PAR Technology Q1 2025 Earnings Call Transcript

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Provided by Quartr
May 9, 2025
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Operator

Good day and thank you for standing by. Welcome to the PAR Technology twenty twenty five First 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. To ask a question during the session, you'll need to press 11 on your telephone.

Operator

You will then hear an automated message advising your hand is raised. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Christopher Burns, Senior Vice President of Investor Relations and Business Development. Please go ahead.

Christopher Byrnes
SVP - IR & Business Development at PAR

Thank you, Daniel, and good morning, everyone, and thank you for joining us today for PAR Technologies first quarter financial results call. Earlier this morning, we released our Q1 financial results. The earnings release is available on the Investor Relations page of our website at pardtech.com, where you can also find the Q1 financial presentation as well as in our related Form eight ks 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. A 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.

Christopher Byrnes
SVP - IR & Business Development at PAR

I'd also like 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 morning and in our annual and quarterly filings with the SEC. Joining me on the call today is PAR's CEO and President, Savneet Singh and Brian Menard, 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 and A.

Christopher Byrnes
SVP - IR & Business Development at PAR

Savneet?

Savneet Singh
CEO, President & Director at PAR

Thanks, Chris, and good morning, everyone. We reported $104,000,000 in revenues in Q1, an increase of more than 48% year over year. Significant services revenue increased by 78% in the quarter to 68,400,000 from last year and 20% organic growth when compared to Q1 twenty twenty four. Total ARR was reported at $282,000,000 and grew 52% including 18% organic from Q1 last year. Accounting for constant currency, sequential ARR grew 10,000,000 from Q4.

Savneet Singh
CEO, President & Director at PAR

Alongside this revenue growth, our non GAAP gross profit grew organically by nearly 35% year over year and we ended the quarter with subscription service gross margins of over 69%. Adjusted EBITDA came in at $4,500,000 for the quarter and nearly $15,000,000 improvement from Q1 last year. This is primarily driven by organic improvements excluding M and A showing the tremendous operating leverage we've demonstrated in our core assets. Our commitment to investing in long term duration of profit dollars continues to really play out. Now to dig into our business with further detail.

Savneet Singh
CEO, President & Director at PAR

Total Operator Solutions ARR grew 49% in the quarter with organic growth at 18% when compared to the same period last year. ARR for this business unit now totals $117,000,000 As we messaged on last quarter's call, in Q1, we paused the PAR POS implementation of Burger King in order to recalibrate for a dual PAR POS plus data central implementation with the customer. I'm happy to report that the rollout has since restarted and we are receiving highly positive feedback from corporate and franchisee stakeholders alike. We are forecasting a strong ramp up in the second half with install velocity expected to peak in Q3 and Q4 for both product offerings. Crucially, the BK slowdown this quarter was offset by strong performance on other initiatives within our operator business.

Savneet Singh
CEO, President & Director at PAR

We continue to see a broader and healthy operational buying environment in the marketplace, demonstrated by the signing of five new par POS customers in Q1. Continuing the trend from last quarter, all deals were multi product in nature. The impact of these multi product rollouts has yet to flow into our P and L and will provide a strong will provide strong revenue opportunities in the second half of this year and well into 2026. As we've mentioned before, these multi product deals increase LTV meaningfully without an additional dollar of acquisition cost. Our Better Together thesis is working.

Savneet Singh
CEO, President & Director at PAR

Further, our TASC platform is seeing continued traction under the PAR umbrella. We have been successful in positioning this product align alongside PAR POS domestically as well as standalone to global minded prospects. The TASC platform pipeline is at a record high and we believe PAR's total POS offering now ensure full coverage of the enterprise hospitality POS market. Outside of POS, our Operator Solutions business unit continues to scale via our back office catalog. In March, we successfully launched our new ParOps product line at a large industry conference.

Savneet Singh
CEO, President & Director at PAR

ParOps includes Data Central and the newly acquired Delegate and delivers an enhanced and feature rich back office offering that is calibrated to meet both corporate and franchisee needs. The new and combined PAR ops pipeline is showing strong and consistent growth as enterprise foodservice businesses emphasize back office initiatives to drive operational efficiencies that ensure favorable and improved operating margins and labor productivity. More specifically, we have been successful in positioning delegate related functionality with our existing customers, while similarly cross positioning the existing PAR catalog with the large delegate customer base. Validating this rising importance of back office in today's business environment, I'm excited to announce that we were recently selected by Popeyes Louisiana Kitchen as the preferred back of house vendor for their network of 3,500 plus stores. This news along with the previously reported back office partnership with Burger King underscores our valued and strategic partnership with RBI and validates our investment thesis into operator products.

Savneet Singh
CEO, President & Director at PAR

Par ops has the largest weighted pipeline we have seen to date. We anticipate macroeconomic pressure to continue the ongoing drive of concepts to upgrade their back office technology and optimize efficiency. Now on to payments. In Q1, Part Payment Services continued to drive high transaction counts and processing volumes across our customer base. Despite being a seasonally slower period, Part Payments continued to grow and added five new concepts to its base.

Savneet Singh
CEO, President & Director at PAR

In the quarter, we rolled out Lenny's Grills and Sub, Rocky Mountain Chocolate Factory, Hooters of America and Chatham Canada. Additionally, we saw continued multi product adoption with the signing of Mr. Pickles and Cargo Coffee on both our wallet and ordering solutions. The launch of PAR gift card offering further enabled our customers to benefit from increased customer engagement, operational efficiencies and cost savings. In short, PAR is uniquely positioned and hedged in the market to service both the dual need of revenue maximization and cost control.

Savneet Singh
CEO, President & Director at PAR

Moving to the engagement cloud. In today's environment, where consumers are more wallet conscious than ever, digital engagement is no longer a luxury, it's a necessity. Loyalty programs and personalized digital offers are now central to driving traffic and frequency. We're seeing this shift play out across our platforms, with record growth in engagement and usage. Brands are doubling down on guest engagement and our tools are making measurable impact.

Savneet Singh
CEO, President & Director at PAR

The number of digital offers distributed and loyalty programs users reached, reached record highs in Q1, feeling growth at scale in both restaurant and retail. We believe this trend will accelerate as more businesses move beyond just getting online to investing in infrastructure that provides ROI, operational leverage and actionable guest insights. Winners in the market are embracing seamless identification, appless loyalty, gamification, AI and connected technology. This is where integrated platforms like ours offering a better together approach drive superior outcomes. Our engagement cloud business delivered standout financial performance in Q1.

