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

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Andrew Hart: Thanks. And then on our numbers, it looks like sequentially, ARPU kind of across all three ARR segments was up. We talked about PAR Pay, I think being a driver of that in operator solutions. Anything else to kind of call out on the ARPU side? And then also on guest engagement, kind of the most significant jump there. Is that just a function of kind of lower ARPU Menu customers rolling off or anything you’ve done on the guest engagement ARPU

Savneet Singh: Yes. So it’s payments on the other side, but it’s price. So we’ve continued to become smarter at how we take price on renewal cycles. How do we show value to our customers and then create value for PAR. So it’s price is the other big lever.

Andrew Hart: Thanks.

Operator: All right. Thank you. One moment for our next question. Next question comes from the line of Eric Martinuzzi of Lake Street Capital Markets. Your line is now open.

Eric Martinuzzi: I wanted to revisit the Burger King rollout. I know you’re going to formalize the plans here in Q4. But just curious to know if you got insight on incentives that they’ll be using to motivate the installed base of franchisees to adopt the new product, whether it’s kind of in line with maybe historical large customer deployments or maybe something a little bit greater than?

Savneet Singh: I probably can’t talk about those specifically, just because those are private to them, but I would say they’re very focused on unifying their POS. That’s how they introduce us. That surpassed and the franchise base is so excited for it. What I can say, Eric, is I expect this to be a relatively rapid rollout for business this size. There’s just tremendous alignment between us, between them. And so this is not going to be the kind of chain that sits on this for many years. This will go very quickly. And we’re contracted that way and aligned that way. And so we both want that to happen. And I think that’s why it will happen.

Eric Martinuzzi: Okay. And then a follow-up to that also tied to PK. Curious to note your hardware run rate has been in the neighborhood of $25 million to $26 million or so. Does that change with the deployment with Burger King?

Savneet Singh: It will depend — we’ll see on our next call, we’ll be able to give you a little bit better guidance on that as we’re working through these plans. The Burger King franchisees, something that will absolutely take our hardware in our services, and it will be our push that by 2025, all of them are taking it, but we’ve got to get them there. But it will be a meaningful driver over time of hardware and services. And then I think as we hopefully are able to get to the other RBI brands, it will be a staple to all of them. But it will certainly be a new customer for us to have on hardware and services going forward.

Eric Martinuzzi: Thanks for taking my questions.

Operator: Thank you. One moment for our next question. Next question comes from the line of Kyle Peterson of Needham. Please go ahead.

Kyle Peterson: Great. Good afternoon guys. Thanks for sneaking me in here. Most of my questions have been answered, but I just wanted to ask quickly on the government business here. It looks like the revenue came in really strongly. Were there any kind of onetime task orders or anything that push that to the upside? Or is what we saw in the third quarter a good run rate to use in our models moving forward?

Savneet Singh: Yes. I think from a revenue standpoint, government obviously hitting all cylinders this quarter. I mean, we expect that that was in the upper 30s we expect it to be in the lower 30s on a quarterly basis. The margin, we were able to convert that back over because the team was able to properly manage direct labor where at times, that was being passed through in some of the task orders to a third party. And the team was able to set up internally so that it actually leveraged the internal team, and that gave us higher margins. So now we’re back to what would you expect your 6% to 8% margins, and that’s what we expect to kind of move forward with.

Kyle Peterson: Got it. That’s real helpful. Thanks guys.

Operator: All right. Thank you for your questions. This does conclude the question-and-answer session. I would now like to turn it back to Savneet Singh for closing remarks.

Savneet Singh: Thanks, everybody, for joining us during this exciting time. We look forward to updating you on our next call.

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

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