PAR Technology Corporation

and thank you for standing by. Welcome to the Power of Technology Fiscal Year 2025 Second Quarter Financial Results Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you'll need to press Star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press Star 11 again. I would now like to turn the call over to your speaker for today, Chris Burns, Senior Vice President for IR and Business Development. Please go ahead, Chris.

Thank you, Lisa. Good morning, everyone, and thank you for joining us today for Part Technology's 2025 Second Quarter Financial Results Call. Earlier this morning, we released our financial results. The earnings release is available on the Investor Relations page of our website at parttech.com. where you can also find the Q2 Financials presentation, as well as in our related form, AK Furnished to the SEC. During the call this morning, we'll reference non-GAAP financial measures, which we believe to be useful to investors and exclude the impact of certain items. A description and timing of these items, along with a reconciliation of non-GAAP measures to the most comparable GAAP measures, can be found in our earnings release. I'd also like to remind participants that this conference call may include forward-looking statements that reflect management's expectations based on currently available data. However, actual results are subject to future events and uncertainties. The information on this conference call related to projections or other forward-looking statements may be relied upon and subject to the Safe Harbor Statement included in our earnings release this morning and in our annual and quarterly filings with the SEC. Finally, I'd like to remind everyone that this call is being recorded and it will be made available for replay via a link available on the investor relations section of our website. Joining me on the call today is PAR's CEO and President, Savneet Singh, and Brian Menard, PAR's Chief Financial Officer. I'd now like to turn the call over to Savneet for the formal remarks portion of the call, which will be followed by general Q&A. Savneet?

