PAR Technology (PAR) Q4 2025 Earnings Transcript

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DATE

Thursday, Feb. 26, 2026, at 4:30 p.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — Savneet Singh
• Chief Financial Officer — Bryan Menar
• Senior Vice President, Investor Relations and Corporate Communications — Chris Byrnes

TAKEAWAYS

• Total Revenue -- $120.1 million, growing 14% year over year, led by subscription services and hardware.
• Adjusted EBITDA -- $7 million, an increase of $1.2 million sequentially from Q3 and $1.3 million year over year.
• Non-GAAP Net Income -- $2.6 million, representing the third consecutive quarter of non-GAAP profitability.
• Annual Recurring Revenue (ARR) -- $315.4 million at period end, up 15% organically, with second-half growth more than double the first half.
• Subscription Services Revenue -- $76 million, a rise of 18%; represents 63% of total revenue, with organic subscription revenue up 11% excluding recent acquisitions.
• Gross Margin (GAAP basis) -- $49 million, improving $4 million or 10%, with continued subscription services margin expansion offset by hardware margin pressure.
• Non-GAAP Subscription Service Margin -- 65.8% overall, and 71% excluding a recent acquisition’s fixed contract, improving by 190 basis points year over year.
• Hardware Revenue -- $28 million, growing by $2 million or 7% compared to the prior year.
• Papa John’s Win -- Secured a decades-long partnership to deploy PAR POS and Ops to 3,200 sites, expanding the company's reach in the pizza category and elevating the TAM for 2026.
• Multiproduct Deal Penetration -- 90% of Q4 operator deals comprised of multiple products; over 80% of all new deals multiproduct, demonstrating successful cross-sell strategy.
• AI Commercialization -- Launch of CoachAI, now active in nearly 1,000 stores, marking the first sector commercialization of an AI-native product.
• Engagement Cloud Growth -- ARR increased 19%, with notable customer wins in new segments such as Shake Shack and Lucky Strike Entertainment.
• Retail Customer Metrics -- A large c-store customer’s member base grew to over 3.6 million members, driving higher customer frequency and measurable behavioral changes.
• Supply Chain Constraints -- Elevated component costs and tight availability, especially for solid-state drives, memory, and processors, are expected to persist into 2027.
• Operating Expense Mix -- R&D at 25% and sales and marketing at 13% of subscription revenue, both at or better than internal targets.
• Cash Balance -- $80 million in cash and equivalents as of year-end, providing flexibility for capital allocation.
• Share Buyback Authorization -- Board authorized a $100 million share repurchase program to enhance capital return optionality.
• 2026 Growth Guidance -- Management expects mid-teens ARR growth, with stronger performance anticipated in the second half and margin improvements from cost actions and AI efficiencies.
• Planned OpEx Reduction -- Approximately $15 million in annualized operating expense savings targeted by end of Q1 2026 through AI-driven automation and operational synergies.

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RISKS

• Component cost pressures and persistent supply chain constraints are creating increased hardware costs and margin compression, with management expecting these challenges to extend into 2027.
• GAAP net loss from continuing operations was $21 million for the year, compared to $25 million in the previous year, indicating ongoing statutory losses despite non-GAAP profitability.
• Subscription service margin decreased from 53% to 51% quarter over quarter due to a one-time intangible impairment in the drive-thru business.
• Cash used in operating activities increased to $27 million from $21 million, largely due to higher accounts receivable, with expectations but not guarantees of near-term normalization.

SUMMARY

PAR Technology Corp. (NYSE:PAR) reported meaningful ARR expansion, robust subscription growth, and accelerated cross-sell momentum across both restaurant and retail verticals. Major wins, including a large-scale Papa John’s contract and multiproduct enterprise penetration, highlight deepening customer adoption of unified platform offerings. Hardware demand and digital engagement enabled solid revenue gains, but persistent hardware component inflation and supply-chain challenges continue to pressure segment profitability.

• Savneet Singh said, "We are first in our sector to commercialize an AI-native product in CoachAI," signaling leadership ambition in sector AI deployment.
• Cross-vertical demand from large enterprise customers is driving large multi-year bookings, such as with Burger King and international expansion with McDonald's.
• Management expects to eliminate "$15 million annualized OpEx through AI-driven automation," with R&D teams reporting 100% adoption of AI workflows and doubled developer productivity year over year.
• The share buyback program, according to Singh, is enabled by "prices that our shares are priced at do not make a lot of sense given the opportunity set, the white space, and the," while capital remains allocated with a high bar for M&A.
• Incremental Q4 ARR grew by $17 million, with management stating, "the majority of our plan for the year is pretty much there," citing high bookings visibility for 2026.
• The GoSkip acquisition and Bridge Technology integration are expected to be accretive and profitable, aligning with management's focus on integrating loyalty and customer data for future platform buildout.

