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Good afternoon and thank you for standing by. Welcome to PAR Technologies First Quarter 2023 Financial Results. 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] As a reminder, today's conference is being recorded. I would now like to hand the conference over to your host today Chris Byrnes, Senior Vice President of Business Development. Go ahead, Chris.

Thank you, Eric, and good afternoon, everyone, and thank you for joining us for PAR Technologies first quarter 2023 financial results call. 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 Q1 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. 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. I'd also 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, I'd like to remind everyone that the call is being recorded and it will be made available for replay via a link available on the Investor Relations page of the 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?

Thanks, Chris, and good afternoon. Par is off to a solid start in 2023, delivering strong results in our first quarter. Restaurants of all types and at all stages are using PAR as their growth enabler, leveraging our unified commerce technology to solve their most challenging business obstacles. These restaurants range from emerging growth brands all the way to established enterprises. Today, I'd like to focus my comments on our recent quarter performance, a view of what our customers are looking at for their technology initiatives. And then finally, a look forward to the rest of 2023 and beyond, touching on the macro environment we're observing and our own internal initiatives. We continue to deploy our unified commerce platform to help restaurants of all sizes improve operations and enhance the restaurant guest experience. Unified commerce drives our most important KPI, customer satisfaction, which leads to longer LTVs and a greater TAM over time. At the end of Q1, ARR reached $116 million, delivering a 23% year-over-year increase, demonstrating the continued growth and scaling of our subscription services engine and contracted ARR now stands at $131 million. Importantly, when adjusting for one-time items such as severance, this growth came with no increase to operating expenses from Q4 2022. Operator Solutions ARR grew 27.4% to $45.2 million in Q1 when compared to the same period last year. During Q1 Operator Solutions added more than 1100 new store activations and new bookings total approximately 1200. Churn continues to be extremely low at 4% annualized for Brink in the quarter. With the recent wins in table service and significant strength in our new customer pipeline, Brink is positioned well to continue scaling. The table service momentum is real and the first two deals I mentioned on the Q4 call are gearing up for launches at the very end of this year and into '24. While the ramp up to take these customers lives is long, the ARR contribution will be meaningful. In addition, we find ourselves with the largest sprint customer pipeline in our history, suggesting continued resiliency within our customer base. Payments continues to be an important part of our growth for operator solutions and unified commerce. Rolling out new payment customer sites was slower in Q1 than we expected, but we're recouping some of that delayed business in Q2. Progress is being made and we should see improvement through the remainder of this year. We are confident that as we cross-sell and upsell payments to all new Brink deals and existing customers, we will continue to see significant customer wins in ARR acceleration. Combine this with a set of new payment offerings including One Tap Loyalty and an improved gateway. This is a strong indication for continued momentum. Moving to Guest Engagement ARR that includes our leading customer engagement platform Punchh and newly acquired MENU. Guest Engagement ARR grew 18% in Q1 when compared to Q1 '22 and totaled $59.4 million. As we talked about last quarter, Punchh, while being the leader in loyalty for restaurants is currently experiencing a slowdown in the marketplace as marketing development funds have been impacted, in turn, delaying rollouts and slowing down new customer opportunities as RFPs are deferred for later in the year. We also recognized some expected churn in the quarter. This was well mapped out and we'd argue in the bucket of healthy churn for both us and the customer. Active store count on a year-over-year basis still increased by 16% and we believe business will improve as the year progresses. In the quarter, we signed some return customers, customers who for whatever reason had in previous years churn and are now re-signing with Punchh as they have realized Punchh is best-in-class. We are also having success upselling additional Punchh modules to existing customers as they build out their loyalty and customer engagement priorities. New leadership in Punchh has started to build a foundation that we can begin to leverage and take Punchh to the next level. Now to update you on MENU, we have been impressed by the early response that MENU has received from prospective customers this year. We have signed nearly 500 locations to date in the United States and this was in advance of any real sales effort. We had previously planned to wait until the second half of this year to bring MENU to the US, but it's clear starting earlier is the right decision. We have aggressively started tooling the business for the US domestic market and we expect revenue to start matriculating in Q3 for these deals. We feel more confident now than we did at the time of the acquisition that MENU could grow into a dominant