we go all in on sort of making our products AI native, then we'll be a benefactor. But we have to do it, right? I think that if you don't, that's when that risk really becomes a real risk.

Right. So speaking to those AI opportunities, you launched PAR AI in September, the intelligence layer embedded across the entire product suite. And the first product was Coach AI, which you talked about being utilized by 1,000 stores. It sounds like daily usage is quite high. Can you just touch on the early traction a bit more that you're seeing with that product and how operators are really engaging with it?

Yes. So Coach AI is not coming out on second version, but the first version was very much like ChatGPT for the enterprise product. How do I query into my data what's happening? So how do I sort of what were everything from daily sales, what was the margin on this promotion to how is my labor schedule looking? Or you can say, hey, where should I focus my time today if you have multiple stores on it. And so really valuable in the sense of helping you streamline where historically, most restaurants would have a singular person who sort of like, hey, can you run the report to figure out did this daypart schedule work or did this promotion work or did this labor schedule work well or however that may be.

Now when you can just query it and it was a pretty powerful kind of first use case. The second version is more on the predictive side, where it's actually prompting you and saying, hey, this labor schedule is really not working for you, like you should look at this. Or stop ordering coffee over here because it's going to be a heat wave or whatever. And so that's the next part that I think will actually make it even stickier because then you're going in not just to figure out what you're going to prompt it yourself, but also get that.

And then version 3, which hopefully comes by the end of this year will be press this button after change labor schedule or change the inventory ordering or change something in the supply chain. So it's been really neat. The other part that I think is interesting is it also really lowers the bar for you to be an expert in this, where historically, you would have to really understand the tooling, run all these reports, build -- push it into whatever BI tool you're using. Now you don't -- anyone can do it, like literally somebody without a college education go in there and be as sophisticated about the details of the restaurant than somebody who has been there for 20 years. I think that's going to be a need to sort of get more people to sort of understand the data, too.

And how are you making your existing customers aware of this AI offering? And then I'd also ask how you're monetizing it. I think you've seen some competitors in the space roll out AI products, and it's really a focus on adoption first, where they want to push it out and have all their merchants adopt it before then going through the monetization efforts. Just curious what your perspective is there.

Yes. So our Coach AI product was available first to our back office customers, which we've got only 13,000. That's why the 1,000 number was really exciting. And then we'll expand it to more and more as we add more data to go further and further cross-sell of our products. We charge between $40 and $90 a month, so we've been testing pricing. So we do charge. So our philosophy was we obviously gave it to our beta users for free to start testing it, giving us insights, how do we adjust it, what it looks like. But we're charging for it.

Our push has always been to our product team, which is you got to make good enough so they want to pay for it. And I think that eventually, every software company will have that sort of chat layer. And so that -- I don't think you charge for that. I think you charge for the predictive nature of it, the action items. And so we'll probably go to a SaaS fee. We did look it early on with a number of customers on a transaction base. In our category, just not going to fly. And so we've gone with a SaaS fee.

And then beyond Coach AI, where do you see opportunities to increasingly embed AI across your offerings, whether in restaurant but also retail?

Yes. So in retail, we launched our first product, I think, last week, which is called Drive AI. And it's really a tool that sits on top of your loyalty system, but really your entire customer engagement to sort of help you understand all the opportunities you have to optimize margin that day, that week. And it's incredibly powerful. It is the most powerful tool we have today where it will literally pull in all your loyalty data, your register data and then sort of give you the insights you have for that day.

So as an example, it might actually flag you and say, hey, stop running this promotion like you've kind of exhausted the inventory, exhausted the margin that we need to get from it or the margin loss we did it to bring in someone else. It layers in your tobacco data, your alcohol data. And so we're going to -- we just started selling it. We expect hopefully similar adoption on that side.

But the way I actually think about it is the power of having that on the customer engagement side is that you as a CIO or CEO can now go into that system and say, hey, create me a marketing campaign for X and figure out the perfect amount of segments to send it to and so on and so forth. And what that does is it removes an incredible amount of work from the brand. So one is it'll figure out here are the 50 segments customers we're going to send this out. We're not going send out to everybody. We're not going to send it out to 3 generic people. We're going to set 3 generic segments. We're going to go to incredibly targeted. You're a 25-year-old male, this demographic data, like you're getting it. You're 30-year-old, you're not getting it, whatever it is. And that is all done through right to figure out who are the perfect people to send that campaign to.

Then it actually builds the campaign. So it's like what are the colors, what makes sure it sticks to the brand ethos. Is it an SMS? Is it a push to an app? Is it an e-mail? It sort of automates all of that and then it actually allows you to run that campaign and then do all the reporting and then dynamically change it over time. And so it is a really, really powerful tool. We'll also charge stats for that as well. So that's kind of what's coming out next.

So on the topic of retail, while historically more focused on the restaurant TAM, PAR continues to see traction there, notably in C-stores and fuel retailers. Can you touch on the success you're seeing here and how over the years, you've expanded your product offerings to drive greater merchant adoption?

Yes. We got pulled into retail 4, 5 years ago. What we sort of observed was that retailers are really encroaching upon the territory of restaurants. The fastest-growing segment of convenience stores for the last 4 years has been prepared foods. So not your bag of chips, but actually real food. And that growth was leading them to wanting to have the same digital tools that restaurants had to compete with restaurants. And so we started -- our loyalty solutions started to get pulled into these larger brands because they wanted to have great loyalty engagement on the food side.

When we saw that really take off, we realized that we needed a more focused effort. And so we made an acquisition there that's since grown really nicely. And I think the major lessons we've learned from that category are that C-stores are really healthy businesses. So they are businesses that are in many parts family-owned or family controlled or influenced. They take very, very long-term bets. And they are -- if restaurants were in 2 or 3, they're like walking out of the dug out. They're really, really starting and because they take their time, they measure twice.

And so as a result, we have -- what we've realized is we have way more influence on our retail customers than we do on our restaurant customers because we're actually their first true digital partner. We're literally almost -- I suspect every other vendor is still running off a server in the back of the store. And so we've created tremendous ROI to our brands. You can sort of see some of the stuff on our website, but you can even see it -- when we launch a brand, you can see it in their earnings call. They start talking about us, and that doesn't really happen in our other categories where we're getting shout-outs as regularly.

Our margins are higher because we charge roughly double for retail that we do in restaurants. So it's a higher-margin business. And I think one of the things we like about it is since it's earlier in that digitization phase, we can actually bring in AI potentially faster because you're not replacing a bunch of stuff, you're not competing with a bunch of other modern vendors. You're really going and saying, hey, let us become that new platform. So it's been a really, really nice growth for our business. And I think also kind of hedges us to degree that convenience stores become restaurants.

Right, right. That's really helpful. Let's briefly hit on your 2026 guidance where you're calling for to sustain mid-teens organic ARR growth. And you've also noted seeing a step change in operational efficiency during the year. What's giving you confidence in achieving this? And are there any key puts and takes in your outlook that investors should be aware of?

The major difference this year from last year was a lot more of our business is baked or booked than in normal years. And that was because we had a really, really strong bookings year last year. We had record bookings in most of our products. And so that allowed us to have a lot of visibility into what will and can get rolled out in 2026. So that's why we felt pretty confident in sort of hitting our mid-teens guidance.

And what I said on the call is that includes almost nothing for these AI products that are coming out, which clearly, we're excited and seeing what we can drive there. And it includes nothing from any new large signings. So these are -- our guidance very much depends on the customers we've signed already. So we're not depending on signing a new customer to hear our guidance or you know some magic whale. It's stuff that's right in front of us. And so we feel really comfortable about it.

We think it's also a really positive sign. I suspect we'll be one of the very few companies that is targeting not to have decelerating growth in this environment. And then on the OpEx side, that's the easy side, right, because you're taking out costs, so you control that fully. And we mentioned on the call, we want to take out $15 million, and we're going to keep charging, hopefully, we hit that and go well beyond that over time as we ourselves become more and more AI native figuring out what we can pull out.

So speaking of key wins, one of PAR's notable recent wins was Papa John's, which is transitioning from its legacy on-prem systems to PAR's POS and ops solutions. What were the key factors driving this win? And what made PAR really stand out to Papa Johns?

Huge win for us for a number of reasons. One, it will probably be our second largest restaurant customer on the software side. But the main reason was it's a new TAM. We don't sell into pizza. We've never really sold into pizza aggressively before. Pizza, surprising to most, is a really different type of workflow in the restaurant. And so as a result, most of the large pizza chains in the United States operate custom-built point-of-sale systems. So Papa Johns has their own custom-built point-of-sale system. So does Domino's, sort of most of these brands. And so -- and they haven't really had an alternative because they couldn't go to an off-the-shelf system because it wasn't built for pizza.

And so it's big for us because it kind of opens up this TAM, and we saw very quickly that as soon as we launched that, we got a bunch of inbounds. So that's why it's just a really kind of exciting thing for us and price point is strong, and it will be a multiproduct customer as well. But as far as why they picked us, it was, I think, 2 core reasons they picked us. First and foremost is Papa Johns wants to be an innovative brand. Their CIO, Kevin Vasconi, was the CIO behind Domino's big turnaround a decade plus ago. He's on stage with Google all over the place. He's got -- he's really, really sort of a visionary guy. And I think that he was very much aligned to our product road map and our vision.

And so I think that was really important because somebody who's sort of got a legendary career in our category for being a visionary, like he or she is not going to partner with something that can't keep up with their dreams because in the end, we'll be the stumbling block if we can't get to where he wants to get to. And so I think that alignment on vision is there.

The second part was in our enterprise category, I honestly don't think they thought anyone else could get to the requirements they had because none of us have pizza, they're really taking a leap of faith. Can we build all the functionality in time for them to go out to market and they were willing to bet on us. And a lot of that came from references. They called our largest customers and sort of said, hey, when we deliver, do we deliver in Q4 or do we deliver in Q5? And I think they got a lot of confidence that we deliver on time. And so I think that's why they picked us. That's why they -- we got a very fair price. And you can see on their earnings calls and their public calls, they're very complement to us and just like we are to them because we're going to hopefully help them really change the way that things are going.

Right. And for an enterprise win of this size, what is the implementation time line typically look like?

It's very brand dependent. This one will probably kick off in a small part of Q4, but really, it's a 2027 event. It's a longer start time because we're building it out. So this is more of a -- when we signed Burger King, we started installing stores 3 or 4 months right after, so it was pretty fast. This is a little bit longer lead time because we are building the functionality before we launch.

Generally, once you sign a brand, you can get going in a few months. But you do roll out roughly sort of medium-sized chains within a year, super, super large chains in 2 years.

Right. And then can you provide some color on the incremental opportunities you see with this partnership over time? I believe on the earnings call, you called out international as a potential.

Yes. We're hopeful to sort of win some of the international markets and hopefully 1 or 2 other additional products that we sell. And sort of looking at it as the sort of platform approach as opposed to going in as here's a bunch of branded products. What's powerful about it is every time we sell them an additional product, they will actually get functionality that could not get elsewhere. So I'm making this up, but they bought our back-office software alongside point of sale in this deal.

They could have bought someone else's back-office software, but the functionality they get by having it under one roof is really unique. So it's simple stuff like well, it's single sign-on. So that's kind of nice because I don't want to go to 2 systems, but it's also the same database, the same reporting in the 2 different systems. It helps unify a lot of that workflow. And so that's kind of our plan, similar to what we do with every other brand. Here, we're hoping for a rapid adoption.

Great. That's helpful. I'd love to hit on competition. Obviously, been a hot topic for the restaurant POS space for years, at this point, I'd say. And we're increasingly seeing many fintechs invest in the space. I'd say more so in the SMB mid-market portion of the TAM, but you do see some meaningfully trying to go upmarket. Just curious what your latest views are on the competitive environment? And if anything in the last year, call it, has changed materially in your view?

It's really hard to go SMB up. The needs of an SMB restaurant are just radically different than enterprise. Like I always think about it, if you ran your local Italian restaurant, you're the chef, you're the CEO, you're the CTO, you're CIO, you're the Head of Security, compliance, like your -- it is -- so by definition, it's got to be a simple-to-use plug-and-play kind of model because you don't have an IT team, you don't have a compliance team. You don't have a CFO generally versus you're selling to the enterprise, the robustness of the product is totally different because you've got compliance in there, you've got CFOs, office of CFO in there, you've got ops, you've got marketing, you've got everybody in there. And so the products are just so different.

And so to go from SMB to enterprise, you kind of need almost like an entirely new product team culture because enterprise sales cycles are a year. SMB sales cycles can be 2 weeks. So it's really different. And as a result, we haven't seen major changes in the competitive landscape really ever. The big established players that have huge market share continue to sort of have aggressive marketing pushes. Generally, their goal is to retain, not to sort of grow net new logos. And we love fishing in that pond because similar to like in the Papa Johns experience, if you want to be a digital brand, you want to be innovative, which is probably almost everybody. I think you want to go with the sort of -- the company that's growing that sort of can give you this unique functionality.

From the SMB side, I think you'll always have Toast. They're super well run, have a great product SMB market, will probably win 1 or 2 mid-enterprise like logos every year. But I just think it's going to be very hard for that to really get to scale. And I kind of always wonder like what's the ROI with so many people and so much time on the category. And then we don't really see a lot of other people come from down there upwards. We don't see Block at all. We don't really see Shift4. We don't see Clover. So it is a relatively small group of core competitors.

Right. That makes a lot of sense. Let's turn on restaurant trends. Just curious what the latest trends you're seeing in the restaurant industry are thus far in the first quarter? And are you noticing any shifts in consumer spending or dining patterns?

Yes. So it's changed a lot. So last year was probably the worst year for restaurants since the pandemic, but really since the great financial crisis. So it was a really painful year for the entire category. What made it unique was that in a -- normally in a challenging economic year for restaurants, the QSR category does really, really well. In 2025, it did not do well. In fact, the full-service dining chains took share from the quick service chains. And a lot of that was this pricing dynamic where you could go to Chili's and pay roughly the same amount as going into your favorite fast food restaurant and getting a meal.

And so the full-service guys came back and stole share. So you saw, particularly from the public companies, a lot of pressure on traffic. Traffic was down for most chains last year, which is just a crazy thing to think about. By the end of the year, we did see things start to stabilize. A lot of that was this push to value. Almost every QSR brand went back to their roots of being value-oriented, and that started to sort of win some of that share back. And we saw a stabilization and we had a really strong holiday season in the United States in Q4, which helped. I think, obviously, people go shopping, they go eating. So I think that helped.

And then early in this year, you're seeing -- obviously, CAVA had really awesome results, but you're seeing some good traction in the larger chains. So you are seeing -- I'm saying stabilization, I'm not comfortable saying it's like coming back. Ironically, it's like the perfect market to be a vendor because they've got cost pressures and revenue pressures. And so we had our best bookings year ever last year by a decent amount. And so I hate saying it, but you know, [ pandemic ] definitely helped sales.

Right. Speaking of cost pressures, there are certainly rising costs of hardware components for the POS providers themselves, particularly memory chips have increasingly been discussed in recent weeks. Can you share any details on these dynamics that you're seeing? And how is PAR really trying to mitigate some of these risks?

So memory is a small portion, but it is a portion of our hardware cost. We sell point-of-sale terminals that are basically computers that are far more robust than your average computer. We've done a bunch of stuff. So the first problem last year was tariffs before memory chips. And we've now been able to -- on most of our customers, get waivers to push that -- most of that cost through, not everybody, but most of them.

On the memory side, we've front-loaded some purchasing. So that's sort of the first mitigation step. We pulled forward roughly $2 million of inventory to make sure to avoid any supply shocks. And then we've worked on reconfiguring our board so that we can use different suppliers, different forms of memory, but also less memory. And then one of the unique things about our product, point-of-sale product is that you can launch it on existing hardware. And so for a customer that might be scared if there's a little bit of a price increase, you're able to sort of say, well, we'll just run on your existing hardware. We don't need it.

And so for example, a lot of Burger King storage, you'll see us running on a device that has a logo of a different company on it. In the end, memory is not a huge portion of the bill of lading. So it's not like it's -- our customers are seeing 50% spikes or anything like that. But we've kind of budgeted for it. We talked about on our call that we'll lose some gross margin to it. But I don't expect it to be dramatic for us just because we've brought in a lot, and it is not a huge portion of the bill for our customers.

Right. Got it. That makes sense. I'd love to go back to the notion of cross-selling. It sounds like there's certainly momentum there in the business right now. And you noted during earnings that most new deals are now multiproduct. What's driving this momentum in the shift of, to your point, initially being a land-and-expand model and now landing with a larger base of work being done already?

I think it's the thesis being right in the sense that if you want to run a restaurant in today's world, you need a more integrated set of products to make it work. The idea that you could have a really nice unified experience for your customers with having a different vendor for your loyalty app, a different vendor for your online ordering app, a different vendor for your mobile app, like it's just hard to make all that stuff work together. And as restaurants so rapidly became digital, again, we really do forget that you do not have an app for any of the restaurants you liked until just a few years ago. It just stretched their needs. And so the idea of having your data in one place is very, very powerful.

The idea of having one system across the different parts of your tech stack allow you to actually be more innovative. And so I think it's just this consolidation of data, the consolidation of systems and vendors because like I said, these are really small tech teams. And so they went from managing 5 vendors to 5 years later managing 15 or 20. That's really tough. And so I think that those are the core points and the functionality we can have by having that stuff under one roof is really powerful.

Can we discuss what the international opportunity looks like for PAR? I know you've continued to internationalize core products of the platform over the years. So just curious where you see the runway there.

Yes. Internationally, it's market by market. So we've got a good business in Australia that's growing. We serve Starbucks out there, Wingstop out there and a number of fast-growing chains in Australia. And you'll, over time, see us plan to flag additional markets, Canada, others, English-speaking and then non-English.

The goal, I think, has been to become the partner for the big U.S. brands to move out there. As they expand their opportunities, we want to sort of be their partner everywhere because, again, having your data at one place in this world of AI is really powerful. But equally important is that these brands have suffered under like very disjointed technology outside the United States. So if you go to the Head of International for most restaurant chains, they'll literally tell you that they're losing meaningful amount of royalties because of old point-of-sale systems not reconciling, taxation. I mean it's kind of nuts.

And so I think we're going market by market. And then our second growth has been we operate a product called Plexure, which does McDonald's loyalty in 68 or 69 different countries. We continue to grow them. Last quarter, we launched with Japan as an example. And so we've got that lever too on the loyalty side.

Great. I'd like to open it up to anyone in the audience who may have a question. I have one more though. On the topic of capital allocation, I think we can end there. So I'm just curious if you can provide your framework for 2026. I know the Board recently authorized a $100 million share repurchase program. Also curious what the bar looks like for M&A this year? And if you are open to M&A, what are any key areas you'd be looking to grow into inorganically?

Yes. On the M&A question, I think we're probably not going to do anything with where our stock price is today. I think it's hard to get something done. But also I think nobody wants to sell their business now either. So I don't think -- hopefully, we're not missing on anything, but I don't see a lot of founders rushing for the exits of high-quality products. A lot of the junk will get out there and sell.

From a capital allocation perspective, we're focused on first co-operations. We -- like I said, we feel really excited. I mean the internal versus external is really interesting. I mean it's -- like internally, we've never felt like we had a better business. We've never felt like we -- our sales team has never won more business. We never had more sales this many sales quota. It will be more profitable this year. And so I think the goal is to fund internal operations and then continue to sort of look at our options.

So I think before we ever repurchase shares, we'll look at -- we've got converts that are due in 18, 20 months, so we'll look at addressing that. But the idea of the repurchase was we do expect to generate meaningful cash flow as we get to the end of this year, next year, and we want to make sure that we have that as a tool. We are constantly looking at all what's the best return on invested capital. And I think today, it's the internal business will be the best return that we have given how much demand we're seeing and also just this AI change and again, being able to sell your products in a 3-month sales cycle versus the year cycle is really like it is an enlightening thing for us.

Everyone, thanks for joining us. I will start by reading, for important disclosures, please see the Morgan Stanley research disclosure website. If you have any questions, please reach out to your Morgan Stanley sales representative.

Savneet, great to have you here. You just reported Q4 last week. Anything that would stand out that you'd like to talk about?

Yes. I think we had a really strong Q4. We ended the year sort of annualized growth about 15%, which is an awesome accomplishment given a little bit of the slow start we had. So we pulled in about, I think, $17 million of ARR just in that quarter, which is a record for us, about $7 million EBITDA. So good profitability, really good growth. And then maybe, most importantly, had our biggest bookings quarter ever as well. So it was really a strong quarter that lots of positives, margin expansion on I think every line.

But I think critical to the future is that the bookings are really important for the next couple of years here. So really strong that way. And then we announced a win of Papa Johns, which will be our, I think, our second largest restaurant customer ever. So a lot of really, really exciting stuff there.

That's great. You've had several AI launches throughout the last year. It seems that it's kind of emphasized throughout the platform at this point. Can you talk, A, just a bit about how AI is playing into the platform? And B, why PAR is foundationally a good place to be to implement AI solutions?

Yes. Maybe I'll do the latter first and then kind of weave into the first part. But AI, I think, we were a company that 3 years ago or 3.5 years ago were freaking out, of like, "Oh, my gosh, this is the end of everything." And we've totally changed, and I think for objective reasons, in the sense that we service an end market that is not digitally native. And it is relatively an organization that depends on vendors to create their future. And I think what we've observed is that they're really dependent upon us to become their vendor to deliver those AI solutions.

And more importantly, one of the great challenges of being in the restaurant and retail category has been this huge vendor sprawl of having, in the last 5 years, adopted a dozen new software products that you didn't have 5, 6 years ago, and then trying to manage all that. And there isn't a CIO or CTO in that organization that wishes they had less. And so we think the category itself is really interesting to service from an AI perspective for all those reasons.

And then maybe the last one I'll sort of suggest is these are organizations that are, they look big optically. We serve a couple of big 1,000-unit-plus restaurant chains, and their entire corporate headquarters is 10 people and the IT team is like 8. Those aren't organizations that are going to go out and go build a point-of-sale system or a loyalty system. They're just not set up that way nor are they willing take the risk to do that.

So I think it's a good -- and then you have sort of the in-person nature of restaurants. It's just a really good category to build. And then you have them trying to serve a digital-native customer base that's evolving very quickly. And so it's a really good market to sell into. And at the same time, a really tough market for you to build your own product if you're coming from that side.

As far as what we're doing, so we kind of witnessed that early on and said, oh wow, like this is going to be the biggest opportunity for us because all these customers are now under intense cost pressure both from the labor side and the input side, i.e., the food. And at the same time, they're really struggling with traffic the last 12, 15 months. And so the need for solutions has really accelerated.

And so we launched our first product towards the end of Q3, called Coach AI, which at the time was ostensibly ChatGPT for your data on the Back Office, but it's sort of turned now into prescriptive recommendations to run your restaurant better. So you can go in there and it will point you, say, hey, you got to go focus on the store. Hey, the labor schedule is not working. Or, hey -- you can query it and ask for what's the most profitable promotion we've done in this part of the country, or whatever it may be.

And what we observed was crazy, for us, which is, of the 13,000 stores we have on Back Office, 1,000 became customers within the first quarter. We are normally in the category that's a 6 to 12-month sales cycle. That was just mind-blowing to us.

The second thing that was interesting was almost every single customer is an active daily user, meaning they use it multiple times a day, which, again, is very unique in the category we service. And third is we made them pay for it. So we weren't sort of saying, here's this thing for free.

So all of those gave us a lot of encouragement that we can really service the need for our customers. And we're turning that product into what we call a self-driving product, which is now, instead of suggesting these recommendations, press this button to implement this recommendation, run this promotion or order this food or whatever it may be.

And so that kind of really encouraged us to kind of triple down and invest in that because I think we can -- I've always sort of seen the AI narrative for vertical software companies as very defensive. It's, oh, we have these great -- we have very low churn and so people love our products. And I think going on offense is actually more important than defending the base that you have today. So we're really aggressively investing, and we've got our second product we just announced today and kind of the same thing in the loyalty space.

But long story short, I think that the end market is really, really ripe for AI. They're desperate for those cost advantages and revenue advantages. And then second, it's just not a category that's going to build it themselves. And so I think the vendors that have trust are the ones that can deliver.

That's really exciting with the new products. And I think what's even more exciting is you're able to commercialize them and charge for them. What gave you the confidence that -- you're in a customer base that, obviously, I guess it speaks to the mission criticality of what you're doing, but can you talk through that decision to actually charge your customers and not just give everything away for free, which is an approach some people take?

