PAR Technology Corporation

Good day and thank you for standing by. Welcome to the PAR Technology Strategic Announcement Call. 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 the session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Chris Burns, Senior Vice President of Business Development and Investor Relations. Please go ahead.

Thank you, Liz, and good morning, everyone, and thank you for joining us on such short notice for this very important and exciting conference call. This morning, we announced two strategic acquisitions that expand our global vision and extend our unified commerce offerings. The press release is available on the Investor Relations page of our website at partech.com where you can also find the in-depth presentation covering the acquisitions, as well as in our related form AK furnished to the SEC this morning. I'd 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 are related to projections of other forward-looking statements. may be relied upon and subject to the forward-looking statement included in our press release this morning in our annual and quarterly filings of the SEC. Joining me on the call today to review the acquisitions is PAR's CEO and President, Savneet Singh, and Brian Minar, PAR's Chief Financial Officer. I'd now like to turn the call over to Savneet for his remarks, which will be followed by Q&A. Savneet?

Thank you, Chris, and thanks, everyone, for joining. Today I'm going to walk through a slide deck that we've posted on our website at parrtech.com, and I'll go through it quickly so we leave time for Q&A. Before starting, I think it's good for us to kind of walk through the vision we're building at Parr before giving the details of the acquisitions we pushed forward this morning. So on slide four, we laid our vision, which is to become the largest enterprise food service technology company by 2030. This vision hasn't changed, and these acquisitions in many ways accelerate that. If you flip to slide seven in the deck, you'll see the way that we define the global food service TAM. Today, primarily, PAR operates in the first two categories, restaurant and retail. The majority of our business operates in that QSR and fast casual markets, and we've grown into C-Store through our punch business line. And as you'll see, our vision is not just to be a restaurant company, but to expand our TAM in serving all food service. Because in many ways, we're moving to where our customers are expanding. The restaurants that many of us are used to trafficking are moving. They're moving to stadiums, senior C-stores, grocery, and hospitality. And so our solutions need to expand with those. On slide eight, we walked through our playbook. And we've tested this playbook now on a number of acquisitions, and we feel confident that we can continue to execute on it. We believe that we can acquire best-in-class products that focus on the enterprise and drive that product leadership with unmatched performance and marquee customers. And we couple that with deep vertical expertise, and that expertise helps us build an ecosystem unmatched in every single vertical we plan. And then we build better together innovation. And our idea here is that by combining more products, you, our customer, get more. And together with this playbook and this large TAM, we feel very confident we're executing on a value creation strategy. If you flip to slide nine, you'll observe our ARR since new management came in in 2018. And you can see that while we've had plenty of organic growth, the inorganic growth has been a huge part of our strategy. And during this time, we feel that we've not only created value in an aggregate basis, but if you flip to the next slide, you can see that on a per share basis, our ARR per share continues to grow at an accelerated pace. We believe this metric is incredibly important because underneath each dollar of ARR, we think is meaningful cash flow. And these two acquisitions today, which in aggregate bring us well over $20 million EBITDA, I think are proof to that story. Flipping to slide 17, you can kind of see the penetration we have at PAR today. Today, if every customer at PAR acquired all of our products, we'd be making well over $10,000 per store. We've got 80,000 unique customers, and then the average customer today maybe uses 1.25 to 1.5 products, although this number is increasing dramatically. And what's so exciting about this is that as we've acquired products, we've demonstrated an ability to have those products run in more and more of our customers. Our recent acquisition of Menu is a really strong example of this. So let me flip to the acquisitions we made today. If you flip to slide 13, you can see the overview of the task business. We announced this morning that we signed a deal to acquire Task, who we believe is the premier global platform for restaurant and hospitality outside the United States. The acquisition is roughly $206 million, made up of both cash and stock consideration. The combination of cash and stock will be determined during the closing process, we suspect, over the next three to five months. Cash consideration would become in the form of 81 cents a share, and then share consideration would come in at 0.015 shares of par stock, which equates to today around 95 cents per share. The stock portion of this consideration can flex from 18% all the way up to 50%, And so the total EV will adjust over time. In total, the business does well over $40 million of recurring revenue and $6 million of adjusted EBITDA. But at PAR, what we find so exciting is actually the product underneath TASK. If you flip to slide 14, you can see the ecosystem that TASK has built. And this slide might look similar or familiar because it's very similar to what we have today at PAR, except it's the global presence of what TASK is bringing to PAR. We believe that TAS truly has built something close to unified commerce abroad, and we're excited to have our customers