product line. The demand isn't the problem as the RFP environment is ripe with opportunities as restaurants realize the operational benefits MENU can bring to their off premise orders while enhancing customer satisfaction and building real customer loyalty with a deep integration into Punchh. We are very early in MENUS introduction to the domestic US market, but the early response and reaction has been nothing but overwhelmingly positive. Our teams are focused on operationalizing the business in the US so that we can blitz the market later this year. Back office continues its turnaround, reported ARR of $11.3 million in Q1 was a 30% increase from last year's Q1. We had activations of 355 stores in the quarter and now have more than 7000 active stores. New store bookings remain on a strong pace as we continue to penetrate large national a large national chicken QSR with new stores being signed in the quarter. In summary, PAR seeing continued market traction with the execution of unified commerce in Q1 with various net new enterprise customers purchasing multiple products across our software ecosphere and legacy customers opting to expand their footprint with PAR. Underpinning our unified commerce platform are four discrete requirements. First, best-in-class standalone products. Our products must be able to stand on their own. Second, best-in-class integrations. Third, unique lighthouse functionality and fourth, a truly open ecosystem that empowers restaurants to make choices that are best for their business. While the term unified commerce has become increasingly commoditized by our mostly single product competitors, our multi-product offering gives PAR a strategic advantage. Innovation requires coordination, and optimal coordination requires control. Unlike competitors, we are able to sync multi-quarter roadmaps between products on all sides of an integration and thereby dictate quality and unlock operational efficiencies such as singular contracts, singular account management, better SLAs and more. Ultimately, what we offer is seamlessness and a unified experience that is scalable. As a platform, revenue may not be linear in '23, given the large number, given the number of large deals we are involved with and the rollout schedule is being worked with the customer. But the scale of our pipeline is expanding and notable. At our core, we are in the customer data business and PAR's unified commerce value for users in the massive amount of real time transactional data captured via unified commerce for Brink via customer identity data through Punchh and business data, including employees, inventory and menu items through data central. As an example, PAR processed 4.7 billion transactions through Punchh in 2022. We enriched this raw data based on machine learning to dedupe, standardize and transform it to make it more actionable. This includes tracking the activity of each guest from multiple channels of engagement and assigning them into the right segment for analytics, targeting and attribution purposes. PAR makes these analytical insights and data available to our customers in a variety of ways. Customers can perform self-service analytics right in the product itself, including campaign performance analytics, employee and business reporting and guest analytics. Customers can export this data on demand for their own self-analysis and visualization. For advanced analytics, we also provide an automated ECL of raw data into their own environments through a data pipeline. This data culture sets up nicely for the wave of artificial intelligence entering our world. Most consistently we hear that there are three distinct ways restaurants see AI is being beneficial to their business. AI can make restaurant visits more consistent and predictable. AI can improve the speed of service and AI can improve order accuracy. It also minimizes human interaction and lets experts focus their time and skill on other tasks. AI can be a lot of things to a lot of different restaurants. For some, it may be utilizing voice, recognizing kiosk or tools for cost cutting and reducing labor costs. For others, they are seeing conversational AI tech that improves order accuracy, while even others need tools to track employee performance and sales data along with inventory forecasting. The possibility of AI adoption is endless and restaurant owners wanting to stay ahead of the game and those wanting to match the market are embracing the early benefits. We believe PAR's core advantage is that we are the only enterprise firm with the data across customer identity, transaction, menu and COGS. This allows PAR and our customers to create real value as we have complete internal data to match with external sources, thereby having a stronger foundation to build large models that lead to insights and automation. The real exciting part of this is that PAR's unified commerce allows us to have these first hand conversations with our enterprise customers, near-time integration with technology partners and a very aggressive product roadmap that includes AI to enterprise restaurants rely on part to consistently deliver. Underlying all this, though, is that while our industry gets caught up in the excitement around the technology, we will never get lost. In the end, we must deliver to a franchisee who must deliver an incredible experience to a guest. The franchisee or store owner could care less what model they use or what algorithm we built. They just want the technology to work. The grit of PAR combined with our deep understanding of the customer along with our data advantage, set us up nicely to capitalize. Bryan will now review the numbers in more detail. Bryan?

