PAR Technology (PAR) Q3 2025 Earnings Transcript

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DATE

Thursday, November 6, 2025 at 4:30 p.m. ET

CALL PARTICIPANTS

• Chief Executive Officer and President — Savneet Singh
• Chief Financial Officer — Bryan A. Menar
• Senior Vice President, Investor Relations and Corporate Development — Christopher R. Byrnes

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TAKEAWAYS

• Total Revenue -- $119 million, representing 23% year-over-year growth, driven by increases in both subscription and hardware revenue.
• Adjusted EBITDA -- $5.8 million, inclusive of $800,000 in accounting adjustments for non-period costs; adjusted EBITDA excluding these items was $6.6 million.
• Non-GAAP Operating Expenses (OpEx) -- 43.4% of revenue, a 590-basis-point improvement from the 49.3% reported in the prior year.
• Annual Recurring Revenue (ARR) -- $298.4 million, up 15% organically and by $12 million sequentially from Q2.
• Operator Cloud ARR -- Grew 31% year-over-year, including 14% organic growth, with notable enterprise deployment scalability and customer satisfaction.
• Hardware Revenue -- $30 million, an increase of 32%, fueled by advance customer demand ahead of tariff changes.
• Hardware Margin -- 17.8%, down from 25.5% in the prior year, with management attributing the decline to increased US tariff-driven supply chain costs and pricing mitigation underway.
• Non-GAAP Subscription Service Margin -- 66.2%, compared to 66.8% the prior year; excluding a fixed-profit acquired contract, margin exceeded 70% and improved by 150 basis points year-over-year.
• Net Loss from Continuing Operations -- $18 million or $0.45 per share, compared to net loss of $21 million or $0.58 per share in the prior year.
• Non-GAAP Net Income -- $2.5 million or $0.06 per share, an improvement of $5.6 million from a non-GAAP net loss of $3.1 million or $0.09 per share a year earlier.
• Cash Flow from Operations -- $8 million in positive operating cash flow for the quarter; year-to-date cash used in operating activities was $15 million, improving from $24 million the prior year.
• GoSkip Acquisition -- $4 million in net cash consideration spent in the nine months ended September 30 for tuck-in asset acquisition.
• Engagement Cloud ARR -- Increased by 16% year-over-year, with over 70% of new deals in the quarter being multiproduct including loyalty, ordering, and pay.
• Professional Service Margin -- 17.6%, down from 29.2% the prior year, attributed to reclassification of non-period costs and SaaS implementation incentives.
• AI Product Launch -- Introduction of CoachAI and embedded PAR AI intelligence layer, targeting operational efficiency and accelerating product adoption across the platform.

SUMMARY

PAR Technology (NYSE:PAR) reported accelerated organic and total ARR growth, signaling strengthened platform momentum and heightened booking activity in enterprise segments. Management outlined a clear commitment to operational leverage, with marked improvement in non-GAAP operating expense ratios and ongoing cost containment supported by AI-driven internal processes. Substantial backlog replenishment offset rollout-driven revenue recognition, providing enhanced forward revenue visibility across both Operator Cloud and Engagement Cloud lines.

• The company confirmed ongoing multiproduct penetration, reflected in 70 plus percent of new engagement deals containing cross-sold offerings, tying to a strategy of consolidating vendor relationships.
• Savneet Singh stated, "2025 is proving to be the strongest bookings year in the history of the operator cloud segment, paving the way for years of sustained growth."
• Hardware revenues benefited from pre-tariff demand pull-forward, while margin compression is expected to normalize due to pricing adjustments taking full effect in future quarters.
• Management highlighted GoSkip as a recent asset acquisition aimed at fortifying the company’s recurring revenue base.
• Quarter-end cash and equivalents stood at $92 million, with balance sheet flexibility reinforced by recent note issuance and full repayment of the credit facility.
• The launch of CoachAI, with integrated natural-language data querying, demonstrates the company's progression toward an AI-native SaaS ecosystem.
• PAR Technology indicated confidence in continued margin expansion and profitability gains as recurring SaaS revenue approaches two-thirds of expected full-year revenue.

INDUSTRY GLOSSARY

• Operator Cloud: PAR’s SaaS platform delivering restaurant operational management modules, including POS, ordering, and related workflow tools.
• Engagement Cloud: Suite of solutions driving customer loyalty and engagement, enabling multi-channel digital campaigns and guest interaction.
• CoachAI: AI-powered operational assistant enabling natural language queries and live business insights across PAR’s platform data.
• GoSkip: Acquired technology asset referenced as a “tuck-in” supporting PAR’s recurring revenue growth initiatives.

Full Conference Call Transcript

Christopher R. Byrnes: Thank you, Elliot. Good afternoon, everyone. I would like to thank you for joining us today for PAR Technology Corporation's 2025 Q3 financial results call. Earlier today, we released our financial results. The earnings release is available on the Investor Relations page of our website at partech.com, where you can also find the Q3 financial presentation as well as in our related Form 8-K furnished to the SEC. During our call today, we will 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 and other forward-looking statements may be relied upon and is subject to the Safe Harbor statement included in our earnings release this afternoon 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 Technology Corporation's CEO and President, Savneet Singh, and Bryan A. 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 a general Q&A. Savneet?