Yes, I think if you're going to talk to the product team at PAR, they'll sort of say that one of the annoying things that I've always said to them is every product team comes, says, "We've got the best product, we have the best product, we have the best product." And I've always said, you have the best product if you're the highest priced and it doesn't hurt your volumes.

And so I think culturally as a business, I think our product team is like, well, if we just give it for free, Savneet's going to say, "Well, how can you tell me it's the best product if no one's paying for it?" And so we kind of have that culturally, as like, hey, a product's valuable if someone actually wants to spend money on it. And so it's kind of part of our DNA to do that.

And it's a really high bar because everybody is putting a wrapper around their products and saying they're an AI product, but very few people are actually building a new product. And so we really early on were like, hey, everyone's going to have a chat interface to their enterprise software products. That's a given. What can we do that is actually a new product that creates new value so we can actually charge for it?

And I think that focus as opposed to not just trying to be the chat wrapper, but actually what's the net new thing, allows us to feel comfortable to charge for it. I think that was a distinction. Now we've experimented with price -- SaaS pricing models, we've used tokens, we've looked at transactional. So we'll figure that part out. But it is clear that the category is definitely willing to pay.

Yes. That's -- it's been really evident just through your numbers. And I'm curious, these are relatively new products, not just for you but for the entire ecosystem, but even starting with Coach AI. Has your go-to-market fundamentally changed? Obviously, you're playing in a segment of the enterprise. How are you articulating this in your typical go-to-market motion?

So our go-to-market has changed not because of AI, but because we have kind of transitioned our customer base to be multiproduct in nature. Maybe the most exciting data point, and I skipped this on your comment on Q4, was that the average customer bought 2 products from us last year, when historically it was 1. And that was a really wow experience for us, which says, "Hey, we're going to mine this customer base. We're going to put more -- push more sales directly." And that is a really great narrative for AI because AI is a beautiful connective tool across all of your products.

So illustratively, if you've got a scheduling software here, you've got a labor management software here, you've got a point-of-sale software here, connecting those through AI is actually a lot easier and a lot simpler to the end user. And so that, I think that is actually really accelerating that sales motion to buy more from us, not less. So I don't -- it's actually changed us more than we've adopted around it.

Yes. I mean I can remember talking to you years ago and you had a vision of building a real platform. And it seems like AI is only as good as its inputs. And if you have a true platform with multi prongs and multiple products, you really get the benefit. I mean have you seen that in practice?

Yes, absolutely. I mean, I think we've seen it in a few ways. Our largest point-of-sale win of all time was Burger King. A year later, they added on our Back Office product and sort of love the AI tooling that we have in there. And that was sort of like, wow, we can displace these big back-office companies with that.

On the online ordering side, where we're a minnow in a big market, we're seeing that the integration between our online ordering and our loyalty business is giving us that, "Oh, my gosh, I can sell the customer something totally different than any competitor because you can sort of have one database, one tax system, one so on and so forth," is really, really powerful. And the ability to use AI to prove that is really -- it's just very, very real now. And I think that's what's giving us a lot of confidence.

And one of the other kind of exciting things I was sort of telling investors is we grew 15% last year. We guided that we don't intend to decelerate our growth year-over-year, which I think is a great thing in a market where everyone is decelerating. But it assumes none of these AI things worked. And so for us, we're excited because I think they create a lot of upside to the company going forward.

Last question on AI, I think we've given it enough airtime. But what do you think -- what's next? Just I mean, you can lump it together or separately for restaurants and convenience stores. How do you see them using this type of technology in the future, either through PAR or just generally?

So I think what -- the first level for every kind of physical business, so these are retail stores or restaurants or convenience stores, stuff that we sell to, is that I see all of them using it as a way to cut cost first. That's why the Back Office matters. How do I manage inventory better, my supply chain better, my labor units? How do I get that data out? How do I lower cost? It's clearly the first thing that they're all jumping into. And I think you have to prove that ROI quickly so that they can buy more and more, versus something long term in nature where [ I think how things worked ].

The second part, we think, is going to be on the customer engagement side. How do I, instead of sending you a random coupon that you're a, whatever, 35-year-old male with 2 kids in New York City, how do I then say, actually, I'm going to send a segmented campaign that's tailored just to a meal? And how do I figure out how to use data that's not just the data that I have in the app from you, but the data that I can get publicly from everywhere else put all together?

And so that ability to like hyper-hyper-target is going to be really interesting from a loyalty perspective and all that data. That cannot happen without AI today. AI sort of creates a bunch of segments and you sort of -- or with machine learning, creates a bunch of segments and you target. But with AI, you can actually target each individual human being and make it feel like a customized experience. I think that's going to be second place.

The third place, which is I think going to be the incredible unlock, is the self-driving restaurant. And in a sense what I mean by that is we have this product we're building where we really do expect that you're in a store and you get a flag that say, "Hot dogs are expiring in 10 days." And very quickly, it says, "Do you want to run a promotion to sell hot dogs?"

And then you press a button that says yes. And then not only does it give you a campaign. It tells you, here's all the perfect segments. It says, here's all the people that never have chargebacks. Here's the people that used to buy hot dogs and bought hot dogs, there's a good chance to bring them back in. It does figure out what colors the campaign should look like. Should it be a push, should it be an SMS, should it be an email? Does all that insane amount of work and testing upfront.

And then you can say, okay, run the campaign. And then when it runs a campaign, say, "Hey, we're also provisioning an extra labor unit the day we run the campaign because there's going to be crowds in the store." And then creates this -- reflects the cycle, and when inventory comes down, shuts the campaign off. And it totally releases that store.

Now why that's so exciting to me is not just because it can do that full 360 view of like optimizing inventory and making the customer feel really happy, but also allows these gigantic organizations to optimize profitability on a per store basis. Today you go run a campaign for, whatever, buy 2, get 1 free, that campaign is across all of your stores. Versus I'm going to optimize that unique store -- each individual store on a hyper-targeted basis. That's really powerful, very unique, and no one is close to doing that yet.

So I think that's the journey of the way that the category will move. And I think that applies to all retail industries.

That's really interesting. I mean we've certainly seen personalization come through. But to hear about it in the store level, it makes a lot of sense, it resonates.

Let's talk a bit about customers. We've talked about Burger King today. Obviously, that was a huge win. You've been able to see a lot of upsell through different products across your portfolio. Let's talk about Papa Johns. I mean that's another landmark win for you guys. Can you talk a bit about the process to win that deal? Are you competing with folks? And this is kind of an entrant, I guess, in a way into a new segment for you.

It is, yes. Yes. So I think it's -- the risk of being hyperbolic, like it's landmark for us in the sense that it is our second biggest deal ever, I think, in restaurants, which is amazing. It's a multiproduct deal, so it's point-of-sale and Back Office, which is great, kind of again proving the model. Yes, and a very great and fair price point.

But why it's really interesting is it entered us into this pizza category. And pizza is really, really unique in the restaurant space in that, for the point-of-sale market, it doesn't really service it today. So Papa Johns has built their own point-of-sale product. Domino's, the same thing. Most of the large pizza chains have built their own systems because the existing off-the-shelf products didn't service that category. So it wasn't really part of our TAM for the longest time.

Downmarket, the same thing. The big point-of-sale companies that sold downmarket didn't really have a pizza offering, and so there's a specialized pizza POS. In upmarket, you built it on your own.

And so why it's exciting to us is we also kind of cracked the code of a really, really high-quality brand that's going through its own transformation, particularly on the digital side. And hopefully, it's the beachhead for us to then go after the rest of the pizza market, which has not actually had an alternative in the past. We're not competing against competitors. We're competing against legacy products they've built at home, and clearly, many of them want to change. And so I think that's really exciting for us.

The process was unique. It was a much faster process than normal, that they were sort of in acute need. I think the other part was the CIO of Papa Johns is a guy named Kevin Vasconi, who is sort of close to royalty in our category. He was at Domino's and Wendy's, so he's sort of the guy that had a lot of digital innovation. And so he was the one to partner with a -- he wanted to partner with a company that was as innovative as him. And so he's literally on stage, I think, with the CEO of Google Cloud at their events as a big partner of GCP. He's pushing edge compute, like all the stuff way ahead of the rest of the category. And I think for him, it was really important that he had a vendor partner that was as aligned to that sort of digital innovation because he's such a legend in doing that.

And so the coolest part about it was that we got it quickly, and then they are trusting us to build all the gaps we have to get pizza because, clearly, haven't done it before, in a very short period of time. And I think that's his bet on the execution of our company, which I would tell you, 99 out of 100 companies in our category like never hit their goals or dates, anything, like it's just notorious. And for us, he did enough references to sort of say that we would. So it's probably a 6-month process, and I think just an incredible partnership.

I assume when you land a big deal like this, and you probably saw some of this in Burger King, I mean, is there some snowball effect where it helps you with others in that category? Obviously, just the reference of having these big brands helps you win other big brands, I assume. Is that how it works in practice?

It does. I think we learned from Burger King. No one's ever really sure of that. But I think after we won Burger King, it was clear how larger brands were like all of a sudden, like, "Oh wow, these younger, newer companies can service the larger brands." And then I think winning Papa Johns is sort of reinforcing to that, but then also hopefully is reference for the other big pizza brands. So I think so, and we certainly saw it after Burger King.

So switching gears a bit to another brand that's near and dear to my heart, Shake Shack. You and I have talked about loyalty and how important that product is specifically to the platform. Can you talk a little bit about the Shake Shack deal? Just tell us the high-level punchlines?

Yes. So no plans, but they purchased our product or committed to purchase our product Punchh. I think Shake Shack is, as you said, a very special brand that has a unique brand promise. And the challenge of that is that brand promise, the way that you feel about Shake Shack, what I used to feel as an intern at CSFB waiting in line to get hot dogs for the trading floor, like that -- it was an in-person experience. It was the quality of the food, it was a small brand.

And then transitioning that experiential feeling you have to something digital is crazy hard, and most of the times it does not work. You'll see brands that have been sort of focused on limited supply or steak restaurants all of a sudden have discounts on a loyalty app, and you're like, it totally kills UR. And I think for Shake Shack, that was probably the most important thing. Can they make that digital presence feel like the same connective tissue you had in the store?

And I think they viewed our product as not only being really robust in terms of the ability to service every type of promotion, the tier structure they want or the point structure they want or whatever it may be, but also experiential and things like offering them games and passes and all sorts of different tokens. And so I think a core reason we won was that we had this breadth of functionality, but also this big focus on creating the experience within their digital presence as opposed to just saying it's a discounting app.

That's great. And sort of switching gears, but I want to talk -- you just made an acquisition of a company, Bridg. I'm curious, how does it align to the broader platform? And I do want to talk about M&A more broadly in a bit. But can you tell us a little bit about this deal?

Yes. It's a really exciting deal for us. Bridg we acquired for $27.5 million. It's about $14.5 million of revenue, so a low-multiple, high-quality business.

Bridg's core product is called IDR, Identity Resolution. And really what it's doing is helping retailers and restaurants identify their non-loyal customers, meaning customers that aren't enrolled in loyalty programs. So you can sort of see who your loyal customers are, your nonloyal customers, compare their behaviors. And then work to create campaigns to convert your customers that aren't on the loyalty program over to your loyalty program.

And the business has I think gone through a lot of change. In 2021, it was acquired for $350 million and then had a -- and then subsequently another $150 million went to earn-out. And so it's a business that was acquired for $0.5 billion just 4 years ago. And so it was a really high-flying, really well-thought-of program built by a supersmart team. But the challenge was that it was within an amazing organization, but one that wasn't meant to service enterprise customers in the way that we do. And so it kind of withered on the line there.

And so when you bring that into PAR, why it's so powerful is now we can go to our customers who are the large -- we have the largest loyalty footprint across restaurants and retail, and now say, hey, we've got your loyalty data in one place, and now we have every other customer -- ostensibly every other customer in your -- in the same database. And now we have all the customer data in one place.

And for us, it was as much of an AI investment as it was a traditional acquisition in the sense that now we are the AI tools to the customer. If you actually want to have any question about your customer, we have it all in one place and we can make it digestible and easy to work.

So we're wicked excited and a leap just from taking that IDR business to becoming a customer data platform. And so it's defense and offense to us. It's solidifying the value of our loyalty program, but also now letting us go after the rest of the space. So it's a really, really exciting deal. And I'd say it's one of those few opportunities where I think the pipeline and focus we have will be underestimated post-deal, because we just see so many ways that we can cross-sell this into our customer base pretty quickly.

That's great. Kind of switching back to the customers. Papa Johns, obviously a Tier 1 deal. Do you see any other Tier 1 deals in the pipeline in the somewhat in the future?

We've got 3 in pipeline right now that are very, very large transactions. All 3 of them would be our -- would be, I think, larger than Papa Johns. And so a really big opportunity for us. We are making tremendous progress. It's been crazy exciting. We won Papa Johns and then, all of a sudden, we had a larger chain come in to the RFP process. And so the pipeline has just -- has not really shrunk in a long time.

And so I think that's representative of a couple of things. One, the category itself is just becoming more and more digital. Like it is just clear that there's more push and more investment by these brands to push into solutions like us. I think the second part is the industry being very comfortable with us and saying, okay, like PAR can actually handle all these companies at scale, this complexity, can do pizza, so on and so forth. I think that's the other part that's there.

And then third, we continue to really move the ball down the field on these 3 deals and feel really excited about the opportunity to win. And so it's, like I said in our guidance on the call, none of our guidance assumes we win anything, and we still feel really good. But obviously, we're hopeful we win more than 1 of these over time.

That's great. And you kind of touched on it earlier too, but just from a market perspective, I mean, are you seeing -- I assume a lot of the larger food service organizations have custom-built stuff and they're just cobbling together different solutions out of, I won't say arrogance, but just out of "We can probably do it best because we need something that's very tailored to us." Are you seeing that trend changing to where the larger food service organizations are saying, hey, maybe these tech -- I'm obviously not calling you a start-up, but like tech-forward platforms?

Yes. So I think categorically, yes. So there's certainly been a move over the last 5, 6 years to stop building internal software and move to third party. Burger King is a really good example of that, but there are others. And I think that's been a great thing.

Now I don't think any of those brands were -- acted with arrogance or hubris when they first made the decision to go build it, because I think they were doing this like 15 years ago when there wasn't a good alternative, and you could argue, if I build my own point of sale or loyalty, it's going to be better than the off-the-shelf thing. But the challenge with building software is you never stop building. And so you're like, oh, I'm going to go spend a bunch of money to build a product and then I can just fire everybody and I can use this product forever. And like that's, as you know, not how it works. And then technology changes, you got to build more, integrate more, have more partners.

And argument I've always given to, when I have this argument with potential customers, the few that kind of hold on, like who's going to hire better developers: a software company or a restaurant company? And who's going to sort of see that -- and not to mention, because our product is in so many other brands, we see so much more stuff. So we can see the innovation coming around the corner where you're just captive to what you have today and you miss out on that.

And so categorically, there's absolute a move to third-party software. Now there are a couple of brands, like literally, it's a couple, less than one hand, that are -- I think will continue to try to build. Yum! Brands has been very public about making massive investments in internal technology. And so I root for them, but I think it's going to be really tough because one of the challenges of serving retail businesses is that you can go build a great technology and then you got to sell it to your own franchisees, there's friction there because they're like, well, are you ripping me off? What are you -- there's a little bit of that.

And then two, connecting this all together is just crazy hard. And so I think in times of economic concern uncertainty, like if you're the CFO, like, why are we spending all this money building our own stuff when we can just have the franchisees pay a third-party vendor?

So I think you'll continue to see people build less and less over time. And that's really just because I think if you look back the last 15 years, I don't think those few brands that did it got a great ROI from it.

Yes. It's a good segue into competition. We obviously see a lot of really new entrants in every category of software that are AI-native and up and coming. How do you see your competition? Has it evolved? Where do you feel like your positioning is across the landscape?

So from a current landscape perspective, it hasn't really changed that much on our core product of POS. We still have our 3 big competitors: NCR, Oracle, Global Payments that own a large portion of the market, and 1 or 2 smaller companies that are always there. But it hasn't really evolved, and AI has not changed that at all, yet. Now we'll watch it very carefully.

But I think that's primarily because point-of-sale is such a heavy, mission-critical product. It's an enormous product. It is hard to replicate. You can vibe-code an interface, but like it's so hard to build the decades of experience, the trust, the integrations, the data. And I don't think there's going to be a single brand of scale that's going to trust such an important product to something that hasn't been really, really tested. And I just think it's really hard.

And that's why I don't think start-ups are trying to go after that category in a big way, at least we haven't seen that yet. But that's incumbent upon us to become that, so that even if that thing exists, you're going to pick the one, the brand that you already trust.

On the engagement side of our business, which is loyalty and online ordering, I think you will see people try and enter that market. But for some of the reasons, I think there'll be modules, not core disruptive products. Because your loyalty engine, it's hard to envision you replacing that, particularly when it's $90 a month. It's not like you're going to save tons of money. But you can imagine certain AI tools coming in and redoing the app, redoing the customer engagement experience with the actual touch to the customer. And so those would be interesting acquisitions for us for maybe down the road, but we haven't seen anyone kind of truly come in and say "We're going to replace it all."

So the enterprise, haven't really seen much change. It's sort of been the same folks and seems to be same folks. And I think our big advantage versus the existing players is, I always envision this sort of world of you go to an enterprise CIO and every vendor is like, "Well, my agent is the best agent," and "My agent is the best agent," and "My agent is the best agent." There's going to be this sort of friction. And you're going to pick the agent that has the most data and the most products in your store because that's the one that's going to be the source of truth, and that's kind of where we feel really lucky right now.

Yes. I mean I would say across tech, being a platform is a real advantage. When it comes to M&A, I think you've been very tactical about how you've augmented the platform, Bridg being a really great example. That was clearly an awesome opportunity and a lot of bang for your buck, to say the least. How does M&A play into the future for you? Is that still going to be a lever that you're going to pull?

I think it's something we always have to maintain to look at, but I think today where our stock price is, like it's probably going to be a smaller lever to look at. I don't think we'll be doing anything aggressive until we feel like we're getting value for the business we've built.

But I think we have been pretty public about kind of built the core building blocks we had. And so we weren't really looking for something big and transformative anyways. And I think where M&A will be really valuable for us over time, provided we get our cost of capital down, is on the sort of tooling around our platform. What stuff that we can fold in that can fit there? Or can we continue to grow into new verticals? Our expansion into convenience stores has been really successful. We see a few other verticals we want to get to in time. And whether we build or buy will be probably dependent on the cost to do that.

But I think we'll continue to do it. We feel like it's really worked well for us. It's certainly elevated the quality of the talent. It's certainly elevated the quality of the business. But I think we've got to pick our spots here really carefully right now.

Great. Anybody have questions? We can pause for a minute and see if anyone wants to ask anything from the audience.

All right. Talking about trends, so if I think about you having a platform strategy gives you a pretty great view into what's going on in restaurants, have you noticed any particularly interesting customer trends or traffic trends or segments or different categories that are -- you're seeing a lot more interest? I'm just curious because you honestly have an amazing view over a lot of different aspects into the food industry.

Yes. I think there are a few macro trends and then some micro trends, meaning short term. One of the biggest macro trends we see is the convenience store market really encroaching upon the restaurant market. If you look at the convenience store category, it's been an incredible category. You look at the stocks of the public convenience stores, they've been some of the best-performing stocks for the last decade, the last 15 years.

But their business is more and more challenged with things like EV charging, things like DoorDash and DashMart making it easier to buy the stuff that you'd go pay for at a convenience store. And so the way that the convenience market has responded is really invested in their food offerings. And so I always sort of say this, but I suspect the biggest competitor of McDonald's is not Burger King, it's 7-Eleven. Do you get your -- you pick up your breakfast sandwich there instead of going to your normal QSR.

And what we've seen is an incredible amount of investment from the convenience store category to now not only compete on breakfast, but to have prepared foods for lunch, for dinner, and really picking a path of being super cheap or being like really high-quality food, or you can look at Casey's which is now the fourth or fifth largest pizza chain in America, but it's a convenience store. You're really seeing just a big trend.

And so as a result, that category is now trying to become digital-like restaurants. So they're buying loyalty from companies like ourselves, and realizing that to truly compete with restaurants, they've got to make very similar investments.

So I think that's a trend. I think that trend continues. And I think it's a challenging one because, again, if we have EV charging and you're stuck charging your car for 10 minutes, like you're probably going to go buy your pizza or your dinner there. And so that will be a really big kind of shift and trend to watch.

I think the other one, which is more recent, has been the value orders we've seen in restaurants have been extreme. And what's been unique about it is normally in a value-based economy, the QSR market has been the net winner because the food is easy to produce, it's cheaper, it's faster. They've got great delivery mechanisms through drive-through and third-party delivery.

And in the last 12, 15 months, they've actually, I think not once, the winners in that category have been the casual dining, full-service dining firms that were able, things like Chili's and Applebee's, bringing down their price point where it was basically close to equivalent pricing to go have a sit-down meal at a Chili's and Applebee's than going to a normal QSR. And so you actually saw share shift move from QSR to full-service dining, which is -- which almost never happens in an environment when people are value-based.

I wonder if that switches back now this year because the QSR businesses do have more ability to bring down price quickly. And so I think that's a trend that we're watching. It's a trend we're observing.

But the last trend we're seeing is certainly some stabilization in the restaurant market. Last year was a brutal market for the restaurant category. An incredible amount of our chains had negative same-store sales traffic, I think 50-plus percent. So that was an incredible statistic. Now they were able to manage revenue with price increases and the businesses certainly continue to prosper. But that was an amazing change to see. And a lot of it happened after the Liberation Day when you saw these crazy spikes down in traffic into the QSR category.

Q4 of last year, you saw that the stabilization in the holiday period was quite strong. And we're continuing to kind of see that stabilization. Now we're not seeing like this, like it going rocketing back upwards, but I think that's a good sign both for our business, but also, I think it's really good for the U.S. economy.

Really interesting. Well, look, in conclusion, just curious, what's next for PAR? You've had a lot of different acts throughout the years, but they've all augmented the same platform strategy. What's the next thing?

For us, it's pretty simple. We've got a really simple plan. First and foremost is build and ship these AI products super cost-effectively, kind of prove not only that our business is protected by AI, but this is actually going to be a massive accelerant to our business.

The second is actually take your own medicine. So we're going to use AI to go cut $15 million of costs internally. It's a super aggressive target, but if you don't mandate, it will never happen. And so we're going to become really, really operationally efficient through that.

And I think the third is just this interesting story of we're not -- year-over-year, we're a much bigger business, but we're not planning to decelerate. And I think that includes not winning any new large deals, it doesn't include any of these products working. And so I think the point being that the business itself is just doing really, really well without any of these investment ideas working, and we certainly think these investment ideas are going to work.

Great. Any final questions?

Awesome. Savneet, thanks very much.

Thanks, [ Neil ].

Good day, and thank you for standing by. Welcome to the PAR Technology Fiscal Year 2025 Fourth Quarter Financial Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Chris Byrnes, Senior Vice President, Investor Relations and Business Development. Please go ahead.

Thank you, Stephen. Good afternoon, everyone, and thank you for joining us today for PAR Technologies 2025 Fourth Quarter Financial Results Call. Earlier this afternoon, we released our financial results. The earnings release is available on the Investor Relations page of our website at partech.com, where you can also find the Q4 financials presentation as well as in our related Form 8-K furnished to the SEC.

Before we begin, please be advised that remarks today will contain forward-looking statements. These forward-looking statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. For additional information on these factors, please refer to our earnings release and our other reports filed with the SEC. Also, we will be discussing or providing certain non-GAAP financial measures today, which we believe will provide additional clarity regarding our ongoing performance.

For a full reconciliation of the non-GAAP financial measures discussed in this call to the most comparable GAAP measures in accordance with SEC regulations, please see our press release furnace as an exhibit to our Form 8-K filed this afternoon and the earnings presentation available on the Investor Relations section of our website. Joining me on the call today is PAR's CEO, Savneet Singh; and Bryan Menar, PAR's Chief Financial Officer.

I'd now like to turn the call over to Savneet for the formal remarks portion of the call, which will be followed by general Q&A. Savneet.

Good afternoon, everyone, and thank you for joining us. Before sharing details of a strong Q4 today, I want to reaffirm PAR's thesis. PAR is becoming an AI-driven hospitality platform company. Our 2 verticals, restaurants and retail are individually mid-teens ARR growers with significant white space anchored by mission-critical systems of record with deep domain expertise. The compounding nature of PAR's enterprise platform is driven by simultaneously allowing customers to play offense and defense via revenue generation and cost efficiency. .

