PAR Technology Corporation

Good afternoon, ladies and gentlemen, and welcome to the fiscal year 2021 first quarter financial results conference call. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. If anyone should require assistance during the conference, please press star zero. As a reminder, this conference is being recorded. I would like to turn the call over. to your host, Mr. Chris Burns, Vice President of Business Development. Sir, you may begin.

Thank you, Sarah, and good afternoon. I'd also like to welcome you today to the call for PARIS 2021 First Quarter Financial Results Review. The complete disclosure of our results can be found in our press release issued this afternoon, as well as in our related Form 8-K 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.partec.com. I also want to be sure all participants today have access to our earnings presentation and business review slide deck that we will use later in the call to better communicate the momentum in our software business. Individuals on the webcast should have access to the deck when they logged on to the call this afternoon. For those just dialing in on the conference call this afternoon, the presentation will can be accessed on the investor page of our website, and we also included it as an attachment on the 8K we filed this afternoon also. At this time, I'd like to take care of certain details in regards to the call today. Participants on the call should be aware that we 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 recordings. I'd like to remind participants that this conference call includes forward-looking statements that reflect management's expectations based on currently available data. However, actual results are subject to future events and uncertainties. The information on this conference call related to projections or other forward-looking statements may be relied upon and subject to the safe harbor statement included in our earnings release this afternoon and in our annual and quarterly filings with the SEC. Joining me on the call today 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?