Thank you, Savneet, and good afternoon, everyone. Total revenues were $100.4 million. For the three months ended March 31st, 2023, an increase of 25.1% compared to the three months ended March 31st, 2022 with growth coming from both restaurant retail and government segments. Net loss for the first quarter of 2023 was $15.9 million or $0.58 loss per share compared to a net loss of $15.7 million or $0.58 loss per share reported for the same period in 2022. Adjusted net loss for the first quarter of 2023 was $12.7 million or $0.46 loss per share compared to an adjusted net loss of $7.1 million or $0.26 loss per share for the same period in 2022. Adjusted EBITDA for the first quarter of 2023 was a loss of $8.8 million compared to the adjusted EBITDA loss of $2.9 million for the same period in 2022. Included in our results for the first quarter of 2023 was a charge of 2.6 million to our hardware margin related to inventory. Including this charge, adjusted net loss for the quarter was $10.1 million or $0.36 loss per share compared to $7.1 million or $0.26 loss for 2022 and adjusted EBITDA was $6.2 million compared to $2.9 million for 2022. We continue to focus on driving improved EBITDA performance with continued top line growth while managing strong cost controls. Hardware revenue in the quarter was $26.8 million, an increase of $1.7 million or 6.8% from the $25.1 million reported in the prior year. We continue to see strong hardware sales, both with our Tier 1 legacy customers and across our Brink customer base. Subscription service revenue was reported at $28 million, an increase of $6.7 million, or 31.4% from the $21.3 million reported in the prior year. The increase came across our unified commerce. The increase in revenues was driven by both site growth and an increase in average revenue per unit as we continue to cross-sell into our existing customer base. The annual recurring revenue exiting the quarter was $116 million, an increase of 23% compared to Q1 2022, with operator solutions up 27%, guest engagement up 18% and back office up 30%. Professional service revenue was reported at $13.8 million, an increase of $1.3 million or 10.8% from the $12.5 million reported in the prior year. Our total recurring revenue base, which includes both subscription services and hardware support contracts within professional services, continues to expand, with $35.3 million recorded in Q1 2023, an increase of 23.4% compared to the $28.6 million in Q1 2022. Contract revenue from our government business was $31.9 million, an increase of $10.4 million or 48.6% from the $21.4 million reported in the first quarter of 2022. The increase in contract revenues was driven by a $9.9 million increase in government ISR solution product line. The increase was substantially driven by continued growth of Counter-UAS task orders. Contract backlog associated with our government business as of March 31st, 2023 was $324 million, an increase of 66% compared to the $196 million backlog as of March 31st, 2022. Total funded backlog as of March 31st, 2023 was $86 million, 105% increase compared to the funded backlog of $42 million for the prior year. Now turning to margins. Hardware margin for the quarter was 16.4% versus 20.2% in Q1 2022. The decrease in margin was driven by a charge to our inventory. Excluding the adjustment, hardware margins were over 20% and we expect hardware margins of at least 20% going forward consistent with recent trending. Subscription services margin for the quarter was 50.2% compared to 50.1% reported in the first quarter of 2022. Subscription service margin during the three months ended March 31st, 2023, included $5.7 million of amortization of identifiable intangible assets compared to $5.1 million of amortization during the three months ended March 31st, 2022. Excluding the amortization of intangible assets, total adjusted subscription service margin for the three months ended March 31st, 2023, was 71% compared to 74% for the three months ended March 31st, 2022. Our rate of acceleration of continued margin improvement slowed this quarter as we absorbed the initial growth of PAR payment services and MENU which are both in early stage products. Professional services margin for the quarter was 17.9% compared to 26.5% reported in the first quarter of 2022. The decrease in margin was driven by a decrease in margins related to our implementation and hardware repair services. Government contract margins were 7.2% compared to 7.3% for the first quarter of 2022. In regards to operating expenses. GAAP SG&A was $27.5 million, an increase of $5.1 million for the $22.4 million reported in Q1 2022. The increase was driven by increases in internal technology, infrastructure costs and sales and marketing expense. The variance also includes $1.5 million of expense related to MENU, which was acquired in Q3 2022. Sequentially net R&D expense of $14.3 million inches Q1 2023 was down $0.6 million from the $14.9 million reported in Q4 2022. Compared to prior year, first quarter net R&D increased $3.5 million from the $10.8 million recorded in Q1 2022. Increase is related to personnel hired in 2022 as we continued to improve and diversify our product and service offerings, including $1.9 million for MENU. Included in operating expenses for Q1 2023 was a $5.2 million reduction to the fair value of the contingent consideration liability for the MENU acquisition. This contract expense is a non-GAAP adjustment. Total operating expenses, including the contingent liability adjustment, totaled $42.3 million versus Q4 2022 operating expenses of $41.2 million. Net interest was $1.7 million compared to $2.5 million recorded in Q1 2022. The decrease is driven by increased interest revenue from our short-term investments. During the three months ended March 31st, 2023. Now to provide information on the company's cash flow and balance sheet position. Three months ended March 31st cash used in operating activities was $16.7 million versus $21.2 million for the prior year. Operating cash needs during Q1 2023 were primarily driven by net loss net of non-cash charges and additional net working capital requirements. Increase in net working capital requirements was primarily due to the annual variable comp payout in Q1 and increased accounts receivable within the restaurant retail operating segment. Cash used in investing activities was $1.8 million for the three months ended March 31st versus $3.1 million for the prior year. Investing activities during the three months ended March 31st 2023 included $0.5 million for purchases of short term held to maturity securities and capital expenditures of $0.8 million for the internal use software. Capitalized software for developed technology costs for the three months ended March 31st was $0.5 million. Cash used in financing activities was $2.4 million for the three months ended March 31st, compared to $1.4 million for the prior year. Finding financing activities for 2023 was driven by stock-based compensation related transactions. Days sales outstanding for the restaurants and retail segment increased from 53 days as of December 31st, 2022 to 60 days as of March 31st, 2023. We expect DSO levels to come back to historical levels closer to 50 days in Q2. Days sales outstanding for government segment decreased from 55 days as of December 31st to 51 days as of March 31st, 2023. I'll now turn the call back over to Savneet for closing remarks prior to moving to Q&A.