INDUSTRY GLOSSARY

• ARR (Annual Recurring Revenue): Subscription revenue annualized as of the period’s end, a forward-looking measure of contracted software/services.
• ARPU: Average recurring revenue per user/location, reflecting per-customer monetization or value capture.
• Engagement Cloud: PAR Technology Corporation’s digital engagement platform, covering loyalty, ordering, and guest interaction tools for restaurants and retail.
• Operator Solutions/Operator Cloud: PAR Technology Corporation’s suite for restaurant/retail operations, including POS, back-office, and analytics modules.
• TAM (Total Addressable Market): The estimated revenue opportunity available for a product or service in a specific market.
• CoachAI: AI-native operational guidance tool embedded in PAR Technology Corporation’s Operator Solutions, purpose-built for prescriptive recommendations at store level.
• Edge Compute: Distributed computing infrastructure where data processing occurs near the data source, relevant for store hardware deployments.
• OpEx: Operating expenses, referring to the company’s ongoing costs for regular business operations.
• CDP (Customer Data Platform): System that aggregates and unifies customer data across digital touchpoints, enabling analytics and personalization.

Full Conference Call Transcript

Chris Byrnes: Thank you. Good afternoon, everyone, and thank you for joining us today for PAR Technology Corporation’s 2025 Fourth Quarter Financial Results Call. Earlier this afternoon, 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 Q4 financials presentation, as well as in our related Form 8-Ks furnished to the SEC. Before we begin, please be advised that 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, please refer to our earnings release and our other reports filed with the SEC. Also, 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 measures, in accordance with SEC regulations, please see our press release furnished as an exhibit to our Form 8-Ks filed this afternoon and the earnings presentation available on the Investor Relations section of our website. Joining me on the call today is PAR Technology Corporation CEO, Savneet Singh, and Bryan Menar, PAR Technology Corporation Chief Financial Officer.

I will now turn the call over to Savneet for the formal remarks portion of the call, which will be followed by general Q&A.

Operator: Savneet?

Savneet Singh: Good afternoon, everyone, and thank you for joining us. Before sharing details of a strong Q4 today, I want to reaffirm PAR Technology Corporation’s thesis. PAR Technology Corporation is becoming an AI-driven hospitality platform company. Our two verticals, restaurants and retail, are individually mid-teens ARR growers with significant white space, anchored by mission-critical systems of record with deep domain expertise. The compounding nature of PAR Technology Corporation’s enterprise platform is driven by simultaneously allowing customers to play offense and defense, via revenue generation and cost efficiency. This is especially true in times of underlying market instability. Where falling behind in digital and its resulting margin loss is a formula for customer pain.

Aggressive investment into our AI platform will deepen our performance and provide further customer expansion opportunities. We have never felt more confident about our positioning and the opportunity set in front of us. Now let's review the numbers. In Q4, we delivered revenue of $120.1 million, up 14% year over year, driven primarily by continued strength in subscription services and an increase in hardware revenue. On a non-GAAP basis, we generated $2.6 million of net income, marking our third consecutive quarter of non-GAAP profitability. Adjusted EBITDA in the quarter was $7 million. Full-year revenue reached $455.5 million, up $105 million year over year, including 21% organic growth with subscription services growing 40%.

Most importantly, full-year non-GAAP net income improved by over $30 million year over year, proving that our operating model is scaling. We continue to stress operating expense efficiency as we scale our business, and Q4 was no different. As a percentage of subscription revenue, R&D came in at 25% and sales and marketing at a solid 13%, at or ahead of our targets. Turning to ARR. We exited Q4 with ARR of $315.4 million, representing 15% organic growth. Crucially, second-half growth was more than double first-half growth, and was powered by cross-sell, with over 80% of deals being multiproduct.

Growth was broad-based, led by POS momentum and the resumed Burger King rollout, along with continued steady performance from Punch and PAR Technology Corporation’s retail platform. The former continues to win new marquee brands while the latter benefits from McDonald's international expansion, including a successful Japan launch. We also saw improving trends in ordering and payments. Now to review our business performance in Q4, starting with the Operator Solutions business. Q4 revalidated our platform strategy. We were selected by Papa John’s for a decades-long partnership in their 3,200 sites, and we will be rolling out PAR Technology Corporation POS and PAR Ops to power their in-store tech stack.

This win builds our momentum in the pizza category, with TAM expansion already reflected in significant pizza pipeline for 2026. Further, we anticipate increasing our partnership with Papa John’s in the future, with both expansion to select international markets and continued expansion within our platform. In addition to this marquee project, our bookings exceeded internal expectations and hit record highs, with over $25 million booked for PAR Technology Corporation POS alone. The mix skewed heavily towards enterprise, multi-unit, multiproduct deployments. Enterprise customers are not buying point solutions. They are buying a unified platform with POS as the gateway into the broader PAR Technology Corporation ecosystem. Our attach rates confirm this. Nearly 90% of Q4 operator deals were multiproduct in nature.

Additionally, we continue to progress on our large tier-one opportunities. The world's largest brands continue to show more and more interest in the PAR Technology Corporation platform, and we will update investors as we convert these opportunities to bookings. We are hopeful that our intense focus on AI helps accelerate these opportunities as these brands are looking for ways to become AI-driven ahead of their peers. PAR Ops, our back-office offering, is evolving from analytics to intelligence. And even more importantly, product capability accelerated. Our first AI product, CoachAI, is now being utilized by nearly 1,000 stores with roughly 1,000 active users, indicating high usability and market fit.

Since launch, we have added enhancements and improved both usability and contextual awareness. The current version of CoachAI moves us into prescriptive operator recommendations, not just showing personnel what happened, but telling them what to do next. Crucially, we are embedding AI directly into daily workflows and are building towards a full self-driving product that is capable of direct and immediate store optimization. This is not incremental enhancement. This is margin-driving capability for operators. The industry does not need more dashboards. It needs fewer decisions and better ones. Our goal is to embed intelligence into every operational layer such that actions drive outcomes.