grow that way as well. One of the most interesting aspects of our business is that today, every one of our large customers, almost every one of our large customers expects more growth outside the United States than inside the United States. And having a platform now to bring our customers abroad increases our ability to win, but importantly, also allows us to help bring global brands back into the portfolio. If you flip to slide 15, you can get an idea of how well-penetrated or how well-liked Task is across some of the premier brands internationally. Task is potentially most known for running the McDonald's loyalty app in over 66 countries. So as you travel globally and try that McDonald's app, more often than not, you're experiencing the Task experience, and that's how we in part discover Task. Today, TASC covers over 110 customers, $40 million of revenue, over $40 million of recurring revenue, and almost half a billion dollars of transactional users in 70 countries. It's an incredible set of products, an incredible team, and one we're really excited to move to par. If you flip to slide 16, you can see some of the vanity metrics around the scale of TASC. Not only are they deployed in 70 countries, they have 4 billion annual loyal transactions, 10.5 billion API calls. This is a business that, while small compared to PAR has incredible scale from a technology perspective, and that, again, gives us great confidence in combining our two businesses. Flipping to slide 17, you can see the vision, which is today we think PAR is delivering on its promise of unified commerce in the United States, adding tasks, takes us global, and gives us one united organization to help serve our customers. If you flip to slide 18, you've got high-level view of the metrics. Again, you'll see $40 million of revenue, $6-plus million EBITDA. That accounts for zero synergies, and we expect there to be many, and a very, very high degree of visibility into that revenue stream. In short, we have been working with the task team now for almost three years to effectuate something here, and I don't think we've ever felt such a great strategic fit. So we're excited to bring this product to our customers, but most importantly, we're excited to bring the task team into PAR. I'll flip to slide 20 and tell you about our second acquisition of Stuzo. Stuzo is the industry leading guest engagement platform for convenience store and fuel. We at PAR have run into Stuzo numerous times as our punch business and Stuzo go head to head quite often. The business ended 2023 at $40 million of recurring revenue and over $14 million in EBITDA. So it's a fast growing but also very, very profitable business in a category that we have been growing organically and very, very quickly. We paid $190 million for this business in the form of $170 million in cash and $20 million in par shares. We think that we can combine the Stuzo platform with Punch and build the ultimate platform for our convenience store and field retailers. If you flip to slide 21, you can get a view of why food service is so important in C-Store. When we stumbled into C-Store, it was because C-Stores were evolving in adding food to their location and they were pulling Punch through. They wanted the same sense of loyalty that our restaurant customers were driving. And as that market started to evolve, we started to see increased demand from our customers, demanding more and more loyalty solutions for C-Store. And while we were doing a good job at PAR, it became very clear that for us to win this market, we needed to partner with Suzo, who we believe had the best solution. Slide 22 talks about their wallet-steering technology, and what we love about it is they've really mastered this idea of one-to-one loyalty, where every guest is measured on the ROI of that one individual guest. And again, we've been touching on this through PAR, but Suzo really takes it to the next level. Slide 23 is maybe my favorite slide in that it touches on all the aspects that STUSO's open commerce platform is integrated in today. So similar to our PAR platform, where we're deeply integrated into the ecosystem of restaurants, STUSO does that within the C-Store. And that's everything from the same POS and back office organizations we're used to, but also into car wash, gas stations, EV chargers, all of these areas of evolving needs. And within all of these evolving areas, you'll continue to see food service pull through. Slide 24 shows the power of Punch and Stuzo together. You can see that not only do we have incredible scale of customers and of members, but we also have an incredible suite of customers touching some of the best brands in the industry. Slide 25 gives you a view of how we think we can grow within this market. We think there's plenty of room to grow in C-Store. While we're starting with our loyalty and engagement solutions, we think we'll expand through back office, point of sale, but also move down market where today our market is almost exclusively focused on the enterprise tier one set of customers. We think there's a lot more room to grow here and are excited to kind of push that forward. And on slide 26 is the high level view of Stuzos Financials. And as you can see, I don't know if we've seen a business of better unit economics during our time apart. The business LTM did $40 million of recurring revenue, $14 million just EBITDA, very, very high margins and a strong degree of visibility and net retention. And in aggregate, between the two acquisitions, we're adding $80-plus million of ARR, increasing our ARR per share meaningfully while adding $20 million of cash flow. And as I said, all these numbers are pre-synergy and looking back to LTM. So we're very excited to welcome to PAR. We think together with our existing solutions, we can cross-sell, up-sell, but most importantly, integrate so that our customers feel like it's one PAR. So with that, I'll pause in opening up to questions from the analysts.