Thanks, Chris. Good afternoon, everyone, and thank you for joining our call today. Following a strong finish to 2020, we posted what I believe to be our best Q1 to date, and our optimism continues to build around the coming quarters and years for our business. The progress being made to distribute COVID vaccines, the decline in infection numbers, and the general reopening of the economy should lead to a strong 2021 for PAR. We began 2021 with strong bookings in Q1, continuing the strong momentum from Q4, and ending Q1 with our largest backlog of all time, which sets the groundwork for accelerated activations for the balance of 2021. While the last 12 months presented many difficult obstacles for PAR and our restaurant customers, many of those challenges created opportunities that PAR was well-positioned to take advantage of. We invested in our software platform, introduced new product innovations, added top talent to our team, completed a significant acquisition, and were able to improve our financial and competitive position. While we'll touch on the financials a bit later, I want to touch on our recent acquisition of Punch. I'm personally very excited about this deal, and Punch is a game-changer for Par and their customers. Punch is a market-leading customer engagement platform that provides cutting-edge software applications including loyalty, promotional campaigns, and marketing artificial intelligence for the restaurant and retail industries. We signed and closed the acquisition simultaneously on April 8th. Punch has more than 200 brand customers, 40,000 customer locations, and currently has $53 million in contracted ARR and 115% net dollar retention. Punch is a very high-quality business with a very high-quality team. On a pro forma basis, Punch ended Q1 with approximately $35 million in ARR and continues to accelerate growth even with the headwinds of COVID. There are many reasons we are excited by this deal. Punch extends PAR's cloud for enterprise restaurants. The addition of the industry-leading loyalty product now makes PAR a unified commerce cloud platform for enterprise restaurants, and our combined company further expands industry's largest integration ecosystem. This deal creates a unique opportunity to improve value within shared and targeted customers and significantly deepens our tech development team and increases our innovation horsepower. Adding Punch positions PAR to fast-track new customer wins with integrated point-of-sale, back-office payment, and guest engagement solutions, and is an exciting step in the evolution of both PAR and the restaurant industry. Customer loyalty in CRM SaaS has rapidly evolved from being a novelty for restaurants to now a business-critical form of managing the customer relationship and revenue generation for enterprise brands. Our existing PAR customers have been very positive regarding our acquisition of Punch and look forward to reaping the benefits of the enterprise-class unified cloud commerce platform. Restaurants are living through a dramatic change in their operating and business models. Technology will be at the center of that change. It is a specific reason that we believe PAR's new unified platform can and will be adopted by the enterprise. As technology continues to be deployed within the restaurant and in-store environments become more and more complex, enterprise restaurants are seeking true technology partners to manage this complexity. There's no question software required by restaurants will grow tremendously over the next decade. While this software trend is surging in restaurants, our company continues to focus on capital allocation and is directing our resources on transactions, products, and people that will have real impact upon our addressing this opportunity. Now, to briefly review the first quarter reported numbers, before Bryan gives further details. In Q1, we reported revenues of $54.5 million. Today, we also reported a gap net loss of $8.3 million or $0.38 per share compared to a gap net loss of $10.9 million or $0.61 per share for the same period in 2020. On an adjusted basis, non-gap net loss for the first quarter of 2021 was $7.6 million or a loss of $0.34 per share compared to a non-gap net loss of $4.7 million or $0.26 per share for the same period in 2020. Now moving to our business performance. If you jump to slide three of the presentation, you'll see a snapshot of Brinks' performance in Q1. I'm very pleased to report that we had 1,345 new store bookings in the quarter and 85% improvement from Q1 in 2020. I think this metric, more than any other, truly demonstrates the momentum and velocity of our cloud point of sale offering. And booking at par is a signed order from a store location pending rollout. The strong pace of Q1 Brinks bookings highlights the continued growth in demand for modern software within the restaurant. As the slide shows, we reported our error at $25.6 million, a 15.3% increase from the same quarter last year. As the pandemic continues to slow, we expect to see an acceleration in our activations as stores begin to open and normalize and return to our traditional activation pace. As restrictions have come down, we've seen activations pick back up, which will help us turning our signed backlog to revenue. I'm encouraged by the progress we've already seen in Q2. If you advance to slide four, You can see that we now have 12,141 active stores and our reported backlog and open order number at the end of the first quarter was 3,327 stores yet to be installed. This record backlog sets the foundation for a very strong 2021. Again, as vaccination rollouts continue to favorably impact restaurant customer traffic and reduce travel restrictions, we'll see an acceleration in activations that will lower the backlog number and drive more normal book-to-bill pace. We installed 718 new brink stores in Q1. We believe this is below where we want to be as installations earlier this year were being impacted by spikes in infections in specific regions and on state-mandated travel quarantines. We will continue to work with our customers regarding implementation schedules along with enhanced indoor safety protocols to ensure our book-to-bill sequence is as seamless as possible. On slide 5, you can see the ARR waterfall over the last five quarters as we continue to grow our ARR. Slide 6 shows the continued impact of COVID-related churn and proves out the phenomenal impact that COVID has had on store closures in our TAM and the inspiring strength of our customers. In Q1, COVID-related churn was 4% annualized at our overall base and will continue to work to assist these affected customers to get back on and open their stores. These metrics are very positive signs for our business and this is down from a peak of 15% during the early stages of the pandemic. Slide 7 shows restaurant magic bookings in the quarter were 231 and error was reported at $9 million. Combined error in Restaurant Magic is now $34.6 million at the end of the quarter. As I commented last quarter, Restaurant Magic and our Data Central application were impacted more by the pandemic than customer-facing technologies like Brink and Punch. We're encouraged by the sequential improvement and expect a more normal booking space as 2021 progresses and similar to our expected growth and activations in Q2. We expect Data Central to also accelerate. Now to quickly review our product and harbor of business in the quarter, that is our point-of-sale platforms and drive-through communication systems business. Product revenues in the quarter were basically flat when compared to Q1 2020. Product sales were delayed in January-February due to increased COVID spread. As we were seeing favorable impact of the vaccine roll and improving capital purchase environment for restaurants, we'll see higher sales throughout 2021. Now to review our government segment. Our government business increased revenue by 3.2% compared to Q1 2020. Our contract backlog at the end of Q1 was $140 million as of March 31st, 2021. Our Intel Solutions business is a driving force behind the growth in the quarter as ISR revenues increased 8.8% from last year's Q1. We continue to seek out contract opportunities where we can leverage our decades-long experience and performance excellence, specifically in value-added revenue contracts that include more direct labor and high-tech contract work within our Intel Solutions business line. Now some takeaways on our company coming out of Q1. Restaurants are looking for a unified commerce platform to handle the rapid growth in digital transformation. Today, restaurants suffer from dozens of siloed, different, and disparate products that lack the modularity to make the solutions work. We've taken big steps in constructing that platform. Second, our acquisition of Punch marries the guests to the transaction. Restaurants are realizing that they don't need a singular loyalty program for their entire brand, but rather a loyalty program for each and every customer. While with the growth of digital and off-premise ordering, restaurants now need to look at profitability and ROI at the guest level rather than the individual store level. Digital orders make it hard to measure ROI on a store basis. Guest engagement helps fill that hole. Third, with our strength and balance sheet, we intend to continue our activity in the M&A space as we execute on our strategic initiatives. Our continued focus is on adding meaningful software products that will allow us to increase our subscription rates and add additional functionality and features for our restaurant customers. Early returns from the Punch acquisition are very encouraging, and we're beyond excited to leverage their team's experience across all PAR. In summary, we start 2021 with considerable optimism. I want to re-emphasize, they will continue to make bold bets going forward on future growth and you can expect us to focus investments across product innovation, marketing, and people initiatives. We believe this ambitious agenda at this time is warranted by the size of the market opportunity and where we stand today relative to it. In closing, I want to acknowledge the sacrifices being made by PAR employees across the globe in these difficult times. Specifically, our current thoughts are with our new Punch colleagues based in India. India is presently in the midst of the worst phase of the pandemic, and it's rare now to find a family that is not impacted by the disease in that country. Even in the face of the most difficult conditions, our business in India continues, and our employees are finding creative ways to do their best for our company while ensuring that our customers get the top-class uninterrupted service that Par and Punch are known for. We truly thank them for that. And with that, I'll turn the call over to Bryan for more details on the Q1 numbers, and then take your questions. Bryan?

