PAR Technology Corporation

Good day and thank you for standing by. Welcome to the PAR Technology first quarter financial results. At this time, all participants are in listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you need to press star one one on your telephone. You would then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that this that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Chris Barnes, Senior Vice President, Investor Relations and Business Development. Please go ahead.

Thanks, Antoine. Good afternoon, everyone, and thank you for joining us today for Part Technology's 2026 First Quarter Financial Results Call. Earlier today, we released our financial results. The earnings release is available on the Investor Relations page of our website at parttech.com. where you can also find the Q1 financials presentation, as well as in our related form, aka Furnished to the SEC. Before we begin, please be advised that our remarks today will contain forward-looking statements. These forward-looking statements are subject to risks, uncertainties, and other factors, which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. For additional information on these factors, again, please refer to our earnings release and our other reports filed with the SEC. In addition, we will be discussing or providing certain non-GAAP financial measures today, which we believe will provide additional clarity regarding our ongoing performance. For a full reconciliation of the non-GAAP financial measures discussed in this call to the most comparable GAAP measure in accordance with SEC regulations, again, see our press release furnished as an exhibit to our Form 8K filed this afternoon are supplemental materials available on our website. Joining me on the call today is PAR's CEO, Savneet Singh, and Brian Manar, 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 a general Q&A. Savneet?

Thank you, Mr. Barnes. I'd like to start today with a core conviction. PAR has fundamentally been miscast in the public market. Historically, We've been heads down, but starting today, for the first time, we'll be providing additional forward-looking financial guidance, along with our previously stated mid-teens AR growth target, because we believe in the power of what we've built and how we're building to drive true shareholder value. Today, you'll see that we're not focused on sleight-of-hand announcements, financial engineering, or AI washing results. We're focused on execution, and we're focused on the dollars and cents that are going to drive real value to our investors and to our customers. We fundamentally believe that our business is in an amazing position to capitalize on our future AI vision of PAR intelligence, that we have a strong foundation shielded from perceived AI market incursions, and that the pipeline we have ahead of us is going to drive material upside to our financials. Now turning to our Q1 performance. Q1 marks a good start to the year and a purposeful shift in PAR's operating strategy and execution. Our goals are clear. One, materially improve PAR's profitability via sustained operating leverage. And two, utilize PAR intelligence to expand TAM and long-term growth. In Q1, we scaled our AI-first restaurant retail platform, eliminated structural cost inefficiency, expanded recurring revenue, and delivered meaningful year-over-year improvement in profitability. Total revenue for the quarter was $124 million, representing 19% year-over-year growth driven primarily by strengths across subscription services and hardware. Importantly, we improved adjusted EBITDA by nearly 2x year-over-year, reflecting tighter cost discipline and stronger operating leverage. This theme will continue throughout the year. OPEX will decline sequentially every quarter in 2026, while ARR, gross profit, and EBITDA all continue to grow simultaneously. In Q1, ARR reached $330 million, of 16% year-over-year, with organic growth of over 11%. This performance reinforces the durability of our SaaS-based model and the increasing strategic value customers place on our omnichannel data-driven platform. Importantly, we continue to grow year-over-year while managing out the low-priced customers we referenced last quarter. While gross margin was impacted by hardware-related tariff and cross-pressure, we're making real progress expanding profitability. we are seeing improved success employing AI across G&A functions. OpEx as a percentage of revenue declined from 50% to 43% year over year, with sales and marketing at 9%, R&D at 16%, and G&A at 18% respectively. As we scale and improve our fundamentals, our progress with AI has become an increasingly important driver of momentum, especially on the product side. PAR serves multi-unit restaurant and retail operators competing in complex, margin-sensitive environments. And that's exactly where our better together and par intelligence strategy is focused. What's driving our competitive wins is not any single feature. It's the combined value of a core platform with expanded feature depth via better together integrations, as well as