As a reminder, to ask a question, please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again. Please stand by while we compile the Q&A roster. Our first question will come from the line of Mayank Tandon with Needham.

Thank you. Good morning, Subneet, Brian, and Chris. Subneet, first, congrats on the deal. I wanted to start with the financial side first. Could you give us a sense of how do you propose to pay for a task, given some of the considerations you mentioned? And secondly, what was the private placement price set and also the shares that were issued to Stuzo shareholders? What price would they do that would help in terms of our modelings?

Sure. So on the task side, you know, today the consideration, we don't know the final consideration between stock and cash. We don't know how much cash we need versus how much stock. You know, one of the things I think we're excited about is given the timeline to close, you know, we expect that we'll have flexibility on our balance sheet from some of the initiatives we have that we've talked about under 10K. And I think that's why we feel comfortable that as we get closer to the point of closing, we'll be able to hopefully get this done without a meaningful change to our cap structure. So very excited that we can potentially solve the majority of that or all of that from our balance sheet moving forward. On the Stuzo deal, we priced the notes.

Go ahead, Brian. Yeah, so we raised in the pipe $200 million. That was at a discount of 8.5%. So that was on the close of Friday, so looking at $38.65, the pricing on that, whereas...

And as we mentioned, 170 of it went to the sellers, and then we funded the rest with stock.

Correct. And all details are in the 8K filing this morning.

Correct. Got it. Very helpful. And then maybe the other question would be around just the product side. So somebody just curious, would you be going to market with the products that the companies already have? In other words, PAR is going to continue to really focus on bringing punch, et cetera, or do you have to integrate over time? Because I think you gave the example in the release where task is selling the loyalty solution to McDonald's, for example. So what does that mean for punch? So I'm just trying to get a sense if there's going to be product innovation or will it be still sort of standalone going to market?

No, no. And the beauty of these deals is that these weren't all the financial sides are so attractive. These are truly product solutions. As I mentioned, we've been courting these companies for, for, for years. On the task side, it's pretty simplistic. We're taking our U.S. customers abroad and bringing them to the task team. You know, it's a hole that we've had for a long time. It's an ask that we get all the time. And we think this is a great way to bring those customers to the international markets. International markets do run relatively independent from U.S. markets, both from the way we operate, but also the way that our end market customers operate. So I think that will be very, very synergistic. The other part of a task that's interesting is they have relationships with some of the large brands that we don't have, and I think we can sort of look to that in the United States. And I think our vision is we'll figure out which product's best, and if there's an ability to cross-sell each product in each market, we will. But today, it's really a handoff to the international side of the business, and we think that's pretty exciting. And of course, the products need to be deeply integrated so that the customer doesn't notice that it's a true handoff. On the Stuzo side, what's exciting here is that we're making our bet on Stuzo, and we're gonna be folding the punch C-Store business within Stuzo making that our platform of the future. And what that does is it obviously saves a ton of costs on the punch side, because as you remember back from Q2, we had a hiccup with our DevOps primarily related to the C-Store market. And so we've got a scalable platform we can build, and I think you'll see that become our arm within that market. Our products integrate nicely. We'll be adding our payment solutions in there soon. And so it's the same exact idea, which is we've got a product that we think is best in class, and we'll be building the same unified offering we did in restaurants. So I look at DUSO as much more expanding our TAM more officially within that convenience store market. Even though we're in it, even though we're growing cooking in it, we really wanted to have the best solution in that market. And I look at TAS as an extension of our restaurant business, but internationally.

Very helpful. I'll get back in queue. Thank you so much.

Our next question will come from the line of Eric Martinuzzi with Lake Street Capital Markets.

Yeah, you talked about synergies. Just curious to know, what are you talking about specifically? Is that revenue synergies, cost synergies?