Savneet Singh: Afternoon, everyone, and thanks for joining us. Q3 was another strong quarter for PAR Technology Corporation, one that shows the progress we are making on all fronts: growth, profitability, and cash generation. Driven by software subscription and hardware revenue growth, we delivered $119 million in revenue, up 23% year-over-year. Our adjusted EBITDA came in at $5.8 million. This number includes $800,000 of accounting adjustments for non-period costs, which, when further backed out, brings our adjusted EBITDA to $6.6 million, continuing a nice march in operating EBITDA and cash flow. Our commitment to a flat cost base also played out. Non-GAAP OpEx was 44% of revenue, down from 60% just eighteen months ago.

This result was driven by our commitment to proving our operating leverage and our ability to begin to realize the operational savings being driven by AI utilization internally. Our ARR hit $298.4 million at the end of Q3, up 15% organically, reflecting steady execution across both sides of our platform. All told, ARR grew $12 million sequentially in Q3, and we expect that number to increase in Q4 to take us to our goals for the year. To dig into our business performance in the third quarter, Q3 was another quarter of solid execution for Operator Cloud. ARR increased 31% year-over-year, including 14% organic growth.

In Q3, we proved we can scale large enterprise deployments, innovate with AI, and keep customer satisfaction high, all while maintaining a disciplined focus on expense management and pursuing additional multiple large tier-one opportunities. Our POS business continues to perform exceptionally well, with high efficiency. Our Burger King implementation cadence during the quarter accelerated dramatically, and we're pacing to meet Burger King's target for 2025, which then creates great visibility for 2026. Our ops platform had a steady quarter as we ramp into Burger King and another large tier-one enterprise. The real story, though, in PAR ops is the momentum and new launches in innovation.

We brought CoachAI to market, an AI-driven assistant that allows operators to prompt operational questions in natural language and get immediate answers from their data. This innovation comes from combining Delegate and data center product suites. We also launched AI chatbot support, helping users self-service faster and reduce support ticket volume, a meaningful productivity win. We expanded our international functionality and onboarded a Burger King franchisee in Canada across all sites, including French language functionality in Quebec, showcasing our ability to deliver for global customers. The PAR ops operational groundwork and product expansion we put in place will pay off nicely in 2026 as we enter the year with record backlog in customer commitments.

Turning to task, as we mentioned last quarter, we pushed out rollouts to next year in preparation for large RFP work. As we now move new customers, our goal will be to maintain our launch schedule for next year from RFP to actual development, while we begin our aggressive build schedule for this tier-one opportunity. That's a major validation of both product and team capability, and hopefully, we will have more to share publicly in time. What is crucial is that 2025 is proving to be the strongest bookings year in the history of the operator cloud segment, paving the way for years of sustained growth.

On last quarter's call, I mentioned that we had $20 million in POS contract value that has not yet been rolled out. Our late-stage and weighted pipeline on PAR POS more than doubles this number again, ensuring a robust growth foundation for years to come. Now turning to the engagement cloud that also had a strong Q3. Engagement cloud ARR grew 16% from Q3 last year, including 15% organic growth. We continue to see real momentum and investment in digital engagement in the markets we serve as brands look to connect more deeply with their guests.

What's exciting is that similar to last quarter, 70 plus percent of new deals signed in the quarter were multiproduct, including loyalty, ordering, and pay, not just one solution, showing that customers increasingly see the value in the full engagement ecosystem and the whole connected platform. We also saw renewals and upsells for Punch with three major tier-one brands, proving that our long-term partnerships continue to grow stronger over time. On the innovation front, we launched new capabilities for engagement in catering and games, both of which enhance the competitiveness of our solution and add real differentiation to our overall engagement platform.

Moving to PAR ordering, I'm encouraged to report that this is our biggest win quarter for PAR ordering to date, highlighted by six new customer wins, all upsells and multiproduct deals, including a 400 plus location enterprise chain, a clear signal that our products are winning at scale. In the quarter, we were also able to sign two new customers who were previously using the largest online ordering provider in our space. We hope this creates a template to accelerate our growth in 2026 as PAR ordering is not only a best-in-class platform now but also an incredibly easy proof point of our Better Together thesis.

Customers with PAR ordering, Punch, and POS can now update menus in one place, push changes to third-party delivery channels, and manage every aspect of their digital business from just one system. It's one of those few times in the enterprise software world where the demo just speaks for itself. Our solution for fuel and convenience stores, PAR retail, had a standout quarter, demonstrating what execution and innovation look like working together. In Q3, we had key integration milestones and launched new features that are driving record engagement and customer success. We also added four new enterprise wins, including a successful Punch to PAR retail migration in the quarter.

It's important to note as we finalize the transitions from Punch to PAR retail, there's an opportunity for us to expand gross margins by taking out Punch convenience store costs and taking up the price for moving customers to the more robust PAR retail platform. From a product perspective, we made command center and introduced messaging center smarter and more dynamic. Audience experts, making it easier for retailers to launch campaigns and analyze audience data in real-time. And all of this hard work and achievement is working. Nearly every customer hit all-time highs in active program membership this quarter.

So great overall quarter for PAR retail, which continues to lead in digital trade and engagement, with strong customer results and clear momentum heading into 2026. A few summary thoughts here before turning over to Bryan for a deep dive on our numbers. This quarter marks a major milestone in PAR's journey to redefine restaurant technology with the launch of PAR AI. Our new intelligence layer built natively across the PAR platform. The first product in this suite, CoachAI, is now live and already transforming how operators manage their business. PAR AI is different. We've embedded AI intelligence directly into the operational workflow across POS, loyalty, drive-thru, payments, and back office.