Thank you, Savneet, and good afternoon, everyone. Product revenue in the quarter was $18.6 million, consistent with the $18.6 million reported in Q1 2020. Service revenue, that includes revenue from our subscription software, was reported at $18 million, a decrease of $0.8 million, or 4.3%, from the $18.8 million reported in Q1 2020. The decrease was driven by a $1.8 million decrease in implementation revenue partially offset by $0.9 million increase in software revenue. The company continues to expand our recurring revenue base, which includes both software-related services and hardware support contracts. In total, the recurring software revenue streams contributed $1.2 million of the increase in service revenue. The company continues to gain momentum of its deployment of Brink TOS and Restaurant Magic's Data Central application, noting a $1.1 million for 18% increase in software as a service revenue as compared to Q1 2020. The quarter ended March 31st, 2021 marked the one year anniversary of COVID related restrictions on restaurants. Those restrictions impacted the pace of which we were able to roll out our new sites. Of the 18 million of service revenue reported in Q1 2021, 14.9 million or 83% is comprised of recurring revenue contracts as compared to $13 million or 69% of service revenue in Q1 2020. Contract revenue from our government business was $17.9 million, an increase of .6 million or 3.5% in the $17.3 million recorded in the first quarter of 2020. This is the result of an increase in the value-add ISR contract and subcontract revenues. Contract backlog continues to be significant noting a total backlog of over 140 million as of March 31st, 2021. Now turn into margins. Product margin for the quarter was 19.8% versus 20% in Q1 2020. Service margin for the quarter was 29.6% compared to 32.6% reported in the first quarter of 2020. The decrease in margin is primarily due to the decrease in implementation revenue and increased in software related costs. Government contract margins were 6.7% as compared to 6.9% for the first quarter of 2020. This decrease was driven by our mission systems line of business impacted by higher labor costs compared to the first quarter of 2020. GAAP SG&A was 14.5 million, an increase of 2.9 and then 11.6 million recorded in Q1 2020. Increase was primarily due to $1.1 million of variable compensation and $0.7 million of acquisition costs related to our acquisition of Punch on April 8, 2021. Net R&D was $5.8 million, up $0.9 million, or 18%, from the $4.9 million recorded in Q1 2020. The increase is driven by additional software investments from our Brink and Restaurant Magic data central product lines. also included in operating expenses for the three months ended March 31st, 2021 was 4.4 million of proceeds received for a one-time recovery of a legacy matter. There was no comparable reduction to expense for the first quarter of 2020. Now to provide information on the company's cash flow and balance sheet position. For the three months ended March 31st, 2021, cash used in operating activities was 3.4 million versus $15.1 million for the three months ended March 31, 2020, primarily due to improvements in working capital requirements. Cash used in investing activities was $1.7 million for the three months ended March 31, 2021 versus $2 million for the three months ended March 31, 2020. Capitalized software for the three months ended March 31, 2021 was 1.5 million as associated with investments for various hospitality software platforms versus the 1.9 million for the three months ended March 31st, 2020. Cash used by financing activities was 2.1 million for the three months ended March 31st, 2021. During the three months ended March 31st, 2020, we received net proceeds of 49.5 million and the $120 million issuance of the 2026 notes offset by the repurchase of the majority of the 2024 notes. Inventory increased from December 31st, 2020 by $3.7 million in preparation for planned installations with some of our enterprise customers. Accounts receivable decreased $4.3 million compared to December 31st, 2020 due to continued improvement in the restaurant and retail accounts receivable. Days outstanding improved within restaurants and retail from 74 days at December 31st, 2020 to 63 days at March 31st, 2021. Days outstanding increased within government from 51 days at December 31st, 2020 to 54 days at March 31st, 2021. This concludes my formal remarks and we'll now move to Q&A.