Savneet Singh
CEO, President & Director at PAR

We exceeded internal targets with ARR increasing 54% including 18% organic growth when compared to Q1 last year. This was driven by our excellent gross retention of over 95% and the addition of a multi product Tier one burger brand. This reflects our ability to execute consistently offering best in class product with better together functionality. Our flywheel is real and gaining momentum across all sectors of par, which positions us for continued success. We're winning multi product deals at an impressive rate.

Savneet Singh
CEO, President & Director at PAR

In Q1, '50 '7 percent of new sign engagement deals were multi product, including punch, ordering and payments. This is a major leap from just 16% in Q1 twenty twenty four. Much of this is driven by ordering. In Q1, we soft launched ordering two point zero, marking our best sales quarter in online ordering in over two years. After a year of deep market analysis and product enhancements, ordering two point zero now offers true enterprise menu management and features like order throttling to help kitchens manage high volumes.

Savneet Singh
CEO, President & Director at PAR

Our latest version of ordering also provides for AI driven upsells, seamlessly leveraging Punch's guest cohort data that enables more personalized upselling and higher check sizes. With over 200,000,000 guests on Punch, we're positioned to build one of the most powerful upsell models in the restaurant industry. Additionally, our new POS import feature ensures real time menu management across all ordering channels, streamlining operations for customers. This is a powerful set of features that we don't believe any point to point integration can solve proving our better together model. In our C store and fuel business, laying the groundwork for our flywheel.

Savneet Singh
CEO, President & Director at PAR

The highlight in Q1 was EG Group's launch of Smart Rewards across 1,500 plus sites. EG anticipates a 275% lift in engagement sign ups this year, which is an outstanding expectation even before their full marketing strategy kicks in. In Q1, we also made our first retail acquisition with the acquihire of GoSkip. GoSkip provides self checkout kiosks and scan and go solutions. Integrating GoSkip into our platform isn't just about adding a feature, it's about bringing our technology in the store.

Savneet Singh
CEO, President & Director at PAR

We've seen in our restaurant business that a connected full stack solution in store and above store truly unlocks the power of data and the business flywheel. GoSkip enhances the utility and stickiness of our digital loyalty solutions, delivering more data, more engagement and the opportunity to attack the growing retail media network. This acquisition is a great way to grow par retail. We see immediate runway to drive incremental revenue within our existing customers and we'll continue to be acquisitive in the convenience and retail industry. Before digging into Q1 hardware numbers, I want to briefly comment on the tariffs.

Savneet Singh
CEO, President & Director at PAR

The uncertainty around these actions along with retaliatory tariffs imposed by other countries have introduced increased volatility in global trade policies and supply chains. Fortunately, after the COVID supply chain disruptions, purposely reduced our reliance on China and distributed our sourcing to other countries in Southeast Asia. On average, we import less than $1,000,000 of peripheral devices per quarter from China. We're continuing to evaluate the current environment and we'll take the necessary steps to mitigate the impacts on our business to the best of our ability. Fortunately, hardware now only comprises 21% of our revenues and so our confidence is high that we can manage and mitigate any negative impacts resulting from the tariffs.

Savneet Singh
CEO, President & Director at PAR

In regards to our hardware business in Q1, we reported improved performance and increased hardware revenues by 20% in Q1 versus the same quarter last year. In the quarter, we saw good demand for our newest platform the ParWave and we are seeing increases in both domestic and global sales. Also contributing to the turnaround was the new ParClear drive thru solution that is setting the standard for drive thru communications and is positioned to be the industry leader in QSR drive thru systems. In summary, we continue to deliver on our Better Together philosophy of multi product innovation, which is core to our go to market flywheel. A great example of this came in Q1 with the completion of PAR POS powered in store loyalty sign up and intelligent upsell.

Savneet Singh
CEO, President & Director at PAR

By leveraging punch code within PAR POS, our customers are able to instantly acquire loyalty customers within the four walls of their restaurant and via AI Insights upsell personalized product offerings. This functionality is keenly desired by our largest customers and recently drove a loyalty upsell into a fast growth Tier one POS concept. Separately, our work on the PAR data platform continues at full speed. PAR's multifaceted product portfolio affords an unmatched breadth and depth of data that when connected unlocks powerful proactive analytics. Not only are we able to leverage AI to produce comparative performance insights, we're also delivering proactive analytics that prompt operators to, for example, to sell expiring inventory via specially designed incentives that maximize profits and minimize operational costs.

Savneet Singh
CEO, President & Director at PAR

In an uncertain future, leading brands want an edge. We utilize smart data to give this edge to them. Our three tier strategy of best in class, better together and open continues to be validated by the market. We believe we are only scratching the surface with our product led cross sell initiatives. But cross sell must also be matched by new logo adoption.

Savneet Singh
CEO, President & Director at PAR

A little over a year ago, post our Burger King win, we had communicated that we had an additional seven Tier 1s in our pipeline. I'm happy to report that since that time, we have now won four of those seven deals and our pipeline has since then been replenished. We think this dynamic will continue, creating a deeper opportunity set to go multi product over time. This holistic approach is a key validation of our platform thesis. In the long run, platforms not point solutions will dominate.

Savneet Singh
CEO, President & Director at PAR

Brian will now review the numbers in more detail. Brian?

Bryan Menar
Bryan Menar
Chief Financial Officer at PAR

Thank you, Savneet, and good morning, everyone.

Bryan Menar
Bryan Menar
Chief Financial Officer at PAR

We started 2025 with the same successful execution of our strategy as we displayed exiting 2024. Subscription services continue to fuel our organic growth and represented 66% of total Q1 revenue. Equally important, our consolidated non GAAP gross margin continued to improve at 54% driven by improved subscription services non GAAP gross margin of 69%, all while continuing to drive efficient leverage of our operating expenses. As a result, for the third quarter in a row, we reported positive adjusted EBITDA reporting $4,500,000 a $14,700,000 improvement compared to Q1 prior year. We are executing to our company plan while also being aware of the ever changing macro environment, analyzing and appropriately adjusting our execution depending upon impacts to our vendors, customers and ultimately to the consumers they service.

Bryan Menar
Bryan Menar
Chief Financial Officer at PAR

Now to the financial details. Total revenues were $104,000,000 for Q1 twenty twenty five, an increase of 48% compared to the same period in 2024, driven by subscription service revenue growth of 78%, inclusive of 20% organic growth. Net loss from continuing operations for the first quarter of twenty twenty five was 25,000,000 or $0.61 loss per share compared to a net loss from continuing operations of 20,000,000 or $0.69 loss per share reported for the same period in 2024. Non GAAP net loss for the first quarter of twenty twenty five was approximately $250,000 or $01 loss per share, a significant improvement compared to a non GAAP net loss of $14,000,000 or $0.47 loss per share for the prior year. Now for more details on revenue.