This approach turns every PAR product into an active decision engine, creating a connected, intelligent restaurant ecosystem. It's built in, not bolted on. CoachAI is our first step. It's an operational intelligence assistant that enables restaurant leaders to ask natural language questions and instantly surface live insights from POS, labor, and inventory data. No spreadsheets, no manual reporting, no extra apps. Importantly, it dramatically lowers the know-how required to be an operational expert, allowing more employees to engage with the product and, most importantly, saving brands hours of time. Early customers like Charter Foods have already limited the need for traditional BI tools and are realizing meaningful time savings and better decision-making. What's next?

Later this year, the PAR engagement cloud will introduce a marketing intelligence assistant, enabling marketers to instantly analyze campaign performance, loyalty data, and customer engagement metrics in real-time. Imagine being able to build, segment, launch, and execute a promotional campaign all within a prompt-like interface. It's a strategic shift to an AI-native future. I've said before, it's not about building tools. This is more than a product launch. It's about owning the workflows so that AI is in the places where you are actually living. This new foundation will fuel capabilities like ROI voice-enabled ordering, real-time audience targeting, and ranked operational recommendations, all designed to make restaurant operations faster, smarter, and more adaptive.

We believe the platform strategy is quickly emerging as the key to long-term value. As GenAI becomes embedded in the fabric of enterprise software, it's not just about building tools anymore. It's about building AI-native workflows. Companies that act as platforms, not point solutions, are in the best position to win. Why? Because they're integrated where work actually happens. That means deeper engagement, better data, and a natural fit for generative AI features that drive real measurable impact. Moreover, you lower the bar for training and adoption, a massive issue in today's early AI products. Leveraging tooling and a toolset that you already understand, this is exactly where PAR shines. We don't just automate tasks.

We connect entire workflows across departments. While point solutions stay stuck in silos, PAR brings teams together, streamlining operations and enabling collaboration at scale. For restaurants, this isn't nice to have. It's the foundation for running a smarter, faster, and more adaptive business. We believe it helps dig a deeper moat and also pulls more customers into doing more with PAR. We feel deeply passionate that AI makes PAR stronger because it brings the value of Better Together to life faster and proves the ROI of the ecosystem our way. Bryan will now walk through our numbers. Bryan?

Bryan A. Menar: Thank you, Savneet, and good afternoon, everyone. In Q3, we continued to execute to our plan on driving organic growth across our products and the verticals we serve while also driving profit and cash flow improvement. All while also ensuring the company has the right resources to execute with excellence on our large tier-one opportunities. Nutrition Services continued to fuel organic growth and represented 63% of total Q3 revenue. The growth from higher margin revenue streams resulted in a consolidated non-GAAP gross margin of 57.5%. An increase of $7.4 million or 15% compared to Q3 of the prior year. Now to the financial details.

Total revenues were $119 million for Q3 2025, driven by subscription service revenue growth of 25%, inclusive of 16% organic growth. An increase of 23% compared to the same period in 2024. Net loss from continuing operations for 2025 was $18 million or a 45¢ loss per share, compared to a net loss from continuing operations of $21 million or a 58¢ loss per share reported for the same period in 2024. Non-GAAP net income for 2025 was $2.5 million or 6¢ earnings per share. An improvement of $5.6 million compared to a non-GAAP net loss of $3.1 million or a 9¢ loss per share for the prior year. Adjusted EBITDA for 2025 was $5.8 million.

An improvement of $3.4 million compared to the same period in 2024. Q3 adjusted EBITDA of $5.8 million included $800,000 of accounting charges for non-period costs. Removing the non-period charges, adjusted EBITDA would have been $6.6 million and more indicative of our current normalized operating profit. Now for more details on revenue. Subscription service revenues reported at $75 million, an increase of $15 million or 25% from the $60 million reported in the prior year and represents 63% of total PAR revenue. Organic subscription service revenue grew 16% compared to the prior year when excluding revenue from our trailing twelve-month acquisitions.

ARR exiting the quarter was $298.4 million, an increase of 22% from last year's Q3, with engagement cloud up 16% and operator cloud up 31%. Total organic ARR was up 15% year-over-year. As stated in our Q2 earnings call, we expected incremental ARR growth to accelerate in the second half. During Q3, incremental ARR increased $12 million versus $5 million in Q2, signaling the return to stronger growth momentum, which we expect to continue in Q4. Our growth is being driven by both site growth and increased ARPU, reflecting successful execution of our Better Together thesis, which is driving both multiproduct deals and cross-selling into our existing customer base.

Hardware revenue for the quarter was $30 million, an increase of $7 million or 32% from the $23 million reported in the prior year. The increase was driven by continued penetration of hardware attachment into our expanding software customer base and increased sales volume from customer demand that was pulled forward in advance of anticipated tariff impacts. Professional service revenue was reported at $14.5 million, relatively unchanged from the $14.2 million reported in the prior year. Now turning to margins. Gross margin was $49 million, an increase of $6 million or 14% from the $43 million reported in the prior year.

The increase was driven by subscription services, with gross margin dollars of $41 million, an increase of $8 million or 25% from the $33 million reported in the prior year. GAAP subscription service margin for the quarter was 55.3%, in line with the 55.3% reported in Q3 of the prior year. Excluding the amortization of intangible assets, stock-based compensation, and severance, non-GAAP subscription service margin for Q3 2025 was 66.2%, compared to 66.8% in Q3 2024. The modest year-over-year decline was driven by the impact of a fixed profit contract that we acquired from one of our 2024 acquisitions.