Ladies and gentlemen, if you have a question at this time, please press the star and then the number one key on your touch-tone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key. Again, ladies and gentlemen, if you have a question at this time, please press star and then the number one key on your touch-tone telephone. First question comes from the line of Samad Samana from Jefferies. Your line is open. You may ask your question.

Hi, good evening and thanks for taking my questions. So maybe Savneet first just, you know, as we look at the bookings number, I mean that still is basically just a hair shy of the record levels we saw in 4Q. Can you maybe help us understand what's driving that sustained strength? Normally in 1Q you see a little bit of a seasonal downtick and then you mentioned cases spiking. So just How should we think about the bookings in the quarter and were there any particularly large deals that accounted for a meaningful portion of that record or near record level number?

No large deals that sort of swung it. You know, it's that continued momentum, you know, Q3, Q4, just continue to have amazing momentum. I would say, though, one of the things that I think we've gotten really good at is after we sign a large logo, we've gotten much better at signing up the stores, you know, to carve up the wheel, if you will. So historically, it's taken us, you know, two, three years to roll out a big concept. Now it's coming much earlier. I actually think that as these COVID restrictions have come down and we see our activations pick back up, which will obviously drive ARR, it will also help us, I think, on the booking side because as that backlog comes down, I think we can push even more aggressively on these existing logos that we haven't totally penetrated yet.

Gotcha. And then I'm going to apologize for making you do a bit of a math question here, but if I just think back to last quarter, I think you'd mentioned that Brink ARR growth should continue to accelerate and in this quarter it actually decel against the prior year. So maybe just help us think about what the shape of that should look like. I know it's tough to pin down because you can't control social distancing regulations in a pandemic but just maybe help us think about how we should think about that acceleration on a full year basis just given the quarter to quarter variance we might see.

Yeah, I don't think we're going to have the quarter-quarter variance anymore unless COVID picks back up. You know, I think us having 3,300 stores in backlog creates a really, really strong foundation for 2021. It'll be hard for us to screw it up, you know, internationally. So I think you'll see acceleration in Q2, again, provided the pandemic doesn't come back. We've already seen, as I mentioned, activations picking up, and I think that'll continue in Q3 and hopefully Q4. So I think this will be the low point because I don't expect COVID to come back and these restrictions that come, you know, the restrictions that we had in January and February were pretty significant, and so that really limited what we could do. I think we'll see really nice expansion in Q2 and in Q3. What does that mean dimensionally by the end of the year? Our AR growth by the end of the year should be in line where we've been historically. And again, I think just having that backlog, and these are signed orders. These aren't like a, you know, booking with, we've got to go build software for it. These are orders that are signed and rolled out. So I expect by the end of the year, we're back to more traditional growth that we've had over the prior years.

Small, but I would just add one other piece to what Savneet mentioned there. Right, you mentioned the year-over-year growth, with this year being, in essence, the end of March, and the end of March of this year was the one year from what the restrictions hit in last year. And so this would be our toughest lapping period in regards to post-COVID. As last year, Q2 of last year, as you recall, we basically had a pause in installations in Q2 of last year.