One of the most encouraging signals this quarter was the breadth and quality of momentum across our Engagement Cloud, both with new logos and existing customers. Starting with Punch, we signed two new noteworthy brands, including Shake Shack, and also expanded meaningfully into the adjacent eatertainment vertical with Lucky Strike Entertainment, which opens up a compelling new category for us. These wins reinforce Punch's position as a category leader and validate our ability to extend the platform into new high-value segments. Ordering continued its strong momentum, adding six new brands in the quarter, including Savvy Ciders and Smoky Mo's. Importantly, these were not stand-alone wins.

They increasingly came as part of a broader multiproduct engagement, which speaks to how customers are buying the platform rather than the point solution. Across PAR Technology Corporation Engagement, co-sell and cross-sell momentum continues to build. More than 80% of new deals are now multiproduct, consistent with last quarter and still trending higher. This quarter included the first large sale of PAR Technology Corporation Catering to Condado Tacos, where we successfully displaced a competitor. We also had the first major deployment of PAR Technology Corporation Games with Smoothie King and the first significant sale of PAR Technology Corporation SmartPasses.

Our retail delivered a strong quarter that demonstrated continued scale, engagement, and execution across the platform, particularly with our largest enterprise customers. One of PAR Technology Corporation Retail's newest and largest c-store customers is driving improved results as their program now exceeds 3.6 million members and continues to drive measurable changes in customer behavior. We are seeing higher visitor frequency, richer customer data, and clear monetization benefits across categories. We continue to see broad adoption of PAR Technology Corporation Retail, but it gets better, as three new customers launched on the platform in Q4.

I am also excited to announce the launch of our newest AI product for c-stores and fuel retailers, PAR Drive AI, a fully integrated AI suite built directly into our unified platform. This is not AI layered on top. It is intelligence embedded into the systems convenience and fuel retailers already use every single day, not only making us AI-native, but building AI in the workflow our customers run today alongside the security, data, and intelligence our customers trust today. We also saw strong performance in the quarter driven by increased hardware demand by our restaurant customers and deployment activity across several of our large enterprise customers.

Some of this acceleration is due to the switchover by restaurants to edge compute. Later this year, we will be coming out with PAR Technology Corporation’s own portfolio to help support this move. We also saw strong momentum with new store openings and continued kiosk expansion, reinforcing the role of self-service and digital ordering within large QSR environments. In Q4, we experienced steady demand across large POS enterprise, including Dairy Queen and Burger King, where ongoing remodel activity, platform upgrades, and new unit growth continue to drive consistent deployment volume.

Even with a strong Q4, we saw significant cost pressures on key components, including solid-state drives, memory, and processors, being driven by significant demand from AI infrastructure buildouts, which is tightening availability and creating elevated pricing across the broader compute supply chain. We are moving early and aggressively with measures to protect our core hardware product lines, while also rationalizing configuration and offerings based on component availability and evolving customer needs. As of today, we expect component cost pressures and constrained availability to persist until supply more fully catches up with demand, which we believe could extend into 2027.

Importantly, we remain focused on mitigation through supplier diversification, product flexibility, and the pricing discipline to ensure we can continue supporting customers. Before turning the call over to Bryan, I wanted to share a perspective on AI, its impact on software, and even more specifically on PAR Technology Corporation. The market fear around the durability of software in an AI-first world is palpable. It would be tone-deaf not to address this directly. PAR Technology Corporation is suffering extreme sell-down. We are in one of those rare moments where a technology shift is structural. For those of us in the restaurant technology space, we believe this moment represents an opportunity to lead.

There are two key realities that guide us as we position PAR Technology Corporation to be a leader in AI technology for restaurants. First, foodservice chains are among the most compelling environments for AI to create real, measurable value. Foodservice is a performance business. Brands compete on speed, consistency, and quality. And their guests are already conditioned to engage digitally. At the same time, rising costs, structural labor challenges, and tight margins mean AI is not being evaluated as a future capability, but rather as a near-term operational imperative. We believe that among all physical businesses, restaurant AI adoption by end users will be amongst the fastest.

And second, PAR Technology Corporation is uniquely positioned to be the company that delivers it. PAR Technology Corporation owns and is the ecosystem of record for tens of thousands of restaurants. Every transaction, every labor input, every menu item, every guest interaction, every payment event—PAR Technology Corporation is best positioned to be the provider that delivers an intelligent operating system where POS captures the data, Payments enriches the data, Loyalty identifies the guest, PAR Ops structures the insight, and PAR AI delivers prescriptive action.

We believe that the winners of AI have three key components: a massive trove of industry-wide first- and third-party data; second, the complex integration into an end-to-end workflow; and third, customer trust—the least measurable and hardest to come by of the three. For PAR Technology Corporation, we have all three. Our AI strategy is not about adding a chatbot on top of our products. We are rethinking our entire product suite to deliver measurable outcomes autonomously. The vision stated plainly: we are building a platform that gives every restaurant brand the firepower of the biggest brands in their segments.