This is especially true in times of underlying marketing stability, we're falling behind in digital adoption and its resulting margin loss is a formula customer pain aggressive investment into our AI platform will deepen our performance and provide further customer expansion opportunities. We have never felt more confident about our positioning and the opportunity set in front of us. Now to review the numbers. In Q4, we delivered revenue of $120.1 million, up 14% year-over-year, driven primarily by continued strength in subscription services and an increase in hardware revenue.

On a non-GAAP basis, we generated $2.6 million of net income, marking our third consecutive quarter of non-GAAP profitability. Adjusted EBITDA in the quarter was $7 million. Full year revenue reached $455.5 million, up $105 million year-over-year, including 21% organic growth with subscription services growing 40% most importantly, full year non-GAAP net income improved by over $30 million year-over-year, proving that our operating model is scaling. We continue to stress operating expense efficiency as we scale our business in Q4 was not different.

As a percentage of subscription revenue, R&D came in at 25% and sales and marketing at a solid 13%. The respectively, at ahead of our targets, perspectively at or ahead of our targets. Turning to ARR. We exited Q4 with ARR of $315.4 million representing 15% organic growth. Crucially, second half growth was more than double first half growth and was powered by cross-sell with over 80% of deals being multiproduct. Growth was broad-based, led by POS momentum and the resume BURGER KING rollout, along with continued steady performance from Punch and plexer.

The former continues to win new marquee plans, while the latter benefits from McDonald's international expansion, including a successful Japan launch. We also saw improving trends in ordering and payments. Now to review our business performance in Q4, starting with the operator Solutions business. Q4 revalidated our platform strategy. We were selected by Papa John's for a decade-long partnership and their 3,200 sites and we'll be rolling out PAR POS and PAR ops to power their in-store tech stack.

This win builds our momentum in the pizza category with TAM expansion already reflected in significant pizza pipeline for 2026. Further, we anticipate increasing our partnership with Papa John's in the future with both expansion to select international markets and continued expansion within our platform. In addition to this marquee project, our bookings exceeded internal expectations and hit record highs with over $25 million booked for PAR POS alone. The mix skewed heavily towards enterprise, multiunit multiproduct deployments.

Enterprise customers are not buying point solutions, they're buying a unified platform with POS as a gateway into the broader par ecosystem. Our attach rates confirm this. Nearly 90% of Q4 operator deals were multiproduct in nature. Additionally, we continue to progress on our large Tier 1 opportunities. The world's largest brands continue to show more and more interest in the PAR platform, and we'll update investors as we convert these opportunities to bookings. We're hopeful that our intense focus on AI helps accelerate these opportunities as these brands are looking for ways to become AI-driven ahead of their peers. Props, our back office offering, is evolving from analytics to intelligence and even more importantly, product capability accelerated.

Our first AI product, Coach AI is now being utilized by nearly 1,000 stores with roughly 1,000 active users, indicating high usability and market fit. Since launch, we've added enhancements and improved both usability and contextual awareness. The current version of Coach AI moves us into prescriptive operator recommendations, not just showing personnel what happened, but telling them what to do next. Crucially, we are embedding AI directly into daily workflows and are building towards a full self-driving product that is capable of direct and immediate store optimization. This is not incremental enhancement this is marginal margin driving capability for operators. The industry does not need more dashboards. It needs fewer decisions and better ones.

Our goal is to embed intelligence into every operational layer such that actions drive outcomes. One of the most encouraging signals this quarter was the breadth and quality of momentum across our Engagement Cloud, both with new logos and existing customers. Starting with Punch, we signed 2 new noteworthy brands, including Shake Shack, and also expanding meaningfully into the adjacent entertainment vertical with Lucky Strike Entertainment, which opens up a compelling new category for us. These wins reinforce punches position as a category leader and validates our ability to extend the platform into new high-value segments.

Ordering continued its strong momentum, adding 6 new brands in the quarter, including savvy sliders and smoky MOs. Importantly, these weren't stand-alone wins. They increasingly came as part of a broader multiproduct engagement which speaks to how customers are buying the platform rather than the point solution. Across par engagement, co-sell and cross-sell momentum continues to build. More than 80% of new deals are now multiproduct consistent with last quarter and still trending higher.

This quarter included the first large sale of PAR catering to [indiscernible] Tacos, where we successfully displaced a competitor. We also had the first major deployment of Power Games in sneaking and the first significant sale of PAR Smart passes. Our retail delivered a strong quarter that demonstrated continued scale, engagement and execution across the platform, particularly with our largest enterprise customers. One of Park Retail's newest and largest C-store customers is driving improved results as their program now exceeds 3.6 million members and continues to drive measurable changes in customer behavior.

We are seeing higher visitor frequency, richer customer data and clear monetization benefits across categories. We continue to see broad adoption of part retail as 3 new customers launched on the platform in Q4 but it gets better. I'm also excited to announce the launch of our newest AI product for C-stores and fuel retailers, PAR drive AI, a fully integrated AI suite built directly into our unified platform. This isn't AI alert on top. It's intelligence embedded into the system's convenience and fuel retailers already use every single day. Not only making us AI native, but building AI and the workflow our customers run today alongside the security data and intelligence, our customers trust today.

We also saw a strong performance in the quarter, driven by increased hardware demand by our restaurant customers and deployment activity across several of our large enterprise customers. Some of this acceleration is due to the switchover by restaurants to edge compute. Later this year, we'll be coming out with PAR's own portfolio to help support smooth. We also saw strong momentum with new store openings and continued kiosk expansion, reinforcing the role of self-service and digital ordering within large QSR environments. In Q4, we experienced steady demand across large POS enterprise brands, including Dairy Queen and Burger King, where ongoing remodel activity, platform upgrades and new unit growth continue to drive consistent deployment volume. Even with the strong Q4, we saw significant cost pressures on key components, including solid state drives, memory and processors being driven by significant demand from AI infrastructure build-outs, which is tightening availability and creating elevated pricing across the broader compute supply chain.

We're moving early and aggressively with measures to protect our core hardware product lines while also rationalizing configuration offerings based on component availability and evolving customer needs. As of today, we expect component cost pressures and constrained availability to persist until supply more fully catches up with demand. which we believe could extend into 2027. Importantly, we remain focused on mitigation through supplier diversification, product flexibility and the pricing discipline to ensure we can continue supporting customers.

Before turning the call over to Bryan, I wanted to share a perspective on AI and its impact on software and even more specifically on PAR. The market fear around the durability of software in an AI first roll is palpable. I would be tone deaf not to address this directly, PAR is suffering extreme sell down. We are 1 of those rare moments where a technology shift is structural. For those of us in the restaurant technology space, we believe this represents an opportunity to lead there are 2 key realities that guide us as we position PAR to be the leader in AI technology for restaurants.

First, food service chains are among the most compelling environments for AI to create real, measurable value. Foodservice is a performance business. brands compete on speed, consistency and quality and their guests are already conditioned to engage digitally. At the same time, rising costs, structural labor challenge and tight margins mean AI isn't being evaluated as a future capability, but rather as a near-term operational imperative. We believe that among all physical businesses, restaurant AI adoption by end users will be amongst the fastest.

And second, PAR is uniquely positioned to be the company that delivers it. PAR owns and is an ecosystem of record for tens of thousands of restaurants, every transaction, every labor input, every menu item, every guest interaction, every payment event parts best positioned to be the provider that delivers an intelligent operating system where POS captures the data. Payments enriches the data. Loyalty identifies the guests PAR ops structures the Insight and PAR AI delivers prescriptive action. We believe that the winners of AI have 3 key components: a massive trove of industry-wide first and third-party data, second, the complex integration into an end-to-end workflow.

And third, customer trust, the least measurable and hardest to come by other 3. For PAR, we have all 3. Our AI strategy isn't about adding a chatbot on top of our products. We are rethinking our entire product suite to deliver measurable outcomes autonomously. The vision stated plainly we are building a platform that gives every restaurant brand, the firepower of the biggest brands in their segments. A single marketing manager at a 200 location chain should be able to execute with the precision, personalization and speed of the entire marketing department of the world's largest restaurant.

We'll empower them with a team of AI agents that actually do the work strategize new plan, build segmented audiences, configure campaigns, deploy one-to-one offers, optimizing in real time and reporting back what worked and what didn't or imagine the regional ops leader overseeing 150 stores empowering them with the situational awareness of a Fortune 500 fuel organization through an AI layer that watches every location and flags what matters, recommends what to do and execute the fix before it becomes a problem now zoom into the General Manager opening the store at 5:00 a.m. This lead walking with the preparedness of an executive chef running 11 Madison, knowing exactly what the who's coming in, what's trending and where yesterday's gaps were.

I guess pulling into the drive to should experience something that feels like their favorite local spot members them and they're talking to a friend. The pattern is the same in every case. AI eliminates the gap beating what small teams can do and with the best operators in the world actually do. Nobody needs another chat interface. What brands need is a system that advises you before you ask, assist while you execute and answers when you need it. across every function at every location with the ultimate goal of driving profitable revenue. That level of scale and dependency makes PAR well situated in the deterministic orchestration layer of this new world. AI won't replace enterprise orchestration but rather leverage it. We are seeing this firsthand with our customers today. Bryan?

Thank you, Savneet. Good afternoon, everyone. We closed out 2025 with our most successful quarter in recent history. From our strong bookings, incremental ARR of $17 million and down through to our $7 million adjusted EBITDA. We continue to execute to our plan of driving organic growth across our products and the verticals we serve, while also driving profit improvement, all while ensuring the company has the right resourcing to execute with excellence on our growth trajectory and an aggressive AI transformation. Subscription Services continue to fuel our organic growth and represented 63% of total Q4 revenue. .

The growth from higher-margin revenue streams resulted in a consolidated non-GAAP gross margin of $61 million, an increase of $8 million or 16% compared to Q4 prior year. We managed the growth while limiting operating expenses, which has enabled us to grow adjusted EBITDA for the third quarter and ERP. Now to the financial details. Total revenues were $120 million for Q4 2025. The an increase of 14% compared to the same period in 2024, driven by subscription service revenue growth of 18%. Net loss from continuing operations for the fourth quarter of 2025 was $21 million a $0.51 loss per share compared to a net loss from continuing operations of $25 million or $0.68 loss per share reported for the same period in 2024.

Non-GAAP net income for the fourth quarter of 2025 was $2.6 million or $0.06 earnings per share compared to a non-GAAP net loss of $37,000 or effectively $0.00 per share for the prior year. Adjusted EBITDA for the fourth quarter of 2025 was $7 million, an improvement of $1.2 million sequentially from Q3 and $1.3 million compared to the same period in 2024 this positive movement is indicative of our ability to continue to drive growth with profitability. Now for more details on revenue. Subscription service revenue was reported at $76 million. an increase of $12 million or 18% from the $64 million reported in the prior year and now represents 63% of total par revenue.

Organic contrition service revenue grew 11% compared to prior year when excluding revenue from our trailing 12-month acquisitions. ARR exiting the quarter was $315 million, an increase of 16% from last year's Q4. We with Engagement Cloud up 19% and operator cloud up 12%. Total organic ARR was up 15% year-over-year. Incremental ARR growth accelerated in the second half of the year and we reported a record $17 million increase in Q4. This progression reflects strong underlying momentum in the business and positions us well entering 2026 our growth is being driven by both site growth and increased ARPU, reflecting successful execution of our Better Together thesis, which is driving momentum in both multiproduct deals and cross-selling into our existing customer base.

Hardware revenue in the quarter was $28 million, an increase of $2 million or 7% from the $26 million reported in the prior year. The increase was driven by continued penetration of hardware attachment into our expanding software customer base. Professional service revenue was reported at $16 million, relatively unchanged from the $15 million reported in the prior year. Now turning to margins. Gross margin was $49 million, an increase of $4 million or 10% from the $45 million reported in the prior year. The increase was driven by subscription services with gross margins of $39 million an increase of $4 million or 13% from the $34 million reported in the prior year.

Subscription Service margin for the quarter was 51% compared to 53% reported in Q4 of the prior year. The decrease in margin is due to an intangible impairment recorded in the current period related to the write-off of capitalized software development costs within our drive-thru business. Excluding the amortization of intangible assets, stock-based compensation, severance and the impairment loss. Non-GAAP subscription service margin for Q4 2025 was 65.8% compared to 64.7% for Q4 2024 that margin includes the impact of a fixed product contract that we acquired from 1 of our 2024 acquisitions, excluding that contract, which is not reflective of core operational performance, non-GAAP suction service margin was 71% for the quarter, an improvement of 190 basis points versus prior year.

The continued improvement is a strong sign of our ability to leverage economies of scale. Hardware margin for the quarter was 23% versus 26% in the prior year. The decrease in margin year-over-year was driven by increased supply chain costs resulting from recently implemented U.S. tariff policies and supply chain constraints with memory components related to a significant increase in demand driven by the AI infrastructure industry. We continue to evaluate and implement pricing adjustments and modify procurement plans to mitigate the impact of supply chain cost movements on our hardware margins.

We expect this environment to persist through 2026, and we'll continue to manage mitigation plans. Professional service margin for the quarter was 28%, unchanged from the 28% reported in the prior year. In regard to operating expenses, GAAP sales and marketing was $12 million, an increase of $2 million from the $10 million reported in the prior year. The increase was primarily driven by inorganic increases related to our acquisitions, while organic sales and marketing expenses increased a modest $700,000 year-over-year. GAAP G&A was $30 million a decrease of $1 million from the $31 million reported in the prior year. The decrease was driven by a $1.5 million decrease of organic G&A expense year-over-year, partially offset by inorganic G&A expenses.

R&D was $22 million, an increase of $4 million from the $17 million recorded in the prior year. The increase was substantially driven by a $3 million increase in development costs as we continue to invest to innovate our product and service offerings. Residual increase was driven by inorganic R&D expenses. Operating expenses, excluding non-GAAP adjustments was $54 million, an increase of $7 million or 15% versus Q4 2024. And when excluding inorganic growth, organic operating expenses increased a modest 8% primarily driven by an increase in R&D investment during the quarter. Now to provide information on the company's cash flow and balance sheet position.

As of December 31, 2025, we had cash and cash equivalents of $80 million. For the year ended December 31, cash used in operating activities from continuing operations was $27 million versus $21 million for the prior year. The increase in cash used in operating activities compared to the prior year was largely attributable to increased accounts receivable. We view the increase as an interim position and expect the days sales outstanding will stabilize and pull into historical levels during 2026.

Cash used in investing activities was $13 million for the year ended December 31 versus $180 million for the prior year. Investing activities included $4 million of net cash consideration in connection with the tuck-in asset acquisition of Go capital expenditures of $3 million for fixed assets and capital expenditures of $6 million for developed technology costs associated with our software platforms.

Cash provided by financing activities was $12 million for the year ended December 31, and versus $279 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. I'd now like to take a moment to reiterate and thank our PAR team and how they manage a successful strong second half of the year.

We pride ourselves in making accretive capital allocation decisions and through our focus on operational execution, position Par for sustained growth and success. We're proud of what we have been able to achieve, but we are, by no means, content on where we stand. We need to double down on executing to our strategy as we progress to 2026. We expect ARR to continue to grow in the mid-teens. And similar to last year, the net growth will be more muted in the first half of the year versus the second half, as Savneet mentioned.

I will now turn the call back over to Savneet for closing remarks prior to moving to Q&A.

Thanks, Bryan. 2025 is a strong year for PAR after a slow start, we added record ARR in Q3 and Q4, with a large swing in EBITDA in net income. We enhanced our platform functionality. We're first in our sector to commercialize an AI-native product in CI. We won the industry's largest projects and drove multiproduct attachment across near 100% of our deals. In 2026, you should expect from us First, continued growth momentum. We will sustain mid-teens organic ARR growth at scale, driven by multiproduct attachment, new logos and deeper partnerships with our existing customers. .

Similar to last year, we expect our second half will be stronger than our first half as we manage out some of our legacy low-margin customers in Q1. We preserve in your upside from 1 commercialization of new mark-to-market AI functionality and two, pipeline conversion of our large Tier 1 opportunities. Second, you should expect a step change in operational efficiency. We expect to eliminate roughly $15 million annualized OpEx through AI-driven automation and the natural synergies of operating at our scale by the end of Q1.

Illustrative of this we've reached 100% adoption of AI across R&D teams with a meaningful shift towards a genetic development. Most of our development is now happening via agents without human involvement in code. A year ago, developers were still touching almost 100% of co-generated. That's driving real velocity, and we have doubled our road map commits into production in the last year. Third, you should expect for us to deploy parts of our operational expense savings into AI platform production. We will deliver code faster, bring to market new and commercializable AI-led products and demonstrably enhance our workflows with Unified data.

RAI investments are not a hedge for our existing business, but the all-out mandate. All of this is set up to where we wanted to be, a leaner operating structure, a more powerful platform and a product road map that positions part to reaccelerate growth. PAR is only at the start of its growth runway. Our average customer uses just 1.8 part products from a list of 6 to 8 core software SKUs, meaning there is at least 3x organic upside within our base. Further, far from driving customer tech inertia, the ongoing restaurant value wars and implied margin pressures in the restaurant business favor consolidation behind a platform vendor like PAR and the move away from point solutions.

Brands cannot afford to not compete across the entire operations frontier, and we are the only enterprise vendor that facilitates us near 100% of our deals are multiproduct for a reason. Additionally, AI platform investments will naturally drive ARPU expansion as customers are willing to pay for excess value. If technology unlocks a larger pie, it will be adopted with Coach AI as an early proof point. The foodservice technology market is being rewin now and the companies that win widens with the data, the platform, the trust and the conviction to move decisively.

PAR has all 4, along with a track record of execution and reinvention. We are quietly and confidently building our future. Operator, we can open the line for questions.

[Operator Instructions] Our first question comes from the line of George Sutton of Craig-Hallum.

Savneet, you mentioned you never felt more confident about the opportunity set. You've not lacked for enthusiasm in the past. So I just want to put that into perspective. If you can give us a little bit more clarity what you mean there.

Yes. I think that specifically, my excitement is really in the AI investments and the AI excitement from our customers. As I mentioned, we really do think, categorically, the restaurant and retail categories are 1 of the best places to adopt AI technology. These are businesses that are fighting extreme margin pressures, labor challenges, operational complexity and I think that AI is an operational imperative for them, a nice tool to try. And so when we see the end markets we serve, open to new products and then we look at our platform as truly the platform of choice we really think it sets us up for an exciting opportunity to be the AI platform that our customers look to build their future on.

Now speaking of AI, you mentioned these large enterprise deals that you are chasing, you are hoping that through using the AI components, you can speed up those deals. Can you just give us a sense of how that has accomplished many times, I know you're in pilot with these folks?

Yes. My perspective is more that as restaurants in particular, look to adopt AI faster and faster it should accelerate sales processes from vendors that can provide them those AI tools to become AI native. And so I think given how much time and investment and candidly, how far ahead we are of our peers, could potentially accelerate some of these deals that we are working really hard to get done.

Our next question comes from the line of Mayank Tandon of Needham.

Savneet, could you speak to the state of the restaurant market? I asked because it seems like the traffic data is pretty mixed right now, but same-store sales have still been fairly healthy given some of the pricing leverage restaurant chains have. How does that square with what you're seeing on the ground in terms of demand for your products? Should we be looking at that as maybe a signal of how demand would impact you? Or is that maybe not that linear a tie-in or correlation rather?

I don't think it's linear yet, but I think it is moving linear to the upside for us in the sense that this is a complicated environment for restaurants. You've got extensively flat to declining traffic for most you have a value war. You've got cost pressures from labor and your cost inputs through inflation across food stuffs and then you've got massive, massive challenge to win digital new digital customer. And all that screens to for you to make the investments to win in that environment, not to pull back and so we think it's a perfect environment to sell, and we think it's even a more perfect environment to use AI to bring these products together.

Just imagine what I just described to you. how in the heck if you're running 1 of these great brands, do you expect to run a clean operation when you've got different tools running your online ordering, your loyalty you drive through your digital exposure through loyalty and social media, but it's really hard to do that. And I think this environment where there's extreme pressure on bringing guests in the door, and extreme pressure on bringing costs down is a really, really great environment to be a vendor in provided we can provide them the value to make their operations more profitable.

So we think it's a great timing. As far as direct trends, we are seeing, I think, a stabilization. I think last the first half of last year was very painful for our restaurant customers. Q3 was a little bit better in Q4, we saw stabilization, really good holiday traffic numbers. I think as you're seeing from some of the companies reporting it's still mixed, but we're not seeing those extreme drop-offs we saw last year, which I think makes me hopeful that we're kind of past that period of time.

That's good to hear. For my follow-up, I wanted to just ask about how the ARR guidance, we can call it that squares with what you would expect on the subscription growth side in terms of the trajectory over the course of the year? And the same question would be applicable to your margin aspirations for 2026. How should we expect that to trend? And can you provide a little bit more color maybe on sort of where you would look to exit the year, if you could share that?

Yes. I think that we similar to last year, our first half will be lower than our second half. Our second half is looking to be extraordinarily strong right now from book deals that we have -- and so I feel very good about the second half. The first half will be a little bit slower. In Q1, and a little bit of Q2, we are, as I mentioned, leaving legacy brands that are candidly not paying the value for the services that we have, which will lead to us having higher margins over time. And even with that, we feel really confident in getting to the mid-teens growth.

And as I mentioned, I think we've got a couple of nice levers to expand beyond that with first some of these new AI product launches and second, the large Tier 1 opportunities. And so we guided to the mid-teens. And obviously, there's upside there, but we want to make sure we give you something we can hit. And the margin flow-through will come through very similar to last year's margin profile. So I expect the growth to be the driver of margin there. And again, upside there. dependent upon how we deploy the savings I mentioned on the OpEx side.

As far as an exit we expect the exit rate in Q4 to be meaningfully, meaningfully higher than Q1 or Q2. We are we haven't given guidance, but we expect that to be very, very significant, getting us pretty close to the run rate margins we want to get to as the company over time.

Our next question comes from the line of Stephen Sheldon of William Blair.

So a high level, I guess, what are you seeing in terms of restaurant willingness to make software changes and decisions right now? It seems like you look at a handful of encouraging at what up John shape [indiscernible] obviously some others. So is it becoming a better environment for customers to make decisions on what to do with their front of house and back of house software even with the corona dynamic consumer spending environment? And does that look any different in the mid-market percent or price?

Good question. And you were cutting a little bit in out, Stephen, I'm going to take liberty in guessing what you're saying, but I think that it's a great environment right now to be in our category. As I mentioned, we had record bookings last year ahead of our expectations. It was really, really got to see what was happening in Q4. and we expect that to continue.

And we are definitely seeing that in the larger chains. We are continually surprised how many large chains are coming into the funnel. And I do think that is because some of the macro challenges that you mentioned, but the last call I mentioned as well, where brands really do need to figure out how to increase frequency, but also cut cost, and we're a great solution. I think the other core secular driver though is AI. I think there's not a brand in the world that is not exploring ways that they can leverage their data better. And we through luck or design are really the only platform that given that holistic view both front and back of house.

And so to your question on what are we seeing in front of back of house, we're seeing it everywhere. Both our engagement side and our operation side grew really strongly last year. we are seeing it a little bit more on the operations side of our business right now, where our brands are really going aggressive on upgrading the foundation of technology that back of house, if you will. But the front of us is not slowing, but we are seeing a little bit more there. In terms of are we seeing in the mid-market or the enterprise, I would say the we're seeing more pipeline created from the large enterprise, but the medium enterprise, call it the chains that are a couple of hundred up to 1,000 are moving as well.

But I think there's a little bit of the larger change of the budget to make those investments. But we are seeing broad-based adoption. And I don't know if it's I'm comfortable saying it's more here or there. I just think we're seeing it everywhere at the moment.

Got it. Very helpful. And hopefully, you can hear me. On the I think the other thing I wanted to ask about was in R&D, I think you talked about a $3 million increase in development costs. So can you give more detail on that? What drove that higher? And specifically, is that tied to some of the Tier 1 opportunities you're pursuing?

Yes. So I think it comes in a few buckets. So the first is we're making some pretty aggressive investments into AI. As you heard, we've already launched 2 products soon to be and we'll continue to push that going forward. It is not white washing. It is not let's put it interface. These are real products that drive real value that we are charging for. These aren't, "hey, we're now an AI product and it's the same price. .

And so there's a real investment going on there. A second part of it is when you're pushing into these large Tier 1 opportunities, there is more investment for us because these are categories that we have not been in before. For example, we are growing into pizza and that is a new space for us. Entertainment is a new space for us. And at the same time, the configuration and changes needed to go after these new potential opportunities is important. And the good part is all that is reusable across others in that category. So that's the second part.

