PAR Technology Corporation (NYSE:PAR) Q3 2023 Earnings Call Transcript

PAR Technology Corporation (NYSE:PAR) Q3 2023 Earnings Call Transcript November 9, 2023

PAR Technology Corporation beats earnings expectations. Reported EPS is $-0.21, expectations were $-0.33.

Operator: Good day and thank you for standing by. Welcome to PAR Technologies’ Fiscal Year 2023 Third Quarter Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that, today’s conference is being recorded. I would now like to hand the conference over to your first speaker today, Chris Byrnes, Senior Vice President of Business Development. Please go ahead.

Chris Byrnes: Thank you, Steven, and good afternoon, everyone. And thank you for joining us for today’s call to review our third quarter financial results. Following the close of trading 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 Q3 financials 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. The 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.

As Steven said — excuse me, I’d like also to remind participants that this conference call may include forward-looking statements that reflect management’s expectations based on currently available data. However, actual results are subject to future events and uncertainties. The information on this conference call related to projections or other forward-looking statements may be relied upon and subject to the Safe Harbor statement included in our earnings release this afternoon, and in our annual and quarterly filings with the SEC. Finally, as Steven said earlier, I’d like to remind everyone that this call is being recorded, and it will be made available for replay via a link available on the Investor Relations section of our website. Joining me on the call today is PAR’s CEO and President, Savneet Singh; and Bryan 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 general Q&A. Savneet?

Savneet Singh: Thanks, Chris. Good afternoon, everyone, and thank you for joining us on today’s call. I’m pleased to report we delivered a strong third quarter. We grew subscription revenue by 24.6% and ARR by 20.4% year-over-year. Adjusted EBITDA improved by over 65% from the same period last year to negative $2.6 million and contracted ARR came in at $143 million in the quarter. Our gross margins rebounded as we messaged last quarter, and we continue to hold OpEx flat while making important internal investments. Operator Solutions ARR grew 38.3% to $53.8 million in Q3, when compared to the same period last year. Operator Solutions ARPU increased by 20% from the same period last year due to higher value projects, often with multiproduct bundling, price increases and PAR payment service implementations.

We are seeing continued elasticity of demand in this business unit and expect this trend to continue. Churn continues to be extremely low at 4.1% annualized for Brink in the quarter. We continue to win new customer opportunities with Brink due to its mission-critical position within the restaurants and the feature-rich capabilities upon which a proven, stable and scalable cloud platform. Brink is the growth enabler for enterprise and emerging enterprise restaurants. This proved out in Q3, as we announced the signing of Burger King as our next exclusive Brink and menu customer, with our products to be rolled out across our 7,000 domestic stores. This deal proves out our enterprise reach and the beginning of what we expect will be a wave of Tier 1 brands transitioning from legacy third-party and internally developed systems to modern SaaS-based products like Brink.

Brink is uniquely positioned in this environment, both due to its status as a category-leading cloud-native product, as well as the ability to uniquely partner and innovate with our multiproduct offering. Our pipeline continues to be robust with ample white space for cross-sell. Our client and intention are to continue to expand our relationship within our RBI and their restaurant logos. RBI has over 30,000 restaurants globally with brands that include Tim Hortons, Popeyes, Louisiana Chicken and Firehouse Subs along with Burger King. What’s more, as we execute against the Burger King plan, we anticipate building deeper partnership with Burger King and we’ll look to push out the longer-term road map of unified commerce, starting with Brink, MENU and data Central.

It’s hard to express how transformative this new customer will be from both the strategic and the financial aspect of PAR. This selection by Burger King , one of the largest and most iconic restaurant brands is something that we will build upon for the years to come. Burger King will be a strong driver for a strong revenue driver for PAR over the next two years as we work through our rollout plans with Burger King this quarter, we’ll update you on our Q4 call with the financial impact and expectations on timing of that growth. Both PAR and BK are committed to an aggressive push working in partnership to deliver BK’s goals of unified POS. I see this as a turning point for PAR in our broader industry as we are well positioned in the market to secure additional deals as other large enterprise restaurant companies look to unify their POS, consolidate vendors and bring on a growth enabler like Brink.