Bryan Menar
Bryan Menar
Chief Financial Officer at PAR

Subscription service revenue was reported at $68,000,000 an increase of $30,000,000 or 78% from the $38,000,000 reported in the prior year and now represents 66% of total par revenue. Organic subscription service revenue grew 20% compared to prior year when excluding revenue from our trailing twelve month acquisitions. ARR exiting the quarter was $282,000,000 an increase of 52% from last year's Q1 with Engagement Cloud up 54% and Operator Cloud up 49%. Total organic ARR was up 18% year over year. Accounting for constant currency sequential ARR grew $10,000,000 or 3.7% from Q4 twenty twenty four.

Bryan Menar
Bryan Menar
Chief Financial Officer at PAR

Hardware revenue in the quarter was $22,000,000 an increase of $4,000,000 or 20% from the $18,000,000 reported in the prior year. The increase was driven by both Tier one enterprise customers and the continued penetration of the hardware in our expanding software customer base. Professional service revenue was reported at $13,600,000 relatively unchanged from the $13,500,000 reported in the prior year. Now turning to margins. Gross margin was $48,000,000 an increase of 22,000,000 or 86% from this $26,000,000 reported in the prior year.

Bryan Menar
Bryan Menar
Chief Financial Officer at PAR

The increase was driven by subscription services with gross margin of $40,000,000 an increase of $20,000,000 or 100% from the $20,000,000 reported in the prior year. GAAP subscription service margin for the quarter was 57.8% compared to 51.6% reported in Q1 of the prior year. The increase in margin is driven by a continued focus on efficiency improvements with our hosting and customer support contracts as well as accretive margin contributions from recent acquisitions. Excluding the amortization of intangible assets, stock based compensation and severance, total non GAAP subscription service margin for Q1 twenty twenty five was 69.1% compared to 65.7% for Q1 twenty twenty four, demonstrating strong margin growth from our core business. Hardware margin for the quarter was 24.6% versus 22.3% in the prior year.

Bryan Menar
Bryan Menar
Chief Financial Officer at PAR

The improvement in margin year over year was substantially driven by favorable product mix, as well as year over year reduction in expense as we aligned our hardware related workforce with organizational priorities. Professional service margin for the quarter was 25.4% compared to 16.5% reported in the prior year. Increase primarily consists of margin improvement in field operations and repair services substantially driven by improved cost management and reductions in third party spending. In regard to operating expenses, GAAP sales and marketing was $12,000,000 an increase of $1,000,000 from $11,000,000 reported for the prior year. The increase was primarily driven by inorganic increases related to our acquisitions, while organic sales and marketing expenses decreased $1,400,000 year over year.

Bryan Menar
Bryan Menar
Chief Financial Officer at PAR

GAAP G and A was $29,000,000 an increase of $4,000,000 from the $25,000,000 reported in the prior year. The increase was once again primarily driven by inorganic increases, while organic G and A expenses decreased by $1,400,000 year over year. GAAP R and D was 20,000,000 an increase of $4,000,000 from the $16,000,000 recorded in the prior year. The increase was primarily driven by inorganic expenses, while organic R and D expenses increased $400,000 year over year. Operating expenses excluding non GAAP adjustments was $52,000,000 an increase of $9,000,000 or 22% versus Q1 twenty twenty four.

Bryan Menar
Bryan Menar
Chief Financial Officer at PAR

And when excluding inorganic growth, operating expenses actually decreased 3%. The organic decrease was primarily driven by a reduction in sales and marketing expenses. The acceleration of new multi product deals along with efficient execution of cross sell wins is enabling us to realize synergies in our sales operating model. Exiting Q1 non GAAP OpEx as a percent of total revenue was 49.8%, a ten sixty basis point improvement from 60.4% in Q1 of the prior year, as we continue to scale efficiently and demonstrate strong operating leverage. Now to provide information on the company's cash flow and balance sheet position.

Bryan Menar
Bryan Menar
Chief Financial Officer at PAR

As of 03/31/2025, we had cash and cash equivalents of $92,000,000 and short term investments of $500,000 For the three months ended March 31, cash used in operating activities from continuing operations was $17,000,000 versus $24,000,000 for the prior year. Cash usage this quarter was primarily driven by seasonal net working capital needs, including annual variable compensation and an increase of accounts receivable primarily related to an annual contracts we have been collecting post Q1. We expect operating cash flow to improve meaningfully back to positive for the remainder of the year. Cash used in investing activities was $6,000,000 for the three months ended March 31 versus 152,000,000 for the prior year. Investing activities included 4,000,000 of net cash consideration in connection with the tuck in asset acquisition of GoSkip and capital expenditures of $1,000,000 for developed technology costs associated with our software platforms.

Bryan Menar
Bryan Menar
Chief Financial Officer at PAR

Cash provided by financing activities was $11,000,000 for the three months ended March 31 versus $191,000,000 for the prior year. Financing activities primarily consisted of the net proceeds from the 02/1930 notes of $111,000,000 of which $94,000,000 was utilized to repay the credit facility in full. Before handing the call back over to Savneet, I would like to provide some insights on how we are managing the fluid environment around tariffs, international trade and the respective impact they're having on capital expenditure velocity. As Savneet stated, our direct tariff exposure is specifically tied to our hardware business. Our international vendor relationships are primarily with Southeast Asia and we strategically reduced our exposure to China when we address the supply chain challenges resulting from the COVID-nineteen pandemic.

Bryan Menar
Bryan Menar
Chief Financial Officer at PAR

The go forward tariff baseline is still being negotiated with the respective countries, but considering our country allocation exposure, we are in a competitive position and can execute the appropriate supply chain adjustments, while minimizing price impact to our customers. We also continue to analyze potential impact of businesses waiting on the sidelines to make capital expenditure decisions until a clear economic picture emerges. As of now, we have not seen a direct impact, but we will continue to monitor closely. I'll now turn the call back over to Savneet for closing remarks prior to moving to Q and A.

Savneet Singh
CEO, President & Director at PAR

Thanks, Brian. Let me wrap up with a few key messages before we open the call for Q and A. We had a strong Q1 with solid growth, excellent gross margin expansion and adjusted EBITDA. While much of our focus is on revenue, it's really worth highlighting that our OpEx organically came down year over year. Today, our sales and marketing expense is 14% of subscription service revenues and R and D is 26% of subscription service revenues.

Savneet Singh
CEO, President & Director at PAR

Both are now near our long term goals of 1525% respectively. We've continued to show success in cutting expenses while growing at a rapid rate. I believe this margin expansion will continue over time. Earlier, I talked about how our product flywheel is really working as we had more multi product deals this quarter than ever before, repeating the trend from last quarter. While this is an incredible demonstration of our product muscle integrating our acquired products, it's also important to acknowledge the tremendous financial impacts that can come from integrated suite of products.