And then the third part, we are making the investments to modernize every product at par. And so we built a really nice moat and a really nice lead, but we think the worst thing we can do is kind of sit here and do nothing. Now if you look collectively, our R&D expense is still 25% of sales, which we think is a very comfortable position to be in. But we really do have the reinvestment are going on, and it's only because we see so much opportunity in front of us today that candidly wasn't there 18 months ago, particularly as it related to AI.

Our next question comes from the line of Samad Samana of Jefferies.

This is Jeremy Shuler on for Samad. I guess first on the Papa John's, you called out intra-quarter that you're expecting an ARPU of around 4,500 per store with price escalators are these stores below list price? I mean, escalators are getting them back up to list? Or have the escalators exit to take you above the typical list price and then I know you called out you have the opportunity to expand the deal with additional products. Should we expect something similar to the Burger King in where it could happen into a rollout? Or just maybe are you just speaking of a future opportunity, just kind of more greenfield.

So it's market pricing for us. So I think it's great. We got really good pricing here. We're really happy with it. And I think the hope Johnson importantly is equally happy with it. It's part point of sale and part back office. So good high-quality deal for both of us. So market pricing. And our escalators are pretty normal now with any contract that we have. So very much in line with the brands we're signing today. As far as future opportunities, we sort of see 2 direct potential opportunities.

The first is potentially upselling the brand on other products we have. That could be ordering, it could be payments, it could be all sorts of stuff that we've got the AI products that I mentioned. And the second avenue for opportunity will be international expansion as we continue to internationalize core parts of our product we want to -- and are pushing to try to win some of the international markets that they operate in.

Great. That's great color. And if I think about the mid-teens ARR guidance, can you help us unpack how much of that is coming from new locations versus cross-seller products? And I know you guys have some large renewals coming up legacy renewals coming up and there's an opportunity to take price there. How much is coming from that as well?

Yes. I think we're probably 70-30 new logo versus existing customer. A lot of it will depend on some of the rollouts we have towards the year, but it's probably 70-30 from a new product to expansion, which is an incredible change for PAR as you probably remember, for years, it was 100. So clearly, the cross-sell and co-sell muscles really changed. .

Our next question comes from the line of Andrew Harte, BTIG.

Congrats on the share buyback authorization. I guess maybe if you could just talk about maybe how you feel about the balance sheet, how do you plan to deploy that $100 million authorization? And I guess it also leads to what you're thinking about profitability and EBITDA margins continuing to scale for this year as well.

Andrew. We want to have the optionality to return capital to our investors in every which way possible. And the prices that our shares are trading, we don't think make a ton of sense, given the opportunity set, the white space and the long-term growth we see in front of us and obviously, the margin profile we want to get to. And so to make sure that we have that tool to operate and ensure that our shareholders are getting the best return.

And so as we look to allocate capital, we sort of first look at what are the organic opportunities in front of us because those are the ones that we have tons of control and data look back up. We'll look at the inorganic opportunities in front of us and then we'll look at buying back shares. And so we want to make sure that we have the ability to do all the and figure out where we can get the highest return. We expect a strong year this year.

As I mentioned in the second half, we're going to have a very, very strong year cash generation, and so we wanted to make sure we're prepared to be in the market. when and if we see these disruptions that we've been seeing because we don't think it makes a lot of sense and completely understand a lot of the AI fears. But as a company, we truly expect to be a net winner in this AI market we think it's important that we eat our own cooking.

And then kind of a 2-part question on growth. You said in the fourth quarter, the PAR POS kind of results significantly exceeded your internal expectations. So I would like to kind of hear where that came out of or what it was that drove that? And then when you think about 2026 growth to, let's just call it, mid-teens to cat 15%, and it's a bit slower in the first half and then faster in the back half. I guess how much of that, call it, 15% for the entire year is stuff that you feel really good about versus how much do you need some wins that you're tracking on to come across the finish line?

I would say the majority of our plan for the year is pretty much there. We don't there's not a lot of go get for us in our model right now, which is why I mentioned sort of the upside to our model is to get incremental adoption of our new AI products and potentially the bookings of large Tier 1 opportunities we're working on. So a good portion of that is booked and planned. Now listen, things can change, we could screw up, so on and so forth, but we feel pretty good about the visibility that we have there.

Our next question comes from the line of Charles Nabhan of Stephens.

Save appreciate the comments around the supply chain and hardware, given some of the price elation and the chip market. But my question there is, are you seeing any impact on RFP activity from higher hardware costs? Or are you seeing restaurants and operators still willing to upgrade their software while maintaining their hardware.

Great question, Chuck. So short answer is, we're not seeing any impact yet on the revenue side. In fact, as you can see, we've had a really good revenue year last year for hardware, and I hope that continues this year. So it is not slowing down refresh cycles whether those refresh cycles are tied to software upgrades or to net new just refreshing hardware, not refreshing software. But we are seeing on the cost side, where our margins were mid-20s, I think we expect margins will be 20%, 21% from a hardware perspective.

So not the end of the world, but the increased volume has helped us offset the gross dollars if prices continue to spike very, very meaningfully, it could potentially have an impact on our customers wanting to maybe hold off until they saw pricing come down. But we have not seen that, and these pricing pressures have started since April since the tariff started April of last year. And so we've had a pretty strong demand year even with that in place. But we're monitoring it very carefully.

And it's just so hard to predict month-to-month, even week to week. And so as we mentioned, as Bryan mentioned, we're putting a lot of mitigation activities in place from reconfiguration to accelerated buying to ensure that we don't have any disruptions. And the reason we're not -- we're focused on disruption is we haven't seen a slowdown in demand.

And I would just add to it as well, too, right, is mitigating plans are not only to manage the margin on the hardware. We're also making sure, too, as part of the plans that we have optionality to make sure that there is no impact in regards to our software growth and roll out, right? So we do have we are still hardware agnostic, but a lot of our customers want the attachment because they want the 1 vendor because we could service everything, right? But we do also have that optionality to give them what they need from a software standpoint and still have flexibility as to what how they're using. And so that may play into it as we go forward. And so we're managing both of those, and we're making sure that this not impact the software side of the house.

Got it. And as a follow-up, I wanted to ask about profitability as we think about our EBITDA estimates for the next couple of years. I know not all the ARR from this year is going to flow through to EBITDA. But in the past, you've talked about roughly a 70% to 75% flow-through to the EBITDA line from ARR based on roughly flattish OpEx is there any reason to expect a deviation from that framework? Or is that still a fair way of thinking about it?

Certainly, we sort of talked about subscription services ARR at around 70% gross margins. Bryan mentioned, I think it was 71% when you exclude the 1 business unit. And then in incremental, we've always said we expect $0.20 of incremental or 20% incremental cost, although we haven't had that because the OpEx has been relatively flat. I don't think those trends change meaningfully, although we will see some investment in R&D this year.

Again, not game-changing amounts. We really do want to continue that AI investment. And so I think the subscription services margins will continue to hold, and you'll continue to see the gross profit dollars be there support EBITDA growth and to cover any investment that we're looking at.

Our final question comes from the line of [ Maxwell Mais ] of Lake Street Capital Markets.

Just 1 for me. If we look actually, I got to if we look at the bridge technology acquisition you guys made last month, I know you guys are you guys are going to see around $50 million of OpEx savings in 2026. Are you guys looking to invest in that platform at all?

Of course, we're going to invest in it, but I don't that is not going to be a cash burn within Bridge. We've kind of budgeted for it to be profitable within Park. Now if we see a ton of opportunity and we see no alternative, we will. But we budgeted it for it to be profitable within PAR and think it will. And the early customer feedback has been really excellent.

And we'll be able to speak more to it when we get through that next quarter's earnings call, right, as we're closing on that in the near future. So we are definitely excited about how we can leverage that platform within our existing .

And then I guess if we just stay on the M&A trend, I mean, is that I mean, how if you were to rank it in terms of capital allocation in 2026, I mean how does M&A rank in 2026 versus the share buyback and other areas of investment?

It's always at a point in time. Today, we are disappointed with our stock price. And so I think it's very the bar for M&A is very, very high. Bridge was a special opportunity for us. We bought it for roughly 2x ARR and ARR that we expect to grow that's profitable. And so and kind of really helping us complete a product suite of having both loyalty and nonloyal guest data in 1 platform that allows us to build a CDP and do a lot more going forward. So it was very strategic for us for a product perspective and then a good price. We're always looking at stuff, but I think M&A is lower on the priority list given where our stock price is.

All right. Thank you. I'm showing no further questions at this time. I would now like to turn it back to Chris Byrnes for closing remarks. .

Thank you, Stephen, and we want to thank everyone for joining us today on the call. We do look forward to updating you further in the coming weeks. Please have a nice evening.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Hello, everyone. My name is Mayank Tandon. I cover fintech at Needham. I'd like to welcome PAR to our conference. Savneet Singh, the CEO; and Chris Byrnes, Head of Investor Relations. Savneet, thank you for joining us.

Thank you for having us.

A regular routine for you. So glad to have you. Well, I figured maybe it might be helpful just to start on the broader market, the lay of the land on the restaurant tech side. I think what we've seen is a lot of conflicting data points in the restaurant world in terms of same-store sales being very healthy, driven by price, but traffic hasn't been that great, at least watching a lot of the fast casual and quick service names. So maybe you could just step back and talk a little bit about the market overall and PAR's positioning in the space?

So first, on the restaurant side, I think 2025 was a very challenging year for restaurants. We saw traffic down in most of the concepts that we served. We saw same-store sales mix across -- some were able to recapture some of that through the price. But it was certainly the most challenging we've seen since COVID as it relates to restaurant sales.

What made it even more curious was that normally in markets like that, the quick service market actually does decently well because you trade down, and that didn't happen here. In fact, you saw people go back to full-service dining, things like Chili's, Applebee's did a great job of winning the value customer. So it was a messy year for most restaurants. And a lot of brands were stuck with this idea of I'm not a value brand, do I become a value brand and cheap in what I've built for all this time to sort of stay this year or do I kind of stay the course.

And so it was just a very challenging year for restaurants. December, you started to see changes. You can even see this in some of the -- you look at Chipotle stock and others, you can see that sales and volume estimates look really good from all the data people are tracking. So hopefully, that continues in 2026. So there's potential for a rebound there. And usually, these things do rebound and stabilize. And with a healthier consumer, maybe some of these tax refund checks, you'll have more spend over there.

As that translates to restaurant technology, restaurant tech is still very much in its infancy and particularly as in the enterprise category, where most brands are still very early on in going through becoming a truly digital business. So I'd say most brands have an online ordering system. They have an integration into the third-party delivery companies like Uber and DoorDash, but they're still really early in upgrading the core parts of what they're doing. And those are really big IT decisions that I don't think a slightly softer sales here had a lot of impact on.

In fact, we had a larger pipeline and more RFP activity in 2025 than we've ever had before. And so maybe it even accelerated some of that. So I'm hopeful that in '26, if restaurant sales continue to stabilize, continue to get to what we saw in December, it should give us a bit of a tailwind.

From your standpoint, looking at the industry, what is more important? Is it the same-store sales data, which would obviously be driven by price to a large extent? Or is it more about traffic? Or is it more the CapEx budget of these restaurant chains? Like what should investors be watching as maybe a good leading indicator of the health of the restaurant tech space? Or is that not a good correlation between tech and...

In the SMB category, which we don't participate in, it is very much the AUVs of the restaurants. Restaurants are healthy, they spend money, upgrade tech, they'll buy a new [ POS ] point-of-sale system. In the enterprise category, unfortunately is not a great corollary. In a slower market, our loyalty and online ordering businesses will actually spike up because you're trying to bring customers in.

In the point-of-sale business, our bread and butter point-of-sale and back office, it doesn't really have big swings one way or the other. So if you go back to 2020, our business didn't change that much. And we were growing really fast, and we grew kind of the same rates after. There wasn't a big change because these are -- again, you're not updating Workday because of a change in same-store sales. You're not updating Salesforce.com because you had a boost in tax refund payments, right? These are bigger enterprise decisions.

And so, I think, honestly, like stability is probably the thing that I look for the most. Volatility is probably the enemy of a store sales cycle.

Got it. I think, let's jump into some of the themes that you talked about last year, which was -- one was the multiproduct strategy, which seems to be paying off. Maybe you could kind of delve into what's the feedback from customers? It does result in longer sales cycles from what I remember, but obviously, it means a stickier and larger revenue opportunity for you. So maybe just walk us through the strategy and how it's been working so far?

Yes. I mean in many ways, the entire thesis of when we took over the company was this platform idea in that restaurants were realizing they need to be digital, but they were going about it by trying to piece together a bunch of different products with the hope of creating a digital experience. And I think history has sort of proven that in software, particularly platforms win.

And just like you can clearly see the AI agents are becoming platforms are doing things across many different verticals and opportunities. Very rarely does a customer or an enterprise want to have 10,000 products they want to manage. And so our thesis for a long time had been, let's have best-in-class products, but make sure when they work together, you get unique functionality that you couldn't get if you're buying these 2 products in 2 different areas. You should assume that if you have an Apple iPhone and AirPods, you should get some functionality you can get if you had beats in Apple.

If you're trying to create that in the enterprise. And that has really played out. And I think it took us time to get there, but it had nothing to do with our go-to-market motion and everything to do with our ability to prove that the product actually created unique outcomes. And so what we saw in 2025 was that roughly 70% of our new deals were multiple products. That's up from like 0, 2 years ago and probably a very small number the year before. That was pretty amazing to see.

And again, it was a product-led motion. It was not a sales-led motion. The powerful aspect of that is, obviously, you get a much higher ARPU starting out with. So the longer sales cycle gets made up for because you can pull in that product a lot faster and monetize it for a long period of time. And I'd argue that if you've got 2 products in the customer, they're probably stickier, thereby enhancing the LTV of that customer as well because you've had them for more years.

So picking up on that in terms of the multiproduct strategy, how has that impacted your TAM? I mean, I don't want to put you on the spot, but maybe you could help quantify how that TAM has maybe moved over the last several years? And where do you stand today? And you've also entered into the international market. You've got C-stores. So maybe more of a broader TAM question for you.

Yes. And we certainly spent a lot of time focusing on TAM. We sort of think we kind of came into the business, we were a single product company. And really, for most of our time, we were point of sale loyalty, and we grew fast. We really think we became winners in those markets. And so it's like, okay, what's next? What's next? How do you build something that serves the customer better and creates opportunity for our employees.

The TAM within our existing base is if we were to cross-sell our existing products just into our existing base, we didn't sign another logo, you can probably 2.5x the revenue we have just from that push into our existing base. So that takes time. But there's a lot of TAM in there. Now the actual white space is probably 4 or 5x, but I sort of cut out opportunities I don't think are real in that number. So that's sort of selling to our existing products. But we also continue to expand into adjacent TAMs.

We are growing very fast in convenience stores now. Convenience stores are the fastest-growing foodservice category in the United States. More people are buying their breakfast -- more people are buying their breakfast at convenience stores, buying their diners at convenience stores. And so we need to be able to find our customers in those spots as well. Earlier or yesterday, we moved into the pizza category. Pizza is a huge category, obviously, in the United States. We didn't sell into that market before. And so we continue to kind of find these new adjacencies that are additional TAM for us to go after.

Any way to like put a number around that TAM and what your penetration today is when you size the whole thing?

The number would be too big to like it's just like fix. It's like McKinsey food. In research report like there are 7 million restaurants in the world that are using point-of-sale system. In the U.S. and Canada, it's about 1 million. Our people will say there's 1 million United States. Our data shows 5 million in U.S. and Canada up roughly half of those are enterprise in nature. And so now that we service pizza, I suspect that entire TAM comes available to us.

Since you mentioned pizza, I'll ask you now instead of later. But let's talk about the win last night. I think at least in my space, it's all red today, but you're sticking out as a -- in a good way. Your stock is up nicely today on the Papa John's announcement. So maybe you could talk about how you won that relationship? Could you size it for us and maybe the time line on how you scale that?

Yes. It is a great deal for us. It will be our second or third largest restaurant customer of the box. It's $14 million, $15 million of ARR, and we do expect to sell additional products in there. So the number is going to climb, I think, if we do a good job for them. It's powerful for us in a few ways. So the first is I think their original desire would have been to partner with one of our competitors that's down the street from them because it's -- they know each other, they go back a long time.

But clearly, that kind of, again, validated how differentiated we were because there was a preexisting relationship. The second reason why this is so powerful is, there is not really -- there is not an enterprise pizza provider. So most of the big pizza companies, Domino's, Little Caesars, Papa John's, they built their own point-of-sale systems because the existing vendors just didn't service pizza. So this gives us an entire new market to go after that we're really excited about that we didn't go after before.

And so that's just huge for us, which is like now we've got this big TAM to go after. And so I think that's the second point that's really, really powerful for us, and I'll go to look why they pick this. The third thing is the team at Papa John's is a very innovative team. Kevin Vasconi, the CIO, he was the CIO of Domino's when they had their amazing technology revolution that led to that amazing stock run. He was the CIO of Wendy's. And he just this morning did a big partnership announcement with Google at NRF, where they're doing a bunch of stuff with edge compute and agentic ordering.

And all of that's in partnership with us. And so that, I think, elevates how people think about us because now we're in that conversation, and we're partnering with them, obviously, to deliver a lot of that really innovative functionality. Now to your question on the process, the process here was -- work was expeditious. It went very quickly. They went from seeing sort of our product to really the core thing they had to underwrite was do they believe that we could build a piece of functionality in a very defined period of time so they can get out to market quickly. And we had a huge advantage of that they had just seen us do that at Burger King. In fact, they had hired somebody at Burger King to see that.

And so I think for them, they felt great confidence we could actually deliver on their dreams of delivery. Normally, you wouldn't take the risk on a vendor, who hasn't been in your category before, particularly when you're that large, but they're willing to bet on PAR, and we'll make that -- we'll obviously pay that back in spades. But I think that was a huge part is that they've seen our success at scale, and they've seen our ability to roll out very quickly.

So if I was to guess, they picked us first and foremost because of that. And then second, we were the only vendor, I think they met that can meet their innovative goals because their desire to be innovative is far more than the average restaurant chain. They want to take real risk, when it comes to kind of taking a bet on the way that we as consumers are going to order in the future. And so, I think it was a combination of they can -- their trust in our ability to roll out and then our ability to build to their innovative future.

You mentioned that the enterprise players are not in the pizza category. What makes pizza that unique that they're not present?

It's a few things. So one is it's like the modifiers. Just the idea that you can add half a pizza with this, half a pizza with that, [ cricket ] this temperature, get that temperature. The flow through the kitchen system is very different. You throw a pizza onto a thing, it goes through, that's different than a bowl or a thing. Pizza has in-store dining, takeaway dining, very, very carryout.

And so nobody built all that functionality. The supply chain is very different. So down market, there are a bunch of point-of-sale vendors -- or sorry, 2 or 3 that specialize in pizza. And -- but in the enterprise side, nobody really was able to do that. Perhaps on...

So the Papa John's win, it's 3,200 locations in the U.S. And can you put any ARPU figures around that? And sorry, just to go back to the timing. I think you mentioned in the press release, it will be done over 2027?

Yes. We'll hopefully start installing in Q4 this year. It's about $4,500 per store, so very strong pricing for PAR, good price escalators. Like we're very -- we and them are very aligned to making this a massive success. But again, also proving the value that people are paying for the quality of our product. So this should really -- I think -- and then like I said, Exercycle will be able to hopefully sell them additional products down the line.

Got it. So when you talked about, I believe, on the last earnings call, something in the order of 1 to 3 Tier 1 opportunities, this would be one of them. Can you provide any updates on where you sort of stand at least on some of the other Tier 1 opportunities that you had called out?

On one of them, we expect to hear probably sometime in Q2. And then the other one, which is the largest one, we're hoping sometime this year. it's a large organization. We're doing a lot of work with them in partnership with them. It's very different than our more traditional deals. And so hopefully, sometime this year, we'll figure out where we are. That one will be transformative to us as an organization. So we'll give as much information as we can when we get to that and if we get to that.

So for good or bad, the market focuses a lot on Tier 1s, but you've also said that there's a lot of other opportunities that don't fall into that category. Could you talk about how important that is to your overall ARR growth as you look ahead into '26?

Yes. I mean I think PAR has had like a very rapid evaluation. I -- ironically, this is the first conference I ever presented at. And when we came here, we had less than $10 million of software revenue 7 years ago. And today, we're at $300 something. And I think that as a result, like we've got a lot of focus on like pipeline and next deal. And I think where we're at today is we want to get to a point where there's not one deal that really determines a year or a quarter. And I think we're getting closer and closer to that with the scale that we have and the quantum of deals -- the quantity of deals that are coming in.

So I think we're getting closer and closer to that. But to me, our year is more determined by the blocking and tackling. This Papa John's one is huge because we entered pizza. We got a great price. We got the ability to sell new products, but most of that impact is a '27 impact. And so for this year, our success will be dependent upon executing on the deals we won in the second half of 2025 and what we win in the next couple of quarters here.

Got it. And then as we think about your growth over time, how do you break it down between location adds versus ARPU expansion? And of course, ARPU will come from selling additional products over time as well. And maybe you could talk about that in the context of both operator and engagement.

Yes. It's a great call out there. So historically, we have been heavily on new logo versus upsell. Today, I think we are finally at a point where we're probably still a 75-25 new customer than we are upsell. It's probably 80-20 because even though we're rolling out Burger King this year and it's an existing customer, still a net new logo -- net new store, right? So the accounting is complicated because you have to look at a per store level.

I would love to get to 50-50 one day. In the next couple of years, we have renewals coming up of our legacy super low-priced customers that will be a nice tailwind for us to start bringing up them to market pricing. We've got a bunch of opportunity for cross-sell and upsell. But by fortunate design, the new wins we have, which continue to be new logos are just so large that I keep hoping it's going to 50-50, but it's still like 90-10 new logo.

We'll take it either way, but the key is obviously to get back to maybe more of your target growth rate, and that's where I was going with it. I think in the past, you talked about 20% being your ARR subscription growth target, and you were a little bit below that for reasons that you had discussed on the last call and the call before that in 2025. How quickly do you think you could get back to that 20% target number just given what you're seeing in the market overall and these new logo wins?

What I'd say is we haven't given guidance yet. But I would say we've said we're a mid-teens grower, and we need to win these big deals to get back to the 20s to get there. So we took a big step yesterday in doing that. And hopefully, there's more to go. And I think that's going to be critical. The other levers for us to get there will be this cross-sell, this upsell. I do expect to be pleasantly surprised with about us winning more and more of these deals that we historically hadn't played into, but I think we have opportunities into.

But the way I think of it is that what I'm starting to continue to believe now is most companies, you grow 30%, then you grow 25%, kind of like a long deceleration, then you kind of stick it. I think we'll end up growing longer than expected because as an example, we announced Papa John's yesterday, and then we got an RFP for a bigger chain than Papa John's. Now we don't put that in the pipeline yet because we got to see if it's just how far it's going to go, but it's like we've never -- we historically would get a new RFP like that once every 3 years. Now we've gotten 4 in the last year.

And so I think that the market is also changing in front of us. And so it's a little hard to predict, but I think of us as mid-teens in these big deals give us a chance to get higher.

Does the international opportunity with Task sort of maybe change the math? Because if you were to start scaling with Task, which, again, I know you've invested a lot in the product and the capabilities, but I don't think you've seen the revenue yet. So could that move the needle in a positive way for you?

Not big enough yet. Task is very small internationally. The loyalty business is quite large, but it will -- we've really positioned it to try to win this one mega deal. And if we're successful in that deal, it will be a huge driver of growth for many, many years, but it will take time. If we're not successful, then we'll start turning on the revenue because we have one good business there. We just haven't taken it live in preparation for potentially winning this larger opportunity.

Got it. Maybe I'll just switch over to the hottest topic, obviously, in the market around AI. I know you've talked about that in meetings and on the earnings call. But if you could maybe just, again, walk through sort of how you're looking at AI in terms of embracing it into your platforms. Do we see any tangible impact in terms of numbers from that AI investment? Or is that, again, maybe TBD or you reach a lot on that?

No. I mean I think that we are highly confident in saying that AI has allowed us to scale our engineering spend more efficiently. So when we reported last 21% or 22% of our revenues went to R&D. That's really, really, really efficient. I think the bodies in our engineering team haven't grown in 18 months I think a lot of that has to do with our ability to be more efficient as we've shipped product. And also the speed has gone up. And so I do think that is a direct result of AI internally.