That's helpful, Collar. Thank you for adding that on. And then just Switching gears maybe, on Punch, I know it hasn't been that long since the acquisition was announced, but have you had maybe any interesting early reactions from either your existing customers and feedback on, you know, hey, that was really interesting, we were looking at it, or vice versa, where maybe Punch customers that weren't using PAR suddenly are taking your phone call. Anything in that regard would be interesting as well.

Yeah, so categorically, I'd say that the feedback was very positive. I think a lot of our customers understood the industrial logic of it. I think they have a lot of respect for the punch, team's ability to get product and ship it quickly. And obviously, they know PAR well. So categorically, it was very positive. Specifically, we've had a number of customers that I think we hadn't, you know, planned to, you know, that sort of weren't, you know, deep in the pipeline that came back and said, hey, this is really interesting. You know, let's take a good look at PAR. And then we've had a category of customers that I'd say, you know, slept on par. You know, I don't think they knew all the change that was happening. And this sort of brought them into the funnel as well. I think the best news, though, that we didn't have any, you know, massive customer anger. We didn't have any customers think we're coming in to screw them. And so in general, it was very positive. Our customers have been really supportive. And obviously, I think living through the pandemic, they understand the why behind this, which which makes it so much easier.

Helpful. And then, Bryan, maybe this one might be for you, but I know that you're not giving guidance, but when should we think about, or how should we think about Punch impacting the numbers going forward? And will that be broken up separately, like Restaurant Magic is, or will it all be integrated together in one recurring revenue line, just getting out ahead of that?

Sure. What you're going to see in the and the 10Q that's going to be coming out in the MD&A section is we are breaking out now away from where we had product lines in the past. We saw Core and Brink and looked at all the various different revenue streams related to those customers that may have had those products to now we're actually going to be having in there within the segment revenue you're going to see pure just hardware, software and services. And so the punch side that we'll be rolling up into the software component and a little bit into the services. both software and services roles into the services line on the financials. So you're going to be able to see a little more transparency going forward now.

Great. I'll turn it over to the next person. But thanks again for taking my questions, and nice to see that strong bookings performance.

Your next question comes from the line of Stephan Sheldon from William Blair. Your line is open. You may ask your question.

Hi, thanks. wanted to dig a little deeper on the visibility you have into the pace of activations for Brink as we think about the next few quarters. I know you expect him to pick up, but can you maybe just help frame expectations around what we should expect in terms of the activation cadence over the next few quarters if you have visibility into that?

Yeah, sure. So, you know, I think before the pandemic, you know, we sort of suggested that, you know, we kind of want our bookings and activations to kind of match. And at the time we said, hey, you know, should be around a thousand. I think we'll definitely get back to that and hopefully well beyond that as, you know, the restrictions continue to come off. You know, we've seen our restaurant customers, you know, now in the month of April, now May, you know, lighten up more and more, which will help us accelerate. The second thing we've done is, you know, I think we put some of our best people on this problem to really say, hey, how do we make this go faster? How do we change what we do to make it better? So I'd expect us to, like I said, I think this is the trough. This was the last, this is, you know, I don't think, I think Q2 2021 will be the first quarter that we haven't had restrictions. Sorry, we haven't had immense restrictions. We still have some chains of ours that are limiting what we do until they get to the point that they can lift restrictions. But for the most part, this is the first quarter since the pandemic happened that we can really push activation. like we did before the pandemic. So I'd expect us to get back to at least where we were pre-pandemic and hopefully accelerate beyond that as things get better and better.

Got it. That's helpful. And then what traction have you seen so far on the payments facilitation side? How interested do your existing customers seem to be about exploring using your PayFac capabilities?

Yeah, I think, you know, my hope is by the end of the year, we have real traction. I think we've learned a lot early on. I think we've actually been excited by some of the receptivity we had from some larger chains. The key thing I think we've learned is our ability to package hardware and the rest of our services at the time of payments is very powerful to the end customer. We can provide more ROI, provide them a lower cost of ownership. And so that's really what we're working on. And so while we're still really early, we had our sales kickoff was in February. I'm pretty encouraged by what we're seeing. And as I said, it'll take us some time to get into these deals. Payment deals are on average three years. But we are seeing good progress, and particularly when we sell the full solution hardware, software, and payments, I think we're making it hard for customers to say no. So we're early, but I'm not, I'm encouraged. And then I think the other part of payments that will be exciting was, you know, how do we think about leveraging payments with what we have at Punch and what we're building in the future, where historically, you know, selling payments from point of sale, you know, your real value is, again, the ability to package or bundle solutions. But when you're the front end guest solution, you know, you actually kind of control the payments flow. So it puts us in a different conversation.

