PAR Technology Corporation

Ladies and gentlemen, thank you for standing by and welcome to PAR Technologies Fiscal Year 2020 Second Quarter Financial Results. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during that portion of the call, you will need to press star one on your telephone. Please be advised that today's conference may be recorded. If you require any further assistance, please press star and zero. Now it's my pleasure to turn the call to Chris Byrnes, Vice President of Business Development. Please go ahead.

Thank you, Carmen, and good morning. I'd also like to welcome you all today to the call for PAR's 2020 Second Quarter Financial Results Review. The complete disclosure of our results can be found in our press release issued this morning, as well as in our related form, aka Furnace to the SEC. To access the press release and the financial details, Please see the investor relations and news section of our website at www.partech.com. At this time, I'd like to take care of certain details in regards to the call this morning. Participants on the call should be aware that we are recording the call this afternoon, and it will be available for playback. Also, we are broadcasting the conference call via the World Wide Web, so please be advised, if you ask a question, it will be included in both our live conference and any future use of the recording. I'd also like to remind participants that this conference call includes forward-looking statements that reflect management's expectations based on currently available data. However, actual results are subject to future events and uncertainties. The information on this conference call related to projections or other forward-looking statements may be relied upon and subject to the safe harbor statement included in our earnings release this morning and in our annual and quarterly filings with the SEC. Joining me on the call this morning is PAR's CEO and President, 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, Chris, and good morning, everyone, on the call today. I hope you and your families are well and safe. The last several months have presented incredible challenges to the world, and our thoughts go out to all those impacted by the global pandemic. I'd especially like to thank our essential workers at PAR for their responsiveness and flexibility as they have continued to show up to serve our customers. Our ability to keep our operations team continuously running in the challenging environment is a significant accomplishment and clearly demonstrates the power of our core values. To begin, I want to let you know I'm very optimistic about the future of PAR. The COVID-19 pandemic has had a drastic impact not only on our company, but on the restaurant industry as a whole. Fortunately, and by design, Park Technology was and is in a strong market position to continue to provide value for our customers. Even in the most difficult of times this past quarter, we were able to book 814 new Brink customers, along with 209 new Restaurant Magic customers in the quarter, and repeated favorable performance in the second quarter last year, an amazing accomplishment. Due to our focus within QSRs and fast casual restaurants, We witnessed that our customers were part of the restaurant segment that was able to maintain operations and take market share during this challenging time. These restaurants were well equipped with modern technology to quickly adjust their operations to curbside pickup, drive-through, online ordering, and delivery. Before diving into the results today, I wanted to step back and touch on three very important overarching aspects of our business. First, the Brink business is incredibly resilient. While it's absolutely true that the restaurant business is a high failure rate business, Brink's focus on the enterprise customer is unique. This statistic is most evidenced by the fact that at the end of July, only 6% of our Brink stores were closed due to COVID-19. Historically, our business has been a single-digit annual churn business, and as we emerge out of COVID-19, I expect us to continue to improve that metric. Second, During our previous calls, I relayed to you the dynamic shifts underway in the restaurant industry from older on-premise server-based technology to cloud-based solutions. As with other industries, we believe that once a cloud transformation takes hold, the wave does not stop. The last four months has dramatically accentuated this point. As restaurants dealt with the reality of diminished traffic, they had to quickly adapt to emerging digital trends to survive. Those restaurants who were agile and made the proper technology investments were able to quickly shift their business models to thrive. While the pandemic will not last forever, it's our belief that years of demand have been pulled forward for digital products. Pandemic or not, there is not a restaurant in the country that can survive without the enablement of a digital presence today. This presence will likely include strong integration to the third-party delivery, native online ordering, mobile application access, smart routing, curbside pickup, and much more. Third, our TAM is large and Brink has yet to penetrate the vast majority of it. It's estimated that there are 700,000 to 1 million restaurants in the United States that use a point of sale product. Of that market, we estimate half of those units are addressable to par. Historically, we have been a single product company averaging $2,100 per store. That alone is a multi-billion dollar addressable market. As we've talked about, we're expanding our art booth to the launch of new products Acquisitions of New Categories, and a Payments Business. While much of our resources over the last few quarters have been squarely focused on brink development, in the coming quarters we'll begin to ramp up our upsell engine. While we have not upsold significantly today, we are seeing a deep desire from our customer base to rationalize vendors. Restaurant businesses are looking for their point-of-sale players to take on more responsibility, not less. It's our estimate that the average enterprise restaurant spends $10,000 a year on recurring software products, and that amount continues to grow. Brink has only penetrated the very tip of that spend. As the Brink Foundation solidifies, we believe we'll be able to continue to make additional features more available through our platform and solve many of the challenges our customers face today. This will lead to continued strong customer retention and the beginning of what we believe can be industry leading net dollar retention. Before I hand the call over to Bryan, I wanted to spend one minute defining our metrics. We report revenue in three buckets, product, contract, and service. Product is our traditional hardware business. This encompasses point-of-sale terminals, drive-through products, and peripherals. Contract is 100% of our government services revenue. Service is a combination of our recurring SaaS offerings along with our traditional recurring service contracts associated with hardware sales and installation services. We disclose metrics we think useful for investors to track our performance. First, ARR is a measure of our annualized recurring revenue at the end of the quarter. This is 100% Brink and Restaurant Magic related. Second, bookings. Bookings are signed purchased orders. We take a very conservative view on bookings, and a store is put into bookings only when we received a signed committed order. I believe this is the most important leading indicator of our business. Open order backlog. Simply put, this metric is the number of restaurants where we have a signed order that we have yet to install. Lastly, churn. Churn is a dollar value of recurring revenue lost in the quarter, usually annualized. As we continue to grow our business, we'll continue to provide additional breakouts of new metrics to help you guide our performance. I will now turn the call over to Bryan to review our Q2 financial performance.