Thanks, Brian. To comment briefly on the economic environment, while we can't predict what the future holds at a macro level, we're forging ahead with conviction and vigilance as we look to continue to fuel durable growth over the long-term and deepen our strategic advantages. Today, while there are pockets of weakness within the restaurant industry, broadly speaking, the market is still showing signs of strength. Outside of Punchh, we continue to see robust pipeline. In particular, we see more RFP activity for Brink than we ever have before. PAR's internal execution matched with the macro worry creates a stage for a more aggressive M&A environment. If we can continue to deliver, we should be able to leverage our currency to effectuate accretive transactions that add unique product or additional market share to our business. As I've mentioned, for the past several quarters, we've been able to grow revenue and IRR while not increasing overhead while adjusting for one-time items such as severance and inventory adjustments. We were successful in maintaining our operating expenses quarter-over-quarter as we implement our plans on becoming a profitable company. We're focused on executing against our long-term goals and we're eager to take this momentum and build upon it for the rest of the year in the out years to come. As always, I'd like to thank all of PAR's employees for their dedication and efforts over the past quarter and for never forgetting our mission to enable personalized experiences that connect people to the brands, meals and moments they love. At PAR, we have a demanding environment and we ask a lot from our team members. We are constantly striving to increase our growth without increasing OpEx spend, all the while expecting each and every one of us to do more to deliver for our customers. I thank you and have the utmost confidence that all your hard work will be rewarded. With that, I'll open the call for Q&A. Operator?