We've done an okay job with support an okay job sort of elsewhere. But we -- I think if you talk to anybody that works at our company, they would say, we're clearly all in pushing everything to an AI-first solution. However, it's the product side that matters more. And this is where we've kind of put the gauntlet down to our teams, which is you can't just put out a LinkedIn post talking about the future of AI. You've got to give a SKU that has revenue associated to prove it.

A long time ago, you might remember me saying this, whenever a product person would come to me and say, I built the best product. It's like there's only one way to prove built the best product. Is it the highest priced product in the market and do you have the highest market share. And to me, in AI, it's your ability to actually get people to pay for it. So we launched our first SKU at the end of September called Coach AI. We've got a very, very strong pipeline. We've got, I don't know, a dozen or a couple of dozen customers on it already that are paying us monthly for it.

The data -- the early data is awesome. They're using it, and they're using it a lot. And the way that we've told our product team or the way our product team and we've kind of brainstorm AI is there's going to be like -- we call it sort of like 3 layers of AI at PAR, but I think it's going to be everywhere, which is the first layer is the UI/UX layer of every product becoming chat-based. So if you look at the products that we sell, we do tons of reporting for the back office, tons of reporting for the marketing.

Usually, you have a marketing expert download report and say, was this campaign effective? How do I segment this tool? How do I figure out X, Y, Z? Well, now you can use AI to ask all those questions. Hey, what campaign is working, what product is expiring, where should I run this that, whatever? How do I do this? What stores should I focus on today? What campaigns are working and should I kill? Really removing the need to be an expert in that tool and it becomes like a ChatGPT.

And so, we've launched that there. We've launched that in our Loyalty program next so that you can then say, tell me the most profitable segment of customers I have and tell me why. The second -- and the really big win, I think, for product-led fresh PAR is we look at it as what are products we can create that with AI that you could not create before Gen AI. So not AI, but Gen AI, meaning ostensibly, if there was not Gen AI, this product wouldn't exist anymore. And so there are some really cool things that we're doing that allow us to give a better perspective. So as an example, one of the visions we have that we're building really quickly towards is in marketing, there's the concept of a segment of one. How do I market to my as a one person so that the campaign is completely tailored to exactly everything you do. That isn't possible without a massive amount of compute and processing.

And then we said, let's take the next level, how do we maximize an individual store? Imagine you're, I don't know, a random franchisee of a 3,000-unit chain. The marketing campaign that your corporate runs is not meant for your store. It's meant for all of whatever, Arby's or McDonald's or whatever. But what if you could leverage Gen AI to say, I'm going to run a marketing campaign for that one store to target the perfect customers to monetize the excess inventory that I have on that day, like that's the kind of stuff that we're trying to build out.

And so that's the next layer that we're really, really focused on getting out in the market next. So long story short, we're really, really, really focused on it. Our product managers have a revenue target of AI SKUs. So again, AI SKU is a SKU that we couldn't build before there wasn't AI. And so they'll have an AI SKU that they've got a target for 2026.

Got it. Very helpful. A few more questions for you. Savneet, 1 is on -- I should have asked this earlier, the BK rollout. I know there was a little bit of a delay because of the additional product that you sold, but bigger ARR. Where are we today in terms of BK rollout? And how critical is that to getting back to maybe more of your target ARR growth for this year?

We're kicking but. I think we had a really good -- as I mentioned, we ended September really high. October was our best month ever. November, December were good if you exclude the holiday weeks. January is usually a little slower, but we're rock and rolling. And I think we'll -- our goal is to be close to done by the end of this year. So we're moving really fast. We finally got some clearance to release the number of sites we're at. So that will be out and you'll see it -- that will be out there in a week or 2, you'll see how many sites we're actually in now. But it's going very fast and very well.

Excellent. And then turning to margins.

Leading to, I think a lot of these RFPs and deals.

And then turning to profitability. I think, again, you've shown great progression. We've been able to manage OpEx very well. Given the mix of business, do you have any sort of aspirations for where EBITDA margins could be in the near term, medium term, long term? How do you see it playing out?

In the long term, I do. I think in the medium term, it's very dependent on the mega deals that we're looking at. And so for example, we're making a pizza investment now. We didn't make it before. And so that's not going to be an enormous investment, but that's still an investment that we have to make to make sure that we only just get this customer launch, but we build pizza now for hopefully a lot more pizza customers.

If we win this mega deal, there will be tremendous investment to support it, but with incredible IRRs back to us, which we'll absolutely be transparent about and share with you and the Street to make sure we're not there. But in the long run, I look at our margin profile, it's actually not that complicated to figure out. Here's why. I've always said that generally in software, if you look at the ACV of -- average ACV of a software company, you can pretty much figure out their margin. The higher ACV, the higher margin generally over time.

And so if you look at companies of our rough ACV, they historically have been mid-20s cash flow, free cash flow margin companies. I suspect we have the opportunity to be even higher because the 2 main levers on -- that you as a CEO have a ton of impact on are R&D and sales and marketing. And today, our R&D line is near best-in-class. We're spending 21%, 22%, 23%, whatever it is on R&D, and we're spending 11% of sales on sales and marketing -- revenue on sales and marketing.

So the 2 lines that normally you have overspend on, we're really, really efficient. And so what's critical for us to get to very high margin is -- our G&A continuing to stay relatively flat and fixed because we do have a higher G&A base than most companies are not anymore, but historically because we had this big hardware -- this big legacy hardware business. And then 2, our gross margins going up from -- our software gross margins are about 71%, getting that up over time, which is also just a function of scale as we scale the DevOps infrastructure costs, and we redo one important contract.

And then finally for me, on the capital allocation side. Again, you've been very active on M&A historically. Where do you stand today? Are there any holes to fill in terms of capabilities, geographic expansion? How do you view M&A going forward?

So up until now, our M&A has been spear fishing, like we've been very focused on we want this category, we want this products. And today, we are being very, very careful and opportunistically looking at things that could create -- expand our flywheel. So an example would be in the category of like restaurant and retail technology, DCs have not had a great run. If you weren't like, I don't know, DoorDash like or Toast, like you probably didn't make a lot of money in the category. And so there are a lot of companies that have built some really cool tools that are kind of stalling out on the revenue and are looking at down rounds or debt rounds or extension rounds.

And I think those founders are more and more willing to sell and come and build their vision within PAR. So very, very small things that we could wave in as a technology acquisition that would give us something special that we couldn't have before. We are not fans of our stock price today. So I don't think you'll see us do anything big because we don't want to -- even if it's accretive, I just feel like we don't want to dilute our shareholders until hopefully, we get some more good news going and we can build that reflexive motion again.

But today, there's -- we have a few things going on. They're very small, very, very important technology for what we want. So think of it more as like tech that we really want versus a gigantic business.

Got it. I think we have a few minutes left. Any questions from the audience? I'll open the floor. Mark?

Savneet. [indiscernible]. You discussed being able to empower clients to do so based on the inventory...

We're very close. We can show you a demo. We don't have a customer there yet, but we can show you a demo. So what we've done is kind of stitch together this -- you get a flag that your hot dogs are expiring in 11 days. And you can then trigger to the marketing system to build a campaign, segment the campaign, A/B test the campaign, figure out what -- let's send it to our favorite hot dog customers or people who never had our hot dogs or who've also never had a chargeback. And that's all done through AI. And then you can schedule that campaign and then it will trigger back to the back office software saying, "Hey, trigger an extra labor unit on the day that we're running that campaign so the store is not overrun."

And all within that, it's also then how do you update the third-party delivery menus and so on and so forth. And so, we've got it sketched out. We've got a demo. We're still probably a little bit of ways away from getting customers there because it's also a completely new motion for them. When I'm talking to these big CIOs, I'm like the one part of the restaurant that no one has ever really figured out profitability is like how do you maximize that single unit marketing ability -- because there's so many restrictions.

You can have a -- be the franchisee of a big chain, but you're very limited in how you can market to your community and to your stores. And now imagine, if you could use digital marketing. So if I'm in the ZIP code of your store, how can my app look completely different than the app of -- I live in upstate New York. Like how can my app be rebranded, go bills and buy the bills thing, this thing that, like those things have a huge influence. And then if you take a step forward, like I think what's going to happen is this -- we're going to move to this appless world. But for the apps that stay around, those apps will look very different. My app, I might like color black and you might color green, and so the apps will look totally different. The buttons look different. Like everything is going to be segmented into one.

And so I think when you combine that with the personalization of the store, it's a really powerful tool. Today, we're still super early. We've got a demo, but we've got to get customers to say yes.

Is McDonald's according to your SEC filing is still the largest customer?

Correct.

Yes. We haven't heard too much about the McDonald's. So are they -- do they buy software? Do they buy hardware? Do they buy a combo? Give us some...

They buy combo. So they've been our largest -- or usually our largest hardware customer for 40 or 50 years. They were the first customer and they continue to buy a lot of hardware and services. It spikes -- it changes a lot year-over-year. So if they're refreshing their stores, you'll see a big spike up in -- like this year, they spent a lot of money on hardware and services, and so it spikes up. They're also a very large software customer. We run their loyalty program in 65 or 70 countries and territories internationally. So we are in Spain, Hong Kong, Japan, where if you use McDonald's loyalty app, that's us.

Great. The other -- if I can have a follow-up question. If you look at your operating cash flow, it has been actually quite volatile. I mean you guys actually turned positive in the second quarter of '23, then negative, then positive, negative, negative, positive, positive and negative in the most recent quarter is positive. So how should we think about that is? You guys think...

So the way I would think about it is, the Flex is almost always related to our hardware business, the AR and AP in particular. So we sell -- we charge you -- if you're -- just think of the first month of a customer's bill that buys our software business, they'll spend $250 a month on the point-of-sale software, $10,000 on the hardware.

Now the hardware is onetime, and we charge a $250 for the next 10 years, if you will. And so, the ARAP does fluctuate as we collect. We have very low bad debt expense, so we do collect, but that's generally the fluctuation. So what I tend to look at is the -- if you look over time, the conversion from EBITDA to free cash flow is really just an interest expense exercise on the quarters that we don't have an acquisition.

So is your company going to consistently generate free cash flow...

Yes.

What is the time line?

No. I mean we generated about $700 million last quarter. We expect next year to be free cash flow positive as well. So...

With the hardware.

Yes, yes, yes. Because that's just a short-term working capital. That's not a capital investment we need to continue to make.

Great. I think with that, we have to sign off. Savneet, thank you again. Chris, thank you. And again, congratulations on the big picture start of the year.

All right. Great. Good afternoon, everyone. I'm Pat Ennis, and I'm on the payments processors and fintech team here at UBS. We're excited to host PAR today. On stage with me is Savneet Singh, PAR's Chief Executive Officer. Thank you for being here today. Savneet?

Thanks for having me.

Great. Okay. So let's just dive into kind of maybe an intro to PAR. So for those less familiar to the PAR story, it may be helpful for you to give a brief overview of the company, the different segments of the business, some of the high-level trends in the enterprise POS business and just the competitive landscape as well.

There's a lot there. Okay. So we sell software to large restaurant chains, primarily in the quick service, fast casual category. We're -- we sort of sell to 2 buyer personas, CIOs, which is point of sale and back office; and then Chief Digital Officers or CMOs, which is customer engagement software like loyalty and online ordering.

The sort of the foundational thesis of our company is that restaurants are becoming more digital, and we believe the way for them to become digital is through a more integrated solution as opposed to a bunch of point solutions.

So what restaurants have done over time has been, let me go buy a point-of-sale product here, let me go buy an online ordering product here, a loyalty product here, very disjointed type of products with the hope that creates this unified beautiful solution back to the customer and back to their operations. And we've always thought that doesn't make any sense. We thought that, that should be more integrated, a more holistic solution that allows them to take advantage of that. And so we've gone about -- we started out with point of sale.

We then bolted on back office, online ordering loyalty to make a more integrated solution. So that's kind of how we go to market. Competitively, the core thing to kind of, I think, understand about our business is we service enterprise chains. We don't sell down market, and those are really different end markets.

So there are some incredible companies down market, obviously, Toast, Square, et cetera. We are spending -- we spend 99% of our time not competing against those guys and mostly with Oracle and SR Global Payments through a product called Xenial. And it's not -- and it's really because it's just such a different end market. The needs of an enterprise chain are wildly different than a small -- your local Italian sitdown restaurant. And so we've been lucky in that we -- when we took over the company, we had -- we were in 5,000 point-of-sale sites Today, we're in 30,000. We're in 80,000 loyalty, and that's all net new game. We -- this has all been shared stolen from those kind of legacy providers over time. So it's kind of a nice pond deficient in that while we do compete a little bit on the fringes with some of the really cool companies, we're generally competing with more legacy products.

Okay. And you hit on some of this in your response there, but you've expanded PAR's product portfolio from POS to loyalty payments, back office, online ordering, among others. How do you pick areas to invest in? And what products have the greatest impact on your ability to sell to restaurants?

We've always looked -- so M&A has been a product-led motion for us, not a market share, not necessarily a financial-led motion at first. It's always been focused on where -- if we were to acquire a product, could we then integrate that product into our suite of products as the collective becomes more attractive to the customers. What that really means is if we buy -- acquire or build a second or third or fourth product, can we convince you that buying 2 products from PAR gives you unique outcomes you couldn't get if you're buying those from 2 different vendors. So I'll give you kind of a basic example. Today, if you have a point-of-sale company that's PAR and have a loyalty product that's PAR, those are 2 different companies that are fighting for that brand's attention.

But if you buy both of those products in par, what's really need is we can actually then provision a loyalty module at the register for that cashier to be like, hey, Pat, like I saw you're owning all the train, we have sec menu, whatever it is. That doesn't happen today because the POS companies never get a real estate on their screen to a loyalty company that they don't own or have an invested interest in.

Conversely, the loyalty guy is not going to get the data to the POS guy. And so it sounds very basic, but this is kind of like the majority of the interactions of restaurants. And so by giving them this unique functionality, we can now say, "Hey, you can go buy a loyalty from someone else, but if you buy from us, here's an example of functionality you can get only if you buy those 2.

And so we look for what we call better together outcomes where we can really prove to you buying more from us isn't a bundle, but it's actually a unique functionality you couldn't get outside of us.

And so that sort of is the rule for us, which is we have to be able to sort of say that when we're adding it to the collective, we're actually making the collective more attractive. i.e., hopefully taking up the opportunity for cross-sell and growth in the future.

Amazing. Understood, and that makes a lot of sense. So I mean, moving from the products to kind of what your current TAM is, could you just give us a sense there? And are all enterprise restaurant chains and C-stores addressable? And is this a global opportunity?

So definitely not all are addressable. We really try to be really precise on what our TAM is and kind of that does guide some of our growth in convenience stores as an example. So in restaurants, there are a wide range of estimates, but there's anywhere from 300,000 to 450,000 enterprise restaurants in, call it, the U.S. and Canada. That's our core market that we're going to sell into. Lots of people will say the number is a lot larger. We don't the math that we look at.

And so we're less than 30,000 or 30,000 point-of-sale sites. So we have a super long way to go, we think, in that market. And I think that market is an awesome market to sell into. People like to say restaurants are bad businesses, but quick service franchise businesses are awesome businesses, and they survive a long time.

And so we feel it's a good end market. On the loyalty side, it's about half that. So call it, 100,000, 150,000 -- 150,000 kind of enterprise-like chains. The other half are mom-and-pops that have a local gas station. And in the enterprise space, we're in 20,000. So we again have a long way to go. And so -- and in that sector, we are just getting the flywheel going on our second and hopefully eventually our third and our fourth products.

Okay. Great. That's really helpful context. And moving to -- from kind of the TAM to par, just maybe latest industry and restaurant macro trends, so the backdrop. QSRs have been pressured recently with several pointing to weaker traffic or spend from the low-end consumer. Is this a time period or is this a period of time where PAR engagement products are of even more value for your customers and prospects?

Yes. I mean 2025 has categorically been a weak restaurant market, particularly in the QSR, fast casual space where we play. Ironically, it's been a good bookings year for us because of that, I think. I think we've had a good year regardless, but I think that when you see traffic declines or flatlining, you feel a pressure to engage your customers more. And so as a leading loyalty provider, we benefit, I think, in that.

And obviously, I think our results show increased activity. At the same time, I think that on our core ops business point of sale, which is really our main land and expand product. You really learn in these kind of slower markets that not having a really robust or modern point-of-sale system really does limit your ability to counteract and grow in tough markets.

You're pretty limited in the digital innovation you can do because you've got an old point-of-sale system, you haven't upgraded in many years. And so that also does kind of reinforce -- imagine the CEO of a chain that has declining traffic and you're like, "Oh, what if we built this really amazing digital interface into our brands? And everyone is a great idea.

And then the CIO is like, well, I got to go to the point-of-sale company to see if they can do this integration, and they're going to tell me it's going to be years. And so that also kind of helps push along. So I do think these slower times have historically been really good for bookings, and that's certainly what we've seen this year. So I think it helps. if you have a drastic drop, obviously, all things are off the table. But usually, we see really strong momentum when things slow down a little bit.

Totally understood there. And I mean, in that same vein, restaurant owners have gone through a lot over the past few years with COVID-19 inflation, tariffs, technology disruption. What are some of the specific main challenges or opportunities that restaurant owners face today and that you can help them solve?

It's all of that and more. I mean I think running a restaurant is a really complicated business. People think it's relatively simple, but you've got to manage a supply chain that's far more complex than most people think. You've got to deal with labor that turns over every 90 to 120 days.

You've got increasingly compliance rules on food and safety. You've got incredible, incredible pressure to become a digital business when the -- your restaurant hasn't changed. If you go into a restaurant -- quick service restaurant today and you went there 30 years ago, those 4 walls haven't really changed that much.

But all of a sudden, you've got to serve the Uber Eats customer, the DoorDash customer, the online ordering customer, the loyalty customer, the guy that wants to pay the phone, the guy that wants to pay the QR code at the table plus the drive-thru, like you're kind of taking a brick-and-mortar business and trying to make it digital.

And so I think all these things have put tremendous pressure to make things simple, which is if you're a restaurant operator, I think you're like, I don't really want to manage 20 different vendors, just make it simple and easy so I can focus on my food and my guest. And so it's a long-winded way of saying, I think that in an effort to become digital, restaurants have done themselves as a service.

They've had this crazy vendor sprawl. And so when something breaks, everyone doesn't know who to point to figure out. And so a lot of what we do is sort of bring simplicity, which is saying, hey, the back office and reporting and the point-of-ale reporting is one report model, and they're like, oh, that makes life easier or online ordering loyalty, you don't have the same database, you don't have 2 different menus.

A little fact of like the complexity of restaurants is that you will have a different in-store menu from your DoorDash menu, from your loyalty menu, from your Uber Eats menu from this menu that menu, and then you'll have a different of those for every store you have thousand restaurants, you're going to have thousands and thousands of menu floating around with different pricing, different combos, different whatever.

And everyone looks like what's the source of truth. And it's usually it all ends up rolling up the point-of-sale system. But that point-of-sale system is extensible across everything, well, that's really simplifies your life. And so it's a very long-winded way of saying that like they're under attack in 10,000 different ways.

And so we give them, I think, an opportunity to take back control a little bit so they can focus that time. From an acute perspective, the core pressures they have are traffic. Restaurant traffic is down. Restaurants are losing share to convenience stores and particularly for the breakfast daypart and I think over time more and more.

And then I think the second meta issue they face is that while inflation has slowed, cost within the restaurants has not come down. So whether that's real estate, food or labor, like it just hasn't come down. And so dealing with a point where traffic is down, so you want to kind of bring down pricing to increase volumes. But then as you bring down ARPU, you still -- your costs haven't come down. And so I think it just leads to more technology investment over time.

I appreciate those examples that really brought it to life. And I guess moving on to kind of PAR's more recent company trends. You talked about having mid-teens or higher organic ARR growth expectations now. What would be some of the drivers for getting ARR growth into the 20% plus range going forward?

So what we've kind of said is we feel really comfortable getting to mid-teens with the business we have today. And there's lots of levers and opportunities, but I think we want to get ourselves like we feel really good. We're winning at high rates, and we're seeing the pipeline continue to grow and part of it for all the stuff that we just talked about. For us to, I think, become a 20% grower it will be dependent on winning these large deals that we're very advanced with a number of them.

And I think it's reasonable to assume that hopefully, that we can win some of those deals over time. And so I think what I can say for sure is that the durability of our growth, I think, is going to be very strong. I think we're going to grow stronger for a number of years because the pipeline is so large because of the large deals.

And is there an opportunity for us to grow 20%? Of course, like I think we win these deals and it is really impactful. But the durability, I think, is just really, really strong. And that all comes back to the fact that we are in 30,000 restaurants. And so there's just a long tail of stores that have to convert.

Definitely still some -- a lot of runway there. And you talked about hardware and professional services margins as well this past quarter being pressured. But it sounds like you have confidence to get them both back to the 20% plus range. Can you talk about the strategy there?

Yes. So the drag on margins has been tariff related for us. we have been able to, for the most part, get -- be able to start passing on tariffs to our customers. It doesn't happen overnight. And so Q3 was a big hit to our -- excuse me, to our gross margins because we absorbed the tariff. We -- from the moment tariffs go up, we go to our customers.

We try to get an amendment to hey, we're going to pass the tariff cost on to you. And usually, it happens on the next quarter where we can get that going. And so you have the customers kind of sprint try to get in before the tariffs. And so we'll get some of it back in Q4, and then I think next year, we'll hopefully get back to "normal".

And so just the tariff mitigation plan. It's -- and our customers have been really, really supportive of like, hey, we get why this is happening and you've got to do this. But it's going to take us a couple of quarters to get back to normal gross margins.

Understood. And moving to kind of the recent wins in the pipeline. You announced some impressive contract wins with Burger King and Wendy's in '24, among others. How do you sell par when you're pitching to management at these companies? What are they looking for in a partner?

I think when you're selling to large enterprises, there are all sorts of reasons that you win. A lot of it, I think, is belief. If you're a CEO or CFO or COO of a big restaurant company, do you have any clue about how software is built? You don't, right? And so what you're really trying to convince them is, number one, you can trust us as a vendor. And how do that? Well, you can say here's all the customers we have, here's proof points, it's references.

And here's product road map. And then I think the second part is showing them a vision of the future. And I think one of the biggest mistakes that people make in all of enterprise software is you go get -- you finally get to the C-suite. And then you paint in this view that like your world is about to be disrupted and don't worry, I'm going to save you.

And like that is just not a good pitch. because, yes, the world is being disrupted, but it never happens overnight. And you don't want the vendor that's going to say like coming on a shining white horse thing, like I'm going to save you because that's just different. The -- you have enough mental model, that's not the way it is going to work.

And so what we try to go and say, listen, we're not going to come here and tell your world is going to be disrupted. It's clearly -- things are changing. Here's our products are reliable, they're stable. And by the way, call any of our customers to prove it out. And that's a lot of what I do is like, listen, I am so subjective.

So asking me if our product is the best, it's like the dumbest question in the world. But you don't need to ask me, ask our customers. And I think that matters more than anything else. And I do think you have to build some belief of the future because every single one of those CEOs is reporting to a Board just like myself and everyone else and need to partner on innovation and AI. And so if you can paint that vision of the future that you can help them be that partner. That's really the goal of those meetings.

And how does PAR's new business pipeline look right now?

It's really strong. I mean we've never had more pipeline before. I think a lot of it is being driven by the point of sale and back office space where we continue to see tremendous momentum in these really, really large deals. And then I think on the loyalty side, we've never had higher win rates. We've done a tremendous job making our products super competitive.

Honestly, I think there were all these fears of this start-up, that start-up, and I think they've all kind of fallen to the wayside or really kind of given up trying to compete with us on the enterprise side. And so I think as venture money has candidly exited our vertical, the people coming in with stupid economic deals has kind of fallen away, and we've kind of sped up that market.

So we never have more pipeline. And I hope we see in '26 and '27, the same thing, which is as we grow, the opportunity to win bigger and bigger deals continues.

And along the lines on those bigger and bigger deals, you've talked about the several Tier 1 near-term opportunities. How exactly do you define Tier 1? And then can you add some color on those opportunities as well?

Yes. Tier 1 historically, we've said is 1,000 stores and above. But what's happened is we've now won deals that were in many thousands. And so what we've sort of characterized is that we have a few deals in pipeline. One of them is very, very large, and we've got a couple that are much larger than 1,000 stores. And so that's what's kind of been unique, which is historically, we'd want to win one of these deals every few years, and now we have 3 all at once.