Excluding this contract, which is not reflective of core operational performance, non-GAAP subscription service margin was over 70% for the quarter, an improvement of 150 basis points versus the prior year. This contract is up for renegotiation in 2027, and we expect that renewal process will provide an opportunity to improve the underlying economics. Hardware margin for the quarter was 17.8% versus 25.5% in the prior year. The decrease in margin year-over-year was substantially driven by increased supply chain costs resulting from recently implemented US tariff policies. The company began implementing pricing adjustments during the quarter to mitigate the impact of tariffs, and in future periods, we expect hardware margins to return to the mid-twenty range moving forward.

Professional service margin for the quarter was 17.6%, compared to 29.2% reported in the prior year. The decrease in margin year-over-year was primarily driven by the reclass of non-period costs from R&D and incentives offered on SaaS implementations to facilitate adoption of a recurring subscription revenue stream. We expect professional service margins to return to the mid-20 range going forward. In regard to operating expenses, GAAP sales and marketing was $12.5 million, an increase of $2 million from the $10.5 million reported for the prior year. The increase was primarily driven by inorganic increases related to our acquisitions, while organic sales and marketing expenses increased a modest $700,000 year-over-year.

GAAP G&A was $31.7 million, an increase of $4 million from the $27.4 million reported in the prior year. The increase was substantially driven by certain non-cash or non-recurring expenses, of which $3.5 million are non-GAAP adjustments. While organic G&A excluding non-GAAP adjustments remained flat year-over-year. GAAP R&D was $19 million, an increase of $1 million from the $18 million recorded in the prior year. The increase was entirely driven by inorganic expenses, while organic R&D expenses actually decreased $200,000 year-over-year. Operating expenses, excluding non-GAAP adjustments, were $52 million, an increase of $4 million or 8% versus Q3 2024. But when excluding inorganic growth, operating expenses were flat year-over-year.

Exiting Q3, non-GAAP OpEx as a percent of total revenue was 43.4%, a 590 basis point improvement from the 49.3% in Q3 of the prior year, demonstrating our ability to scale efficiently and drive operating leverage. Now provide information on the company's cash flow and balance sheet position. As of September 30, 2025, we had cash and cash equivalents of $92 million and short-term investments of $500,000. For the nine months ended September 30, cash used in operating activities from continuing operations was $15 million versus $24 million for the prior year. Operating cash flow has steadily improved throughout the year, as we continue to drive incremental profitability and reduce our net working capital needs.

Q3 operating cash flow was positive, with cash provided by operating activities of $8 million for the quarter. Cash used in investing activities was $11 million for the nine months ended September 30 versus $178 million for the prior year. Investing activities included $4 million of net cash consideration in connection with the tuck-in asset acquisition of GoSkip, capital expenditures of $3 million for fixed assets, and capital expenditures of $4 million for developed technologies associated with our software platforms. Cash provided by financing activities was $12 million for the nine months ended September 30.

Financing activities primarily consisted of the net proceeds from the 2030 notes of $111 million, of which $94 million was utilized to repay the credit facility in full. To recap, following a slower first half, Q3 marked a pivot to meaningful growth and continued incremental profitability for 2025. This momentum is evident across key financial metrics. 12 million or 70% annualized sequential ARR growth, non-GAAP subscription service gross margin percent improved 150 basis points from Q3 2024 when excluding the non-operational impact of the aforementioned acquired fixed profit contract. Non-GAAP OpEx as a percent of total revenue improved 590 basis points in Q3 2024.

Adjusted EBITDA improved $3.4 million from Q3 2024, and operating cash flows were a positive $8 million for the quarter.

Savneet Singh: Thanks, Bryan. In short, Q3 was a strong execution quarter, and we possess the scale, product subscriber base, and financial strength to lead the enterprise food service technology category. What's in front of us are significant business opportunities with major tier-one deals and a pointed AI product approach. Moreover, our growth into new large TAM industries continues to validate our PAR advantage in 2025, and the investments we're making should bear fruit in years to come. We're on track to deliver nearly $450 million in revenue, approximately two-thirds of which is recurring SaaS.

We are also driving gross margin expansion, building a solid cross-sell and upsell motion, and seeing results across our global installed base of over 100,000 restaurants and retail stores. The long-term plan is for PAR to be the clear enterprise winner. First of restaurants, later with C stores, and over time in the next vertical. Being the anointed winner with others who've done similar work in different verticals in this niche market creates a unique market dynamic that will warrant evaluation. We are convinced this foundation we have built has set PAR up to compete for and win the largest of tier-one restaurant technology deals in history. In the short run, our priorities remain clear.

First, continue to grow ARR in the mid-teens organically or higher. Second, to execute on a unified Better Together product roadmap while building and commercializing new AI-driven functionality. Third, drive operating leverage and expand EBITDA. And fourth, close and announce large strategic tier-one deals to provide further visibility for long-term revenue growth. A critical aspect of our story now is revenue growth visibility. While especially operator cloud products rollouts can take time given the in-store nature of the deployments, coupled with late-stage tier-one pipeline, PAR has accrued a very sizable backlog. We have a very strong foundation to build off of. In other words, the short-run priorities I just mentioned are just our baseline.