A single marketing manager at a 200-location chain should be able to execute with the precision, personalization, and speed of the entire marketing department of the world's largest restaurant. We will empower them with a team of AI agents that actually do the work—strategize a new plan, build segmented audiences, configure campaigns, deploy one-to-one offers, optimize in real time, and report back what worked and what did not. Or imagine the regional ops leader overseeing 150 stores, empowering them with the situational awareness of a Fortune 500 fuel organization through an AI layer that watches every location and flags what matters, recommends what to do, and executes the fix before it becomes a problem.

Now zoom in to the general manager opening the store at 5 AM. This leads to walking in with the preparedness of an executive chef running Eleven Madison, knowing exactly what to prep, who is coming in, what is trending, and where yesterday's gaps were. A guest pulling into the drive-thru should experience something that feels like their favorite local spot, remembers them, and they are talking to a friend. The pattern is the same in every case. AI eliminates the gap between what small teams can do and what the best operators in the world actually do. Nobody needs another chat interface.

What brands need is a system that advises you before you ask, assists while you execute, and answers when you need it—across every function at every location, with the ultimate goal of driving profitable revenue. That level of scale and dependency makes PAR Technology Corporation well situated in the deterministic orchestration layer of this new world. AI will not replace enterprise orchestration, but rather leverage it. We are seeing this firsthand with our customers today. Bryan?

Bryan Menar: Thank you, Savneet. Good afternoon, everyone. We closed out 2025 with our most successful quarter in recent history, from our strong bookings, incremental ARR of $17 million, and down through to our $7 million adjusted EBITDA. We continue to execute to our plan of driving organic growth across our products and the verticals we serve, while also driving profit improvement, all while ensuring the company has the right resourcing to deliver with excellence on our growth trajectory and aggressive AI transformation. Subscription services continue to fuel our organic growth and represented 63% of total Q4 revenue.

The growth from higher-margin revenue streams resulted in a consolidated non-GAAP gross margin of $61 million, an increase of $8 million or 16% compared to Q4 prior year. We managed the growth while limiting operating expenses, which has enabled us to grow adjusted EBITDA for the third quarter in a row. Now to the financial details. Total revenues were $120 million for Q4 2025, an increase of 14% compared to the same period in 2024, driven by subscription service revenue growth of 18%.

Net loss from continuing operations for 2025 was $21 million, a $0.51 loss per share, compared to a net loss from continuing operations of $25 million, or a $0.68 loss per share, reported for the same period in 2024. Non-GAAP net income for the fourth quarter 2025 was $2.6 million, or $0.06 earnings per share, compared to a non-GAAP net loss of $37,000, or effectively $0 per share, for the prior year. Adjusted EBITDA for 2025 was $7 million, an improvement of $1.2 million sequentially from Q3 and $1.3 million compared to the same period in 2024. This positive movement is indicative of our ability to continue to drive growth with profitability. Now for more details on revenue.

Subscription service revenue was reported at $76 million, an increase of $12 million or 18% from the $64 million reported in the prior year, and now represents 63% of total PAR Technology Corporation revenue. Organic subscription service revenue grew 11% compared to prior year when excluding revenue from our trailing twelve-month acquisitions. ARR exiting the quarter was $315 million, an increase of 16% from last year's Q4, with Engagement Cloud up 19% and Operator Cloud up 12%. Total organic ARR was up 15% year over year. Incremental ARR growth accelerated in the second half of the year, and we reported a record $17 million increase in Q4.

This progression reflects strong underlying momentum in the business and positions us well entering 2026. Our growth is being driven by both site growth and increased ARPU, reflecting successful execution of our Better Together thesis, which is driving momentum in both multiproduct deals and cross-selling into our existing customer base. Hardware revenue in the quarter was $28 million, an increase of $2 million or 7% from the $26 million reported in the prior year. The increase was driven by continued penetration of hardware attachment into our expanding software customer base. Professional service revenue was reported at $16 million, relatively unchanged from the $15 million reported in the prior year. Now turning to margins.

Gross margin was $49 million, an increase of $4 million or 10% from $45 million reported in the prior year. The increase was driven by subscription services, with gross margins of $39 million, an increase of $4 million or 13% from the $34 million reported in the prior year. Subscription service margin for the quarter was 51% compared to 53% reported in Q4 of the prior year. The decrease in margin is due to an intangible impairment recorded in the current period, related to the write-off of capitalized software development costs within our drive-thru business.

Excluding the amortization of intangible assets, stock-based compensation, severance, and the impairment loss, non-GAAP subscription service margin for Q4 2025 was 65.8%, compared to 64.7% for Q4 2024. That margin includes the impact of a fixed product contract that we acquired from one of our 2024 acquisitions. Excluding that contract, which is not reflective of core operational performance, non-GAAP subscription service margin was 71% for the quarter, an improvement of 190 basis points versus prior year. The continued improvement is a strong sign of our ability to leverage economies of scale. Hardware margin for the quarter was 23%, versus 26% in the prior year.

The decrease in margin year over year was driven by increased supply chain costs resulting from recently implemented U.S. tariff policies and supply chain constraints with memory components related to a significant increase in demand driven by the AI infrastructure industry. We continue to evaluate and implement pricing adjustments and modify procurement plans to mitigate the impact of supply chain cost movements on our hardware margins. We expect this environment to persist through 2026, and we will continue to manage mitigation plans. Professional service margin for the quarter was 28%, unchanged from the 28% reported in the prior year.