Savneet Singh
CEO, President & Director at PAR

An often misunderstood aspect of software M and A is that a roll up can create value in simply acquiring businesses. I think that model is flawed as disintegrated roll ups provide value as capital allocation vehicles, not operating vehicles. The underwriting of those investments are really investments in an allocator versus investing behind an operating strategy with defined allocation goals. What I've learned from PAR is that as we acquire new products, we're able to accelerate growth through technology integration in consolidated sales and product teams. When we integrate an acquired product, we make it easier to buy our product, but also prove that two products integrated contain new features unavailable before an acquisition.

Savneet Singh
CEO, President & Director at PAR

This leads to greater sales. As customers buy more products from par, our products become far stickier. It's harder to rip out three integrated products than one siloed module. This stickier base then has a longer and larger customer value, with higher retention, thereby increasing the ROIC of each equity dollar invested and in my opinion suggests arguing for a higher and durable trading multiple than a disaggregated roll up. The key is that each new acquisition actually accelerates growth once integrated, lowers churn and increases the duration of the customer cash flow stream, hence expanding LTV and increasing the value of par far more than standard M and A.

Savneet Singh
CEO, President & Director at PAR

This is why we view our M and A motion as both a product and financial initiative. Today, it's clear that restaurants and foodservice businesses are seeing a slowdown in traffic. To combat this, they will need to embrace more technology. Those that lean in will be the winners. The impact of the macro uncertainty is hard to time.

Savneet Singh
CEO, President & Director at PAR

Today, demand for par products continues to be strong, we're fully prepared to deal with any potential slowdown. We operate in a market where large deals can take multiple quarters or even years to execute, where upfront R and D is at times needed to win large deals and we're maximizing lifetime value of a customer can come at the expense of quarterly metrics. We will always choose the path of maximizing long term value. We are not a reactive organization. We have built an unparalleled sector flywheel.

Savneet Singh
CEO, President & Director at PAR

This will not change irrespective of short term macroeconomic gyrations, tariffs or otherwise. This is the secret of our longevity and why our flywheel is only in its infancy. But this is our time to be aggressive. The fear in the market excites our team at par, because we know this is where we are at our best. While others are fearful, we'll continue to make the investments organically and inorganically to expand and accelerate our flywheel.

Savneet Singh
CEO, President & Director at PAR

As always, I want to thank my PAR teammates for their hard work in making these results possible. At our company, it's our day one mentality that drives our collective hunger and ambition. Thank you for the time this morning, and we will now open the call up for questions.

Operator

Your line is open.

Mayank Tandon
Senior Analyst at Needham & Company

Thank you. Good morning. Submit, it sounds like with the BK rollout and these new deals that you won, there might be a step function in growth in the back half. To that extent, could you speak to the cadence of the growth as we look across the next three quarters and as the go live start to impact your revenue? And in that sense, are you still looking at a 20% ARR organic growth number for the year?

Mayank Tandon
Senior Analyst at Needham & Company

Or do you think it could actually be better because now you have some of these new deals that could go live in the back half?

Savneet Singh
CEO, President & Director at PAR

We're still going to continue to target 20% plus organic growth for the year. What's been really exciting, as I mentioned, is we had those seven Tier one deals we talked about a year a little over a year ago. We won four of them. And I think the most exciting part about the company is that almost all the deals we're signing now are multi product, which create far more revenue than an individual deal in our past. As you suggested, we'll see more impact from these deals and our big POS rollout in the second half of the year.

Savneet Singh
CEO, President & Director at PAR

So I think you'll see gradual Q2s and Q1 be relatively similar, and then you'll see a nice pickup in Q3 and Q4. And I think what's going to be super exciting is that you'll also see significant EBITDA expansion towards the end of the year, because we are now at a scale where we're getting the operating leverage on the individual large customers we launched in the last, call it, twelve months. So it's really exciting second half of the year. And I think given the continually high win rates across these Tier one deals, also makes for a pretty strong 26.

Mayank Tandon
Senior Analyst at Needham & Company

So Amit, then just as a quick follow-up, I would love to hear if you could provide more details on the five new logos of multi product wins. I think you mentioned Popeyes as one of them. I'm assuming that's one of the Tier 1s you won this quarter. But if you could maybe reconcile the two new Tier 1s that I believe you won this quarter because you already had won two last year. And then the five new logos, could you share any ARR metrics around that?

Mayank Tandon
Senior Analyst at Needham & Company

And any other details you can provide on those wins?

Savneet Singh
CEO, President & Director at PAR

Yes, of course. So, let me just clarify the numbers. So, we won five new POS deals in this quarter. We won, I believe, eight in Q4, so there's a bunch of deals that we've won on that side. And then we've won similar amounts on the engagement cloud as well.

Savneet Singh
CEO, President & Director at PAR

So the number of deals is actually quite high. I unfortunately can't talk about any deal size and logo together given contracts and stuff. But generally, what we're finding is that, on these larger deals, we are really well situated to, come in, make an impactful launch and then bring in the second product relatively quickly as we saw at Burger King and others. On these smaller deals, or call it the mid sized deals, that's where we can bundle multiple products at the time of the deal. And so that's the other

Savneet Singh
CEO, President & Director at PAR

part of it, which is

Savneet Singh
CEO, President & Director at PAR

we're kind of balancing these larger deals, are generally single product, then you add in the second product within a year of launch. The mid sized deal is you can sell multi product at the time of the initial sale. So unfortunately, can't actually give sizes on these deals with a specific logo. That's their private information. But like we said in the call, what's exciting is even though we've won the deals that we talked about a year ago, the pipeline has been replenished pretty meaningfully.

Savneet Singh
CEO, President & Director at PAR

And so it's sort of the digital transformation within the underlying category continues to be there.

Operator

Thank you. Our next question comes from Stephen Sheldon with William Blair. Your line is open.

Stephen Sheldon
Research Analyst - Technology, Media & Communications at William Blair & Company, L.L.C

Hey, good morning. Thanks for taking my questions and congrats, a big congrats on the sales momentum. First, it looks like reported ARR for the third and fourth quarter were brought down just a touch relative to what you reported last time. Can you give some detail on that? I guess it has something to do with acquired ARR, but just any additional context there would be great.

Savneet Singh
CEO, President & Director at PAR

It's actually FX. So the business we acquired in the second half of last year, Task is almost entirely revenue from outside The United States, and so it's the FX adjustments.

Bryan Menar
Bryan Menar
Chief Financial Officer at PAR

And so when you really account for the constant currency, Stephen, that's where I kind of referenced there the earnings and going from Q4 to Q1, we saw the $10,000,000 3 point 7 percent incremental growth on constant currency.