Thanks, Chris, and good morning, everyone. Thank you for joining us today. We reported $112.4 million in revenues in the quarter, an increase of 44% year-over-year. We also continue to expand our profitability. Adjusted EBITDA came in at $5.5 million. This number includes $450,000 of accounting charges for non-period deferred contract costs, which, when further backed out, brings our EBITDA to $6 million for the quarter. Subscription services revenue increased by 60% in the quarter to $72 million from last year and 21% organic when compared to Q1 2024. We delivered AR of approximately $287 million, up 49% year-over-year, and achieved organic AR growth of 16%, showing positive momentum across our platform as we just restarted our major rollout and are prepping for several multi-product rollouts later this year in early 2026. These results reflect the growing demand for unified technology in the food service industry and the better outcomes our solutions can deliver for brands. Now to dig into our business with further detail. Total operator cloud ARR ended at $119 million and grew 42% in the quarter, with organic growth at 13% when compared to the same period last year. This growth is slower than our historical trend due to the mid-quarter restart of BK, which only hit scale starting in June. Crucially, we have significant committed rollout visibility through Q4, which will markedly increase POS growth in the second half of the year. As we measured in last quarter's call, In Q2, we restarted the working implementation of PAR POS and initiated the rollout of PAR Ops to their stores. We continue to receive very positive feedback from corporate and franchisee stakeholders alike, and this successful partnership was ultimately crucial to us also contracting with Popeyes Louisiana Kitchen with PAR Ops. Outside of Burger King, we're seeing strong mid-market traction with 17 new direct POS logos signed in Q2 alone, continuing the trend from last quarter. All of these deals were multi-product, proving the strength of our product and better together value proposition versus up-and-coming point solution competitors or SMB providers trying to crack the enterprise. Our thesis is delivering outcomes of efficient operations and higher sales is playing out quickly in the mid-market and beginning to gain traction in the enterprise with proof points like ParOps and RBI. Our back office product suite, which we retitled from Data Central to ParOps earlier this year, is proving to be one of the most exciting areas of innovation and growth at PAR. PAR Ops delivered a strong sales quarter with three new customer deals. We also kicked off our implementation with Popeyes Louisiana Kitchen and Burger King. We believe that a key Better Together enhancement has been the addition of the delegate product suite, which we believe will drive our flywheel with strong multi-product adoption. As an example of this, Coach AI, our AI-powered intelligent assistant, pulls real-time POS data drive-through timer information, and voice of the customer guest metrics to give in-store operators actional intelligence to maximize efficiency. It is a clear enhancement of both the POS and back-office experience. We're at the point where ParOps itself is becoming a hero product within the Par portfolio that is capable of driving cross-sell. The ParOps product suite has a significant late-stage pipeline covering multiple existing and prospective Tier 1 and 2 customers, and we are trending towards both 2025 and 2026 being record years for this product line. Separately, with respect to our TaskPOS platform, we have aggressively repositioned our focus to pursue global Tier 1 deals and realize the value that the PAR umbrella brand brings to go-to-market efforts. We have gotten extremely compelling feedback from the biggest and fastest-growing brands that our TaskPOS platform architecture is the best in the world for global brands pursuing international expansion. Because of that, we've taken the important measure, add investment to this business, while pausing projected rollouts to focus on building out the product for the slate of late stage tier one prospective customers. A recent example of task potential was the recent launch of Wingstop's inaugural store in Australia this past quarter. We believe the near-term trade-off of growth for product build-out will set par up for massive success in the future. We anticipate rolling out our accrued multimillion-dollar backlog of tasks starting in Q1 2026. We believe our decision to run a double-pronged POS strategy with par POS for domestic brands and tasks for global brands will ensure we cover the maximum amount of enterprise concepts. There is no one-size-fits-all with point-of-sale software, and with our current portfolio, we cover both domestic and global enterprise QSR brands while also building a pathway toward continued expansion in other hospitality verticals. Now on to payments. In the second quarter, PAR's payment business started a major shift in operating model, moving from 99% card present transactions to now accepting and selling card not present transactions with the cross-sell of our PAR wallets, ordering, and retail solutions. Due to this shift in the timing around the attaching payments with PAR POS rollouts, we saw a slower than normal quarter in Q2. The second half of this year should return payments back to the growth as we've signed some significant 500-plus location card-not-present payment deals that we will announce very soon. We continue to see PARP payments as a key and strategic growth driver for PARP with a much larger and future TAM, given the addition of new sales channels and outlets. In short, Operator Cloud is uniquely positioned and hedged in the market to service both the dual need of revenue maximization and operational efficiency. While our business may not be consistent quarter-to-quarter, The 2025 pipeline keeps us very confident about the long-term growth with nearly $50 million in prospective ARR within just POS and back office. Further, our point-of-sale products have over $20 million of ARR tied to already contracted rollouts, giving high future visibility and confidence. It's important to note that the aforementioned pipeline number does not even include two mega tier one deals we are pursuing. Moving to the engagement cloud. In Q2, we continued to strengthen our market position driven by our robust customer demand and strong strategic innovation. We exceeded internal targets with engagement ARR increasing 55%, including 18.5% organic growth compared to Q2 last year. For enterprise restaurants, the growth trajectory of digital engagement loyalty programs significantly outpaced traditional sales channels. Despite broader industry headwinds and consumer spending, brands remain committed to enhancing their digital strategies with par's punch ordering and wallets platforms being key focus points of investment. In today's competitive market, where customer acquisition costs continue to rise, loyalty programs have shifted from optional extras to essential tools. They're critical not only for dragging repeat business, but also for building lasting emotional connection with guests. Our platforms, powered by a better together approach, uniquely positioned restaurants to capitalize on these opportunities and drive superior outcomes. As a result, we have begun winning multi-product deals at an impressive rate. In Q2, we signed 10 new engagement mid-market and enterprise customer deals. 70% of these deals included multiple products, including Punch, ordering, and payments. Let me reiterate that point. 70% of our deals from Punch now include a second product, When last year, Q2, zero deals did this. This is an enormous change at PAR. Critical to this multi-product evolution is the expansion of PAR ordering. We closed six new ordering deals this quarter, demonstrating momentum and growing demand for our comprehensive offerings. What's particularly noteworthy is that 100% of new Q2 ordering deals were cross-selled into our existing base. What largely drove that trajectory change in the cross-sell within the engagement cloud was our launch of a new suite of products, our engagement, which unifies four essential pillars, marketing, ordering, loyalty, and data into one integrated solution. Even more exciting than our recent wins is our product momentum. The industry is ready to move beyond online ordering 1.0 and is actively seeking innovation. Our development team Velocity underscores this. Story point commitments have doubled compared to last year, meaning we're now launching twice the product volume. The perfect example of this are the embedded AI-driven tools proven to boost check size via intelligent upsell, and drive higher one-to-one personalization through Smart Segment Builder. We feel that our ordering product is now best in class versus the legacy peers focused on driving cash flow returns versus product outcomes. Similar to Opular or Crowd, Engagement Cloud ended the quarter with a pipeline of over $50 million, providing strong visibility for future growth. Now turning to Part Retail. Our retail delivered another strong quarter and is quickly becoming the second pillar of our multi-vertical strategy. Our flywheel and convenience in fuel is starting to accelerate. In Q2, we secured four high-value enterprise wins. Historically, in the C-store industry, deals are chunky. In an average year, we would close two to four total. Our speed this year highlights the growing trend amongst operators, a move towards consolidation with a single trusted technology partner. and we're building momentum and are actively engaged with eight more enterprise opportunities with the potential to close in the back half of this year. Additionally, this quarter we completed the integration of our new self-checkout product, Skip. This is adding an extremely healthy ARPU white space and tight synergy to drive better outcomes for our customers. Our largest customers are already in talks to expand their relationship with self-checkout. In comparison to restaurant, we see that while C-Store deals move slower, they are highly strategic, long-term, multi-product relationships that drive massive future potential to hire ARPU and expand within the PAR ecosystem. Just as important as new customer wins in C-stores is the expansion among existing customers. A standout example is EG Group, one of the largest global forecourt operators. Since launching on PAR retail, EG has scaled significantly, currently performing at nearly three times its original program metrics. More importantly, they are now actively evaluating additional PAR products, including self-checkout. to drive further operational efficiencies and open new revenue streams. This kind of expansion, combined with the momentum we have winning new logos, demonstrates the beginning of our long-term flywheel in the convenience and fuel industry. We are quickly viewing the potential of this industry to becoming a meaningful driver of PAR's growth overall. Moving to hardware. We had a stronger than planned quarter in hardware revenues with an increase of 33.5%. there are a number of our hardware customers who accelerate their purchase ahead of tariffs being assigned. The continued uncertainty around tariffs will increase volatility into global trade policies and supply chains. We will constantly evaluate the current environment and will take the necessary steps to mitigate the impacts on our business to the best of our ability. In summary, Q2 was a validation of PAR's platform strategy and market position. Q2 saw 27 new logos signed with PAR, of whom 19 were multi-products. Across food service, we're seeing a definitive shift in buying behavior towards unified enterprise-grade solutions, an environment in which PAR is uniquely well-positioned as an industry leader. While our quarter-to-quarter movements are never linear, our 2025 pipeline of new deals stands near $100 million, which gives us great confidence around long-term durable growth. What's more, we feel even more excited that when looking at pipeline, we exclude our largest deals from these accounts in order not to be overly reliant on a deal or two, giving us even more confidence on our long-term potential. Brian will now read the numbers in more detail, and I'll come back at the end. Brian? Thank you, Stephanie, and good morning, everyone.