In regard to operating expenses, GAAP sales and marketing was $12 million, an increase of $2 million from the $10 million reported in 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 $30 million, a decrease of $1 million from the $31 million reported in the prior year. The decrease was driven by a $1.5 million decrease of organic G&A expense year over year, partially offset by inorganic G&A expenses. GAAP R&D was $22 million, an increase of $4 million from the $17 million recorded in the prior year.

The increase was substantially driven by a $3 million increase in development costs as we continue to invest to innovate our product and service offerings. The residual increase was driven by inorganic R&D expenses. Operating expenses excluding non-GAAP was $54 million, an increase of $7 million or 15% versus Q4 2024, and when excluding inorganic growth, organic operating expenses increased a modest 8%, primarily driven by an increase in R&D investment during the quarter. Now to provide information on the company's cash flow and balance sheet position. As of 12/31/2025, we had cash and cash equivalents of $80 million.

For the year ended December 31, cash used in operating activities from continuing operations was $27 million versus $21 million for the prior year. The increase in cash used in operating activities compared to the prior year was largely attributable to increased accounts receivable. We view the increase as an interim position and expect the days sales outstanding will stabilize and pull into historical levels during 2026. Cash used in investing activities was $13 million for the year ended December 31, versus $180 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 $6 million for developed technology costs associated with our software platforms. Cash provided by financing activities was $12 million for the year ended December 31, versus $279 million for the prior year. 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. I would now like to take a moment to reiterate and thank our PAR Technology Corporation team and how they managed a successful strong second half of the year.

We pride ourselves in making accretive capital allocation decisions and, through our focus on operational execution, position PAR Technology Corporation for sustained growth and success. We are proud of what we have been able to achieve, but we are by no means content in where we stand. We need to double down on executing to our strategy as we progress to 2026. We expect ARR to continue to grow in the mid-teens and, similar to last year, the net growth will be more muted in the first half of the year versus the second half, as Savneet mentioned. I will now turn the call back over to Savneet for closing remarks prior to moving to Q&A.

Savneet Singh: Thanks, Bryan. 2025 was a strong year for PAR Technology Corporation. After a slow start, we added record ARR in Q3 and Q4, with a large swing in EBITDA and net income. We enhanced our platform functionality. We are first in our sector to commercialize an AI-native product in CoachAI. We won the industry's largest projects and drove multiproduct attachment across near 100% of our deals. In 2026, you should expect three things from us. First, continued growth momentum. We will sustain mid-teens organic ARR growth at scale driven by multiproduct attachment, new logos, and deeper partnerships with our existing customers.

Similarly to last year, we expect our second half will be stronger than our first half as we manage out some of our legacy low-margin customers in Q1. We preserve in-year upside from, one, commercialization of new, mark-to-market AI functionality and, two, pipeline conversion of our large tier-one opportunities. Second, you should expect a step change in operational efficiency. We expect to eliminate roughly $15 million annualized OpEx through AI-driven automation and the natural synergies of operating at our scale by the end of Q1. Illustrative of this, we have reached 100% adoption of AI across R&D teams, with a meaningful shift towards agentive development. Most of our development is now happening via agents without human involvement in code.

A year ago, developers were still touching almost 100% of code generated. That is driving real velocity, and we have doubled our roadmap commits into production in the last year. Third, you should expect us to deploy parts of our operational expense savings into AI platform production. We will deliver code faster, bring to market new and commercializable AI-led products, and demonstrably enhance our workflows with unified data. Our AI investments are not a hedge for our existing business, but the all-out mandate. All of this is a setup for 2027 for where we want it to be: a leaner operating structure, a more powerful platform, and a product roadmap that positions PAR Technology Corporation to really accelerate growth.

PAR Technology Corporation is only at the start of its growth runway. Our average customer uses just 1.8 PAR Technology Corporation products from a list of six to eight core software SKUs, meaning there is at least 3x organic upside within our base. Further, far from driving customer tech inertia, the ongoing restaurant value wars and applied margin pressures in the restaurant business favor consolidation behind a platform vendor like PAR Technology Corporation and the move away from point solutions. Brands cannot afford to not compete across the entire operations frontier, and we are the only enterprise vendor that facilitates this. Near 100% of our deals are multiproduct for a reason.

Additionally, AI platform investments will naturally drive ARPU expansion, as customers are willing to pay for excess value. If technology unlocks a larger pie, it will be adopted, with CoachAI as an early proof point. The foodservice technology market is being rewritten now, and the companies that win will be the ones with the data, the platform, the trust, and the conviction to move decisively. PAR Technology Corporation has all four, along with a track record of execution and reinvention. We are quietly and confidently building our future. Operator, we can open the line for questions.

Operator: Thank you. At this time, we will conduct a question-and-answer session. 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 first question comes from the line of George Sutton of Craig-Hallum. Your line is now open.

George Sutton: Thank you. Savneet, you mentioned you had never felt more confident about the opportunity set. You have not lacked for enthusiasm in the past, so I just want to put that into perspective. Can you give us a little bit more clarity on what you mean there?

Savneet Singh: Yes. I think specifically my excitement is really in the AI investments and the AI excitement from our customers. As I mentioned, we really do think categorically the restaurant and retail categories are one of the best places to adopt AI technology. These are businesses that are fighting extreme margin pressures, labor challenges, and operational complexity, and I think that AI is an operational imperative for them, not a nice tool to try.