Moving to payments. In Q3, we saw ARR from a PAR payment services more than doubled from Q3 2022 and expect this growth trajectory to continue. This is incredibly impressive as we report payments on a net basis after all third-party and interchange costs. We saw momentum in the third quarter with customer adoption across our in-store, online and one tap loyalty programs. In Q3, we signed brands such as Rocky Mountain Chocolate Factory, Hat Creek Burger and Coconut Kenny’s to name just a few. We completed the system-wide rollout with Smoothie Kings 100 — 1,100 stores went live and initiated rollouts with CHOP and clean eat [ph]. Customers are increasingly attaching PAR payments via Brink, MENU and Punchh, again validating our unified commerce strategy.

Moreover, customers are seeing robust ROI in our Unified Commerce integration and innovation. One Top loyalty, which combines Brink, Punchh, and payments is driving a 70% increase in loyalty program sign-ups for Apple Wallet users and a 23% increase in repeat visits per customer using Apple Wallet. We believe that PAR’s multiproduct offering gives us a strong competitive advantage and moat in the current market climate, bundle savings and incremental ROI at a time when tech spend is under scrutiny. Moving to guest engagement ARR, that includes our leading customer engagement at Punchh and digital ordering platform menu. Guest engagement ARR grew 8.2% in Q3 when compared to Q3 2022 and totaled approximately $62.2 million. We again saw record usage across Punchh platform and are encouraged by the increased customer value we are delivering on a daily basis.

We went live with new customers, including Booster juice, SmokinJoe [ph] Barbecue and DASH during the quarter. Equally important, we are seeing the pipeline build up from a slow start in the beginning of the year and expect to announce some exciting deals in the coming quarters. Even more interesting, while Punchh has very low churn, and we are even seeing some of the few brands that have churned from Punchh over the last few years return as they now realize Punchh delivers the most value in the marketplace. We have invested in our platform to better support our customers’ business requirements and are proactively adding features to increase our addressable market and the ability to raise price in the renewal cycles. The other important piece in guest engagement is our digital ordering engine MENU.

MENU is signing up new customers at a rapid place. Excluding Burger King, we signed over 750 locations in Q3. Scooters Coffee, Coconut Kenny’s and Restaurant Services Limited all signed during the past quarter. The new customer pipeline for Q4 is healthy and will drive additional logo signings. In Q3, menus integration was fully certified on DoorDash, Grubhub along with Uber Eats, and we successfully piloted RBI on those integrations as well. In Q3, we went live with our first customer in the US and now have over 1,100 sites signed up on menu. The majority of our menu signings include payment attachment. We continue to believe these early customer signings validate our investment thesis on acquiring menu and menu was a key part of our win at Burger King.

Back office and data Central delivered a solid quarter. Reported ARR of $12.4 million in Q3 was a 21% increase from last year’s Q3. We now have more than 7,500 active stores. In the quarter, we went live with Hoda’s restaurants, Earl Enterprises, and expanded our relationship with Love’s Travel stops. Briefly touching on hardware, we had another solid quarter and continue to see high attachment rates with Brink and also in shoulder markets that have rugged environments with high traffic and require maximum hardware performance and industry-leading reliability. Moving to the operating levers of our financial model within subscription services. Adjusted gross margins for subscription services year-to-date expanded to 67%. As we spoke about last quarter, onetime items and investment spend brought down Q2 gross margins, and we saw a strong return from those investments this quarter and the reduction of onetime credits.

Our goal in the medium term is to get adjusted gross margins to 70% plus in the long run to be in the mid-70s and higher. Over the last year, software transition to become our largest business, and similar to how we broke out subscription services as a revenue line this year, in our coming releases will begin to provide more detail on the makeup of not just our gross margin, but the operating expenses supporting the growth in subscription services. As a start, when looking at Q3, we roughly estimate sales and marketing expenses for our subscription services to be around 25% of ARR. As we continue to grow revenues at a strong pace, we expect this number to continue to work its way down to our long-term girl of 15% or less. As we work through shared cost allocations, we’ll provide more detail in the coming releases on how this number is trending.

R&D expense as a percent of ARR in Q3 was estimated to be around 41%. R&D efficiency has been a huge focus for PAR, and we’ll continue to work this number down to our long-term target of 25% of ARR. Our investment in menu emerging have slowed our efficiency here a bit, but we’ll see continued improvement going forward. And as many revenue expands, we will see this move rapidly. Without menu, our R&D expense as a percent of ARR would have been 400 basis points better, but we think we’ll get that investment back in spades in time. Again, in the coming releases, we’ll provide more details so that you can track our progress to our long-term targets. These improvements have been layered on a G&A base that we are continuing to hold tight on. But what I think has hit it in our results is that we’ve been able to expand gross margin and hold operating expenses near flat while making a tremendous investment in menu, ramping headcount rapidly for Burger King and making a large internal investment into IT systems.