Thank you. At this time, we'll conduct the question-and-answer session. [Operator Instructions] And our first caller is Samad Samana with Jefferies. Samad, your line is open. Please go ahead.

All right. Great. Hey, good afternoon. Thanks for taking my questions. Maybe Savneet first one for you. Just looking at the metrics ex-Punchh, you actually added the most dollars of operator solutions there are quarter-over-quarter that you've done in kind of as far back as my model goes. So I think you're seeing pretty good strength there and you had a pretty tough year-over-year comp. So I'm curious how much of that is just the timing of go lives versus payments, adoption versus just new customer acquisition? If you could just maybe break that apart and help us understand what's driving that strength and how much of it is company specific versus maybe seasonal?

It's definitely company specific and not seasonal. In fact, it's actually understated because as I mentioned or said quickly, you know, our payments should have been higher this quarter. Some of it slipped into Q2 and it shouldn't have. And so it's definitely a trend that I think will continue throughout the year. It's resulting really from the continued growth of Brink and the cross-sell of payments. That is we're really starting to figure out on a more consistent basis. So it's the combo of, you know, Brink adding more customers at higher and us being doing a good job of stapling payments to every deal we can.

Okay. And then maybe, Brian, one for you. Just as I think about the gross margins and operator solutions and restaurant magic growing faster, how should we think of maybe the subscription revenue gross margin, either mixing or changing as Punchh's growth has been a little bit slower? Should we should we think about that as having a material impact going forward or should it be in a fairly consistent range as what we've seen over the last few quarters?

I'll take the high level and give it to Bryan. So the short answer is, you know, the margins are muted now because of primarily menu and to a degree payments. We put a lot of investment into menu as you heard, given the unexpected customer demand in the US and payments because we have a build up there, the margins of Punchh, Data Central and Brink are all relatively high, not all the same, but all very high. And so as menu and payments scale, it'll bring the gross margin up because the rest of them all are relatively high. But Bryan, anything else you want to add?

Yeah, the only thing I'd add there is, as you know, Samad over the past couple of years, we have also had saw deep improvement in Brink as we improve margins there. On the hosting costs, I think we've gotten ourselves to a pretty good level there. There's still some opportunity and the next area is doing something similar on the Punchh side. So we will see improvements there. But you're not going to see the drastic. It'll be each quarter, but we have to absorb a couple more quarters of the early growth of MENU and Payments as they get critical mass.

Okay. I'm going to break the rules and squeeze in a third question because, Savneet, your closing remarks, you mentioned it sounded like you might have been hinting at that there may be M&A on the horizon where you're going to attempt to be opportunistic. I'm curious if, one, that's what you were trying to intimate and two, how we should maybe consider that with the backdrop of trying to get to profitability.

So I think I don't know if I was hinting or ostensibly saying I think we're going to see a lot of M&A in our category. There was a lot of venture capital money that came in that I think is stranded in companies that either really didn't deserve venture capital money or can't raise at prices that make sense anymore. And so we're seeing a lot of deal flow today. The interesting part is that we see that both in the small startups, but also in the large part of the market. And what I think is interesting is that I believe we will have outperformance as an organization and as a result have a better multiple than the deals we're looking at. And I think if we look to be the consolidator, we will be in a very, very strong position. So I think it was there as it relates to the points of being profitable. I don't think you'll see us do a deal that doesn't get us to profitability faster or similar unless it added tremendous growth where the ROI would have made sense. But I think the deals we're seeing today not only can be accretive to our growth but also to our margins.

Great. I appreciate you taking all my questions.

Standby for our next caller. And Will Nance is here with Goldman Sachs. Will, your line is open, please go ahead.

Hey, guys. Good afternoon. I appreciate you taking the question. Savneet, I'm wondering if you can talk about maybe the outlook for ARR growth in the context of some of the comments you made on the various segments. It sounds like maybe a little bit more positive on Brink. It sounds like pulling forward some of the menu, the menu rollout and then still some of the ongoing weakness in Punchh. I guess when you put it all together, how are you thinking about the outlook for ARR growth? And, you know, could the net of, you know, pulling the demand in Brink and pulling forward menu, you know, lead us to be sort of outperforming or even accelerating over the course of the year?