a premise of par intelligence functioning as an agent harness that drives profitable actions. Together, we see our par intelligence AI vision as an amplifier of our platform and future growth. In particular, We are more bullish than ever in our ability to drive sustained, profitable growth through AI. Brands moving away from legacy solutions consistently tell us the same thing. Fragmented technology stacks slow them down. When your core data lives in one platform like PARS, you unlock the ability to deploy agents across the entire tech stack, not just with a single siloed product. PARS multi-product enterprise deals are precisely possible because of the binding power of of a modern point of sale tying together all the facets of the data tech stack. That's a structural advantage. Context equity is the cornerstone of winning in the AI era. Customers are signing your decade-long multi-product deals with PAR precisely because they know the difference between an agentic platform based on deep workflows and shallow dashboarding. We believe these long-term contracts are a key proof point that we are becoming the trusted AI partner for our category. Let's dig into the Q1 performance in detail. On the operator cloud side, Momentum was led by ParPoS and Data Central with continued execution against the Burger King rollout and wins such as AndPizza, Tijuana Flats, Sarku Japan, and Pizza Factory. The ParPoS Burger King implementation is running at a sustained pace of over 400 sites per month, and we have a strong plan into more than 3,000 additional sites that will go live this year. We continue to work in lockstep with our most recent Tier 1 win, Papa John's, as we kick off their dual POS and data central implementation plan late this year for all of their US-based restaurants, and the full system will be live by the end of 2027. We are seeing exciting pipeline traction in the pizza vertical, with this sector poised to be disrupted as the market is fragmented, lacking new entrants, and primarily run off legacy custom-built tech stacks. ParfPOS is the foundation of our platform, and we are quickly progressing with agentic OS capabilities. Across the portfolio, Attach rates are the story, as nearly 90% of new operator deals in Q1 were multi-product. Yet the average customer still uses fewer than two of our core software solutions. PAR is not reliant on home-run Tier 1 deals to meaningfully drive growth. The continued expansion of multi-product cross-sell into existing accounts by itself provides meaningful runway. On the engagement side, ARR growth is driven by cross-sell, upsell, and pricing actions, as well as the initial contribution from Bridge. In the quarter, Punch had a one-time strategic contraction that we previously called out on last quarter's call. This onboarding of customers was necessary due to the materially unfavorable legacy pricing deals in place and the lack of pricing flexibility amongst a very small subset of customers. In most cases, the pricing was an 80% discount from our standard subscription pricing. The proof point is that our organic ARPU engagement increased by 27% year-over-year. Another long-term benefit will be the reduced OPEX and more efficient gross margins over time. This represents another shift in our mentality from revenue at any cost to profitable growth. Excluding this, Punch had a solid growth quarter with a greater than 50% win rate on competitive deals. More than 80% of engagement deals this quarter were multi-product, and the exciting thing is that it's becoming the norm. In Q1, part ordering closed three brand new deals, all including multi-product attachments. The quality and scales of these wins matter. One of these wins is particularly notable. This was a competitive win, taking share directly from the largest legacy ordering provider. It's a 70-plus unit brand, driving meaningful ARR. That's exactly the profile we want. Scale, intentional platform selection, with the ability to sell an additional functionality, and meaningful economics. Another important example is the selection by Pizza Factory. This was an all-par, full-platform deal across 100-plus locations. Adding ordering to our bag gives us a strategic weapon versus POS or loyalty-only players. Full platform plus pizza is a powerful combination, and it's a strong validation of how well our solutions work together in a high throughput complex environment. We continue to see strong demand from brands migrating off legacy online ordering providers and standardizing on par ordering. Moving to retail. We continue to see strong momentum in our retail business and the fuel and convenience space. most notably with the success of Q1 launches of Stinker Stores, H&S Energy, and Parker's. Our pipeline for the remainder of the year remains strong, with several Tier 1 enterprise brands in active negotiations. In Q1, we released our Touchpoint self-checkout, including loyalty extension, and we're excited about the market opportunities as we expand our footprint inside the four walls of a C-store. On the AI front, PAR Intelligence is now alive across nearly 