Great question. So I think we'll see all of the above. You know, obviously, Task is a public company. They're meaningful public company costs, everything from, you know, listing fees, auditor fees, board fees. So there's some of the mechanical costs that I think we can take out. But obviously, we think there's a lot more to add from the revenue side. You know, Task is an incredible product. You know, every time I see a demo, I pinch myself at the quality of what's been built. And I think we can bring a lot more to that organization. I think the task team would tell you, you know, part of the excitement is we have these relationships with the biggest restaurant brands in the world, and we've been telling them we can't operate them internationally. And so now I think the revenue synergy side there is exciting. On the studio side, Stuzo is an incredibly efficient business, and so I think we look at synergy there, as well as on the revenue side. Can we accelerate their go-to-market when you combine Punch and Stuzo? We think you're taking the two best products, putting them together. That should increase win rates and drive future synergy. And then I think there's the cost element I mentioned, which is I think on the Punch side, we'll be able to rationalize costs on our infrastructure side, given we'll be leveraging the Stuzo platform going forward.

Okay, and then on the... The international versus domestic sticking to the task product capability, do you feel like you've lost out on domestic wins because you did not have a global solution?

Not yet, but I think that will be the path of the future. I think we've now had enough transactions where our customers are saying, hey, can you take on this non-US business? And we say, no. Today, I don't think it's a headwind at all, but I think it's just an amazing tailwind for us. I always say, You know, today our customers pick us because the majority of their business is the United States and we have the best product in the United States. I think as they make these massive investments internationally, we've got to go with them there and we can't just pretend that we can live in our isolated box and keep winning the U.S. and not have that impact internationally. So I don't think we've lost anything because of it. I just think it increases our ability to win. You know, particularly for some reason we're neck and neck and we say, well, don't worry, it's the same company internationally and domestically. I think that's a huge value add to our customers.

Thanks for taking my questions.

Our next question will come from the line of George Sutton with Craig Hallam.

Thank you. Nice transaction. So I wondered if you had conversations with folks like McDonald's, which are named customers in this deal. Starbucks is also a named customer. Just curious sort of how much encouragement they've given as part of this.

Oh, I can't really talk too much about that, but I think, you know, a lot of our diligence was, you know, the quality of these products, how happy the customers with these products and the ability to grow with these products. And so, you know, I think, you know, ostensibly, you know, you know, I can answer your question, but not directly, you know, but I think we feel really good that the customers are very, very happy. The customers continue to grow spend. And the feedback's really great. And I always encourage everybody, if you're in France, open up that app and take a look. It's really, really high quality. And then go to another country, and you'll notice how seamlessly it moves to the next country. So they built something very special, and we feel very, very strongly about it.

So you laid out on your last earnings call several RFPs you're working on. I'm curious how this might accelerate or impact some of those.

I don't think it'll change them at all. I think, you know, those RFPs will certainly, you know, go back to them up and that, hey, we've, you know, got a solution for the national markets. I think it'll help us. But, you know, those are advanced and I think very focused. So, you know, again, these weren't done for those deals. These were done for how do we continue, you know, building a business for the next, you know, five, 10 years. So short answer is it will be incremental maybe for these deals we're working on, but I think that wasn't the reason we did it.

One other thing if I could be, Stock composition of the task deal, can you just talk about what determines the end game here in terms of they're the ones, I assume, making the decision of cash versus stock?

Yeah, well, the shareholders get to decide. So, you know, we know that the CEO and management are rolling over. We just don't know what the non-management shareholders have decided, and that will happen over the next three months or so. Perfect. Thank you.

Our next question will come from the line of Stephen Sheldon with William Blair.

Hey, thanks. Good morning. It seems like you guys are going to have a lot on your plate between the Burger King rollout, continuing to integrate and expand menus capabilities, and now you'll have two more acquisitions to integrate and layer in. How concerned are you about being able to manage all of this effectively?

It's a great question and one we think about a lot, but the short answer is I'm not. I think we've kind of been preparing for this for a long time. And again, one of the beauties of what we're buying is it's not just great products, it's great people. And so in many ways, solving our international problem as an example frees up more time because you're spending less time trying to answer those questions and find something to work there. And given that we run relatively, while we integrate our products, We run relatively decentralized so that we can discover the next layer of management and give them the accountability and feeling of ownership. I'm not worried about it at all. I feel actually really good about it. And then with Stuzo, as I mentioned, this is a business that's run world class. While it's a small business, it's truly been run by an incredible team. And so I expect us to learn from that team and how we can operate that same sense of rigor on the economics that they have. So I feel very good about it. And in many ways, know c-star they said our fastest growing category at par and we just haven't given it the oomph that it needs and this certainly does that and so again i think it actually ends up eventually freeing up time because it makes a strategic decision for us which is we're going to take that market serious but then also now have a team we can back as opposed to stretching then uh you know the team at punch so i feel very good about it actually creating more leverage for us over time um and you know i you know we built this really strong bench of talent apart and might as well put them to use on something that's big and can drive meaningful value back to us.