So when we see the end markets we serve open to new products, and then we look at our platform as truly the platform of choice, we really think it sets us up for an exciting opportunity to be the AI platform that our customers look to build their future on.

George Sutton: Now, speaking of AI, you mentioned these large enterprise deals that you are chasing. You are hoping that, through using the AI components, you can speed up those deals. Can you just give us a sense of how that is accomplished? Many times I know you are in pilot with these folks.

Savneet Singh: My perspective is more that as restaurants, in particular, look to adopt AI faster and faster, it should accelerate sales processes from vendors that can provide them those AI tools to become AI-native. And so I think, given how much time and investment and, candidly, how far ahead we are of our peers, it could potentially accelerate some of these deals that we are working really hard to get done.

George Sutton: Got it. Thank you very much.

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

Mayank Tandon: Thank you. Good evening. Savneet, could you speak to the state of the restaurant market? I ask because it seems like the traffic data is pretty mixed right now, but same-store sales have still been fairly healthy given some of the pricing leverage restaurant chains have. Does that square with what you are seeing on the ground in terms of demand for your products? Should we be looking at that as maybe a signal of how demand would impact you, or is that maybe not that linear tie-in or correlation, rather?

Savneet Singh: I do not think it is linear yet, but I think it is moving linear to the upside for us in the sense that this is a complicated environment for restaurants. You have ostensibly flat to declining traffic for most. You have a value war. You have cost pressures from labor and your cost inputs through inflation across foodstuffs. And then you have a massive, massive challenge to win a new digital customer. And all that screams for you to make the investments to win in that environment, not to pull back. So we think it is the perfect environment to sell, and we think it is even a more perfect environment to use AI to bring these products together.

Just imagine what I just described to you. How, if you are running one of these great brands, do you expect to run a clean operation when you have different tools running your online ordering, your loyalty, your drive-thru, and your digital exposure through loyalty and social media? It is really hard to do that. And I think this environment, where there is extreme pressure on bringing guests in the door and extreme pressure on bringing costs down, is a really, really great environment to be a vendor in, provided we can provide them the value to make their operations more profitable. So we think it is great timing.

As far as direct trends, we are seeing, I think, a stabilization. I think last Q3 was a little bit better. In Q4, we saw stabilization and really good holiday traffic numbers. I think, as you are seeing from some of the companies reporting, it is still mixed, but we are not seeing those extreme drop-offs we saw last year, which makes me hopeful that we are kind of past that period of time.

Mayank Tandon: That is good to hear. For my follow-up, I wanted to just ask about how the ARR guidance—if we can call it that—squares with what you would expect on the subscription growth side in terms of the trajectory over the course of the year? And the same question would be applicable to your margin aspirations for 2026. How should we expect that to trend? And can you provide a little bit more color maybe on where you would look to exit the year, if you could share that?

Savneet Singh: I think that, similar to last year, our first half will be slower than our second half. Our second half is looking to be extraordinarily strong right now from booked deals that we have and so we feel very good about the second half. The first half will be a little bit slower. In Q1 and a little bit of Q2, we are, as I mentioned, leaving legacy brands that tend to not be paying the value for the services that we have, which will lead to us having higher margins over time. And even with that, we feel really confident in getting to the mid-teens growth.

And as I mentioned, we think we have a couple of nice levers to expand beyond that with, first, some of these new AI product launches and, second, the large tier-one opportunities. And so, we guided to the mid-teens, and, obviously, there is upside there, but we want to make sure we give you something we can hit. And the margin flow-through will come through very similar to last year's margin profile. I expect the growth to be the driver of margin there and, again, upside there, depending upon how we deploy the savings I mentioned on the OpEx side. As far as an exit, we expect the exit rate in Q4 to be meaningfully higher than Q1 or Q2.

We have not given guidance, but we expect that to be very, very significant, getting us pretty close to the run-rate margins we want to get to as a company over time.

Mayank Tandon: Got it. Thank you for taking my questions. Appreciate it.

Operator: Our next question comes from the line of Stephen Sheldon of William Blair. Your line is now open.

Stephen Sheldon: Hey, thanks for taking my question. So at a high level, what are you seeing in terms of the restaurant availability to make software changes and decisions right now? It seems like you have had a handful of encouraging stuff, including with Papa John’s, Shake Shack, and others. So is it becoming a better environment for customers to make decisions on what to do with their front-of-house and back-of-house software, even with uncertainty around AI and the dynamic consumer spending environment? And does that look any different in the mid-market versus enterprise?

Savneet Singh: Good question. And you were cutting a little bit in and out, Stephen, so I am going to take some liberties in guessing what you were saying. I think that it is a great environment right now to be in our category. As I mentioned, we had record bookings last year ahead of our expectations, and we expect that to continue. It was really, really exciting to see what was happening in Q4. And we are definitely seeing that in the larger chains. We are continually surprised how many large chains are coming into the funnel.

And I do think that is because of some of the macro challenges that you mentioned, but the last caller mentioned as well, where brands really do need to figure out how to increase frequency but also cut cost, and we are a great solution. I think the other core secular driver, though, is AI. I think there is not a brand in the world that is not exploring ways that they can leverage their data better, and we, through luck or design, are really the only platform that can give them that holistic view both front and back of house.

So, to your question on where we are seeing it in the front and back of house, we are seeing it everywhere. Both our Engagement side and our Operator side grew really strongly last year. We are seeing it a little bit more in the operations side of our business right now, where our brands are really going aggressive on upgrading the foundation of technology of back of house, if you will. But the front of house is not slowing.