Stephen Sheldon
Research Analyst - Technology, Media & Communications at William Blair & Company, L.L.C

Okay. Got it. Thanks. And then maybe following up on the last question. I mean, you've got a lot of encouraging wins here.

Stephen Sheldon
Research Analyst - Technology, Media & Communications at William Blair & Company, L.L.C

And if we're just assuming somewhat reasonable implementation schedules, I guess, do you have any early read on what organic ARR growth could potentially look like next year? Or just generally, how much visibility do you have now, especially with the four Tier one wins that you've talked about? Do you already have good line of sight to over 20% growth next year given what you've already won?

Savneet Singh
CEO, President & Director at PAR

I don't think we have enough visibility the May for '26 yet. What I would say is we feel really good right now, because not only are we winning these deals, but we're also attaching multiple products, right? And so the value of the deal is higher than we've been historically been used to, where it was usually one deal, one deal, now it's sort of two. So right now, don't think we can sort of say, hey, we're there, but I think we're certainly going to shoot for it given what's happened so far.

Operator

Thank you. Our next question comes from Will Nance with Goldman Sachs. Your line is open.

Will Nance
Will Nance
Vice President at Goldman Sachs

Hey, I appreciate you taking the question. I appreciate the detail on FX. I think that may have got lost in some of the morning shuffle. So if I'm hearing that right, sounds like a lot of is it Australia dollar? I mean, I think most currencies have weakened year to date, but I think the Aussie dollar is actually stronger year to date.

Will Nance
Will Nance
Vice President at Goldman Sachs

So just wanted to confirm that that's the case, and maybe you could give us an update on the currency exposure so we could think about constant currency going forward.

Savneet Singh
CEO, President & Director at PAR

Yeah, that's right. So, it's New Zealand dollar and Australian dollar, New Zealand actually bigger, and so that's where the FX hit. If you adjust for constant currency, the sequential ARR growth was $10,000,000 So, it does have an impact going forward.

Will Nance
Will Nance
Vice President at Goldman Sachs

Yep. That makes sense. That makes sense. Okay. Did you have a number on just like the percentage of ARR that is outside of The U.

Will Nance
Will Nance
Vice President at Goldman Sachs

S?

Savneet Singh
CEO, President & Director at PAR

Twenty Five Percent,

Savneet Singh
CEO, President & Director at PAR

Twenty Percent.

Bryan Menar
Bryan Menar
Chief Financial Officer at PAR

It's less than that.

Bryan Menar
Bryan Menar
Chief Financial Officer at PAR

It's just under 20%.

Savneet Singh
CEO, President & Director at PAR

It's under 20%.

Will Nance
Will Nance
Vice President at Goldman Sachs

All right. Very helpful. Appreciate that. Okay. And then just an update on the competitive environment.

Will Nance
Will Nance
Vice President at Goldman Sachs

You've seen some of the down market competitors make some traction upmarket. What are you seeing in the RFP processes and any notable changes in conversations?

Savneet Singh
CEO, President & Director at PAR

I think we're really happy with our competitive position. Certainly, table service deals, as we've talked about in the past, we're growing in there and I think starting to make real impact into those sales processes. These are those ones in particular are very long sales processes. That's where we see some competitive positioning. But nothing that I think is worrying us in that when we're head to head in the lab with a customer, I can't think of a time where the customer said we don't have the product to win.

Savneet Singh
CEO, President & Director at PAR

Now, that doesn't mean we always win. There might be economic things that change there. There might be relationships. But generally from a product perspective, we feel really strong. And I think in the end, in enterprise software product wins.

Savneet Singh
CEO, President & Director at PAR

So we feel really, really good. And as I mentioned, on these Tier one deals, we're still winning at a very high clip. And so I feel pretty good right now, but we obsess over every little competitor too. So we're constantly kind of seeing how we stack up.

Operator

Thank you. Our next question comes from Andrew Hart with BTIG. Your line is open.

Andrew Harte
Director & FinTech Analyst at BTIG

Hey, thanks for the question. Sidney, you talked a lot today, I think, about just multi product adoption. I guess, when you think about how the PAR platform as a whole has evolved over the past year or so with all these different solutions and different ways to serve customers, what is the cross sell opportunity or pipeline look like? I guess, like, would fully baked ARPU look like for a customer versus what it's like today? Just trying to get an idea of what the penetration of that cross sell is and how much room for growth there is going forward.

Andrew Harte
Director & FinTech Analyst at BTIG

Thanks.

Savneet Singh
CEO, President & Director at PAR

Yeah. I think Brian and I have said this before, is we could if every customer bought every product, it's at least a 4x from where we are today in our revenue. So it's really, really meaningful. Now that won't happen. There are certain customers that that won't happen, but there's a lot of opportunity.

Savneet Singh
CEO, President & Director at PAR

And the critical part, Andrew, why I've been the last two quarters been talking about this is that there's two elements to this. The first is our products being integrated in a way that makes competitive dynamics to the last question incredibly favorable. I referenced this in the call, but we had a really unique customer win this quarter where we won a really, really impressive large tier one chain because they realized that they could have their loyalty data, if you will, at the POS. And so if you combine Punch and PAR POS in store, your cashier can be prompted with AI suggestive upsells. They can see the loyalty data, loyalty points prompt you, same with the drive thru.

Savneet Singh
CEO, President & Director at PAR

That's an example of what we may think is simplistic functionality that nobody else really has right now. And I think that's just crazy powerful. And so as we build these technical features that combine the products, it really makes the cross sell a lot easier because then it's almost like, how can I not choose that because I can't get these sets of features and functions? So one is that sort of technical integration that's now coming out from par that is really exciting and leading to the cross sell. So it's not that we've amped up sales.

Savneet Singh
CEO, President & Director at PAR

In fact, our sales team has come down in size and gotten more efficient. It's that technical side that's actually winning the deals. And same on the ordering side that I spent some time on today, which is really growing nicely. The second part of the multi product side is the resulting financial impact. Now as I mentioned, we haven't seen that flow through the P and L yet.

Savneet Singh
CEO, President & Director at PAR

That's why I'm really excited for the second half of the year in 2026. But when you sell two products for the price of one, if you will, on the acquisition cost, it really is highly, highly profitable. So we still have that really interesting lever as it relates to our profitability in the next couple of years here.

Andrew Harte
Director & FinTech Analyst at BTIG

Great. Thanks. And then maybe just following up on some of the questions that have been asked on ARR growth. Obviously, think a lot of puts and takes. I'm just hoping to maybe dissect it a little bit more.

Andrew Harte
Director & FinTech Analyst at BTIG

I guess, on the first part of the delayed Burger King to expand the relationship, I think everyone's in agreement. That's great. I guess, can you help us understand maybe what the the headwind to growth would have been in or was in one q from the pause on Burger King? And it's nice to hear that it's turned back on. And then the second half of it, talked about there's a lot of other areas where the flag was made out.