1,700 retail sites, including enterprise-scale deployments at Parker's Kitchen and Cumberland Farms. We are currently in discovery mode, using real-world operator data to refine our models and eliminate hallucinations. Our roadmap is aggressive. Following this initial scale-up, we will move into the action phase, introducing agentic program management and automated campaign creation, combining the agentic insights with the autonomous ability to act instantly, showcasing the power of AI orchestration the agentic operating system, and our vertical software. Looking further ahead, we'll add a strategy layer, incorporating external signals like weather and marketing conditions to guide site-level management automatically. We are exceedingly confident that we'll be the AI partner for our customers in this vertical. Overall, Q1 reflects continued progress in retail as we scale our customers, extend our product capabilities, and embed intelligence to the platform in ways that support AR expansion and long-term value creation. Briefly, on hardware. Q1 was a remarkably strong quarter. We're ahead of plan, and the full year is tracking nicely. While tariffs continue pressure margins at the edges, demand remains strong, and our par wave terminal continues to serve as the enterprise standard during a major refresh cycle. Crucially, we're seeing continued partnership velocity with McDonald's across both hardware and services sales. I also want to update you on our acquisition of Bridge, which is an integral part of the par intelligence platform. Bridge is an identity resolution platform that enables multi-unit operators to unlock the value of first-party data by resolving identity across their entire transaction base, not just loyalty members. Today, most retailers only see a fraction of transactions through loyalty programs, which limits measurement, personalization, and ultimately monetization to a fraction of a retailer's customer base. The value Bridge delivers to customers is best evidenced by our work with a large national retailer with over 15,000 sites, where our identity resolution supports a marketable base of 100 million customers and contributed to a reported 44% sales lift. Even in the brief time since we closed down the deal, we now have a strong pipeline across tier one restaurants and other national retailers and existing PAR customers. Bridge is crucial in our ability to drive AI outcomes for customers that we can monetize versus the basic dashboarding of our peers. Before turning the call over to Brian for a deeper dive into the numbers, I want to emphasize the importance of PAR intelligence for our customers. PAR intelligence is not a new point solution, and it's not a generic AI tool. It is an agent of harness that sits across and above the PAR platform, unifying data, reasoning on real operator economics, and orchestrating outcomes across the business without adding additional headcount, hours, or manual effort. Where traditional platforms stop at dashboards and alerts, PAR intelligence moves from data to outcomes. PAR Intelligence unites data across point of sale, ordering, loyalty, payments, back office, retail, and third-party systems. All of this is powered by something incredibly hard to replicate. PAR's ability to process more than 12 billion annual transactions, 640 million guest profiles, and over 20 years as a data backbone of the largest restaurant and retail operations in the world. PAR Intelligence leverages enterprise-level context-first reasoning, unit P&Ls, labor constraints, menu performance, and guest interactions. It executes actions through A agents, always within the defined rules of the operator. Adoption of PAR intelligence is accelerating because the use cases are clear. The platform is moving from reporting what happened to recommending, and in some cases, automating what to do next. Customers like Parker's Kitchen, a 100-plus unit C-store chain, are seeing immediate ROI, with Parker's CEO highlighting, quote, better outcomes are being driven by PAR's agentic operating system. Because PAR intelligence sits across and above the PAR platform is ultimately enhancing value, thereby the stickiness of our beachhead products. Importantly, PAR does not have the same pricing exposure as some of our SaaS peers who have a per seat monetization construct that can be undercut by AI and its potential impact on customer team sizes. PAR overwhelmingly contracts on per store basis. The viability of this model is tied to enterprise site counts, which remain stable versus customer staffing levels. AI is not a separate initiative for PAR, It's an embedded capability that expands our platform value and supports long-term profitable growth. Our intelligence will not cannibalize existing per-site software revenue. Rather, the continued introduction of intelligence-driven capabilities serves as a fully incremental revenue stream. Our confidence here comes strictly from the deep engagement we have with our customers and their rapid early adaption of our first set of tools. With that, Brian will dive into the numbers in greater detail.