In terms of whether we are seeing it in the mid-market or the enterprise, we are seeing more pipeline created from the large enterprise, but the medium enterprise—called the chains that are a couple hundred up to a thousand—are moving as well. There is a little bit of the larger chains having the budget to make those investments, but we are seeing broad-based adoption, and I do not know if I am comfortable saying it is more here or there. I just think we are seeing it everywhere at the moment.

Stephen Sheldon: Got it. Very helpful. On the R&D, I think you talked about a $3 million increase in development cost. Can you give more detail on what drove that higher? And specifically, is that tied to some of the tier-one opportunities you are pursuing?

Savneet Singh: It kind of comes in a few buckets. The first is we are making some pretty aggressive investments into AI. As you heard, we have already launched two products, soon to be three, and we will continue to push that going forward. It is not whitewashing. It is not “let’s put it in your face.” These are real products that drive real value that we are charging for. These are not, “Hey, we are now an AI product, and it is the same price.” And so there is a real investment going on there.

A second part of it is, when you are pushing into these large tier-one opportunities, there is more investment for us because these are categories that we have not been in before. For example, we are growing into pizza, and that is a new space for us. Eatertainment is a new space for us. At the same time, the configuration and changes needed to go after these new potential opportunities is important. And a good part is all that is reusable across others in that category. And then the third part: we are making investments to modernize every product at PAR Technology Corporation.

We built a really nice moat and a really nice lead; we think the worst thing we can do is sit here and do nothing. Now, if you look collectively, our R&D expense is still 25% of sales, which we think is a very comfortable position to be in. But we really do have the reinvestment arm going on, and it is only because we see so much opportunity in front of us today that, candidly, was not there 18 months ago, particularly as it relates to AI.

Stephen Sheldon: Very helpful. Thank you.

Operator: Thank you. Our next question comes from the line of Samad Samana of Jefferies. Your line is now open.

Jeremy Seller: Hi, guys. This is Jeremy Seller on for Samad. Thanks for taking my questions. First, on the Papa John’s, you called out intra-quarter that you are expecting an ARPU around $4,500 per store with price escalators. Are these stores below list price and the escalators are getting them back up to list, or are the escalators set to take you above the typical list price? And then I know you called out you have the opportunity to expand the deal with additional products. Should we expect something similar to the Burger King win where it happens intra-rollout, or are you speaking of a future opportunity more greenfield?

Savneet Singh: It is market pricing for us. We got really good pricing here. We are really happy with it. I think Papa John’s, importantly, is equally happy with it. It is for point of sale and back office, so it is a good, high-quality deal for both of us. So, market pricing, and our escalators are pretty normal now with any contract that we have. So, very much in line with our brands we are signing today. As far as future opportunities, we sort of see two direct potential opportunities. The first is potentially upselling the brand on other products we have. That could be ordering. It could be payments. It could be the AI products that I mentioned.

And the second avenue for opportunity will be international expansion. As we continue to internationalize core parts of our product, we want to win and are pushing to try to win some of the international markets that they operate in.

Jeremy Seller: Great. That is great color. And when we think about the mid-teens ARR guidance, can you help us unpack how much of that is coming from new locations versus cross-sell of products? And then I know you have some large legacy renewals coming up; there is an opportunity to take price there. How much is coming from that as well?

Savneet Singh: We are probably 70/30 new logo versus existing customer. A lot of it will depend on some of the rollouts we have towards the year, but it is probably 70/30, from new product to expansion, which is an incredible change for PAR Technology Corporation. You probably remember for years it was 100. So, clearly, the cross-sell and co-sell muscle has really changed.

Jeremy Seller: Great. Thank you for taking my questions, guys.

Operator: Thank you. Our next question comes from the line of Andrew Hart of BTIG. Your line is now open.

Andrew Hart: Hey. Thanks for taking my question. Congrats on the share buyback authorization. If you could just talk about how you feel about the balance sheet and how you plan to deploy that $100 million authorization, and what you are thinking about process and EBITDA margins continuing to scale for this year as well. Thanks.

Savneet Singh: Thanks, Andrew. We want to have the optionality to return capital to our investors in every which way possible. The prices that our shares are trading do not make a lot of sense given the opportunity set, the white space, and the long-term growth we see in front of us, and the margin profile we want to get to. So we want to make sure that we have that tool to operate and ensure that our shareholders are getting the best return. As we look to allocate capital, we first look at what are the organic opportunities in front of us, because those are ones that we have tons of control and data to look back at.

We will look at the inorganic opportunities in front of us, and then we will look at buying back shares. We want to make sure that we have the ability to do all three and figure out where we can get the highest return. We expect a strong year this year, as I mentioned, in the second half. We are going to have a very, very strong year in cash generation, and so we want to make sure we are prepared to be in the market when and if we see these disruptions that we have been seeing, because we do not think it makes a lot of sense and completely understand a lot of the AI fears.

But as a company that we truly expect to be a net winner in this AI market, we think it is important that we eat our own cooking.

Andrew Hart: Thanks. And then a two-part question on growth. You said in the fourth quarter the PAR Technology Corporation POS results significantly exceeded your internal expectations. Where did that come out of or what drove that? And then when you think about 2026 growth—let's call it 15%, a bit slower in the first half and then faster in the back half—how much of that 15% for the entire year is stuff that you feel really good about versus how much do you need some wins that you are tracking to come across the finish line?