Got it. That's helpful. And then just as we think about our models and as you close on these, would you expect to maintain TAS and SUZO's current level of profitability? And again, just as we think about our models. Or are you thinking you might need to ramp the investments? I mean, they are nicely profitable, but they're both playing in markets that have big opportunities. It seems like there's a lot of growth opportunities. Could you be ramping the investments, thinking about things like go-to-market, et cetera, where maybe we shouldn't be expecting their current level of profitability to continue at least in the near term?

No. I mean, the numbers I gave you were LTM. And so I expect the NTM to continue to grow and get better. So And, you know, I feel really good we can add value both on the revenue side and on the cost side. So, you know, we feel good. And we've been conservative going in. You know, we wanted to make sure that the numbers we put out, you know, are true, they're verified. These are both smaller companies, and we feel very good about that now. So short answer is no, I think they'll get better. And everything we've sort of put forward right now is LTM.

Great. Thank you.

Our next question will come from the line of Anja Soderstrom with Sidoti. Hi, can you hear me?

Yes, Anja.

Okay, sorry. It got cut off. Thank you for taking my questions and congratulations on these acquisitions. I'm just curious, do you expect this to accelerate your AR growth beyond the stated targets or Are you not comfortable to comment on that now, maybe?

You know, I think they'll be within our targets. I think, you know, certainly a year from now, they'll certainly help us accelerate, but I think it'll stay within our range. I don't think they're not diluted to our growth. I think they could accelerate our growth, and obviously they add meaningful to our bottom line in our past Rule of 40.

Okay, thank you. And in terms of the cross-sell and up-sell opportunities here, do you see an opportunity there for the hardware side as well, or?

Certainly. I think there's an opportunity for the task platform to run on part hardware. Obviously, part hardware is in something like 100,000 stores across the world. So we should not only look at it as an opportunity to sell hardware, but also plant our software flag where our hardware customers are. So certainly a real potential, really nice energy there.

Okay. Thank you. That was all for me.

Thanks, Anya.

Our next question will come from the line of Charles Noppen with Stevens.

Good morning and thank you for taking my question and congratulations on the deal. Just to put a finer point on some of the earlier conversations and questions, just looking at the interim financials for TASC, looks like they reported 36% growth in revenue and 57% growth in recurring revenue. I guess my question is, are there any areas or clients that they might be deemphasizing? Or conversely, is there any revenue synergies that could potentially add to that growth rate? Or should we kind of think about those levels of growth as sort of a go-forward trajectory for that business?

25 is really the year we'll see the impact of whatever we can bring to these businesses because as you know, Chuck, the sales cycle here isn't overnight. And so I think we'll see in 25 what synergies we can bring to these businesses. I think we can potentially do more as it relates to payments. On TAS particularly, a lot of it is going to be our ability to cross-sell. Can we bring our U.S. market customers abroad and then can we help ramp up their existing international presence, which is I think so much of the value So the short answer to your question is, I think it's a 25 thing to see the success of our cross-sell. I think in 24, both these businesses will grow within our normal range of 20 to 30, and I think there's room to be optimistic on each of them.

Got it, okay. And as a follow-up, just looking at slide seven, you outlined the various areas of the TAM, and obviously this expands your penetration into the C-store area, but you had alluded to stadiums as well. My question is, do you feel like you have the assets and capabilities in place to expand into various areas of the TAM right now? And if you could just kind of elaborate maybe on stadiums or other areas of interest as well, I think that would be helpful.

So the short answer is we don't do anything in that market today, but the product suite of TAS does operate in stadiums and what we call non-traditional markets. If you remember when we announced Burger King back in, I think, December, One of the comments we made is that we're not in the non-traditional units. Well, today we potentially have a solution to do that. So TAS would be our bet into moving into those markets. And it's a really good question because one of the things that I think we've all learned over the last decade or so is that every food service location has this debate of do you create a private label brand or do you create your own brand? When you go to a baseball game, more often than not, it's not the random stadium restaurant. well-known brand, whether it be Burger King, Shake Shack, so on and so forth. When you go to an airport, it's generally not wide-level brands. When you go to a convenience store, you're seeing the big brands like a Dunkin' Donuts or Subway and all those brands. And so you're seeing our customers get pulled into those non-traditional markets. And historically, we have been able to operate there because we didn't have CPG integration or we didn't have reading technology. These acquisitions kind of pull it there. And so, you know, we're making this big bet on C-Store with Suzo. And I think that will be our first sort of true, true push into that second vertical. And again, it's a little disingenuous that we're already there. It's a big part of our revenue. We're growing fast. But certainly, I think you'll see us expand there. And then if we get that right, I think you'll see us continue moving these other markets. And as I mentioned, TAS does have a product suite that touches casinos, stadiums. But, you know, we'll see. You know, I think there's just a lot of opportunity. We've got to prioritize the stuff that's going to work for us to do it all. And so we feel great in restaurants. Now we feel great about C-Stores, and then we'll see where the future takes us.