We'll see if we're successful. And today, we feel great. I mean I feel like even from when we reported our last quarter, the ball is like we're getting to the red zone of 2 of these for sure. And we feel more encouraged now than we did 2 weeks ago, 3 weeks ago. So we feel really, really, really excited. We got to get the stuff signed and out there. But we're not dependent on those deals, but we feel pretty good where they are right now.

That's helpful context. And when we are thinking about enterprise, and I know every deal is unique, but in terms of the sales cycle and implementation time line, can you just give us kind of broad swath on what that looks like usually?

Sales cycles for us are kind of 9 months to a year generally. The loyalty one is, I think, shorter. And that's generally shorter because the big loyalty RFPs are almost always big consultant-driven, Accenture, Deloitte, so on and so forth. And so they're very organized processes and there's a date, there's a winner and you start rolling up. From contract signing, we launched 6 months later and we start billing 6 months later.

So signing to go live is 6 months. Some deals come before that, but nothing goes beyond 6 months. 6 months, you're paying us whether you've launched or not. So we're pretty strict on that. On point of sale, you sign a deal with the corporate. And once you sign an MSA, you quickly work to configure the software to make sure you can solve all the needs of the customer and then you roll out store by store. So those rollouts can take -- just depend on the size of the organization.

So it can -- Burger King will take us 2.5 years kind of 2.5, 3 years. Smaller changes we can get done in 3 months, 6 months. But generally, we try to make it a defined time line, so we will go to our customers and say, "Hey, this is our price point, provided you roll out within the next 12 months or the next 18 months, whatever size is. And so there's a ramp in revenue on the operator side of our business. The market engagement side is you go live in 6 months.

Okay. Got it. And moving to M&A and how you've kind of grown some of these products or actually brought them to market. Last year, you made 3 acquisitions, Stuzo, Task, and Delaget. What was the strategy behind these acquisitions?

Yes. So I'll work reverse. So delegate is more of our down the fairway M&A, where we're looking to add a product to the collective that makes the collective stronger. Delegate was in the back office space. Our back office product is growing super well. It's probably got more pipeline relative to revenue than any of our products by a long shot. So tons of demand there. But in delegate was a module that fits in there that we thought we could upsell and make that work really well.

That's kind of our more down the fairway type of deal. The other 2 deals were really distinct. They were completely unique for us. And we -- and those are what we call like TAM expanders. So PAR, which we acquired in July or closed in July or August, was focused on international. We were getting more and more pull from our customers to have an international solution.

We did not have an international solution that could service them. And so we made that investment in our acquisition to try to go after that international market. But also Task was a platform that we thought we could win some of these global brands that are not just international, but want the same point-of-sale product in the United States and internationally.

And so it was really well tooled for that. I think a really cool product that we thought we could scale. And given the RFPs that we're in, we feel like, okay, that was -- that seems to have worked. But that was really focused on adding international as a -- increasing the TAM.

Stuzo was our -- kind of cementing our place in the convenience store space. We had grown pretty quickly in our loyalty business within the convenience store space. 10%, 15% of our revenues were coming from convenience and growing faster than restaurants.

The challenge for us was that as we got pulled into the convenience stores, we weren't experts in convenience stores. Our product wasn't really built for that, right? So think of all the stuff that's in the convenience stores not in restaurant, tobacco, alcohol, age restricted products, regulation, gas, like we didn't have any of these integrations, but we had the best food product in the world. And because the stores were becoming restaurants overnight, we grew super fast because we're able to handle that food business.

But we realized if we're going to be great here, we're going to either make a big investment or we're going to need to acquire something. And we stumbled across stuzo that made it very clear that there was a best-in-class product that we think had an incredible team, incredible culture and had enough scale where we could leverage that to go upsell additional and incremental products.

And so we took the swing. I'd say it's one of the best deals -- it will come back as one of the better deals we've ever done. We bought it on an EBITDA multiple, but it was growing at revenue multiple type businesses. It's it's probably our highest satisfaction product for us PAR.

But more importantly, it certainly gives us the belief that we will be able to do the same playbook in restaurants as we do in convenience stores, which is land one product, add a second, add a third and integrate them so the customer gets something really special. So it's been really exciting to see how fast that's grown.

And sticking with C-stores here, what's the TAM look like? And who are the main competitors?

So there's about 150,000 something like that enterprise, give or take, in C-stores in the country. And there's a huge market internationally, which we haven't serviced yet, but we probably will serve over time. Today, that market is not very digitally penetrated like it is in most other markets. And so as an example, there are 3 big point-of-sale players in convenience stores.

For the most part, they're all on-premise and really old legacy software. And that's not me saying it as a point-of-sale guy trying to act like we're cool. The people that Workday would tell you that as well. These aren't products that have perceived that are -- I don't think anyone that works in those businesses nor anyone in the category would say these are super innovative or digital businesses. They just have incredible market share, and they're super sticky because they haven't had to be innovative.

And so we came at it from the loyalty space because what we have observed is that the digital growth within convenience stores is going to be in loyalty, online ordering, kiosk, not the point of sale, unlike restaurants. And so that's why we came at it that way. And so the way look at the opportunity say there's 150,000 stores.

We've got one product that's roughly $19,00, $2,000 a year per store. And then we just launched our second product, which is called Touchpoint, which is kind of a self-checkout product. And hopefully, you'll see product 3, 4, 5, and we will grow this business by site count growth, but also adding a lot more product.

That's great. And sticking with M&A and just going specifically to Task, serves that global marquee customer base that you've mentioned following the acquisition, what's the opportunity for PAR internationally now?

So there's a couple of parts. Task is really strong in Australia, New Zealand, a few other markets, and we'll continue to kind of grow there. But where Task is getting more interest than we would have ever expected is on global brands. And so we have purposely taken down Task growth and focus those R&D resources on trying to win very large restaurant businesses that want a global brand across everything they do.

It's way ahead of schedule. But wildly exciting because we have a product that we think is best-in-class. We have a product that we think we've made it as PAR much more durable. And given the halo of the PAR brand, we can go to the biggest brands in the world and say, let's go become your global solution. And so I think I used to tell investors, there's a call option that this becomes a global thing. It's a call option to win more business from the biggest brands in the world. Those call options seem to be like coming in a lot faster.

And so the core blocking and tackling, we've actually slowed down the go-to-market motion because we've -- it's a small business that we've geared the R&D to focus on these really, really big opportunities. And those big opportunities are potentially transformative to who we are as a company as well. So while it sucks to slow down revenue growth and something that has a lot of revenue -- that can have a lot of revenue growth, we think the trade-off is in our favor.

Yes. That's great to hear the potential success you could have and see with Task and the global brand. We're coming up on time. We have a few minutes left. So I just thought if anyone in the audience has a question you'd like to ask, we can do that. Otherwise, I have a few questions on competition.

That's a really, really great question. So it varies widely. So there's 350,000 enterprise restaurants. Historically, we would add to our base, 4,000 to 6,000 a year is sort of what we've historically done for 5, 6, 7 years.

And so that's kind of how I look at -- and assume our win rates are 25% to 50% in a given year, so it's relatively high win rates. And the #1 reason for loss is you stick with incumbency and then you probably come back in a year or 2 anyways is generally how I've looked at it.

The reason why I say it varies is that in the last 12 months, we have numerous deals that are much larger than anything we've looked at in the past or are multiple Tier 1s in 1 year that will likely change that from hopefully 4,000 to more than that over time.

So it seems like that is accelerating is the point I'm making. But normally, we've -- we kind of pulled in 4,000 to 6,000 a year, and that number seems to be accelerating in general. But the dispersion of how many logos that is varies tremendously.

Any other questions? I thought maybe we could end with one on kind of competition. And you hit on this at the beginning, but you have those modern POS players more down market. What are the main challenges they would see from trying to move upmarket into enterprise, especially the larger brands?

I think building a product for the enterprise is really different than building a product for small business software. Maybe simplistically, when you're selling to an individual restaurant or a chain of 2 or 3 restaurants, generally, like the CEO is also the chef, is the CMO, the CIO, the CFO, the head of everything. It's a single -- or it's 2 people making decisions for everybody. That's a really tough -- really different sales motion than you're going to go sell to RB's and they've got consultants in private equity and does your product integrate into SAP or Oracle or there's like so many different layers of that. And so there's very different products. Culture is also very different. When you're selling down market, you can win a customer on an awesome Instagram ad. In the enterprise, you're really focused on true product-led differentiation.

Your marketing does not matter a ton. It's really does your product differentiate when you're in the lab and when your customers see that. So they're just really different needs of the customer. When you're doing enterprise, you'll have -- you'll be integrated into -- many of our stores have 20, 30 different integrations and just from the point-of-sale system to 20, 30 different products.

When you're, again, selling down market, you might have 1 or 2 integrations you reach sort of, like not a lot more than that because you're looking for a very captive, simple product. It's like QuickBooks versus SAP. Like they kind of both our financial reporting for businesses, but they're really different needs. So I think those companies are incredible, and they can absolutely work their way upmarket. It's super slow. It takes a long time to understand the nuances of the customer base. And I think in the end, I just always thought that they are better focused like dominating that down market and versus the upmarket and kind of getting blows and then when markets slow down, like why are we wasting time.

But to me, it's just a very different products. And if they focused all their efforts on the enterprise, of course, they could do it. But I don't think they can do that given the success they have down market.

Got you. Understood. And I mean, I think we're coming up on time here. So just -- that's all we had for today. Savneet. I appreciate you joining us and for PAR being a big part of the conference and Chris attending as well. Thank you, guys.

Thanks for having us.

Good day, and thank you for standing by. Welcome to the PAR Technology 2025 Third Quarter Financial Results Conference Call.

[Operator Instructions]

Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Chris Byrnes, Senior Vice President of IR and Business Development. Please go ahead.

Thank you, Elliot, and good afternoon, everyone. I'd like to thank you for joining us today for PAR Technologies 2025 Third Quarter Financial Results Call.

Earlier today, we released our financial results. The earnings release is available on the Investor Relations page of our website at partech.com, where you can also find the Q3 financial presentation as well as in our related Form 8-K furnished to the SEC.

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.

A description and 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.

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. 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 afternoon and in our annual and quarterly filings with the SEC.

Finally, I'd like to remind everyone that this call is being recorded, and it will be made available for replay via a link available on the Investor Relations section of our website.

Joining me on the call today are PAR's CEO and President, Savneet Singh; and Brian Benard, PAR's Chief Financial Officer. I'd now like to turn the call over to Savneet for the formal remarks portion of the call, which will be followed by general Q&A. Savneet?

Good afternoon, everyone, and thanks for joining us. Q3 was another strong quarter for PAR, one that shows the progress we're making on all fronts: growth, profitability, and cash generation.

We delivered $119 million in revenue, up 23% year-over-year, driven by software subscription and hardware revenue growth. Our adjusted EBITDA came in at $5.8 million.

This number includes $800,000 of accounting adjustments for non-period costs, which, when further backed out, brings our adjusted EBITDA to $6.6 million, continuing a nice march upward in EBITDA and cash flow.

Our commitment to a flat cost base also played out. Non-GAAP OpEx was 44% of revenue, down from 60% just 18 months ago. This result was driven by our commitment to improving our operating leverage and our ability to begin to realize the operational savings being driven by AI utilization internally.

Our ARR hit $298.4 million at the end of Q3, up 15% organically, reflecting steady execution across both sides of our platform. All told, ARR grew $12 million sequentially in Q3, and we expect that number to increase in Q4 to take us to our goals for the year.

Now, to dig into our business performance in the third quarter. Q3 was another quarter of solid execution for Operator Cloud. ARR increased 31% year-over-year, including 14% organic growth.

In Q3, we proved we can scale large enterprise deployments, innovate with AI, and keep customer satisfaction high, all while maintaining a disciplined focus on expense management and pursuing additional multiple large Tier 1 opportunities.

Our POS business continues to perform exceptionally well. Our Burger King implementation cadence during the quarter accelerated dramatically with high efficiency, and we're pacing to meet Burger King's target for 2025, which then creates great visibility for 2026.

Our OPS platform had a steady quarter as we ramped into Burger King and another large Tier 1 enterprise. The real story, though, in PAR OPS is the momentum in new launches and innovation.

We brought Coach AI to market, an AI-driven assistant that allows operators to prompt operational questions in natural language and get immediate answers from their data.

This innovation comes from combining delegate and data center product suites, and we see cross-sell and upsell possibilities across our wider base. We also launched AI chatbot support, helping users self-service faster and reduce support ticket volume, a meaningful productivity win.

We expanded our international functionality and onboarded a Burger King franchisee in Canada across all sites, including French language functionality in Quebec, showcasing our ability to deliver for global customers.

The PAR OPS operational groundwork and product expansion we put in place will pay off nicely in 2026 as we enter the year with a record backlog and customer commitments.

Turning to TASK. As we mentioned last quarter, we pushed that rollout to next year in preparation for large RFP work. As we now move from RFP to actual development, our goal will be to maintain our launch schedule for next year with new customers while we begin our aggressive build schedule for this Tier 1 opportunity.

That's a major validation of both product and team capability, and hopefully, we will have more to share publicly in time. What is crucial is that 2025 is proving to be the strongest bookings year in the history of the Operator Cloud segment, paving the way for years of sustained growth.

On last quarter's call, I mentioned that we had $20 million in POS contract value that has not yet been rolled out. Our late-stage and weighted pipeline on PAR POS more than doubles this number again, ensuring a robust growth foundation for years to come.

Now turning to the Engagement Cloud, which also had a strong Q3. Engagement Cloud ARR grew 16% from Q3 last year, including 15% organic growth.

We continue to see real momentum and investment in digital engagement in the markets we serve, as brands look to connect more deeply with their guests.

What's exciting is that, similar to last quarter, 70-plus percent of new deals signed in the quarter were multiproduct, including loyalty ordering intake, showing that customers increasingly see the value in the full engagement ecosystem, not just one solution, but the whole connected platform, a single cockpit to manage your entire digital business.

We also saw renewals and upsells for Punchh with 3 major Tier 1 brands, proving that our long-term partnerships continue to grow stronger over time.

On the innovation front, we launched new capabilities for the Engage for engagement in catering and games, both of which enhance the competitiveness of our solution and add real differentiation to our overall engagement platform.

Moving to PAR Ordering. I'm encouraged to report that this is our biggest win quarter for PAR Ordering to date, highlighted by 6 new customer wins, all upsells and multiproduct deals, including a 400-plus location enterprise chain, a clear signal that our products are winning at scale.

In the quarter, we were also able to sign 2 new customers that were previously using the largest online ordering provider in our space. We hope this creates a template to accelerate our growth in 2026, as PAR Ordering is not only a best-in-class platform now, but also an incredibly easy proof point of our Better Together thesis.

Customers of Par ordering and Punchh, and POS can now update menus in one place, push changes to third-party delivery channels, and manage every aspect of their digital business from just one system.

It's one of those few times in the enterprise software world where the demo just speaks for itself. Our solution for fuel and convenience stores, PAR retail, had a standout quarter, demonstrating what execution and innovation look like working together.

In Q3, we hit key integration milestones and launched new features that are driving record engagement and customer success. We also added 4 new enterprise wins, including a successful Punchh to AT Retail migration in the quarter.

It's important to note that, as we finalize the transitions from Punchh to PAR Retail, there's an opportunity for us to expand gross margins by taking out Punchh convenience store costs and taking up the price for moving customers to the more robust PAR retail platform.

From a product perspective, we made Command Center smarter and more dynamic and introduced the messaging center and audience experts, making it easier for retailers to launch campaigns and analyze audience data in real time.

And all of this hard work and achievement is working. Nearly every customer hit an all-time high in active program membership this quarter. So a great overall quarter for PAR Retail in which continues to lead in digital trade and engagement with strong customer results and clear momentum heading into 2026.

A few summary thoughts here before turning it over to Brian for a deep dive on our numbers. I briefly mentioned this earlier, but this quarter marks a major milestone in PAR's journey to redefine restaurant technology with the launch of PAR AI, our new intelligence layer built natively across the PAR platform.

The first product in the suite, Coach AI, is now live and already transforming how operators manage their business. PAR AI is different. It's built in, not bolted on.

We've embedded AI intelligence directly into the operational workflow across POS, back office, loyalty, drive-through, and payments. This approach turns every PAR product into an active decision engine, creating a connected intelligent restaurant ecosystem, all pulling data from a clean pane of glass.

Coach AI is our first step. It's an operational intelligence assistant that enables restaurant leaders to ask natural language questions and instantly surface live insights from POS, labor, and inventory data.

No spreadsheets, no extra apps, no manual reporting. Importantly, it dramatically lowers the know-how required to be an operational expert, allowing more employees to engage with the product and, most importantly, saving brands hours of time.

Early customers like Charter Foods have already eliminated the need for traditional BI tools and are realizing meaningful time savings and better decision-making. What's next?

Later this year, we'll introduce a marketing intelligence assistant with the PAR engagement platform, enabling marketers to instantly analyze campaign performance, loyalty data, and customer engagement metrics in real time.

Imagine being able to build, segment, launch, and execute a promotional campaign all within a prompt-like interface. This is more than a product launch. It's a strategic shift to an AI-native future.

As I've said before, it's not about building tools. It's about owning the workflows so that AI is in the places where we as users are actually living. This new foundation will fuel capabilities like ROI ranked operational recommendations, voice-enabled ordering, and real-time audience targeting, all designed to make restaurant operations faster, smarter, and more adaptive.

As Gen AI becomes embedded in the fabric of enterprise software, we believe the platform strategy is quickly emerging as the key to long-term value. It's not just about building tools anymore. It's about building AI native workflows.

Companies that act as platforms, not point solutions, are in the best position to win. Why? Because they're integrated where work actually happens. That means deeper engagement, better data, and a natural fit for generative AI features that drive real, measurable impact.

Moreover, by leveraging tooling and a tool set that you already understand, you lower the bar for training and adoption, a massive issue in today's early AI products. This is exactly where PAR shines. We don't just automate tasks. We connect entire workflows across departments.

While point solutions to stuck in silos, PAR brings teams together, streamlining operations, and enabling collaboration at scale. For restaurants, this isn't a nice-to-have. It's the foundation for running a smarter, faster, and more agile business.

We feel deeply passionate that AI makes PAR stronger because it brings the value of better together to life faster and improves the ROI of doing more with PAR. We believe it helps take a deeper moat and also pulls more of the ecosystem our way.

Bryan will now walk through our numbers. Bryan?

Thank you, Savneet, and good afternoon, everyone. In Q3, we continue to execute our plan of driving organic growth across our products and the verticals we serve while also driving profit and cash flow improvement, all while ensuring the company has the right resources to execute with excellence on our large Tier 1 opportunities.

Subscription services continued to fuel organic growth and represented 63% of total Q3 revenue. The growth from higher-margin revenue streams resulted in a consolidated non-GAAP gross margin of $57.5 million, an increase of $7.4 million or 15% compared to Q3 prior year.

We managed the growth while continuing to drive efficient leverage of our operating expenses. Now to the financial details. Total revenues were $119 million for Q3 2025, an increase of 23% compared to the same period in 2024. Driven by subscription service revenue growth of 25% and inclusive of 16% organic growth.

Net loss from continuing operations for the third quarter of 2025 was $18 million, or $0.45 loss per share, compared to a net loss from continuing operations of $21 million, or $0.58 loss per share, reported for the same period in 2024.

Non-GAAP net income for the third quarter of 2025 was $2.5 million or $0.06 earnings per share, an improvement of $5.6 million compared to a non-GAAP net loss of $3.1 million or $0.09 loss per share for the prior year.

Adjusted EBITDA for the third quarter of 2025 was $5.8 million, an improvement of $3.4 million compared to the same period in 2024. Q3 adjusted EBITDA of $5.8 million included $0.8 million of accounting charges for non-period costs.

Removing these non-period charges, adjusted EBITDA would have been $6.6 million and more indicative of our current normalized operating profit.

Now for more details on revenue. Subscription service revenue was reported at $75 million, an increase of $15 million or 25% from the $60 million reported in the prior year, and represents 63% of total PAR Revenue.

Organic subscription service revenue grew 16% compared to the prior year, when excluding revenue from our trailing 12-month acquisitions. ARR exiting the quarter was $298.4 million, an increase of 22% from last year's Q3, with Engagement Cloud up 16% and Operator Cloud up 31%.

Total organic ARR was up 15% year-over-year. As stated in our Q2 earnings call, we expected incremental ARR growth to accelerate in the first half of the year to the second half.

During Q3, incremental ARR increased $12 million versus $5 million in Q2 when excluding the GhostSkip asset acquisition, signaling the return to stronger growth momentum, which we expect to continue in Q4.

Our growth is being driven by both site growth and increased ARPU, reflecting the successful execution of our Better Together thesis, which is driving both multiproduct deals and cross-selling into our existing customer base.

Hardware revenue for the quarter was $30 million, an increase of $7 million or 32% from the $23 million reported in the prior year.

The increase was driven by continued penetration of hardware attachment into our expanding software customer base and increased sales volume from customer demand that was pulled forward in advance of anticipated tariff impacts.

Professional service revenue was reported at $14.5 million, relatively unchanged from the $14.2 million reported in the prior year. Now turning to margins.

Gross margin was $49 million, an increase of $6 million or 14% from the $43 million reported in the prior year. The increase was driven by subscription services with gross margin dollars of $41 million, an increase of $8 million or 25% from the $33 million reported in the prior year.

GAAP subscription service margin for the quarter was 55.3% and in line with the 55.3% reported in Q3 of the prior year. Excluding the amortization of intangible assets, stock-based compensation, and severance, the non-GAAP subscription service margin for Q3 2025 was 66.2% compared to 66.8% in Q3 2024.

The modest year-over-year decline was driven by the impact of a fixed profit contract that we acquired from one of our 2024 acquisitions.

Excluding this contract, which is not reflective of core operational performance, non-GAAP subscription service margin was over 70% for the quarter, an improvement of 150 basis points versus the prior year.

This contract is up for renegotiation in 2027, and we expect that the renewal process will provide an opportunity to improve the underlying economics. Hardware margin for the quarter was 17.8% versus 25.5% in the prior year.

The decrease in margin year-over-year was substantially driven by increased supply chain costs resulting from recently implemented U.S. tariff policies.

The company began implementing pricing adjustments during the quarter to mitigate the impact of tariffs in future periods. We expect hardware margins to return to the mid-20% range moving forward.

Professional service margin for the quarter was 17.6% compared to 29.2% reported in the prior year. The decrease in margin year-over-year was primarily driven by a reclass of non-period costs from R&D and incentives offered on SaaS implementations to facilitate adoption of the recurring subscription revenue streams.

We expect professional service margins to return to the mid-20% range going forward. In regard to operating expenses, GAAP sales and marketing were $12.5 million, an increase of $2 million from the $10.5 million reported for the prior year.

The increase was primarily driven by inorganic increases related to our acquisitions, while organic sales and marketing expenses increased by a modest $0.7 million year-over-year.

GAAP G&A was $31.7 million, an increase of $4 million from the $27.4 million reported in the prior year. The increase was substantially driven by certain noncash or nonrecurring expenses, of which $3.5 million are non-GAAP adjustments, while organic G&A, excluding non-GAAP adjustments, remained flat year-over-year.

GAAP R&D was $19 million, an increase of $1 million from the $18 million recorded in the prior year. The increase was entirely driven by inorganic expenses, while organic R&D expenses actually decreased $0.2 million year-over-year.

Operating expenses, excluding non-GAAP adjustments, were $52 million, an increase of $4 million or 8% versus Q3 2024. But when excluding inorganic growth, operating expenses were flat year-over-year.

Exiting Q3, non-GAAP OpEx as a percent of total revenue was 43.4%, a 590 basis point improvement from the 49.3% in Q3 of the prior year, demonstrating our ability to scale efficiently and drive operating leverage.

Now, to provide information on the company's cash flow and balance sheet position. As of September 30, 2025, we had cash and cash equivalents of $92 million and short-term investments of $0.5 million.

For the 9 months ended September 30, cash used in operating activities from continuing operations was $15 million versus $24 million for the prior year.

Operating cash flow has steadily improved throughout the year as we continue to drive incremental profitability and reduce our net working capital needs.

Q3 operating cash flow was positive, with the cash provided by operating activities of $8 million for the quarter. Cash used in investing activities was $11 million for the 9 months ended September 30, versus $178 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, capital expenditures of $3 million for fixed assets, and capital expenditures of $4 million for developed technologies associated with our software platforms.

Cash provided by financing activities was $12 million for the 9 months ended September 30, versus $279 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.