Our mandate continues to be to leverage our existing business to pursue more aggressive, accretive, and creative M&A opportunities. This is a buyer's market, and PAR is a proven value creator. Multiples across our sectors have compressed dramatically, allowing for the potential for creative asset acquisitions. More importantly, though, we have the expertise and grit to actually pull it off. Our current flywheel multiproduct deals expansion is great proof of this. During our time here, we have evolved from an unfocused, hardware-driven, and money-losing business with a singular software product to a profitable platform SaaS company bidding for and executing the biggest deals in the industry. This will absolutely happen again and again.

We intend to further consolidate our existing markets while building out the PAR flywheel in new verticals. Our ambition is to be larger and faster, predicated on an ever-expanding Better Together platform. And this ambition is deeply rooted by every single member of our team. Again, thank you for your time and your continued confidence in PAR. We're happy to take your questions. Operator?

Operator: Thank you. As a reminder, at this time, we will conduct the question and answer session. To ask a question, you will need to press 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Samad Saleem Samana of Jefferies. Your line is now open.

Samad Saleem Samana: Hi. Good evening, and thanks for taking my questions. And it's good to see the progress both on the top line and on the side. So congrats on that. Maybe for Savneet, just in thinking about the pipeline, I think you know, the word record in terms of, like, it was described as, you know, tipping point in some ways by Bryan for the business. It's a you guys I think we had similar confidence in Q2. It's just further visibility.

As we sign more deals, that have given us a lot more visibility for Q4 and the rest of next year, and then further progress these larger tier-one deals where now we see real visibility and hopefully a couple of them it just gives us more confidence. I think we had similar confidence, but it's rising as we get more and more deals signed. I think the other part is our backlog didn't come down. You know, we rolled out a record amount of revenue this quarter. And our backlog filled back up.

Which means that, you know, we're signing at a faster rate than we're actually rolling out, which, you know, I think gives us more confidence again on the visibility in the out years. Great. And then you mentioned valuations coming down in the space. You mentioned M&A. And I know the company has made a lot of progress in digesting some of the M&A from years past. So just should we take that as a signal that now that you're far enough along in the digestion of tasks and Stusa and some of the other assets that you would maybe think about firing that M&A muscle back up again? Or is that more of a view?

Just help us think through that last comment.

Savneet Singh: It's opportunistic. You know, what I meant by that is we're seeing, you know, obviously, our multiples compressed, but what we're noticing a lot of the assets we wanted to buy have been compressed far more. And there's also unique opportunities to carve out assets and businesses that we like as well. And so, you know, we're gonna be opportunistic. We're gonna be super careful about using our shares. But, you know, we're seeing, you know, enough accretive deals where, you know, I wouldn't be surprised if we found something.

There's nothing imminent or anything like that, but we feel pretty good about where we stand relative to the multiples we're seeing, some of the assets we've been tracking for many years.

Samad Saleem Samana: Great. Last question for me, and I'll turn it over. But just there's maybe been, you know, I'd say some mixed performances out of certain pockets of groups that may that aren't necessarily part customers, but that are representative of what's going on more broadly with consumers. And so I'm just curious if you have seen that have any impact on customer decision-making, whether that makes it more imperative than ever to have the right technology in place, and or if it's slowing down deal cycles or if you're seeing both and it's netting out. Just how is some of the recent news or headlines on what's happening in restaurants translating into deal closures for you guys?

Savneet Singh: Yeah. Great questions, Samad. So in the first half of the year, it was painful for, I think, across the board. We saw meaningful slowdown in traffic and sales for many of them. We saw it pick back up towards the second half of this quarter. But I'd say categorically, we haven't seen a slowdown in RFP activity. In fact, we have more RFP activity at scale than we had before. Where it impacted us in Q2 was that at the franchisee level, rollouts were slower because franchisees were waiting for business to stabilize. I think that's now reversing, and we're seeing really good momentum.

But, you know, the macro question is a good one because I think what we continue to see is that as sales volatility exists in our category, the investments in technology seem to be increasing, not decreasing. So we're seeing more excitement around a lot of the AI tooling we have. And I think maybe most exciting for PAR, we absolutely see more interest in consolidating vendors. And, you know, we are one of the few players that have, you know, I'd argue, close to a full suite of products. And so I think that's giving us a little wind in our sails. Great. Thank you so much.

Operator: Thank you. Our next question comes from George Frederick Sutton of Craig Hallum. Your line is now open.

George Frederick Sutton: Thank you. Nice message, guys. So specifically to task, you had mentioned that last quarter, you had put off some implementations because you were focused on the RFPs. Just want to make sure I understand what the updated message is relative to that.

Savneet Singh: Yeah. You know, I think we continue to the same plan. We've got a lot of task business that needs to get rolled out. It'll get rolled out in '26, and, you know, we're moving from RFP to actual development on a larger opportunity. And so, you know, it's critical for us to get to hold our commitments to our customers to get those deals out in '26 while also building for this large opportunity.

George Frederick Sutton: Now with respect to 2026, you made multiple points through your prepared comments that there were different things setting you up very well for 2026, AI, the BK rollout, the template for products, etcetera. Can you just give us a broader sense of what this ultimately means for '26?