These three large investments are being made without adding to our operating expenses. We estimate that while OpEx has been nearly flat for the last four quarters, we’ve actually made incremental investments of approximately $9 million in new internal IT, of Burger King ramp-up and the additional menu investments needed for the US market, all without adding to our OpEx space. This has been done by reallocating our capital and teams to investment areas and becoming tremendously more efficient within Brink, Punch and Data Central. To highlight just how efficient we’ve gotten. If we hypothetically were to remove menu from our P&L, our adjusted EBITDA will be positive for this quarter, an incredible accomplishment when you think about where we were just one year ago.

I highlight this to make two points. First, our core business of Brink Punch and Data Central have gotten efficient and efficient fast. While the spend on Menu and Burger King cover this up, it shouldn’t be lost how efficient our teams are getting. Second though is that we believe our investments in Menu, IT and Burger King will be worth the short-term pain. Menu’s win at Burger King was the first of many proof points to come. Our plan is simple to continue to drive strong revenue growth while holding operating expenses very tight. We’re going to push aggressively towards the Rule of 40, and our path here will be accelerated the additional acquisitions we see coming around the corner. Bryan will now review the numbers in more detail, and I’ll come back at the end.

Bryan?

Bryan Menar: Thank you, Savneet, and good afternoon, everyone. Total revenues were $107.1 million for the three months ended September 30, 2023, an increase of 15.5% compared to the three months ended September 30, 2022, with growth coming from contracts and subscription services revenue, partially offset by hardware and professional service revenue. Net loss for the third quarter of 2023 was $15.5 million or $0.56 loss per share compared to a net loss of $21.3 million or $0.79 loss per share reported for the same period in 2022. Adjusted net loss for the third quarter of 2023 was $5.8 million or $0.21 loss per share compared to an adjusted net loss of $11.9 million or $0.44 loss per share for the same period in 2022. Adjusted EBITDA for the third quarter of 2023 was a loss of $2.6 million compared to an adjusted EBITDA loss of $8 million for the same period in 2022.

This improvement was driven by an increase in subscription services margin and our continued commitment to holding operating expenses flat, while allocating investments for menu and internal enterprise systems and Burger King. Hardware revenue in the quarter was $25.8 million, a decrease of $5.5 million or 17.6% from the $31.3 million reported in the prior year. The $25.8 million revenue recorded in Q3 is consistent with Q1 and Q2 results and in line with expectations. Subscription Services revenue was reported at $31.4 million, an increase of $6.2 million or 24.6% from the $25.2 million reported in the prior year. The increase was primarily driven by increased subscription services revenue from our operator Solutions business of $4.2 million, driven by a 21% increase in active sites and 20% increase in average revenue per site.

The remaining increase of $1.7 million was driven by increased subscription services revenue from our guest engagement business, driven by 1.5% increase in active sites and a 5% increase in average revenue per site. The 1.5% increase in guest engagement sites is a result of approximately 6% site growth partially offset by 5% site churn. We’ve managed churn as we transition Menu strategy from international to North America in addition to managing the inflection point of Punchh’s product maturity to enable continued site growth and noted increase in product usage from our existing customer base. The annual recurring revenue exiting the quarter was $128.3 million, an increase of 20.4% from last year’s Q3 with operator solutions up 38%, guest engagement up 8% and back of house up 21%.

Professional services revenue was reported at $11.5 million, a decrease of $0.3 million or 2.8% from $11.8 million reported in the prior year. $7.2 million of the professional services revenue in the quarter consisted of recurring revenue, primarily from our hardware support contracts. Contract revenue from our Government business was $38.4 million, an increase of $14 million or 57.4% from the $24.4 million reported in the third quarter of 2022. The increase in contract revenues was driven by a $14.6 million increase in government’s ISR Solution product line. The increase was driven by continued growth of Counter-UAS task orders. Contract backlog with our government business as of September 30, 2023, was $327.5 million, a decrease of 5% compared to $344.8 million as of September 30, 2022.