To recap, following a slower first half, Q3 marked a pivot to meaningful growth and continued incremental profitability for the second half of 2025. This momentum is evident across key financial metrics, $12 million or 17% annualized sequential ARR growth.

Non-GAAP subscription service gross margin percent improved 150 basis points from Q3 2024 when excluding the nonoperational impact of the aforementioned acquired fixed profit contract.

Non-GAAP OpEx as a percent of total revenue improved 590 basis points from Q3 2024. Adjusted EBITDA improved $3.4 million from Q3 2024, and operating cash flows were a positive $8 million for the quarter.

I will now turn the call back over to Savneet for closing remarks prior to moving to Q&A.

Thanks, Bryan. In short, Q3 was a strong execution quarter, and we possess the scale, product, subscriber base, and financial strength to lead the enterprise foodservice technology category.

What's in front of us is significant business opportunities with major Tier 1 deals, an aggressive acquisition strategy to deliver sustained additional inorganic growth, and a pointed AI product approach.

Moreover, our growth into new large TAM industries continues to validate our PAR Advantage, and the investments we're making should bear fruit in years to come.

In 2025, we're on track to deliver nearly $450 million in revenue, approximately 2/3 of which is recurring SaaS. We're also driving gross margin expansion, building a solid cross-sell and upsell motion, and seeing results across our global installed base of over 100,000 restaurants and retail stores.

The long-term plan is for PAR to be the clear enterprise winner. First in restaurants, later with C-stores, and over time in the next vertical. Being the anned winner in this niche market creates a unique market dynamic that will warrant evaluation commensurate with others who've done similar work in different verticals.

We are convinced that this foundation we have built has set PAR OPS to compete for and win the largest of Tier 1 restaurant technology deals in history.

In the short run, our priorities remain clear. First, continue to grow ARR in the mid-teens organically or higher; second, execute on a unified better together product road map while building and commercializing new AI-driven functionality.

Third, drive operating leverage and expand EBITDA. And fourth, close and announce large strategic Tier 1 deals to provide further visibility for long-term revenue growth.

A critical aspect of our story now is revenue growth visibility. While especially operator cloud products rollouts can take time, given the in-store nature of the deployments, PAR has accrued a very sizable backlog, coupled with a late-stage Tier 1 pipeline.

We have a very strong foundation to build off of. In other words, the short-run priorities I just mentioned are just our baseline. This is the minimum expectation I have of our team.

Our mandate continues to be to leverage our existing business to pursue more aggressive, accretive, and creative M&A opportunities. This is a buyer's market, and PAR is a proven value creator.

Multiples across our sectors have compressed dramatically, allowing for the potential for creative asset acquisitions. More importantly, though, we have the expertise and grid to actually pull it off.

Our current flywheel of multiproduct deals expansion is great proof of this. During our time here, we have evolved from an unfocused, hardware-driven, and money-losing business with a singular software product to a profitable platform SaaS company bidding for and executing the biggest deals in the industry.

This will absolutely happen again and again. We intend to further consolidate our existing markets while building out the PAR flywheel in new verticals.

Our ambition is to be larger and faster, predicated on an ever-expanding better together platform. And this ambition is deeply rooted in every single member of our team.

Thanks again for your time and your continued confidence in PAR. We're happy to take your questions. Operator?

[Operator Instructions]

Our first question comes from the line of Samad Samana of Jefferies.

It's good to see the progress both on the top line and on the expense side. So congrats on that.

Maybe first, Savneet, just in thinking about the word record in terms of like the pipeline, I think it was described as a tipping point in some ways by Bryan for the business. So the tone is very, very positive.

Can you maybe help me understand with a little bit more precision in terms of what changed between 2Q to 3Q that's giving you, I think, what seems like incremental confidence, particularly as you ended the call with that at least mid-teens growth outlook?

And then I have a couple of follow-ups.

I think we had similar confidence in Q2. It's just further visibility as we signed more deals that have given us a lot more visibility for Q4 and the rest of next year, and then further progress these larger Tier 1 deals, where now we see real visibility and hopefully a couple of them, it just gives us more confidence.

I think we had similar confidence, but it's rising as we get more and more deals signed. I think the other part is that we rolled out a record amount of revenue this quarter, and our backlog filled back up.

And so our backlog didn't come down, which means that we're signing at a faster rate than we're actually rolling out, which I think gives us more confidence again on the visibility in the out years.

And then you mentioned valuations coming down in the space. You mentioned M&A. And I know the company has made a lot of progress in digesting some of the M&A from years past.

So just should we take that as a signal that now that you're far enough along in the digestion of TASK and Stuzo Holdings and some of the other assets that you would maybe think about firing that M&A muscle back up again? Or is that more of an opportunistic view? Just help us think through that last comment.

It's opportunistic. What I meant by that is we're seeing -- obviously, our multiples compress, but what we're noticing is a lot of the assets we wanted to buy have compressed far more.

And there are also unique opportunities to carve out assets and businesses that we like as well. And so we're going to be opportunistic. We're going to be super careful about using our shares.

But we're seeing enough accretive deals where I wouldn't be surprised that we found something. There's nothing imminent or anything like that, but we feel pretty good about where we stand relative to the multiples we're seeing, some of the assets we've been tracking for many years.

Last question for me, and I'll turn it over. But just there's been, I'd say, some mixed performances out of certain pockets of maybe groups that aren't necessarily PAR customers, but that are representative of what's going on more broadly with consumers.

And so I'm just curious if you have seen that it has any impact on customer decision-making, whether that makes it more imperative than ever to have the right technology in place, and/or if it's slowing down deal cycles, or if you're seeing both of it's netting out?

Just how is some of the recent news or headlines on what's happening in restaurants translating into deal closures for you guys?

Yes. Great question, Samad. So the first half of the year was painful for, I think, our category across the board.

We saw a meaningful slowdown in traffic and sales for many of them. We saw it pick back up towards the second half of this quarter. But I'd say categorically, we haven't seen a slowdown in RFP activity.

In fact, we have more RFP activity at scale than we had before. Where it impacted us in Q2 was that at the franchisee level, rollouts were slower because franchisees were waiting for business to stabilize. I think that's now reversing, and we're seeing really good momentum.

But the macro question is a good one because I think what we continue to see is that as sales volatility exists in our category, the investments in technology seem to be increasing, not decreasing.

So we're seeing more excitement around a lot of the AI tooling we have. And I think maybe most exciting for PAR, we absolutely see more interest in consolidating vendors. And we are one of the few players that have I'd argue, close to a full suite of products.

And so I think that's giving us a little wind in our sales.

Our next question comes from George Sutton of Craig-Hallum.

Nice message, guys. So, specifically to TASK, you had mentioned that last quarter, you had put off some implementations because you were focused on the RFPs. I just want to make sure I understand what the updated message is relative to that.

Yes. I think we continue with to same plan. We've got a lot of test business needs to get rolled out get rolled out in '26. And we're moving from RFP to actual development on a larger opportunity.

And so it's critical for us to hold our commitments to our customers to get those deals out in '26 while also building for this large opportunity.

Now, with respect to 2026, you made multiple points through your prepared comments that there were different things setting you up very well for 2026, AI, the BK rollout, the template for products, et cetera.

Can you just give us a broader sense of what this ultimately means for '26?

Not yet. We're going to give guidance on the next call. But I think maybe the biggest takeaway is we have a lot more visibility now than we've had in the past because of the backlog that we've signed.

And as a result, I think we can get more precision as we get to the end of the year. And then I think the other part about it is the market, to the last question, part of what we're also learning is that the market likes our strategy.

Every single car ordering deal was a multiproduct deal, including payments and loyalty. We're starting to see that the thesis that we put out there and now the product execution is caught up.

And so that should give us the opportunity to take a lot more share next year. And that's kind of my wish is I hope it s up for success because we've been really impressed with what's happened in Q3 and what's happening in Q4.

Our next question comes from Mayank Tandon of Needham.

Savneet, I'll just nitpick a little bit. You've been saying that you could grow ARR 20% organically for quite some time.

I think you said that your target is mid-teens plus. Is there a change in the market? Or do you think this is just a function of the type of deals you're pursuing, which may take longer to land?

Maybe that's a good thing long term, but maybe it slows down the revenue ramp. I'm just curious as to why the shift from 20% organic to mid-teens organic, if I heard your comments correctly.

Yes. So last quarter, we said we're going to target mid-teens. And so I'm continuing that message here.

When I was running through the priorities, it was our short-term priorities, which is continuing to hit at least that and hopefully more going forward.

The major delta we're talking about is 2025, where our first half was slower than we wanted. And so I think it will be hard for us to get to that 20% for this year.

And so I think there's an opportunity for us to do that to accelerate in '26 and '27 as the last caller I was talking about. But right now, I think we feel really comfortable with mid-teens opportunities to go higher.

And given the whole momentum we have in AI and some of these larger deals, we'll see where that shakes out on our next call. But I guess, I think we feel really good where we are.

And more than anything else, I think there's more opportunity for us to get back to where we were on this call than there was last call.

And then, if I could just ask more about the competition. Just listening to Toast and other players in the market, it seems like there's obviously a share shift going on from legacy to the more modern solutions like yours and Toast and other players in the market.

I'm just curious, are you starting to see each other now because they're moving upmarket? I know not in the QSR space necessarily, but making some progress in your core enterprise space.

I think you've had some opportunities down market. So I'm just wondering if you're starting to maybe see each other more often and what that means for the market overall?

Not as much as you think. I mean, I think we have incredible respect for the team, the business, what they've built.

And we've been competing in enterprise deals for years and years. I think at the large QSRs where we make our bread and butter, traditionally, it's still the same few folks as the incumbency, ourselves, and usually one of the other legacy providers. I think, and so today, I think if we surveyed our sales team, it would say the same all.

We definitely see each other more in the smaller mid-market part of the world, where they are pushing aggressively.

And so we do see each other there. But the large Tier 1s have unique dynamics when we see them. And obviously, I think we think, again, very highly of them, but we feel like we continue to expand our moat, and particularly this multiproduct dynamic, I think, is really going to help us going forward.

[Operator Instructions]

Our next question comes from the line of Charles Nabhan of Stephens.

I wanted to clarify your comments around moving from RFP to development. Specifically, I haven't seen any big announcements, but are you alluding to one of the super Tier 1s that you had been targeting and talking about over the past couple of quarters?

We're generally in a market where the press release comes out quite a bit after we've won a deal, unless it's a renewal of an incumbent.

So you generally won't see the press release, honestly, until well later if we won something. In regard to what I was talking about, all I'm suggesting is that we were in an RFP process and in the deal, and now we're starting to build. And then as we get details, we'll share them as we're allowed.

And as a follow-up, I feel like I have to ask the obligatory Fiserv question here. I know Clover is downmarket from you, and it's still early days. But there's obviously quite a bit of disruption going on in the payment space and negative sentiment around some of the fees that they've been charging.

So with that said, do you see an opportunity to attach payments coming out of some of the disruption, the potential disruption in the payment market?

Not really. In our market, payments are a much more transparent business than it is in the SMB side of the world.

And so generally, when we win payment deals, it's in 1 of 2 ways. It's a hypertransparent package with the point of sale, where we can help bring down costs, hardware funding traditional ways that point-of-sale companies win deals, or it's through our online ordering business, which is starting to grow, where our Order and Pay module is really valuable to bundle in as a package deal.

So that's when we see it. As far as the disruption that's happening down there, we just don't participate in that SMB space. So it hasn't really changed anything in our area.

Our next call comes from Stephen Sheldon of William Blair.

First one here, I just wanted to see if you could help us unpack sequential trends in Operator Cloud ARR.

Great to hear that the BK rollout accelerated. But just given that, I'm also a little surprised that ARR there was up less than $3 million sequentially. So, any rough sense of how much of the Burger King contract ARR, when you think about the full deployment, would be included in the 3Q ending ARR number?

And are there any offsets that you saw this quarter, such as churn in the broader operator base that weighed against sequential trends? Just anything to unpack the sequential ARR growth in the operator.

No meaningful churn. I think the way to think about it is back-end weighted. The last month of the quarter was an excellent acceleration for us, and that continued into October.

October was our best month. So it's more just the back-end weighted. And so that's why I think you hear Bryan's comments in mind, we feel like Q4 will potentially be a nice uptick. So it's just the back-end nature of the rollouts within the quarter. And no significant churn.

And then on loyalty, I guess, can you just talk some more about the growth you're seeing there? It seems like loyalty is becoming a much bigger focal point with brands becoming a bigger factor in consumer decision. So, how much runway is there left for part to grow in loyalty as you think about location penetration, pricing increases, et cetera?

And how different does that opportunity look now between restaurants and convenience stores, broader retail?

Loyalty is a mandate. It was nice to have, and now I think we're witnessing that in times of sales slowdowns, traffic slowdowns, you really need a robust loyalty program to not just grow traffic and revenues, but also keep your margins high.

And so it continues to impress us how much demand there is for that. We're earlier in that cycle for convenience than we are in restaurants. But even in restaurants, I think what it's leading to is that it's not just the loyalty that you had a few years ago. It's more upsell for a new product.

It's a lot more opportunities to sell the AI initiatives I talked about. And so while our loyalty product probably won't double sites in the next year or 2, I think you'll see us continue to push up ARPU with the addition of new products, because I think early on, you had an all-encompassing loyalty product.

I think in the future, it's going to be a bunch of modules that are built into that, that we can upsell and create a lot of value for the customers.

Our next question comes from the line of Adam Wyden of ADW Capital.

The first question is around M&A. I know you spoke about it, but obviously, your shares are down almost, I guess, 2/3 from where we were in November.

I guess my question to you is, would this prospective M&A be accretive to your growth rate? And I mean, how do you think about doing M&A with your stock down 2/3?

I mean, if I look at it on '27 or even '26, you're trading in the teens or whatever, it's 15, 16, 18, 20x EBITDA. I mean, how do you think about buying businesses while your profitability is inflecting because the '27 is on a revenue multiple basis, you're the cheapest you've ever been, and your profitability is inflecting.

So I'm just curious how you think about doing M&A within that paradigm.

Yes. On the call, I think it's twofold. So one, we won't do something that's not accretive. I think we've been very strict about that in everything we've done.

And so what we're observing is that while our multiples compressed, we're seeing far more compression in some of the assets that we've been tracking for a very long time. And part of that is that we think there are some carve-out opportunities that we could leverage.

And so I don't think you'll see us do anything close to a big deal. I don't think you'll see us dilute you and ourselves in any way; that's irresponsible. I think you'll see us find niche assets that we can use cash on the balance sheet, or if we use our shares, there's a large margin of safety for us to make it accretive.

So I think it's just relative to what we're seeing in the market; we think we can create value. It's not going to be anything crazy, but it's enough where we think we can take up the growth rate of the collective PAR by taking a product and pushing it through our distribution system now.

So anything that you buy would be accretive to your existing growth rate? Meaning, you think that will day 1 be a higher growth rate than PAR? Or you're saying, like, how do you think about the growth rate? I know that's been a challenge over the years, the last couple of deals, because it slowed down TASK for the big Tier 1.

So I'm just curious how you think about adding things day 1 accretive versus.

Yes. So historically, that's always been the goal. Day 1 is accretive, and then the opportunity to accelerate beyond that. So that's definitely what we want to try to accomplish.

And then my second question is, you made a comment about something that was in development, I guess, RFP.

Now, does that mean that you're -- because I know like you've been dancing around this whole Tier 1 thing. And clearly, you lost one today. And obviously, that restaurant chain is doing very poorly, and it's not crazy for them to renew something when their hair is on fire.

So it doesn't particularly bother me. But when I think about the other Tier 1s, I think you mentioned 3, and it sounds like, at least based on our channel checks, there may be 4 I mean, how do you think about where you are -- I mean, are you basically saying you won one of the super Tier 1s basically because you're saying, well, we went from RFP to development.

I mean, is that what you're saying? I mean, obviously, there's no press release because there's all the stuff about compliance, and everyone doesn't want to get hacked while they're doing it. But I mean, is it fair to assume that one of the super Tier 1s is basically signed and you're now in the process of rolling out?

And can you comment about the other -- I guess, the other 2, and where you think you could be in that process?

Unfortunately, I can't comment on any of that from my perspective. I think where we sit today, we've never felt more excited about the pipeline that's right in front of us, right here. And I think my comments touch on where we are in some of it.

So, as we get information we can share publicly, I promise we will. We're not trying to be cagey, is a limited way to say. But today, we feel really good about the pipeline that's in front of us right now.

So what does it mean to go from RFP to development? I mean, what does that mean exactly?

Generally, the way our business works and it's not the same for everybody. After we win an RFP, we get to some form of development. Now it's not a guarantee by any means. You still have to do a lot of work from there, but it's generally a very good sign.

Our next question comes from the line of Maxwell Michaelis of Lake Street Capital Markets.

I want to go back to your comments in the prepared remarks around PAR Ordering. It sounds like a pretty good quarter.

Wondering if you could give some more information around that segment as well as it sounded like you won a customer with 400 locations.

Yes. Listen, it's a tiny product for us today, but it's starting to really move for us. What I think is going to be interesting about it is we feel pretty good that not only can we start to continue to attach it to our loyalty wins, but we can also upsell it to our existing customers and hopefully pull in payments alongside it.

So it's a really nice opportunity for us. As I mentioned, and you just suggested, we did win a 400-plus store chain. It was a takeaway from a market leader, so we felt great about that.

And I think we're hopeful more of that comes. And more than anything else, I think it's just validation that the product is now at a point where we can argue it's best-in-class, and we can absolutely argue that if you have additional PAR products, you're going to get an experience and outcomes you could not get elsewhere.

And that's what I meant by some of my comments, and if you see a demo of it and you work in our category, it is one of those things that it's, oh my gosh, I can't place somebody filing it that.

[Operator Instructions]

Our next question comes from the line of Anja Soderstrom of Sidoti.

Just curious, and sorry if you covered this already, but in the hardware, what happened there? It seems like there was a nice upside surprise in the quarter.

Are you referring to on the revenue and the margin?

On the revenue.

Sure. Sure, and thanks for the question. What happened was we had a pull-in. We were referring to this back in Q2.

We started seeing orders come in in Q2, for hardware pulled in before the kind of tariffs were getting impacted by the pricing. And so that was the execution, a lot of those actual sales and orders that got in Q2 executed and revenue in Q3.

And then you mentioned the margin was affected by the tariffs, but you're mitigating those, and do you expect them to normalize again in the fourth quarter or?

Correct. So right, those orders came in in Q2, before we actually implemented the tariff price increase. And so then we've actually implemented that during Q3.

So as sales orders kind of burn off into Q4, that will be offset.

And also, you are marketing your offering better together. But how important is the data that you are generating for your customers in your value proposition?

It's hugely valuable. I mean, I think that's why Better Together is working. As I mentioned, 70-plus percent of our engagement deals for the last couple of quarters are multiproduct.

And I think a huge part of it is because if you pick our loyalty and online ordering, you've got one cockpit to manage your digital experience. So you can update menus in real time. You can import the POS menu and online ordering.

You can push it to third-party delivery channels. You can have distinct availability, pricing, and menu on those channels. And so that's all data that we organize in a way that I think gives us a really unique competitive advantage. And that's why we've leaned so heavily into the AI side because I think the provider that has the platform, as I talked a lot about, also has the data, and I think we can make that data actionable.

So your customers have real-time access to the data.

Through Coach AI, they have access in real time to run reports so on and so forth. And again, I think a lot of what I'm observing is that you're lowering the bar to do work.

Historically, think of your traditional BI tools, you're downloading reports, trying to figure out what the margin of this campaign we did, or when we should order this product.

Today, you can prompt and say, "Hey, which store should I focus my time on today? Hey, what store creates a great template for me to fix this, or what labor schedule is working, or what labor module is working?

You can now really, really engage. And so in the past, I think having a lot of data was almost wasteful because it just gave you too much information.

Now we can help you be decision-oriented as opposed to just flooded with a lot of reports that confuse you.

This concludes the question-and-answer session. I would now like to turn it back to Chris Byrnes for closing remarks.

Thank you, Elliot, and thank you to everyone for joining us today. We appreciate your time. We look forward to updating you in the further coming weeks. Have a nice evening.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

All right. We are going to get started here. Next up, we are super excited to have Savneet Singh here, President and CEO of PAR Technology. Savneet took over the role of CEO back in 2019 and has been regular at our conference for the last several years. Savneet, thanks for being here again.

Thanks for having us.

All right. So look, to hop right in, PAR has been through an impressive transformational journey over the last decade. So for those who are not as familiar, it would be great to go through a little bit of background on PAR, kind of how did you get to where it is today.

So for most of our life, call it, 40 years, we were primarily a hardware and services provider to the category. Our founders invented the point-of-sale terminal, had a great run in the '80s, and then sort of 25 years of a more challenged business selling hardware and services to restaurants. So you go into restaurant, you'd see our logo on the devices, but we weren't selling the software on the inside. And so the business was cyclical, tied to the buying cycles of those restaurants.

In 2014, we made a small acquisition that got us into the software space called Brink, which was point-of-sale software for the cloud. And it was very tiny in a few hundred stores. In 2018, I joined the company and we sort of went on this all-out shift into becoming a software business versus hardware business. And so we spent the first year or 2 really rebuilding and rearchitecting that point-of-sale product so it could scale. And since bolted on a loyalty product, a back-office product and a digital ordering product so we can kind of become the end-to-end solution for the enterprise.

And our thesis has always been that restaurants, as they become more digital, their system becomes more fractured. They have more disparate pieces of software not speaking to each other. And over time, the restaurants will want to consolidate to a platform versus a bunch of different stuff. And I think that is really what's kind of propelled us to grow well above our customers -- our competitors, excuse me.

Yes. Great. So you've made some acquisitions over the past year with TASK and Stuzo, most recently, Delaget. Can you just walk through each of these acquisitions, what they brought to PAR? And then as we're approaching the anniversary, it would be great to hear how the integration process has gone and how -- particularly how it's gone relative to your expectations?

Yes. So our M&A backing up is 100% product-driven. So we don't look at M&A as just let's look at how much revenue and EBITDA we can bring in, it's really been focused on are we filling a core hole for a product or creating opportunity for a product set. So we like to think that if we acquire something, it either is a TAM expander or it's making our collective stickier, better and also expanding the TAM that way. So last year, we acquired Stuzo. And Stuzo is now called PAR Retail is the largest loyalty provider in convenience stores. We fell into this market, honestly, little happenstance. We were growing very quickly as a loyalty provider in restaurants and then convenience stores, started buying our software and really looking to expand their food service offering to compete with restaurants and they sort of saw us as a natural extension.

So we had a lot of success, but it was not a focused effort because we were still growing faster in restaurants, and we kind of had this off the side of our desk. And so we decided to go really focused and create a focused effort just to win that C-store market, and so we acquired Stuzo. It's been an incredible acquisition, probably our best integration of all time. By the end of the year, we'll have migrated every customer onto one platform, which is really hard to do in any software business around big enterprises like the Chevrons and Casey's of the world.

And it's been an incredible journey. I think we inherited no credit to us, but a great team, and then we've helped bolster that team. And obviously, they've kind of really risen and helped expand -- taken on our culture and made it better. So been a home run for us. And a category, I think will continue to be more acquisitive over time.

TASK, which we acquired about a year ago, was our attempt at growing into the international market. It's been, I think, a great acquisition in that as we kind of talked about this on our call, we're in three really large potential restaurant RFPs and near final on all of them and two of them are on TASK. Never in a million years that we think that would happen within the first 12 months of buying these products. I used to say that's the call option. That will happen in 3, 4 years maybe. And so that's really exciting to see. And at the same time, the core business is doing really well within its international markets, primarily Australia. We launched with Wingstop. We've launched -- we're already on Guzman y Gomez, which is kind of like the fast-growing, fast casual kind of like not similar food, but concept of Sweetgreen and a few others. So I feel really excited about that business. And again, I think we would do it again over and over again.

Delaget, we bought December 31, 2024. And so we are using that product within our PAR OPS suite. So OPS is kind of our operational set of products. So that, I think, is going to be really -- continue to be a really great driver of growth for us because we think the back office is where an incredible amount of innovation is still to come in restaurants, and this is just part of it. And so this was unique to us because it was incremental functionality within a product as opposed to a new product line. But while it's still really early to determine if it's a success or not, I think the team feels like it will work great. But each one of these things are filling those two buckets that we're expanding our TAM. So the first two, we're expanding the TAM. The second one is making the collective stronger.

Very good. So just on the TASK side, it sounds like things have gone very different to what you expected, but for the better, right. These big RFPs that you didn't expect to be operating in. I think on the call, there was some focus on some of the reprioritization that you had to do on the back of that. So I guess the stock reacted negatively on that. What do you think the market is missing? And how do you think about some of that reprioritization and the impact that it will have on things like ARR growth over the next year?