Savneet Singh: Not yet. We're gonna give you guys the next call. But I think what I think maybe the biggest takeaway is we have a lot more visibility now than we've had in the past because of the backlog that we signed. And, you know, as a result, I think we can get more precision as we get to the end of the year. And then I think, you know, the market, to the last question, the other part about it is probably we're also learning is that the market likes our strategy. Every single part ordering deal, you know, it was a multiproduct deal including payments and loyalty.

You know, we're starting to see that the pieces that we put out there and now the product execution is caught up. And so, that should give us the opportunity to take a lot more share next year. And that's kind of my hope, which is I hope it's a recipe for success because we've been really impressed with what's happened in Q2 and so far what's happening in Q3 and what's happening in Q4. Super. Thanks, guys.

Operator: Thank you. Our next question comes from Mayank Tandon of Needham. Your line is now open.

Mayank Tandon: Thank you. Good evening. So, Savneet, I'll just nitpick a little bit. For quite some time, I think you said that your target is mid-teens plus. You've been saying that you could grow ARR 20% organically. Is there a change in the market, or do you think this is just a function of the type of deals you're pursuing, which may take longer to land? Maybe that's a good thing long term. But it maybe it slows down the revenue ramp. Just curious as to why the shift from 20% organic to mid-teens organic, if I heard your comments correctly?

Savneet Singh: Yeah. So, you know, last quarter, we said, you know, we're gonna target mid-teens. And so, you know, I'm continuing that message here. You know, continuing to hit, you know, at least that and hoping more going forward. You know, when I was running through the priorities, it was, you know, my our short-term priorities, which is the major delta we're talking about is 2025 where our first half was slower than we wanted, and so we think it'll take us it'll be hard for us to get to that 20 for this year.

So, you know, I think there's opportunity for us to do that, you know, to accelerate in '26 and '27 as, you know, the last caller was talking about. But right now, you know, I think we feel really comfortable mid-teens, opportunities to go higher. And, you know, given all the momentum we have in AI and some of these larger deals, you know, we'll see where that shakes out, you know, on our next call. But, you know, like I said, I think we feel really good where we are and more than anything else, I think this call than there was last call. There's more opportunity for us to get back to where we were. Got it.

Then if I could just ask about the competition, just listening to Toast and other players in the market, it seems like there's obviously the share shift going on from legacy to the more modern solutions like yours and Toast and other players in the market. I'm just curious, are you starting to see each other now because they're moving up market? Not in the QSR space necessarily, but making some progress in your core enterprise space overall. I'm just wondering if you're starting to maybe see each other more often and what that means for the market.

Savneet Singh: Not as much as you think. I mean, I think we have incredible respect for the team, the business, you know, what they built, you know, and we've been competing in enterprise deals for years and years. You know, I think at the large QSRs where, you know, we, you know, kind of our bread and butter, you know, traditionally, it's still the same, you know, few folks as the incumbency. Ourselves, and usually one of the other legacy providers. I think that and so today, I think if we surveyed our sales team, it would sort of say, you know, same old.

You know, we definitely see each other more in this mid-market part of the world, where, you know, we're pushing aggressively, you know, they are pushing aggressively, so we do see each other there. But, you know, the large tier ones, it's, you know, unique dynamics when we see them and, you know, obviously, I think we think, again, very highly of them, but we feel like we continue to expand our moat in particularly this multi-product dynamic, I think, is really gonna help us going forward. Got it. Appreciate you taking my questions. Thank you.

Savneet Singh: Thank you.

Operator: As a reminder, to ask a question, you will need to press 11 on your telephone. And wait for your name to be announced. To withdraw your question, please press 11 again. Our next question comes from the line of Charles Joseph Nabhan of Stephens. Your line is now open.

Charles Joseph Nabhan: Hey, guys. Thanks for taking my question. I wanted to clarify your comments around moving from RFP to development. Specifically, I haven't seen any big announcements, but were you are you alluding to one of the super tier ones that you had been targeting and talking about over the past couple of quarters?

Savneet Singh: You know, we're in a market where, you know, the press leak police comes out, you know, quite a bit after, you know, we've won a deal. You know, unless it's a renewal of an incumbent. So you generally won't see the press release, honestly, until well later if we've won something. You know, in regards to what I was talking about, you know, all I'm suggesting is that we were in an RFP process and a deal, and now we're starting to build. And then, you know, as we get details, we'll share them as we're allowed. Okay. Great. And as a follow-up, I feel like I have to ask the obligatory Fiserv question here.

I know Clover is down market from you, but and it's still early days. But you know, there's obviously quite a bit of disruption going on in the payment space and, you know, negative sentiment around some of the fees that they've been charging. So with that said, do you see opportunity to attach payments coming out of some of the disruption the potential disruption in the payment market?

Savneet Singh: Not really. You know, in our market, you know, payments is a much more transparent business than it is in, you know, the SMB side of the world. And so, you know, generally, when payment deals it's in one of two ways. It's a hyper-transparent package with a point of sale, where we can help, you know, bring down costs, harbor funding, sort of traditional ways of point sale companies win deals. Or if through our online ordering business, which is starting to grow where our order and pay module is really valuable to bundle in a package deal. So that's when we see it.

You know, as far as the disruption that's happening down there, we just don't participate in that SMB space. So it hasn't really changed anything in our area. Got it. Appreciate the color. Thank you.

Operator: Thank you. Our next call comes from Stephen Hardy Sheldon of William Blair. Your line is now open.