Got it. Appreciate all the callers. Thanks, guys.

Our next question will come from the line of Andrew Hart with BTIG.

Hey, congrats, guys. Sidney, I think I thought you mentioned that Punch and Stuzo kind of bumped into each other fairly regularly. Can you just kind of unpack that just from a competitive standpoint, what that's looked like historically?

Yeah, as I said, I think we believe we're the two most competitive solutions in the market. And, you know, you know some of our big brands on the C-Store side. But, you know, I would say the Stuzo, you know, again, we wouldn't be going after Stuzo if we didn't think it was the best product in the market. And, you know, that's sort of a full-stop comment. We think, you know, there's no one that can compete with us on restaurants the scale that we do. We think we're really good at convenience store, but we saw a product that You know, it's just very elegant. You know, the founding team there is just fantastic. Everything they do is clean. There's a real cultural ethos. And it's highly focused on that vertical. And I think we saw the limitations of us not being all in. And so this really takes us all in. So the short answer is I think there are categories of C-Store that we potentially do better in. There are categories that they potentially do better in. But I think the combination is going to be a wow factor for the industry going forward. Thanks.

And then I guess maybe just thinking about C-Store, you made the other comment that, you know, there's a lot of white space for, you know, PLS in the future. I guess from a product perspective, you know, where is kind of, you know, is Brink able to go into a C-Store? Or is it we should really just be thinking about that as restaurants right now?

Well, we're in a couple of C-Stores already within Brink. But I think the way we're thinking about it first is expanding the TAM of Stuzo by going into historically Stuzo has been in these large, large enterprises. You know, we think the mid-market and that market is super interesting. I think we're going to quickly look to pull in payments and then slowly try to bring in par products or, you know, continue to buy best-in-class products that fulfill that need. And so, you know, I'm spending a ton of time with, you know, the founder of Stuzo, as is our usual engagement team. And so we're going to pull that out. But the short answer is, yes, we're already in it. And I think by having a focused C-Store team, you know, we can have that honest conversation. Can we win with Brink? Can we win with Data Central? I know we can win our payments, but can we win our products? And obviously, we wouldn't have done this acquisition if we didn't think we could. And so, you know, I think we feel pretty good that we've got a couple products we can bring in right away, and then we'll see how we bring in the rest.

Congrats, guys. Thanks, Andrew.

Our next question will come from the line of Adam Wyden with ADW Capital.

Hi, can you guys hear me? Yep. Hey, so obviously, you know, Casey's, you know, you guys hit, you know, some, you know, an R and D snafu or sort of a mailer snafu, you know, now with you guys owning basically Stuzo and punch and not having to compete in C store. I mean, you know, can you talk a little bit about sort of, you know, the pricing power you think, you know, you now have in the marketplace considering you sort of have the two best solutions and, you know, the potential to sort of combine those resources on the R and D front, maybe into one single solution. Is that, something you guys could think about i mean because that you know historically loyalty has been a product where you know people sort of bounce around a lot and now that you own the two best products you know i would think that that could have meaningful sort of r d sort of cost savings and then also just sort of pricing power because people just sort of don't bounce around can you talk a little bit about that i think on the pricing powerpoint um you know i always tell our product teams you know you can say you have the best product