Total funded backlog as of September 30th was $88.3 million. Now turning to margins. Hardware margin for the quarter was 25.3% versus 18.8% in Q3 2022. The increase in margin year-over-year was driven by better inventory and cost management with kitchen displays, mobile and drive-through products. The team continues to effectively execute on managing costs in addition to pricing where deemed appropriate. We continue to expect overall hardware margins of at least 20% as we go forward. Subscription services margin for the quarter was 50.6%, compared to 48.1% for the third quarter of 2022. The increase in margin is driven by continued improvements of our hosting and customer support costs. Sequentially, subscription services margin of 50.6% improved compared to 43.3% in Q2.

Subscription services margin during the three months ended September 30, 2023, included $5.8 million of amortization of identifiable intangible assets compared to $5.3 million for Q2. Excluding the amortization of intangible assets, total adjusted subscription services margin for the three months ended September 30th was 69% compared to 61% in Q2. The increase in margin is driven by the reduction of onetime credits and efficiencies from investments we made in Q1 and Q2. Professional service margin for the quarter was 23.8% compared to 7.4% reported in the third quarter of 2022. The increase in margin was driven by timing adjustments, including identified use cases in Q3 2023 for previously reserved service inventories. We expect professional services margin to transition back to the mid- to high teens as we end the year consistent with the professional services margin of 17% for the nine months ended September 30, 2023.

Government contract margins were 7.9% as compared to 10.4% for Q3 2023. Margins bounced back to normal historical levels during the quarter as the team transitioned to internal direct labor to properly support task orders and improve margins compared to the 4.3% recorded in Q2 2023. In regard to operating expenses. GAAP SG&A was $26.2 million, a decrease of $0.3 million from the $26.5 million reported in Q3 2022. The decrease was driven by lower benefit expenses and corporate expenses. Net R&D was $14.7 million, an increase of $1.8 million from the $12.8 million recorded in Q3 2022. Backing out menu and non-GAAP adjustments, the growth in R&D is $1.1 million or 7%. The increase is related to personnel hired as we continue to improve and diversify our product and service offerings, including the ramp-up needed for our recent Burger King win.

Sequentially, net R&D expense of $14.7 million in Q3 was down $0.2 million from the $14.9 million reported in Q2 as we continue to appropriately manage the effectiveness of our R&D investments. Total non-GAAP operating expenses was $37 million, an increase of $1.6 million versus Q3 2022. I backing out menu, we are flat versus Q3 2022. As we indicated at the end of 2022, we will continue to manage the growth of our business while keeping 2023 operating expenses flat compared to 2022 exit rate. Net interest expense was $1.7 million compared to $2.1 million recorded in Q3 2022. The decrease is driven by increased interest revenue from our short-term investments in 2023. Now to provide information on the company’s cash flow and balance sheet position.

For the nine months ended September 30, cash used in operating activities was $18.5 million versus $33.6 million for the prior year. The reduction in cash burn compared to the prior year was due to management of net working capital, primarily resulting from improved inventory management as well as the impact of operating leverage resulting from our freeze OpEx. Cash used in investing activities was $4.8 million for the nine months ended September 30 versus $64.3 million for the prior year. Investing activities during the 9 months ended September 30, 2023, and included capital expenditures of $5 million for internal enterprise system software, a $3.4 million for developed technology associated with the restaurant retail software platforms, partially offset by $3.6 million from transfer of short-term investments.

Cash used in financing activities was $1.8 million for the nine months ended September 30 compared to $2 million for the prior year, financing activities for 2023 and was driven by stock-based compensation-related transactions. Days sales outstanding for the restaurant and retail segment increased from 53 days as of December 31, 2022, and to 60 days as of September 30, 2023. We expect DSO levels to come back to historical levels of the lower 50-day range. Days sales outstanding for the government segment decreased from 55 days as of December 31, 2022, to 46 days as of September 30, 2023. As we reflect on our Q3 performance, we delivered on improving margin rates and allowing those margin gains to flow through to the bottom line as we continue to manage OpEx investments to drive profitability improvement.

As Savneet mentioned, we’ve made considerable investments in internal IT and menu development, while not growing the R&D and G&A base in a meaningful way. This reallocation of resources highlights the agility of our team. ARR and corresponding subscription services revenue are our growth drivers, and we are confident there is significant growth runway ahead of us with both cross-sell acceleration and new logo wins such as our recent announcement of Burger King. I will now turn the call back over to Savneet for closing remarks prior to moving to Q&A.