Stephen Hardy Sheldon: Hey, thanks for taking my questions. One here, just wanted to see if you could help us unpack sequential trends in operator cloud ARR. Great to hear that the BK rollout accelerated, but just given that, I'm also a little surprised that ARR there was up less than $3 million sequentially. So any rough sense of how much of the purchasing contract ARR you think about the full deployment, would be included in the 3Q ending ARR number? And are there any offsets that you saw this quarter such as churn in the broader operator base that weighed against sequential trends? Just anything to unpack the sequential ARR growth and operator.

Savneet Singh: No meaningful churn. You know, I think the way to think about it is, you know, back-end weighted, you know, the last month of the quarter was an excellent acceleration for us and that continued into October. October was our best month. So it's more of just the back-end weighted, and so that's why I think, you know, you're on Bryan's comments in mind. We feel like Q4 will potentially be a nice uptick. So it's just the back-end nature of the rollout within the quarter. And no significant churn. Okay. Thanks. And then on loyalty, I guess, can you just talk some more about growth you're seeing there?

It seems like loyalty is becoming a much bigger focal point with brands becoming a bigger factor in consumer decision. So how much runway is there left for PAR to grow in loyalty as you think about location penetration, pricing increases, etcetera? And how different does that opportunity look now between restaurants, you know, and, you know, convenience stores, broader retail?

Savneet Singh: You know, loyalty is a mandate. You know, it's nice to have it now. I think we're witnessing that in times of, you know, sales slowdowns, traffic slowdowns, you know, you really need a robust loyalty program to just grow traffic and revenues, but also keep your margins high. And so it continues to impress us how much demand there is for that. I think what it's leading to, you know, we're earlier in that cycle for convenience than we are in restaurants, but even in restaurants, it's not just the loyalty that you had a few years ago. It's more upsell of new products. It's a lot more opportunity to sell the AI initiatives I talked about.

And so, you know, while the loyalty product, you know, probably won't double sites in the next year or two, I think you'll see us continue to push up ARPU with the addition of new products because I think early on, it was, you know, you had an all-encompassing loyalty product, I think in the future, it's going to be a bunch of modules that are built into that. That we can upsell and create a lot of value for the customers. Great. Thank you.

Operator: Thank you. Our next question comes from the line of Adam David Wyden of ADW Capital. Your line is now open.

Adam David Wyden: Hey. First question is around M&A. I know you spoke about it, but obviously, your shares are down almost, I guess, two-thirds almost from sort of where we were in November. I guess my question to you is, you know, would this prospective M&A be accretive to your growth rate? And I mean, how do you think about, you know, doing M&A with your stock down two-thirds? I mean, is it I mean, if I look at it on '27 or even '26, I mean, you're trading at basically a multiple I mean, you're trading at, you know, in the teens or the, you know, whatever. It's, you know, 15, 16, 18, 20 times even.

I mean, how do you think about sort of, you know, buying businesses while your profitability is inflecting because the '27 is on a revenue multiple basis, you're the cheapest you've ever been, and your profitability is inflecting. So I'm just curious sort of how you think about, you know, doing M&A within that paradigm.

Savneet Singh: Yeah. As I said on the call, I think it's twofold. So one, we won't do something that's not, like, accretive. I think, you know, we've been very strict about that, you know, in most of almost I think everything we've done. And so, you know, what we're observing is that while our multiples, you know, compressed, we're seeing far more compression in some of the assets that we've been tracking for a very long time. And part of that is that, you know, we think there's some carve-out opportunities that, you know, we could leverage. And so, you know, I don't think you'll see us do anything close to a big deal.

I don't think you'll see us, you know, dilute you and ourselves in any way that's irresponsible. I think you'll see us find niche assets that we can leverage, you know, use cash on the balance sheet or if we're gonna use our shares, there's a large margin of safety for us to make it accretive. So I think it's just relative to what we're seeing in the market. We think we can create value. It's not gonna be anything crazy, but it's enough where we think we can take up the growth rate of the collective PAR by taking a product and pushing it through our distribution system now.

Adam David Wyden: So anything that you buy would be accretive to your existing growth rate? Like, meaning you think that it will day one be a higher growth rate than PAR? Or you're saying that you think it'll how do you think about, like, you know, the growth rate? I know that's been a challenge over the years last couple of deals because it's you slowed down task, you know, for the big tier one. So I'm just curious how you think about sort of, you know, adding things. Sure. You know, day one accretive versus.

Savneet Singh: Yep. So, you know, historically, that's always been the goal. Day one accretive and then the opportunity to accelerate beyond. So that's definitely what we want to try to accomplish.

Adam David Wyden: Alright. And then my second question is, you made a comment about something that was in development, I guess. Now does that mean that you're because I know, like, you've been sort of, you know, dancing around this whole tier one thing, and I clearly, you lost one today. And I, you know, obviously, that restaurant chain is doing very poorly. And it's not crazy for them to renew something when, you know, their hair is on fire. So it doesn't particularly bother me. But, you know, when I think about, you know, sort of the other tier ones, I think you mentioned three and it sounds like, at least based on our channel checks, there may be four.

I mean, how do you think about, you know, where you are I mean, are you basically saying you won one of the super tier ones we basically, because you're saying, went from RFP to development. I mean, is that sort of what you're saying? I mean, obviously, there's no press release because there's, you know, all the stuff about compliance and, you know, everyone doesn't want to get hacked while they're doing. But, I mean, is it fair to assume that one of the super tier ones is basically signed and is you're now in the process of rolling out?

