PAR Technology Corporation Q3 FY2025 earnings call

• Growth and Profitability: Q3 revenue $119 million, up 23% YOY. Adjusted EBITDA $5.8 million, adjusted to $6.6 million when excluding non-period costs. Non-GAAP OpEx 44% of revenue, down from 60% 18 months ago. - ARR: Hit $298.4 million at end of Q3, up 15% organically. - AI Initiatives: Launched PAR AI, including Coach AI and AI chatbot support, embedding AI into operational workflows. - M&A: Opportunistic approach to M&A given compressed multiples in the market. - Backlog and Pipeline: Large backlog and late-stage Tier 1 pipeline, providing visibility for future growth.

Operator Cloud: ARR increased 31% year-over-year, including 14% organic growth. Burger King implementation cadence accelerated. POS Business: Performed exceptionally well, with Burger King implementation on track. OPS Platform: Ramped into Burger King and large Tier 1 enterprise, launched Coach AI and AI chatbot support, expanded international functionality. Engagement Cloud: ARR grew 16% from Q3 last year, including 15% organic growth. 70+% of new deals were multiproduct. PAR Ordering: Biggest win quarter to date with 6 new customer wins, including a 400+ location enterprise chain. PAR Retail: Had standout quarter, hit integration milestones, launched new features, added 4 enterprise wins. Subscription Services: Represented 63% of total Q3 revenue, grew 25% year-over-year. Hardware Revenue: $30 million, up 32% year-over-year due to hardware attachment and pulled-forward demand. Professional Service Revenue: Relatively unchanged from prior year.

• Target mid-teens organic ARR growth in the short term. - Expect Q4 to show incremental ARR growth. - Aim to accelerate growth in 2026 and beyond with AI initiatives and large Tier 1 deals.

• Uncertainties related to future events and market conditions affecting actual results. - Impact of tariffs on hardware margins, though pricing adjustments are being implemented. - Execution risks related to large Tier 1 deal rollouts and integration of acquisitions.

Q: Thoughts on ARR growth shift from 20% to mid-teens?

A: First half was slower, targeting mid-teens with momentum in AI and large deals.

Q: M&A opportunism?

A: Opportunistic due to compressed multiples in the market.

Q: Sequential ARR trends in Operator Cloud?

A: Back-end weighted rollouts, no significant churn.

Q: PAR Ordering segment?

A: Big win quarter with 6 new customers, including a 400+ location chain.

Q: Hardware margin impact from tariffs?

A: Pull-in of orders before tariff impact, pricing adjustments implemented.