Yes. I mean I think the decision -- so we had customers ready to roll out on TASK that would be revenues in 2025 that we proactively went to and pushed out to 2026. The reason we did that was as we got into the later stages of these RFPs, we needed to build a lot of functionality to give us a great shot at winning those RFPs. And so while it sucks to, one, not -- to our investors not to have that revenue come in, but also to call these customers and say, "Hey, we're going to push you out of here or whatever it may be because we're building something else," which is a highly uncomfortable thing to do. We think it's the right way to think about our time and capital allocation because if you win one of these big deals, it pays for itself many times over, but it also gives those customers we pushed off a better product to use because we built great functionality.

And if for some reason, we don't win any of those deals, you've now built the functionality to go win the next large deal. So I think it makes a ton of sense. And normally, we would never have to have one or the other, but we just didn't -- never in wildest dreams we think that would happen now. We always expect that would happen years from now. So it's tough, but I think it's the right -- like if PAR was a private company and I owned every share, I would have made that decision 100 times over.

So I guess talk about that, like is this indicative of a resource constraint? Is it because of the size of these RFPs? And does it make you feel any differently about hiring or investments?

On the first two, yes and yes. I mean, again, TASK is a really small product line. And so if this was on our PAR POS business or our back office business, we would never have to make these decisions, we would be able to do it all. It just happened so far ahead of schedule that we weren't prepared for it. And conversely, I would say, well, man, what have we made that investment a year ago, but like it would have been so stupid to have made the investment to go try, I think we're going to win a big global deal when we don't even have 5,000 customers on it yet, right?

And so it was more a deep focus on always been retrospective of what could we have done differently. And I don't think we would have made -- there's probably nothing you could have said to me, I would have said, "Hey, let's do that earlier until we had the data point that the product was actually like better than we thought." So I think that it was a -- it's a resource-constrained dynamic that won't happen again on TASK. But again, if we bought a business again that had a few million of revenue, we'd probably run it all over again. If they happen to get an RP with the big brands, we probably end up that all over again. And I think that's just the nature. But again, it just happens so rarely that I'm not really worried about it.

Yes. No, that makes sense. Okay. And then I guess the other thing that maybe was lost on people is the international footprint. Most of the other platforms, you mentioned the POS, like being much bigger resources domestically than internationally, I think that played into it as well.

That's correct. Yes. So international, we just -- we didn't -- obviously, the development cast that came with TASK, but we also didn't -- we didn't have an international footprint. So you don't have your support, your installation, all that stuff would have to be...

You can't shift people from Albany to Australia or whatever. I know you're not in Albany, but somewhere around there.

It's all the same.

It's all the same, being north of Manhattan, yes. Okay. Just on the macro point, I know there's been a lot of focus on the health of the consumer. Can you talk a little bit about just what you have seen in your restaurant clientele?

So listen, Q2 was really tough for our restaurant clientele. 2/3 of our customers had negative same-store sales and negative traffic. We've never seen anything like that outside of COVID. It was very surprising. Q1 was slowing, but not like declining. And I don't think anyone was prepared. I listened to almost all the public company restaurants that reported in Q2, and it was a bloodbath for all of them, except for Chili's maybe, like very few did really well. And it was -- I think it was the speed of that shock that caused everyone to freak out, not the fact that it was there.

And so the health of the restaurant was really bad in Q2. And we thought it would be come down in April because of the tariff stuff and sort of like cut back quickly, but it took a few months for it to get back to, call it, some form of normalcy. And now we're there, and it's kind of -- we're kind of beyond that. But yes, Q2 ended very weak for many restaurant companies. And I don't think anyone projected that.

Do you know why, I mean?

I think there's a couple of things, and only two things I can point to. One is when that economic uncertainty came, even though the stock market came rolling back, the average American still was holding on to their wallet. And it seemed to have an outsized impact on restaurant spending. I don't know why. But if you just look at CAVA, look at McDonald's, look at all these brands, like they all had such horrible quarters relative to expectations. I don't -- I think it just -- that, that was the space that the consumers decide not to spend. That usually doesn't happen. I mean we've had quarters where you would see 6%, 7%, 8%, 10% sequential menu price inflation and not seeing this type of impact. And so this is not like -- to me, it was hard to figure out what was the underlying trend because it's not like the inflation numbers were up 10% like we saw the year before or 2 years before.

The second thing that happened, and this is, I think, a little bit maybe more specific to us, we are heavy QSR or fast casual. That is where 80%, 90% of the enterprise business is in the United States. You had this dynamic, though, that the full-service dining restaurants had done a really good job bringing down their prices to be similar to quick service, and there was some shift -- share shift from quick service to full-service dining. So I think that also had something to do with it. But given how categorical it was, I just think it was something to do more with the macro.

Yes. No, I mean, that makes sense. Back to normal, I think we've been hearing kind of negative low single digits consistently for the last couple, I don't know, years at this point, but certainly a number of quarters. Is that kind of what you mean by back to normal?

No, it's a little better than that, I think, is what we see. I think the other part to remember though, is like the way that restaurant data has gone for years has been heavily focused on traffic, and as traffic as a proxy for same-store sales. The problem with that now is because so many orders are digital, whether that's through DoorDash or Uber Eats or through your native applications, it's actually order count that kind of matters more now than traffic because that traffic decline might be being offset by your growth in delivery or off-premise. And that isn't disclosed publicly. And so that's why it's a little bit harder now to like look at the data of restaurants.

So we continue to see delivery increase, not decrease. We continue to see growth in traffic through all native applications, so website, mobile. And so you're continuing to see the digital softwares in the world kind of happen within restaurants. And I think all that's going to mean is that whether you slow down your tech investments in Q2, like you're not going to be able to stop because those channels are not changing. And I do think our -- this wasn't by design, but our bet on QSR and fast casual puts us in a very special place because those are the -- that is the category that will win in a world like that, where -- in a world where more deliveries order than less, you want to be a vendor to the customers that are set up for that, and that's the quick service and fast casual space.

And just to underline it, I think most people know this, but other than -- I mean, you do have PAR payments. There's some exposure to same-store sales and things of that life. But when you see a macro turn like that in the end market, how does it impact PAR?

So most of the time, it does not have a ton of impact on us. Again, because we're selling to the QSR space, which normally takes share and kind of it's relatively healthy and long buying cycles. So normally it doesn't. But for us, it would be a small portion of our payments business, and that's really about it. Everything else is generally pretty immune. And you usually see -- if it's a prolonged period of time, we would then see a boost in our engagement business loyalty. And so our pipeline of our loyalty business has grown pretty considerably. And I suspect that's because of the weak Q2, people are like, hey, I want to focus on revenue-driving software.

Yes. Makes sense. All right. It wouldn't be at that conference without asking about AI. I know you run very lean teams. How are you thinking about AI as an accelerant to internal efficiencies? And then how are you thinking about AI for more customer-facing applications?

On the internal, it's a constant kind of drumbeat of why do we need to hire if we can do with AI. I wouldn't say we're perfect, but I think we probably talk about it more than any other company that's of our size at least, which is this constant like how do we apply, how do we apply. And so where we've seen the most success has been on the dev side. So Copilot, Cursor, Windsurf like we've seen -- we really do track, one, not only how much code is generated, but how much is deployed and shipped and then days on keyboard versus days in meetings and stuff like that. So we've definitely seen real, real where we can point to best dollars we've saved by implementing this tooling. So we've seen that. And I think most companies that kind of go all in have seen that impact.

The second part, we see it is on support. You can clearly see when we've installed tooling in our call centers, in our L2, L3, the, a, the support agent is way more equipped to handle your problems, so resolution times go down. But two, you need less people if that goes down, too. And so we're not yet at a world where we're displacing agents with humans, but I think we're like on that path of if the restaurants are ready, we're ready for that.

And then I think the third place that we see it is just all the manual processes that exist in the company that's been around for 40 or 50 years where we can start adding tons of AI. Where I hope to see it over time is everywhere. I tell our HR team, there should just be an HR agent that I can ask for my W-2, my pay stub, I can ask, hey, can I write my review for this employee, hey, can you pull my last review for Will and his comp and did my review titled as comp? I'm just interacting with that, that's there. And so we kind of challenged everyone on our executive leadership team to come back and map out what is an AI first version of your department look like in 2 years and start telling me how we get -- what are the steps to get there today.

On the product side is where I think we have to be great. I don't think you have a choice not to be. And so we released -- we just released our first set of AI products this week. One is -- the first one is called Coach AI, which is a tool for in-store operators to basically have a ChatGPT like experience on how you're in your restaurant. So it can be like, tell me what shift did the best this week, tell me what product combo is doing the best. Hey, what's my labor schedule for tomorrow? Hey, where am I short in the next 2 weeks on this or that. And so it's that -- but it's also proactively putting stuff in front of you so that operator has to think less and just action more. And that's going to be really cool as we then eventually add in more data from disparate products.

So now you can -- instead of just asking about inventory, you can ask about food costs and then you go to promotions. And our plan is that eventually, it will then incorporate our loyalty business as well. So as an example, when you get a flag on -- historically, you as a restaurant operator, get a flag and say, whatever hot dogs are expiring in 10 days. There's not a lot you can do with that. You can -- but now you can say, oh, great, press the button, go on a promotion for hot dogs. That promotion will be through Gen AI targeted, whether it's SMS or app or how are you going to target to the right customer base that will actually like your hot dogs. And then it will then trigger to your back-office software to trigger an extra labor unit the day you run the promotion to make sure that you can handle the customers and so on and so forth. And so as we add more products to that, it will be really powerful to kind of coach you through that and optimize your profitability on a per store basis.

Our second wave of AI products coming out this year will be on the marketing side, where I think offensively, it's how do you target a customer more one-to-one. So instead of doing a segment, how do I target Will specifically. And now you got a young kid at home and realizing X, Y and Z. And so that, I think, is going to be really, really exciting over time because you're going point-to-point marketing and also giving you that, again, conversation like, hey, can you write me a campaign that does this? Hey, can you pull up the last report of marketing campaigns that we did and what was the ROI on those products? What marketing campaign should I cut, stuff like that, giving them that again. And why that's so powerful is that it allows anyone in the organization to be an expert now on how to target customers as opposed to the person that would have to come and say, run me report to do this and tell me this. It lowers the bar for everyone to be involved.

Totally. No, that makes sense. Okay. I wanted to bring it back to the financial trajectory. We touched on some of the changes in implementation schedules earlier in the conversation. Can you talk about just the longer-term growth rate for ARR, maybe putting some bigger wins, things like Burger King or any other large RFPs that might come in the door? How do you think about kind of the sustainable growth rate for the business? And then how do you think about how one of these like large Tier 1 RFPs could impact that?

So I think we guided on the call for mid-teens growth. And I think we can grow at those rates for some time with our existing base of customers, the quantity of upsell we have. And I think we just see a lot of opportunity in what we have in these multiproduct deals we talked about in the call. I think if we win these much larger deals, that does go -- take us back into the 20s where we've been historically. And I think it's not just these deals, but it's our ability to win them every single year going forward, which I think the category is moving in that direction. So that's kind of look at it, which is without -- we don't win any of them, which I think would really suck and given our finance in three, like I hope we get at least one. Hopefully, we get all. But even without that, I still think we're a really nice grower with great profitability.

Great. You continue to see pretty healthy growth in the hardware side. Could you talk about any tariff-related impacts you're seeing both in kind of the POS business and as it relates to kind of the core kind of software-oriented business as well as kind of the legacy hardware business?

We haven't seen a ton of impact. The biggest impact ironically was positive. In Q2, we saw people kind of rush to buy because of the fear of tariffs. I think in our business, the software still drives so much more of the decision than the hardware. The hardware does matter, and we've seen those that are trying to grow into the enterprise. Their way of getting in has been giving away free hardware. That does have impact. It matters a lot. But if your core product can't deliver on the promises that you've given, like it doesn't really matter.

And so it does have some impact. It has certainly will slow down things here or there, but we've generally found ways to pass on the tariff impact to our customers. And the bigger challenge is the uncertainty. That's what creates the slowdown for us. So if there's -- where we are exposed to tariffs are Korea, not so much in China anymore, Taiwan, like those are the countries that we are more susceptible, but our entire category is. So it's not like anyone gets an advantage.

Yes. Makes sense. Okay. Maybe let's talk about competition then. We always get questions on competition in the restaurant and software space or the kind of software-enabled payment space for restaurants. Particularly at the lower end of the market, I think everyone is well aware of the success that Toast has had in kind of edging out a lot of the more marginal competitors. They've been making some inroads upmarket. NCR Voyix has also been doubling down. How do you think about the competitive dynamic longer term and how you feel like PAR is positioned?

For most -- I mean, all of the time that I've been the CEO, our core biggest competitors and shared donors to us have been NCR, Oracle and Xenial, which is owned by Global. And that's kind of been in every RFP, one of those are the finalists alongside of us if we're a finalist. Toast, we see in every RFP. I don't think there's been one, they haven't participated or thrown their hat in the ring for many, many years. And they have won some deals, I think sometimes for esoteric reasons, sometimes for pricing. I think that we don't really look at it yet as the sky is falling. In fact, we won more POS deals this quarter than we've ever won before. We won 17 direct deals, 10 indirect deals through resellers. That is, I don't know, 2 or 3x what we normally would win.

So my point being, we would have competed likely against Square or Toast in every single one of those deals. And so our win rates are still really high, and we haven't seen that impact. And I think I have so much love and admiration for Toast, as you and I have talked about. I think it's an incredible business. I don't know if it makes a ton of sense for them to be in our category. I always give this math, which is we are loyalty point-of-sale on ordering. But our point-of-sale business itself is less than $100 million, and we've been fully focused on that for 7 years, I guess, 6.5 years, 7 years I've been the CEO.

If Toast won all those deals, if they added $100 million of ARR to their business, it doesn't really like move the needle. You know what I mean in the sense of like, is it really worth the time. And so I think there'll be a competitor, but I don't know -- I don't think it changes a ton. And I think the reason why is enterprise software is a product game, it's not a marketing game. It's just can you build the best product. And I think we still have the best product, and I think our data will show that.

Great. So just maybe talk through typical go-to-market in each product. You just mentioned success you're having both through direct and indirect sales. What -- how is the go-to-market structure today? And are you leaning in particularly in any one channel?

90-plus percent of what we do is direct. Indirect, we only do for point-of-sale and smaller concepts and something we've done for a long time. The reason we do that is oftentimes, that's where you discover the next Sweetgreen or the next CAVA or the next great GrowthChain. And so we kind of say -- we keep good relationships there. But almost all of what we do is direct. Our sales has sort of -- we have two buyer personas we service. One is the CIO, and that's our -- what we call our operator solutions. That's point of sale, that's back office, that's payments. That's software that the employees in the restaurant are touching. And then our second motion is to the kind of CMO or Chief Digital Officer, which is where we sell loyalty and online ordering, and that's stuff that touches the end customer.

And our goal is to land with a hero product in each one of those verticals and then kind of upsell and then eventually cross-sell amongst the two. I think the biggest change in our market is now that we're now usually able to sell two products at the time at first sale. Normally, that was a multiyear journey. And I think that will continue. I think that the biggest change in the end market of buyers outside of their macro world is that they're trying to consolidate more of this stuff versus having 10 dozen incremental investments and trying to figure out how to get it all to work together.

Yes. No, that makes sense. So maybe talk about that, the cross-sell success. What does the trajectory look like? And what's kind of the end state for getting fully cross-sold sales and things of that nature?

So last quarter, 70% of our deals were multiproduct deals, 100% of point-of-sale deals were multiproduct. So point-of-sale really being a beautiful land and expand product. In Q1, 100% of point-of-sale deals were multiproduct and 50% of all deals. And so we've kind of stumbled our way. A year ago, I think the answer would have been 0 or basically close to 0. And so we've kind of stumbled our way to figuring out how to actually attach product at the point of the first sale. And then hopefully, we can grow from there.

We kind of do a very, very detailed, we call it, like opportunity of our TAM, meaning we don't assume every customer will ever buy every product because there are certain customers McDonald's and Burger King, we don't think we'll ever buy our payments products because they've got direct deals and like -- so we removed that from our TAM. Or if we've got a customer that's spent $100 million building their own loyalty product, we don't assume they're going to buy loyalty. And so when we kind of trim that down and say what is the actual observable TAM within our base, we think it's like tripling -- is a triple within there. Now whether that takes 2 years or 10 years, I don't know. But there's a really nice kind of well to kind of dig into over time of mining the existing base. And so it's probably 2 to 3x of our current revenue base and we can get what we think is actually actionable product into those customers.

Got it. And then just continuing on that, the cross-sell has been particularly noticeable in some of these marquee client wins. Could you maybe talk through some of the changes in Burger King, Wendy's and just maybe update us broadly on kind of time lines around those implementations separately?

Yes. So we signed Burger King in November, December of 2023. We started installing in April of '24. So it was a really fast turnaround for us for something so big. We've had great success. A year into the deal, we were able to upsell them a second product, which is our PAR OPS, which is our back office product. It used to be called Data Central, a huge win for us. We didn't win this product at the time we won the point-of-sale business. They had chose another vendor, but now kind of nominated us as their preferred vendor going forward. It adds a wide range, but it probably adds another $6 million, $7 million of revenue to an already very large $20 million, $22 million, $23 million deal. And importantly, I think it makes us stickier at the customer because now they've got two products.

The reason why I think we were successful was not because we sold it really hard, it's because the products were deeply integrated into each other such that the customer, i.e., the franchisee or the store owner now had one reporting platform. They didn't have to go to two places, they had one database. So the data integrity was very high. It made it so obvious to use us versus having to use a different vendor and have two different systems to log in and compare data, that's kind of a mess. And so I think we're able to demonstrate the product functionality, which then made it a no-brainer for them to kind of push us forward.

And so that's kind of been the unlock. It hasn't been that we've been better go-to-market or we "figure out to cross-sell." So as we integrate the products, we've been able to unlock the cross-sell opportunity. That, I think, is the major distinction for us. And I think that will continue as we integrate deeper and deeper and deeper, will give you less reasons not to pick us and be less -- have to be less convincing because it will be so obvious outside of the box. And we continue to see that. I think all these new deals, we're winning -- again, our sales team is doing a great job, but most of that is because the product is there.

The other place that we see this now is on the digital ordering side. We have a very, very small online ordering business. And we've been building and building and building. And so it's a real competitive alternative to Olo and some of the existing players there. And I think we're now at a point where like, hey, we're actually going to win a bunch of these deals. And we're winning it because we think the product is amazing. It's super modern. It's built in today's modern world versus built a long time ago.

But more importantly, why it's so useful, I think, is because it allows you to manage your digital from like one place, one digital cockpit to manage your menu. So your online ordering menu changes, it automatically updates your loyalty menu. So you don't have to update in two places. You have change in image here, changes in image over there, you update pricing, menu, so on and so forth. You can do that from one place. And that integration is very hard to convince -- it's very hard to argue against that if you're a customer saying, okay, I want to manage whatever PAR's loyalty here, and I want to manage someone else's -- another online ordering product here, and then my team is going to constantly like that. Our solution, I think, is just a lot simpler.

Yes. Great. Let's pivot to payments. Understand we're still early innings, but how are you currently approaching the payments opportunity? You talked about how -- maybe it's less applicable at the very high end of the market. What's kind of the target audience for that product? And where are you at in sort of cross-selling that into the base?

It's been an evolution. I think for the first couple of years, we've been in payments for 2 or 3 years. Most of our or almost all of our business came from point-of-sale deals where you're tapping your card and we're getting the processing and sometimes the gateway. And we did a good job of kind of getting through, I don't, 5% to 10% of the base. And now every renewal cycle, we're trying to kind of attach it in. Where we're seeing a lot of opportunity in payments is actually the digital side. So because we're the largest loyalty software in restaurants, we're in the pockets of 2/3 or 3/4 of Americans or adult Americans. So we're touching you somehow.

And we are selling into those customers that have our apps, the ability to pay through their loyalty app. And that's really powerful because not because we make a lot of money, but because it makes the checkout experience a lot seamless. So you check out with your Smoothie King card that's in your Apple or Google Wallet that allows you to earn points on that transaction, allows you to redeem a coupon or whatever rewards you have and pay in one tap.

So instead of going and saying, "Hey, here's my loyalty number, can I use this -- here's my coupon and can I get points for this order and then here's my tap to pay?" It's one tap and you're done. And so when we do that, we get the processing revenues out of that. And so that's a really powerful outcome for our customers, outcome for their customers and then us making the processing revenue. And so we're making a big push into this kind of off-premise payments. which is not a place we did before. And then lastly, as we grow in online ordering business, which we have been very tiny and slow to get to, but now going very quickly, we then get the processing fees if you're ordering on one of the websites we power.

Great. All right. A couple of minutes left here. Maybe you can touch on expense management. I think we've been very impressed with the company's ability to manage expenses despite maintaining the top line trajectory. As the business continues to expand, just how do you think about the need to add more resources and what's sort of the normal OpEx growth trajectory from here?

I think we've kind of -- I think we've realized over time that the beauty of our business over time is that we don't ever need a big step-up in operating expenses to support new customers. Burger King was our largest deal by a long shot, and we barely added anything. And candidly, if you look at our financials, it looks like we added nothing because we were able to cover it up through cost cuts elsewhere. And that's kind of how we want to be.

There may be one or two deals that happen in the lifespan of PAR that will require incremental investments that investors would notice from our P&L. But I think our stated goal is to always, always keep OpEx growth really small single digits. That requires a ton of work because everyone gets a raise every year if they stick around the company generally. And so you've got to cut to fund those raises.

And then I think part of the reason we've been successful is the deployment of AI across our development teams. Our biggest investment is always going to be R&D. And our ability to ship more product with less people will be critical to our ability to keep those numbers down. Today, we spent about 25% of revenue on R&D, 14% to 15% on sales and marketing. Those are great numbers. I think those are near best-in-class. And so G&A is where we need to continue to hold that as tightly as possible so that we can scale and get the operating leverage there over time.

Got it. Great. Just on capital allocation. You've done several deals. There's been a lot of speculation in just like the M&A backdrop in the market, obviously, some like well-telegraphed processes that are out there. Just wondering, it would be great to hear how you're thinking about the M&A environment and if this is an area we could see PAR return to over the course of the next 12 to 18 months?

We're always looking. Our M&A is very product-led. Like I said, it's not let's go buy $100 million of revenue this year. And so it's opportunistic in that sense. So if we can find a product that makes our collective stickier, i.e., expand the LTV or opens up a TAM we think we can win, we'll go after it. So today, we have relatively smaller deals in the pipeline. We've got a couple of AI deals, a couple of products in the back office that we're looking at. And those are solutions that we don't have today that actually make our collective better, meaning the chance for multiproduct deal adoption will increase. In our category, restaurants and convenience store software, there's half a dozen to 10 large companies that will always take a look at, which will dramatically change the size of our company. But it's so infrequent that they trade. And so we never really count on that and kind of focus on this continual product, more of these product-led acquisitions.

Great. So last question. During the 2024 Investor Day, you highlighted the data platform strategy, which enables synergies across operators that have more complex operations. Can you talk a little bit about that strategy and how it improves on the current value proposition?

Yes. We're focused on coming out with what we call the PAR Data Platform. But really simplistically, it's a platform that takes your data across your entire restaurant. So this would include the products that are PAR products, but also the products that are not PAR products. So that might include credit card data. It might include competitor data, whatever that may be. And the reason why we think this is powerful is AI is kind of funny. We live in a world where every enterprise, whether you're a bank or a restaurant, you've got too many software applications running that don't talk to each other. Like it's just -- you talk to any CIO, they're going to tell you the same thing. And now we have AI, and I just think AI makes that problem worse because it's like are you going to listen to my agent or that guy's agent, who's going to win? What agent wins in that battle, who's the source of truth?

And so what we're trying to build is that source of truth for our customers. And we think we have the right to potentially win because we have the most -- the wildest product, meaning we have the most data to leverage to go do that. And so this is an attempt to put that data in one place, give you that foundation to get insights, but then really build your AI future out of. Because today, I think it's really hard to build these beautiful AI outcomes when you're using just a small sliver of your data across your -- so it will make you a little bit more efficient in one thing you do, but it's not really like giving you unlock that you couldn't do before Gen AI.

Got it. That makes sense. Well, I think that basically takes us the time, but thank you so much for having the conversation with us today. I appreciate you coming to the conference yet again, and I hope we see you back next year.

Thanks, Will.