Great. Thank you.

Again, ladies and gentlemen, if you have a question at this time, please press star and then the number one key on your touchstone telephone. Your next question comes from the line of George Sutton from Craig Hallam. Your line is open. You may ask your question.

Thank you. Savneet, just another question. Thank you.

It's all about us staffing and getting in front of it. So I think, you know, could we do 1,000 in the quarter? Of course, we're all staffed to do that. Could we do 1,500? Absolutely. Could we do 2,000? We could. We'd have to sort of hire more around it and then so on and so forth. So it's very manageable for us to do this. And we are staffing up in advance of that. So we've made some, you know, hires specifically to prepare that activation. Again, as we've seen that activation pick up this month, we've, you know, you can even see on our website, we've pushed for it. So I expect whatever that cadence we need to get to, we can get to. And today I'd say, where do we max out? It's probably $1,000, $2,000 a quarter, where it is sort of depends. But that wouldn't be the worry. I think we can step up for that quickly.

Gotcha. On the restaurant magic side, so if we think about what Chipotle and others are saying about the cost of labor, Thank you very much.

I think one of the things we're excited for is if you think about our Q2 and Q3, with the pandemic restrictions easing, it's pretty amazing that we'll be able to accelerate activations and also accelerate restaurant magic, which got hit during the pandemic harder than Brink. I expect this to be hitting on all cylinders, but that product is much more of a pull-through. When we sell Brink, it's a lot easier to pull that through. Brink is more the lead-in.

Okay, and then final question relative to how you've discussed those units that have really the brink offering versus those units that don't have the brink offering within the same brand. Can you give us any update there from an ROI or perceived ROI perspective?

There's absolutely a perceived ROI. I think one of the most exciting things we've seen is that some of the chains we've signed in the last The pace at which we are signing new stores is much faster than anything we've done in the past. And that's going to continue. I think that's just us, honestly, having gotten smarter about how we sell that product, which is, as you said, very ROI-based. We come in and we say, hey, here's why this makes sense. Here's what we've learned. And I think, you know, oftentimes just being smart about how we think about incentives, right? So, you know, I'm just making this up. If we said, hey, you get a month of SaaS free for installing, for booking in the next couple months, right? You know, it's extremely ROI positive for PAR because if they wait a year to install versus doing now, we make that money back in spades. So I think we've gotten a lot smarter about how we kind of, again, sign up those stores. And we saw it play really well in Q1.

All right. Thank you.

Your next question comes from the line of Anya Sattersturm from Sedoti. Your line is open.

Hi, and thank you for taking my questions. Actually, some of them have already been asked. But in terms of the punch in integration and the sales team there, how big is that sales team and how is that integration going with the cross-selling and up-selling in terms of training and ramping that up?

Sure, absolutely. And it's relatively small, you know, about a dozen or so quota-carrying folks. You know, we're really early into this, so we've worked on what's going to be our playbook to, you know, cross-sell what's our playbook for, you know, cross-account collaboration. We're really excited. I mean, I think it's, as I mentioned, when we told our customers, there was quite a bit that came in that some customers that we weren't expecting. Just thinking through the last month, you know, there's a number of accounts where I'm actively involved from the quote unquote par side and vice versa. So It's been incredibly positive early going. As we move forward, we'll see much deeper collaboration because we'll have better mapped out where's the overlap, where are the places we need to push punch, where are the places we need to push brink, and the other products that we have. So I think that part will be, of all the things that happen in integration, that will be the part that we have the most success in because, again, we're very much answering a customer need as opposed to creating a need.

Okay, thank you. That was a good overview. That's all from me.

Again, ladies and gentlemen, if you have a question at this time, please press star and then the number one key on your test zone telephone. Your last question comes from the line of Adam Warren from ADW Capital. Your line is open. You may ask your question.