But if you want the most expensive product, then you can't say you've got the best product because people aren't paying for it. And I think Stuzo's delivered on that. Their product is two, two and a half X the cost of Punch in that market. And I think they deserve it because they drive incredible ROI to their customers. And so obviously, I think combining Punch and Stuzo, we have the opportunity to take up price on our Punch customers, but really deliver just a world-class solution back to our customers. And again, obviously, I don't believe in taking price for taking price stakes. I think we have to add the value to our customers so that as they get ROI, we get ROI. And we will be able to demonstrate that with Stuzo really, really quickly. So to your point, yes, I think it's going to be amazing. I think, you know, having the two best products in the market, combined resources, and both of us are committed not to hurt our customers, but actually get meaningful outcomes for them. You know, I think that's why we'll win. You know, one of the things I said on our last earnings call, and I really mean it, is, you know, consolidation has always been this tradeoff between simplicity and functionality. And we're working so hard to prove that wrong. I don't want you to think because you bought two products in par, you're giving up something. We actually want you to think you're getting something more. And in this example, while it's not two distinct products, I think the idea is we're not combining Plunge and Stuzo to kill one product and force you on another product. It's actually to build you a better product that you can make more money on, hence we can make more money on. So I feel great about that. On the cost side, this part I think is really interesting. You sort of referenced our challenges earlier. in Q2 and certainly combining the DevOps and infrastructure cost of this organization will make us more efficient. We didn't build the product when we started for the C-Store market which uses loyalty solutions far more than restaurant customers do. And so that lack of vision from us I think limited our ability to grow but also dramatically hurt us. And you'll see us combine those resources and so you'll see the punch restaurant margins go up, and I think you'll see the C-Store margins do go up. So I think it's a win for both.

Yeah. And then, you know, you talked on some of the, you know, previous calls about going to, you know, you sort of elected to sort of do menu in the United States because you didn't really have a go-to market because, you know, there was currency and all this other stuff. You know, it's our understanding that task has a point of sale. So, you know, obviously you can cross-sell into existing task units. you know, punch and menu and other stuff. It's a beachhead and sort of manages that currency. But I mean, do you see this as an opportunity now that you have task as a point of sale internationally that you can go and sell data central menu payments, all these other stuff? I mean, does task sort of provide the beachhead for sort of international expansion for your existing products in your mind?

Yeah, I think so. I mean, task, we think is the best POS abroad. And I think it creates an opportunity for us to do that. But, you know, I also say, you know, we have no problem if the task products end up being better than our products, bringing their products onshore. So, you know, to me, it's just about figuring out the best product. But the short answer is, of course. And you've got to remember how literally all of our large customers have more growth outside the United States than inside the United States. And so we've got to be able to serve that. And so to me, the synergies are actually just bringing our U.S. customers abroad, giving them a solution so that they've got, you know, a complete global solution versus, stitching together different, all these various different markets. And, you know, I would say, you know, what we love about the TAS team is they're so product focused, but I think what we can bring to them is a lot more of the go-to-market muscle. So we feel very proud about that.

So, and you mentioned, last question, you mentioned Rule of 40. I mean, obviously, you know, TAS is growing really fast and Stuzo, you know, seems to be growing really fast and obviously not diluted to your growth rates. I mean, do you think that, you know, you guys can exit, you know, exit the year, you know, at a rule of 40 or close to a rule of 40? I mean, because there's obviously a meaningful disconnect in valuation between where PAR is and, you know, for example, a company like Agilisys. I mean, this company now is bigger than OLO, double Agilisys, international. I think this is, you know, obviously the last piece of the puzzle. I mean, do you think that – you know, that everything in your core is on path that you think that, you know, with this in conjunction, you guys could, you know, be, you know, getting close to rule 40 by the end of the year?

I think this brings up our, this brings our path of profitability up, you know, meaningfully, right? So, you know, if we were targeting end of the year, I think we'd get there far faster now. And so obviously our rule of 40 score grows to that. And so short answer is, yeah, I think this is going to be incredible for the financial side of part, but, you know, moving up our profitability targets, It helps our Rule of 40 score, but what it does more than anything else is increases our TAM, increases our ability to grow for many years to come. We've been growing nicely for a long time, and this just allows us to grow longer and longer, put our team in a better position. So I feel excited that we're going to pull forward the profitability, and we would have gotten there anyways. We were feeling really good about that on our own, but this certainly accelerates it, and then obviously has an impact on the Rule of 40. Adam, we're going to jump to the other caller. That's it. Thank you. Thank you. That's good.

Our next question will come from the line of Samad Samana with Jefferies.

Hey, good morning. Thanks for taking my questions. I guess first, Stephanie, I know someone asked earlier how you feel about all of the things that are going on at once. I guess I want to ask the question in a slightly different way, which is, as we think about the BK rollout, ramping payments, and now digesting acquisitions, how should we think about the prioritization What is the number one priority now? Or if you could just stack rank those, and then I have a couple of follow-ups as well.