Savneet Singh: I would say the majority of our plan for the year is pretty much there. There is not a lot of go-get for us in our model right now, which is why I mentioned the upside to our model is to get incremental adoption of our new AI products and, potentially, the bookings of large tier-one opportunities we are working on. A good portion of that is booked and planned. Now, things can change. We could screw up, and so on and so forth, but we feel pretty good about the visibility that we have there.

Andrew Hart: Great. Thanks.

Operator: Our next question comes from the line of Charles Nabhan of Stephens. Your line is now open.

Charles Nabhan: Hi, good afternoon, and thank you for taking my questions. Savneet, appreciate the comments around the supply chain and hardware, given some of the price inflation in the chip market. But my question there is, are you seeing any impact on RFP activity from higher hardware costs, or are you seeing restaurants and operators still willing to upgrade their software while maintaining their hardware?

Savneet Singh: Great question, Charles. The short answer is we are not seeing any impact yet on the revenue side. In fact, as you can see, we had a really good revenue year last year for hardware, and I hope that continues this year. It is not slowing down refresh cycles, whether those refresh cycles are tied to software upgrades or to net-new refreshes of hardware without refreshing software. But we are seeing it on the cost side, where our margins were mid-20s, and we expect margins will be 20–21% from a hardware perspective. Not the end of the world, but the increased volume has helped us offset the gross dollars.

If prices continue to spike very, very meaningfully, it could potentially have an impact on our customers wanting to maybe hold off until they saw pricing come down. But we have not seen that, and these pricing pressures have started since April, since the tariffs started in April, and so we have had a pretty strong demand year even with that in place. We are monitoring it very carefully. It is hard to predict month to month, even week to week. As Bryan mentioned, we are putting a lot of mitigation activities in place, from reconfiguration to accelerated buying, to ensure that we do not have any disruptions.

The reason we are focused on disruptions is we have not seen a slowdown in demand.

Bryan Menar: I would just add as well, mitigation plans are not only to manage at the margin on the hardware, but we are also making sure, as part of the plans, that we have optionality to make sure there is no impact in regards to our software growth and rollout. We are still hardware-agnostic, but a lot of our customers want the attachment because they want one vendor since we can service everything. We also have that optionality to give them what they need from a software standpoint and still have flexibility as to the hardware they are using. That may play into it as we go forward.

We are managing both of those, and we are making sure it does not impact the software side of the house.

Charles Nabhan: Got it. As a follow-up, I wanted to ask about profitability as we think about our EBITDA estimates for the next couple of years. I know not all of the ARR from this year is going to flow through to EBITDA, but in the past, you have talked about roughly a 70% to 75% flow-through to the EBITDA line from ARR based on roughly flattish OpEx. Is there any reason to expect a deviation from that framework, or is that still a fair way of thinking about it?

Savneet Singh: We have talked about subscription services ARR around 70% gross margin—Bryan mentioned, I think it was 71% when you exclude the one business unit—and then, on an incremental basis, we have always said we expect $0.20 of incremental, or 20% incremental, cost, although we have not had that because the OpEx has been relatively flat. I do not think those trends change meaningfully, although we will see some investment in R&D this year. Again, not game-changing amounts, but we really do want to continue that AI investment.

I think the subscription services margins will continue to hold, and you will continue to see the gross profit dollars be there to support EBITDA growth and cover any investment that we are looking at.

Charles Nabhan: Got it. Appreciate the color. Thank you.

Operator: Our final 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. Just one for me—actually, I have two. If we look at the Bridge Technology acquisition you made last month, I know you are going to see around $50 million of OpEx savings in 2026. Are you looking to invest in that platform at all?

Savneet Singh: Of course we are going to invest in it. That is not going to be a cash burn within Bridge. We have budgeted for it to be profitable within PAR Technology Corporation. Now, if we see a ton of opportunity and we see incremental opportunity, we will. But we have budgeted for it to be profitable within PAR Technology Corporation, and we think it will. The early customer feedback has been truly excellent.

Bryan Menar: Yes, and I think we will be able to speak more to it when we get through next quarter's earnings call as we are closing on that in the near future. We are definitely excited about how we can leverage that platform within our existing base.

Maxwell Michalis: And if we just stay on the M&A trend, if you were to rank it in terms of capital allocation in 2026, how does M&A rank in 2026 versus the share buyback and other areas of investment?

Savneet Singh: It is always at a point in time. Today, we are disappointed with our stock price, and so I think the bar for M&A is very, very high. Bridge was a special opportunity for us. We bought it for roughly 2x ARR—an ARR that we expect to grow—that is profitable, and it really helps us complete a product suite of having both loyalty and non-loyal guest data in one platform that allows us to build a CDP and do a lot more going forward. So it was very strategic for us from a product perspective, and at a good price.

We are always looking at stuff, but I think M&A is lower on the priority list given where our stock price is.

Maxwell Michalis: Alright. Thank you.

Operator: I am showing no further questions at this time. I would now like to turn it back to Chris Byrnes for closing remarks.

Chris Byrnes: Thank you, and we want to thank everyone for joining us today on the call. We look forward to updating you further in the coming weeks. Please have a nice evening.

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

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