Savneet Singh: Thanks, Brian. Let me wrap up with a few key messages before we open the call for Q&A. We are at a unique point of inflection at par. We believe our business is winning at a higher rate than ever. At the same time, we’re observing a strong change in our financial profile. What makes us even more positive is that we believe we’re just at the beginning of a tidal wave of large deals coming to market, which should provide for long-term sustainable growth. In our next earnings call, we look forward to giving guidance on the details of that growth in addition to more color on our big rollout as well as more detail on our buckets of spend so that you can have clarity on how to get to the rule of 40. Second, as I mentioned earlier, what I think is hidden in our results is that while it looks like we aren’t growing investment spend as viewed by our flat operating expenses, in reality, we’re spending large amounts on menu internal IT and Burger King [Audio Gap] existing expense base.

We are funding tomorrow’s growth engines without net new expense. Third, we are working towards a Rule of 40. This quarter, our adjusted EBITDA was negative $2.6 million. As I mentioned, if we backed out menu from Q3, our adjusted EBITDA would have been positive. Similar to my last point, our core products of Brink, Payments, Punchh and Data Central are becoming very profitable, allowing us to pump money into our growth engines. We are making the investments into MENU Burger King and internal IT because we believe we’ll make a return that far exceeds the investment, and our win at Burger King proven the value of that spend already. This also reinforces the point I made on our Q3 2022 call. I shared that for roughly every dollar of sales and marketing expense, we add about $1 of ARR.

What we’ve shown since then is that for those incremental dollars of ARR, we have not needed to grow R&D, sales and marketing or G&A to take that new revenue live. Meaning that for every dollar of new gross profit generated from this new ARR a dollar has been falling to the bottom line as we have not added new OpEx. I think this highlights the scalability of our business and the underlying true cash flow of each new contract we signed. Adding new customers with our existing product suite requires little to no incremental R&D, sales and marketing and G&A expense. We’re working hard to balance our focus on profitability and between reinvesting in our products to maintain long-term revenue growth and maximize our TAM. But more is to come, and we’ll use that same focus on profitability we have shown on our existing products on MENU once it scales.

This has also given us tremendous confidence to move faster on acquisitions broadly as our playbook is working. In summary, our competitive position has never been stronger. Our strategy is winning and is the right path to this market at the right time. It’s a special opportunity that we are not taking likely. Restaurants need to consolidate vendors, unify their systems and data and PAR is the only player of enterprise scale we think worthy of their trust. In closing, I’d like to thank our global team for their efforts and dedication on their continued success at PAR. With that, I’ll open the call to the Q&A. Operator?

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Q&A Session

Operator: Thank you. At this time, we will conduct a question-and-answer session. [Operator Instructions] Our first question comes from the line of Will Nance of Goldman Sachs. Your line is now open.

Will Nance : Hey, guys. Appreciate you taking the question. And thank you for all the helpful details looking forward to all the new disclosures in the coming quarter. Wanted to maybe start on the BK win. So you mentioned you think this kicks off a wave of Tier 1 restaurants looking to upgrade their technology going forward. Wonder if maybe you could kind of double-click on that. What are you seeing in the market? What do you think the time line is on that wave? And then maybe on the BK win specifically, could you maybe give us a little bit better sense for how the RFP process went for this? How long did it take? How many competitors were in the process? And any color on whether you were seeing more legacy competitors in that process or maybe more challenges like yourself? And then how do you think about the competitive positioning going forward with this win under your belt? Thanks.

Savneet Singh : Yes. So on the first question, we feel like we’re in the beginning of that title wave. I’d say just in this quarter, we’ve seen more RFPs and interest from the largest brands in the world than we have in my entire time at PAR as it relates to POS. And we also see that in loyalty within punch. And so it seems to have kicked off, and I don’t think it was coordinated, but there is this movement by the large players to now look at third-party software, because of the reasons I think we’ve talked about in the past, which is it’s incredibly expensive to maintain your own IT systems. And it’s very hard to keep them modern and the advantage of having a modern software product is you get the benefit of the development we do for everybody.

So I think we see that happening and the RFPs that have kicked off, again, that we’ve been just notified in the last couple of months here are far more than we’ve ever had literally since been at PAR. So it’s very exciting to see that. As it relates to our big win, all processes are competitive and for a deal this large that’s an exclusive and a mandate — it’s incredibly competitive. The competition, I’d say, historically are the large enterprise players. There isn’t another large sort of upstart like ourselves in the enterprise space that can handle the scale volume and innovative demands of a brand as large as BK. And so in the end, I think it came down to one, our product. I think our product sit on its own and I think if you talk to anybody there, I think they would say we went clearly on product.