Andrew Harte
Director & FinTech Analyst at BTIG

Part of it was like the seven tier ones in the pipeline a year ago, four of them have gone live. So, Nick, can you just talk about the implementation timeline for those? Like, does that give you do those four wins give you two years of solid ARR growth, three years? Just trying to think about the durability of ARR growth over beyond the next couple of quarters.

Savneet Singh
CEO, President & Director at PAR

Sure. Let me do the second first. So those four that we won, they've been won, not rolled out. So there's still a lot of revenue to come. So just a quick clarification, which again is probably, I think, really exciting, which is those deals, for the most part are not driving the growth that we saw in this quarter.

Savneet Singh
CEO, President & Director at PAR

Those are still to come. So that's really exciting. And I think as far as durability of revenue growth, that's where we feel really strong today, because we see that we have these deals rolled out plus the other deals that I mentioned on the call that we've won. So I think for the next couple of years we see pretty strong revenue growth where we've got a nice backlog, if you can call it backlog, to get rolled out. The timeline to roll out a deal varies significantly.

Savneet Singh
CEO, President & Director at PAR

From our engagement side of our business, it's about six months from signing to launch to get it live. That's been pretty consistent since we've acquired and worked on the Punch product line. On the POS side, from the moment you sign the deal, we usually guide that if you're a thousand store chain, it takes us about a year to get you live, provided we have your commitment and support. And for larger chains, they can take two years. But those ones are a little harder to forecast because you're working in tandem with the corporate, but those ones give you longer visibility because you're rolling out over time, kind of like we're doing on Burger King.

Savneet Singh
CEO, President & Director at PAR

To your first question, I feel really great. Without our biggest customer rolling out, we still hit 18% growth really comfortably without any other those big deals going. So I think that just shows we don't need to depend on large mega deals to still grow at pretty high rates. So I was really happy with the quarter.

Bryan Menar
Bryan Menar
Chief Financial Officer at PAR

I think I would just add to what Savneet said there too is the fact that now we're seeing some acceleration on the flywheel for the cross sell. As that becomes a bigger percent of our total growth that comes over, that kind of fills in the gaps that may cap in between these large sales cycles and some of these larger logos. So it helps to smooth out the ARR growth as go forward.

Operator

Thank you. Our next question comes from Samad Samana with Jefferies. Your line is open.

Samad Samana
Samad Samana
Managing Director at Jefferies Financial Group

Hey, good morning. Appreciate you guys taking the questions as always. Maybe first, Savneet, appreciate the commentary on what differentiates your M and A strategy versus maybe some other companies that have a kind of a more of a financial sponsor type of view on M and A. And maybe if I build on the question, just as we think about all the transactions that you guys have done and the balance sheet where it is today, if you think about future potential M and A, especially if you think about something transformative, are one, I guess, are you thinking about an opportunity like that? And if so, should we think about it as something like how would you think about approaching the balance sheet just given the where you've already spent capital recently?

Samad Samana
Samad Samana
Managing Director at Jefferies Financial Group

Just maybe any color there. And then I have

Samad Samana
Samad Samana
Managing Director at Jefferies Financial Group

a follow-up as well.

Savneet Singh
CEO, President & Director at PAR

That's a great question. So short answer is, we're going to be aggressive. I think, Samad, we're a company that's constantly sort of assessing where are we great and candidly where do we suck. And one of the things that we learned in kind of that really transparent environment is how do we continue to make our M and A better and better.

Savneet Singh
CEO, President & Director at PAR

And I think what I can say to you is because we're so obsessed on the products fitting within par, we haven't made a lot of mistakes. If look at our M and A deals, I sort of think we've really, really got it right. And a lot of that is the integration of the people. If I look at the acquisitions we made last year, we've retained well over 90 plus percent of those employees, well over. And that's kind of rare.

Savneet Singh
CEO, President & Director at PAR

And that's allowed us to kind of build the momentum from the flywheel from the product side. So that foundational point is we're going to do it again and again. And I think the transformative deals are exciting to us if they fit a product rubric that allows us to create more value to the customer. Because in the end, if we combine the products together and we create more value to the customer, we can then take more value back to par and our shareholders. So we'll absolutely do that.

Savneet Singh
CEO, President & Director at PAR

How we fund that I think is really dependent upon a few things. One, what's our cost of capital of the levers that we have at the time that we're making the deal? And so if we're buying a business at a multiple that's meaningfully discounted to our equity, we look to use equity. If it's a smaller transaction like we did with Skip this quarter, we're comfortable using cash on the balance sheet. And then I think given the success we've had in the convert market, we can continue to at the convert and debt markets.

Savneet Singh
CEO, President & Director at PAR

It really, really is dependent on what's our cost of capital at that time. And then looking at that lens of what doesn't limit our flexibility going forward. Because I think as you've seen with us, we've gone through a period of two years doing nothing and then one year doing two or three deals. And so it's that combination of lowest cost of capital that doesn't mess up our flexibility for the future, is kind of how I think about it.

Samad Samana
Samad Samana
Managing Director at Jefferies Financial Group

Appreciate that. And also I appreciate that you use the industry standard of where do we suck to judge as well. Same here about myself. And then maybe just a follow-up for Brian. If I think about the if I just this is more of a housekeeping question than anything else.

Samad Samana
Samad Samana
Managing Director at Jefferies Financial Group

It looks like in the slide deck maybe the ARR was revised for some of the historical numbers. I just wanted to know is there any kind of divestiture or is that being rebased because of currency? Just trying to understand what changed in the slide deck for the historical numbers. I'm curious if you knew off the top of your head.

Bryan Menar
Bryan Menar
Chief Financial Officer at PAR

Yes, it's purely related 100% to the FX currency, and that's why we referenced the constant currency. So you saw that in Q3, Q4 post the acquisition of TaskPlutcher.

Operator

Thank you. Our next question comes from Charles Nabin with Stephens. Your line is open.

Charles Nabhan
Research Analyst at Stephens Inc

Good morning and thank you for taking my question. Sounds like you're getting a lot of good traction in the payments business. My question there is, I know a few quarters ago, you had mentioned that payments was still a bit dilutive to adjusted gross margin. I wanted to just get a sense for the impact on gross margin from the payments business, as well as any color you could provide around the size of payments relative to either subscription revenue or total revenue.

Savneet Singh
CEO, President & Director at PAR

Sure. So, payments are still dilutive to gross margin, but going in the right direction. So, as you can see, we continue to have nice gross margin expansion. And so, even though payments is not yet at the company wide gross margins, it's working its way up there. In totality, payments is still less than 10% of revenues.

