PAR Technology Corporation (NYSE:PAR) Q2 2023 Earnings Call Transcript

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Bryan Menar: And you are seeing how that attachment is high too through the ARPU increase, right, in Operator Solutions, because it is in essence attached through there on top of Brink. So the ARPU per site that has now both for Brink and also the payments is driving that increase.

Operator: Our next question comes from Patrick Mcilwee from William Blair.

Patrick Mcilwee: Hey, guys. I’m on for Stephen Sheldon today. My first one, given some of the one-time expenses and profit that came in a little bit late quarter, how should we be thinking about the trajectory for profit adjusted EBITDA over the rest of the year and is it fair to expect we kind of return to pretty steady progress towards breakeven?

Savneet Singh: Absolutely. I think this quarter, to get on the gross margins, but the OpEx lines they were exactly where we wanted to be, and our growth was strong. I think growth will continue to be strong through the year. And the key for us hitting our profitability goals will be getting to the high end of our guidance, from the beginning of the year. Like I mentioned earlier, I think we feel confident we are going to call back some of the gross margin, next quarter and then the following quarter and moving forward. And I think there is no doubt, profitability is around the corner. And if we can deliver on the high end of the revenue side, I think we will hit there. If we don’t, we will miss. But I think it is on us to kind of execute fast as we can to get there. But I think the directory is very clean from here.

Bryan Menar: I think with security administration, we have reset, like, on the subscription margin. We ended this quarter at lower 60s. We are seeing the visibility for mid 60s and then to higher 60s as we go to Q3, Q4, getting ourselves back onto that 70% margin that we were at the end of last year before we were kind of putting the fore on the gas in regards to the investments on the younger products.

Savneet Singh: And what I think is interesting there is that, most of that is coming back from a little bit of efficiencies, but also just revenue turning on for these investments we have made, particularly MENU, which starts adding revenue this quarter, and this quarter being Q3 and then really in Q4. But what that growth that Bryan talked about doesn’t take into account is the actual investments we are making in Punchh and Brink and so on and so forth, which will come in 2024. So I think this will be the story. This year has been the story of holding out that flat while maintaining growth. I think next year, will be a deep focus on trying to get the best in class gross margins while maintaining growth.

Patrick Mcilwee: Okay, great. And at Punchh, you had or guest engagement, I should say you had 3400 activations in the quarter, but only saw, I think about a $1.5 million step up in ARR sequentially. So I just wanted to ask, is that step up as expected or have you seen any pickup and churn there related to some of the budget headwinds or some of the capacity issues you had this quarter on that front?

Savneet Singh: So, I think it is as expected. I think there is always some churn quarter to quarter, but not anything meaningful or concerning on our end, but there is definitely churn, in the quarter for Punchh that offset some of that activation. And then as you suggested there were at least one time issues that that kind of impacted it. But no, there is been Punchh, as you can see from the sites versus the ARR, Punchh pricing is up a little bit, so it is not, there is no discount or anything like that.

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