For sure. And one of our values at PAR is focus. And so for us, it's an obsession on you get to be strategic only if you've executed. You get the luxury to be strategic when you've executed well. And so we prize that tremendously. And so we've got a group of leaders at PAR that own disparate aspects of our business. We've got our operator business, and then we've got our digital engagement business. And both of those leaders need to drive the execution we have in front of us. And so, you know, as a company, obviously executing on Burger King, it comes number one. We've got to execute on that so that we can win more business, prove the trust they put into us. You know, it's not lost on us how much trust that organization put into us, and we need to deliver on that. And so without question is executing on that rollout and driving that forward, and our entire team is aligned to that. I think after that, it's about driving the synergy from these acquisitions. While it's been so much work, and I said it's been years in some cases, to get these transactions to a point where they could execute, where we could buy them at such accretive prices and deliver value back to their own shareholders, now we've got to prove it, and the hard work starts now. We're aggressively working on our integration plans, and it's overnight. We don't wait a day. We're flying out today to push that forward. And then I think, you know, as the CEO, so much of what my job is then to sort of, you know, constantly have an objective conversation with our team and say, did we make the right decisions? Are we doing the right thing? And so, you know, hey, maybe six months from now, we look at our priorities and say, hey, this is not the thing that drives the most shareholder value over time. But the short answer is we are obsessed with execution this year. We're obsessed, as I said, we're obsessed with getting profitable. Before this, this certainly accelerates it, and that doesn't take the gas off that execution on profitability. But from a strategic perspective, I'd say, you know, getting that Burger King right, getting these deals integrated, number two but you know given the depth of management that we have now you know each leader has the three to five things that we we have started in Jan 1 and for them to get their compensation and that doesn't change now understood and maybe if I think about what this does it gives you a closer relationship to some of these large brands that you serve here in the US abroad and vice versa

When you think about the buying motion at a large brand, whether it's McDonald's or Burger King, is there a different executive that's making the decision on the international front versus U.S. domestic? And how can you tackle that? Or is it typically a decision being made at the most corporate, senior level at the corporate, and now this gives you multiple entry points? Just how should we think about how this impacts how the buyer thinks is approaching par where the decisions are being made on the buyer side?

That's a really, really good question. So the short answer, unfortunately, is it depends on the brand and how they're structured. Some brands run incredibly centralized. Some brands run decentralized. But I would say even the decentralized brands, gosh, there is a real push to unify the core parts of technology. So there may not be a push to sort of say, oh, we want to run our kitchens differently in a country different than we do in the United States. But the core infrastructure technology of POS I don't think I've heard a brand not suggest they want to unify that across the globe. And so I think in conversations with investors, I've sort of talked about how some of these big brands we've won, they've just said, hey, do you want the international business? And we've actually had to be like, no, we can't. And what's been painful is many times that international business was as large or larger than the United States. So the short answer is it depends on how the brands are run. Some run very decentralized, some run very centralized. I'd say most brands are trying to add more centralization to their international efforts because the international efforts are such a high growth area that they like to control that. But regardless, there is just a real, real focus on trying to find more simplistic solutions. And again, they have the learnings now of having been big businesses in the United States for so long and learning from the mistakes and the wins they had here and then applying that internationally. So I think that all benefits us.

Great. And this last question for me, I think for the most part, there seems to be more synergies than not between both the acquisitions But to the extent that there's areas where there's product overlap, is the long-term view that wants to determine whichever one is what's called the category leader post-integration, is it to shut down the other parts or is it to continue to kind of let them operate under the umbrella with the car brand? How should we think about where there's product overlap? Is there going to be one kind of centralized brand, one central product?

Yeah, I don't think we want to have, you know, five different POSs running in the United States as an example. I think we will always have to focus on one product that's going to be our winner in the market. And so, you know, in C-Store, you can see the bet we've made there, which is we really think we can grow the C-Store product, and there's no pride of authorship there. You know, they've got a product that we think we can build better. We're going to use that, and that can be our product there. I think as it relates to, you know, the task side, we'll figure it out as we go. And again, we have to be completely objective on it. best product wins, and it's that combination of best product, ability to scale, and then obviously the timeline to do that. So, of course, I don't think we want to have duplicative resources across the organization.

Great. Thanks for taking my questions, guys. Congrats on the work.

Thanks, Saman. That concludes today's question and answer session. I'd like to turn the call back to Savneet Singh for closing remarks.

Thank you, everyone, for joining us. We look forward to updating you on our next quarterly call.

This concludes today's conference call. Thank you for participating. You may now disconnect.