Savneet Singh
CEO, President & Director at PAR

And remember, critical to us, we collect payments or we report payments on a net basis. So it's still small, but it's working its way there. I think once it gets to a meaningful size, we'll start breaking it out. But we're not yet at 10% of total revenue, which is exciting because we have a lot of penetration still to go.

Charles Nabhan
Research Analyst at Stephens Inc

Got it. And as a follow-up, appreciate the comments on tariff exposure and sounds like you've made some actions over the past few years that help alleviate that headwind to some degree. But as we think about that exposure, could you give us a little color around how quickly that book, the hardware book turns over? I assume the exposure lies in your incremental deals as well as the contracts that are coming up for renewal. So any color around how that flows through would be helpful.

Bryan Menar
Bryan Menar
Chief Financial Officer at PAR

Yes, sure. I'll answer that and then certainly can fill in the blanks. But we also make sure again, on our contracts, right, that we have the ability to have flexibility and pricing when there's exposure to things such as tariffs. But at the same time, we also make sure, especially because of that hard, high hardware attachment rate to software as well. And we work with the customers come to the right resolution.

Bryan Menar
Bryan Menar
Chief Financial Officer at PAR

So I think we're feeling comfortable on where we are from a country exposure standpoint. We're being open with all customers on where like we're seeing this move. And I think it's been good conversations. We don't see there being an issue. And then I think also from a supply chain standpoint, we make sure that we have able to kind of pull in as well.

Bryan Menar
Bryan Menar
Chief Financial Officer at PAR

And so we've been able to lock in some pricing and pull in some of our POs that we wanted later in the year, so that we could actually service our customers and many of our customers remembered how we were able to supply them back in COVID where others couldn't. And so we've also started seeing POs come in from our customers to help leverage that.

Operator

Thank you. Our next question comes from Adam Wyden with ADW Capital. Your line is open.

Adam D. Wyden
CIO & Founding Partner at ADW Capital

Yes. Okay. So a couple of things just to clarify. You said that the four out of the seven are not rolled out. Now can you clarify, are you talking about new Tier one logos that you haven't won?

Adam D. Wyden
CIO & Founding Partner at ADW Capital

I guess would you like so Popeyes Data Central is not included in that. But like for example, if you had won Wendy's point of sale, could that be that even though you have Wendy's punch? I'm just trying to understand how you sort of think about the Tier one logos. Are they brand new logos that you haven't penetrated at all in any capacity? Or is it like a major could it be a major product like Wendy's point of sale, like, that you don't already have?

Adam D. Wyden
CIO & Founding Partner at ADW Capital

Do you understand what I'm saying? Like, and how do you sort of define tier one logo?

Savneet Singh
CEO, President & Director at PAR

Sure. So, the seven logos are ones we refer to, I think on our about a little over a year ago after 1BK when we were talking about the pipeline, we had said we were in the process, RFP process of seven new customers. Of those, we won four. And we define Tier one as a thousand stores and above. They would be of those seven, six would be net new logos, one would be major upsell into an existing customer.

Savneet Singh
CEO, President & Director at PAR

So six of the seven will be net new logos to par.

Adam D. Wyden
CIO & Founding Partner at ADW Capital

Okay. And just to clarify, then I have one other question. You're saying the four out of seven have not been rolled out, but then you also sort of said your pipeline has been replenished. So on top of that, you would argue that even though you won those four out of seven, you have another four Tier one logos that are in RFP. Is that sort of how you define it being replenished?

Savneet Singh
CEO, President & Director at PAR

Yeah. So I'd say we're, of those four, one has been rolled out, not entirely, and then we've got three coming. And then, as far as pipeline being replenished, on a weighted average weighted dollar basis, which is the way that we look at pipeline, the dollar value of the pipeline is more than it was when I made that comment over a year ago.

Adam D. Wyden
CIO & Founding Partner at ADW Capital

Okay, amazing. And then a little bit more on M and A. Obviously, you've done a really nice job on M and A. Obviously, you've sort of said you want to be the largest sort of player in restaurant tech. I'm just curious like can you talk about sort of some of the things that you think might be coming to market?

Adam D. Wyden
CIO & Founding Partner at ADW Capital

And obviously, know it has to be product specific and it has to be sort of integrated. But I mean, if you were to say like what would an ideal par look to you like in three to five years? Like, what would sort of be the margin structure and and growth rate and sort of scale? I mean, I'm just curious sort of, like, if you had a canvas and you could say, This is what the business could look like in five years. Like, what does that look like to you?

Savneet Singh
CEO, President & Director at PAR

You know, It's an impossible question because if you asked me five years ago, I'm not sure I would have designed where we are today. I would been wrong and happy with what we have today than what I would have guessed five years ago. What think is going to happen when we're shooting for a par is we are really ambitious team. Candidly, if we just stay in our swim lane, I think we'd all be disappointed about what we accomplished. And so I think if you look at us three to five years from now, I suspect that we'll be running the same playbook we've done in restaurants, in the retail space as we've just started there, and other adjacent categories where we truly are not the restaurant leader, but the dominant food service leader across many categories more.

Savneet Singh
CEO, President & Director at PAR

And so, you and I have talked about my love of certain businesses like Roper and others. I think we want to do that, but we want to do that in a more industry specific manner. Because as I mentioned on the call, I think what I've learned at par is that when you can integrate M and A and create true revenue growth plus stickier customers and that integration is really critical, believe you actually deserve a higher multiple because essentially, every acquisition actually makes your business better because it increases the lifetime value of an individual customer because whether they're more sticky or you can increase revenue, so on and so forth. And so I think that's the way that we think about it. And so I would love to create the next version of one of those businesses, but each vertical will be very, very integrated like we've done in Park, and I think that's really served us well.

Operator

Thank you. Our next question comes from George Sutton with Craig Hallum. Your line is open.

George Sutton
Partner & Senior Research Analyst at Craig-Hallum Capital Group LLC

Thank you. Particular congratulations on the Mr. Pickle Steel. Sabine, I'm curious when we talk about the better together in the context of how the RFPs are coming into you. My assumption is the RFPs are typically around one specific area.

George Sutton
Partner & Senior Research Analyst at Craig-Hallum Capital Group LLC

And then through that process, you try to cross sell or after that process, try to cross sell. Do you see a scenario where the RFPs graduate to a more mature thought around a broadened technology suite that really limits the potential to you as the provider?

Savneet Singh
CEO, President & Director at PAR

That's an amazing question. The short answer is yes and yes. So RFPs come in, they're generally single product in nature and then we work to sort of introduce the other products and hopefully then convince them to do that. But the reason why I said your question is fantastic is what you just described is what we're seeing happen today. Historically, the deals were here's an engagement deal, here's a POS deal, today those are colliding into one.