Hey Savneet, congratulations on pulling out of COVID. It's super exciting and obviously love to see the strength in the backlog. So my question is, if you look back kind of the history of the company when it was super hairy and I got involved, the company had no capital, we got you in there, you had to solve all the tech debt, you were on pace to have your Thank you so much for joining us. You know, we don't give guidance, but, you know, I think

sort of our business has grown at that 40-50% clip and I think we've got the potential to do that depending on how we execute and COVID staying where it is. I think Underwriting that for 2021 is very much completely tied to our ability to roll out this backlog. If we didn't sign any more stores for the rest of the year and just roll out our backlog, we'd be very close to hitting those targets. I've never been more optimistic about our ability to drive the growth from what we've got signed already. and it just be a matter of executing. And I think obviously adding punch just helps us continue that acceleration. So I think it's, again, I hope it's our last COVID impacted quarter where the bookings aren't so far ahead of the activations and I think it will be. And so, yeah, I think we should be able to get to a relatively exciting growth rate because there's so much already signed. You know, we don't need to sell too much the rest of the year that's going to hit a relatively high ARR growth number.

Right. Okay. And then my follow-up question is, you know, look, I obviously have been in this company for a long time. We were sitting with a large franchisee, call it about 100 units of what I would call a tier one chain that is probably larger than anything you already have. And, you know, we were sitting there and they said, well, we hate changing our point of sale because, you know, every single time we change it's, you know, $50,000 of hardware. And Well, we both know that it's not 50. It's probably 6, 7, 8, 9, 10, which maybe is an education program. But when I said to them, I'm like, well, what if PAR could give you the hardware for free? Would you do it? And they said yes. And I guess my question really is, and it's kind of a threefold question, but if I look at the success of Punch, to me it feels like Punch integrated with restaurant chains that basically said, look, we're going to guarantee you this ARR. Now, they're doing that and many more. Thank you for joining us. Thank you for joining us. So, you know, to me, this is like, how do we educate the consumer that they need this and that the return is multiples on itself and then, you know, making people do it faster and making it easier, right? Making it easier, whether it's through payment or loyalty fund. I mean, how do you think about those things?

Yeah, so, you know, listen, I think it's well underway, right? I mean, the bookings that we have are very much the result of getting out there and letting the story be known and understanding where we are. The addition of Punch will accelerate that because now it's coming in and solving a much bigger problem, that end-to-end, you know, unified commerce platform. So I think it's well underway. I mean, you know, bookings are the best indicator for the health of our business. If our bookings were challenged, I would be nervous, and they're not. You know, again, Q1 is our best Q1. And so I think it's well underway. I think it's happening. And I think specifically to the larger chains, it sounds like that you met. You know, I would say I always thought they would take longer to kind of morph the cloud because of the legacy infrastructure they have and how hard and potentially painful that is. But I think the ROI now is so significant. whether it be the ability to have better online ordering, better loyalty, better kitchen, so on and so forth. But to do all the things that they are desperately looking to do and are doing and having on a modern platform, I'd be shocked if it wasn't priority one or two on every CEO and CIO's list at every large chain. So I think that's all underway and we'll see more and more larger and larger chains kind of make that switch and make that decision. and again, we benefit a lot from Punch being in a lot of these brands already and us already having a point of contact and a product that drives significant ROI.

Yeah, no, look, Punch being in with Yum! Brands and Taco Bell and all of these great companies is great. I mean, look, I don't know if it's lost on you, but McDonald's says they're putting up dynamic yield. I mean, they were the forerunner in terms of investment in restaurant tech. Now they're basically taking a step back and for those of us who've studied this company, PAR was basically formed on developing the modern port of sale system for McDonald's. So, you know, look, if anyone's in pole position to sign on McDonald's, it's us. So, you know, look, I'm super excited. You know, Dairy Queen's 5,300. I'm looking forward to the next, you know, the first 10,000-unit chain and taking over the rest. So thank you for working hard, and that's it for me.

I am showing the further question at this time. I would like to turn the conference back to Mr. Savneet Singh for closing remarks.

Thank you everyone for joining. We look forward to talking to you next quarter.

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