And can you comment about the other, I guess, the other two and sort of where you think you could be in that process?

Savneet Singh: Unfortunately, I can't comment on any of that on, you know, subject perspective. I think where we sit today, we've never felt, you know, more excited about the pipeline that's right in front of us right here. And I think, you know, I think my comments kind of touch where we are in some of it. So, you know, as we get information we can share publicly, I promise we will, we're not trying to be cagey. It's just we're limited in what we can say, but, you know, today, we feel really good about the pipeline that's in front of us right now.

Adam David Wyden: So what does it mean to go from RFP to development? I mean, what does that mean exactly?

Savneet Singh: I mean, generally, I know we tend to, you know, after winning RFP, we get to some form of development. Now it's not a guarantee by any means. You still gotta do a lot of work from there, but it's generally a very good sign. Thank you.

Operator: Our next question comes from the line of Maxwell Michalis of Lake Street Capital Markets. Your line is now open.

Maxwell Michalis: Hey, guys. Thanks for taking my question. Wanna go back to your comments in the prepared remarks around PAR ordering. It sounds like a pretty good quarter. Wondering if you could give some more information around that segment as well as it sounded like you won a customer with 400 locations there.

Savneet Singh: Yeah. It's a tiny product for us today, but it started really, you know, to move for us. You know, what's what I think is gonna be interesting about it is, you know, we feel pretty good that not only can we start to continue to, you know, attach it to our loyalty wins, we can also upsell it to our existing customers and hopefully pull in payments alongside of it. So, it's a really nice opportunity for us. As I mentioned and you just suggested, you know, we did win a 400 plus store chain. You know, it was a takeaway from a market leader, so we felt great about that.

And I think, you know, we're hopeful more of that comes. And, you know, more than else, I think it's just validation that, you know, the product is now at a point where, you know, we can argue it's best in class and can absolutely argue that if you have additional PAR products, you're going to get an experience and outcomes you cannot get elsewhere. And that's kind of what I meant by some of my comments, which is, you know, and, you know, if you see a demo of it and you work in our category, you know, it is one of those things that's it's a, oh my gosh. I can't believe somebody finally did that. Alright. Great.

Thanks, guys.

Operator: Thank you. As a reminder, to ask a question, you will need to press 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. Our next question comes from the line of Anja Soderstrom of Sidoti. Your line is now open.

Anja Soderstrom: Hi. And thank you for taking my question. Just curious, I'm sorry if you've covered this already, but in the hardware, what happened there? It seems like there was a nice upside. Surprise there in the quarter.

Bryan A. Menar: Are you referring to on the revenue or the margin?

Anja Soderstrom: On the revenue.

Bryan A. Menar: Sure. Sure. So yeah, thanks for the question. What happened was we had pull-in. We were referring to this back in Q2, right? We started seeing orders come in Q2. For hardware kind of pulled in before the kind of tariffs were getting impacted from the pricing. And so that was the execution. A lot of those actual sales and orders have gotten Q2 executed and then revenue in Q3.

Anja Soderstrom: Okay. And then you mentioned the margin was affected by the tariffs that you're mitigating those. And you expect them to normalize again in the fourth quarter?

Bryan A. Menar: Correct. So, right, those orders came in Q2. Right before we actually implemented it on a tariff price increase. And so then we've actually implemented that during Q3, so our sales orders kind of burn off into Q4. That'll be all set.

Anja Soderstrom: Okay. And also, you are marketing your offering as better together. But how important is the data that you are generating for your customers in your value proposition?

Savneet Singh: It's hugely valuable. I mean, I think that's why it's better together is working. You know, as I mentioned, you know, 70 plus percent of our engagement deals now over the last couple of quarters are multiproduct. And I think a huge part of it is because, you know, if you pick our loyalty and online ordering, you've got a dish one cockpit to manage your digital experience. So you can push it to third-party delivery channels. You can have distinct availability, pricing, menu on those channels. And so that's all data that we organize in a way that I think gives us a really unique competitive advantage.

And that's why we've leaned so heavily into the AI side because I think, you know, the provider that has the platform, you know, they talked a lot about all sorts of data, and I think we can make that data actionable.

Anja Soderstrom: Okay. So your customers have real-time access to the data and?

Savneet Singh: They do. Yeah. And through CoachAI, you know, they have access real-time to run reports through so on and so forth. And again, I think a lot of what I'm observing is that, you know, you're lowering the bar to do work, you know, historically, you know, think of your traditional BI tools, you're downloading reports, trying to figure out, you know, what was the margin of this campaign we did or, you know, when should we order this product. You know, today, you can prompt and say, hey, which store should I focus my time on today? Hey, what store creates a great template for me to fix this?

Or what labor schedule is or what labor module is working? You can now really, really engage. And so, you know, in the past, I think, you know, having a lot of data was almost wasteful because it just gave you too much information. Now we can help you be decision-oriented. As opposed to just flooded with lots of reports that confuse you.

Anja Soderstrom: Okay. Thank you. That was all for me.

Operator: Thank you. This concludes the question and answer session. I would now like to turn it back to Christopher R. Byrnes for closing remarks.

Christopher R. Byrnes: Thank you, Elliot, and thank you to everyone for joining us today. We appreciate your time. We look forward to updating you in the further coming weeks. Have a nice evening.

Operator: Thank you for your participation today in today's conference. This does conclude the program. You may now disconnect.

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