Savneet Singh
CEO, President & Director at PAR

We actually are seeing more and more customers collapse the digital, which would be the digital side of restaurants historically has been the, call it, the marketing and IT world. And the operational side would be the operators in the IT world kind of merge into one buyer. And that has been really, really instructive in how we think about our own business and continuing to collapse and consolidate what we do internally. And so the short answer is we push it the way you describe. I believe the market is moving to the way where it will be combined offerings and actually saying, Hey, I want these outcomes.

Savneet Singh
CEO, President & Director at PAR

Show me how your products get to these outcomes versus give me just a back office solution.

George Sutton
Partner & Senior Research Analyst at Craig-Hallum Capital Group LLC

Got you. And just one question for clarity. You mentioned that 57% of your deals were multi product this quarter versus, I believe, you said 16% just a year ago. Just wanna make sure I heard those numbers. To me, that's an amazing message if that's the case.

Savneet Singh
CEO, President & Director at PAR

So it's even better than that. So, in the operator solution side, so we we run the two separate business units, as you know. In the operator solutions side, 100% of deals have been multi product the last two quarters. That's just really off the charts. On the engagement side, we're up to 57 of new deals are multi product, up from 14%.

Savneet Singh
CEO, President & Director at PAR

So it's really, really been exciting. A lot of that's been driven by we rebuilt the par ordering product and that is now being attached into a meaningful amount of deals. So yes, that's why I sort of talked about it a lot on this call. And again, it's apropos to your prior question, right, which is that the market is kind of coming in that direction.

George Sutton
Partner & Senior Research Analyst at Craig-Hallum Capital Group LLC

Perfect. Thank you.

Operator

Thank you. Our next question comes from Eric Martinuzzi with Lake Street Capital Markets. Your line is open.

Eric Martinuzzi
Senior Research Analyst at Lake Street Capital

Yes, curious to know on the Power Ops product, which

Eric Martinuzzi
Senior Research Analyst at Lake Street Capital

is

Eric Martinuzzi
Senior Research Analyst at Lake Street Capital

the amalgamation of the Data Central and Delegate, Prior to the acquisition of Delegate, what was the ARR for a typical Data Central location?

Savneet Singh
CEO, President & Director at PAR

About $1,500 a year.

Eric Martinuzzi
Senior Research Analyst at Lake Street Capital

Okay. And then what does that expand to if someone adds on Delegate,

Eric Martinuzzi
Senior Research Analyst at Lake Street Capital

or is it just bundled in now?

Savneet Singh
CEO, President & Director at PAR

So Delegate has a couple of different modules. So it's anywhere from, call it, 500 up to 1,314 hundred dollars depending on by all three modules or just one.

Eric Martinuzzi
Senior Research Analyst at Lake Street Capital

Got it. And then a question regarding the hardware. Was there any evidence of people pulling ahead orders in Q1 in anticipation of potential tariff related inflation?

Savneet Singh
CEO, President & Director at PAR

We

Savneet Singh
CEO, President & Director at PAR

see that in Q2. So we did see some of that happen in Q2. So we think Q2 will be strong from a hardware perspective. But as Brian mentioned, is 20 ish percent of our business now. And so we don't look at that as having tremendous impact quarter to quarter.

Savneet Singh
CEO, President & Director at PAR

Think that's the beauty of it, is the tariffs, scary for some, we feel we're going to manage it really well. And I think the team did such a good job during COVID that we've really got redundant supply chains, very little exposure to China. And so we have seen some of that. I think we'll see maybe a little more throughout this quarter, but I think we expect the hardware to continue to be strong for at least Q2 and hopefully the rest of the year. But we haven't I don't think we and Brian have yet seen orders getting pushed out because of hardware cost.

Savneet Singh
CEO, President & Director at PAR

And I think that the result of that is because we've been able to avoid the China tariff.

Eric Martinuzzi
Senior Research Analyst at Lake Street Capital

Got it. Thank you.

Operator

Thank you. Our next question is a follow-up from Adam Wyden with ADW Capital. Your line is open.

Adam D. Wyden
CIO & Founding Partner at ADW Capital

Hey, thanks guys for taking my question. On this, I know you guys talked about the rebasing of the ARR of about, I guess, was like $3,500,000 for constant currency. Can you talk about what the effect on EBITDA was in the quarter and what the actual effect on revenue was? Because it looks like you would have made a lot more EBITDA and a lot more revenue on a constant currency basis. And then as you sort of expect, like you're going to have higher incremental margins going forward as the other businesses are sort of growing sort of going forward.

Adam D. Wyden
CIO & Founding Partner at ADW Capital

Can you just talk a little bit about that?

Bryan Menar
Bryan Menar
Chief Financial Officer at PAR

Yes, good question, Adam. I think from an EBITDA step or from a revenue standpoint would have impacted probably about a million from an FX exposure standpoint. And then you're roughly load that call 700,000 and change from an EBITDA there.

Adam D. Wyden
CIO & Founding Partner at ADW Capital

Right. Okay. Got it. Great. That's it.

Operator

Thank you. I'm showing no further questions at this time. I would now like to turn it back to Christopher Burns for closing remarks.

Christopher Byrnes
SVP - IR & Business Development at PAR

Well, you, Daniel, and thank you to everyone for joining We look forward to updating you further in the coming weeks and days. Please have a great weekend and have a nice day.

Operator

This concludes today's conference call. Thank you for participating. You may now disconnect.

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Key Takeaways

  • PAR reported $104 million in Q1 revenue (up 48% YoY), subscription services revenue of $68 million (up 78%), ARR of $282 million (up 52% including 18% organic), and delivered $4.5 million in adjusted EBITDA, a $15 million improvement from last year.
  • The “Better Together” multi-product flywheel drove record cross-sell rates—100% of new Operator Solutions deals and 57% of new Engagement Cloud deals were multi-product, boosting customer lifetime value without extra acquisition cost.
  • Operator Solutions momentum continued as the Burger King POS rollout resumed with a strong H2 ramp expected, the ParOps back-office suite launched, and PAR was named preferred back-of-house vendor for Popeyes’ 3,500+ stores.
  • Engagement Cloud ARR grew 54% (18% organic) with record loyalty and digital offer distribution, and the soft launch of Ordering 2.0 introduced enterprise menu management, order throttling, and AI-driven upsells powered by Punch data.
  • PAR Payment Services added five new concepts and launched a gift card solution, while the GoSkip acquihire expanded PAR’s footprint into retail self-checkout and scan-go, laying groundwork for further convenience-store and retail acquisitions.
AI Generated. May Contain Errors.
Earnings Conference Call
PAR Technology Q1 2025
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