But two, I think there was a sense of majority, a sense of culture and alignment of, hey, unifying POS is a big project, we want to do it really fast. And I think they felt that really came from who we were in our culture. And they’ve been an incredible partner through that. So I think you showed all the best parts of PAR. It showed our product, it showed our culture, our speed, but also our ability to roll out quickly.

Will Nance: Got it. Very well and then, look, just maybe a question, the contract business, obviously firing on all cylinders right now. And I know you previously said you wanted to make sure that the market appreciated the kind of momentum at that business and the size of some of the recent contract wins. And it keeps getting better. So I guess the question is, is now the time to evaluate a process for that business can the performance get better? And then, I sort of ask in the context of you’ve got a lot going on, huge win now. It sounds like you’re going to be ramping expenses to kind of absorb BK win, you’re talking more acquisitions. I know you’re working on menu as well. So when you think about all that, like how are you thinking about priorities for kind of like simplifying the business and maybe recycling some of the capital?

Savneet Singh: Yeah. No doubt the time is right. And in our Q2 MD&A, you can kind of see we’re continuing on those strategic alternatives for that business, and we’ll push forward aggressively because we do think it’s the right time. And I think we would look to deploy that capital exactly how you suggested. As it relates to ramping up for working and stuff, the beauty of our deal there is that while we ramp up quickly, we’re very quickly compensated for it. So there’s short-term spend a long-term, it’s incredibly profitable. So I’m not too worried about there. So I think the investment will be primarily in M&A for what we’re looking to do. We don’t need to potentially divest the business to fund the go-forward growth we see in menu and in Burger King another large deals.

Will Nance: Got it. That’s very helpful. I appreciate you taking the questions today.

Savneet Singh: Thanks Will.

Operator: Thank you. One moment for our next question. Next question comes from the line of George Sutton of Craig-Hallum. Your line is now open.

George Sutton: Thank you. Savneet, congrats on the BK, so curious in terms of the capacity for what you can rollout, in other words, how quickly you did 1,200 units, this quarter. Can you give us a sense of what the capacity is without substantial cost increases?

Savneet Singh: I would say today, if we did nothing, would be probably double that. Obviously, we’d ramp up what we needed to. This quarter, we’re kind of working out the rollout plans with BK. And so next quarter, I’ll be able to kind of announce how we see that ramp up going. It will be aggressive and it will be a push, but I think a big part of their evaluation of PAR was could we handle that and how we’d handle the burst and overages on expectations. And so I think that was a big part of the reason why we won.

George Sutton: As you’re looking at these large scale RFPs, how many of them are focused on the point of sale versus a broader unified solution as you think of it?

Savneet Singh: I would say they all the time start off as POS and then we’re able to bring in more to the table. And so our goal is to always start every customer out with at least two products. BK was a great example. But I think as I look at the ones coming down the pipe, most of them will also be two product deals. We’ve got one that’s a four-product deal we’re working on right now. And so the market is definitely — my comments when I meant that the opportunity in TAM was the market is kind of now turned to our strategy, I think, there is just this tremendous desire to have simplification, vendor consolidation and I think, I guess at a big part of the reason that we won Burger King was we had the menu offering built into Brink.

And so I think that helped us differentiate ourselves. I think other brands will look at that the same way, particularly if they’re saying, well, you can also do online ordering, and you can also do back office. It helps the story and the ROI equation gets stronger and stronger for the brand.

George Sutton: Just one clarity question. When you get into a four-product deal opportunity, the list of competitors gets extremely short. Is that correct?

Savneet Singh: I don’t think there’s anyone else is generally saying, hey, I can part do this or I can put together three or four other vendors. And you can just imagine in an environment when tech spend is being scrutinized where you’ve got small IT teams, that pitch is pretty attractive.

George Sutton: Understand. Thank you very much.

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

Jeremy Sahler: Hey guys, this is Jeremy Sahler on for Samad Samana. Thanks for taking the questions. On the guest engagement churn, you mentioned it briefly in your opening remarks, it was related to taking menu to the US market. Can you maybe elaborate a little more on that? What exactly do the churn?