Yeah. I think we'll be in the range we put that 20% to 30%. Where we are is still we still have to a long way to go. You know, in particular, we've got, you know, a couple opportunities we've won in signed, as I mentioned, these table service initiatives. The date they go live has a tremendous swing in our revenues for the year because of the, you know, the sheer quantity of ARR. So it's obviously all good if we can pull those in earlier. It does have a big impact. As you said, you know, menu winning ahead of schedule certainly gives us an opportunity for upside. Now, it takes a little bit of time to get every deal live because, you know, building an online ordering website is not an overnight process, but it's not also nearly as long as it is to take a Brink customer live. So those are really positive things. And like I said, we see really strong stabilization of Punchh. You know better than I expected. You know, if you asked me how I felt this quarter about Punchh versus last quarter, I'd say we feel much better. You know, where we need to pick up the pace is on payments because the opportunity is too large. And while it's working, it should be it should be better. And I think MENU needs to really capture this opportunity. And it's ripe given where our competitors are and where we are. We've got to pick that up. But I think in aggregate, we feel pretty good about where we are. And like I said, you know, quarter-to-quarter, we can't we don't have perfect visibility, but there are levers we have interior that do add some nice potential upswings for us, particularly the large table service deals that I mentioned. And, you know, if we can land one of the larger menu RFPs we're in, know, those will have pretty nice impacts for us.

Got it. Very helpful. And then maybe as a follow up, I'm just I think it's your quarter. You made some comments around one of the big five chains potentially moving to upgrade some of their point of sale, potentially moving to a more modern platform. Obviously, we've seen the headlines around, you know, some of the big chains and big cost cutting efforts. Just maybe wondering if you could provide a landscape on the -- an update on the landscape for some of the -- Tier 1 fast food chains. One, where do you see them in sort of, you know, closer or farther from the upgrade cycle? And, you know, maybe in the near term, you know, how that relates to sort of demand on the hardware side, which kind of continues to outperform at least your top line expectations, I would think, relative to the macro uncertainty that we're seeing.

Yeah, it might be the most interesting observable data point in that. I said on the call a few times, we've never had a break pipeline so robust with large customers. You know, we've always had a robust pipeline with mid-sized customers and emerging customers, but we've never had so many large customers in RFP, not even sort of pipeline real, real potential transactions. And you know why I think that's so interesting is that know we are in a slowdown for restaurants, but the customers are still going forward on these technology initiatives around POS. So, you know, the short answer is, you know, we see this sort of secular shift to the cloud within POS, really gaining steam, gaining share. You know, is it, you know, a flash in the pan or is it secular? You know, I think there's enough in the pipeline that makes me think that this is just the snowball building. And, you know, as you sort of referenced, we are seeing more large, large, large brands opening the door. Now, you know, I say probably a little bit ahead of schedule from what we expected. Now, we'll see if any of them actually do anything. We'll see if it comes through. But purely from a pipeline and RFP perspective, I think it's highlighting the strength of those customers, but also their commitment to upgrading technology no matter what the environment is.

Got it. Makes sense. I appreciate you taking the questions.

Standby for our next caller. Patrick Mcilwee with William Blair. Patrick, your line is open. Please go ahead.

Hi, Thanks for taking my questions. So I think you said that you attached payments to roughly 80% of your break signings last year. And I wanted to ask one, are you still seeing that level of attachment this year? And in two, given some of those payment deals were pushed out a little bit, it sounds like potentially back a quarter. Are you still thinking that you can generate somewhere around that 15 million in payments ARR this year or have your thoughts changed their?

You know, so I think we'll continue to hit sort of that 80% plus attachment rate on new Brink deals. The real velocity for us will be the upsell into the base where we haven't done as good of a job, you know, as far as where the revenue would land. You know, I think it's probably between 10 and 15. You know, I think 15 would be, you know, a stretch today. But, you know, if one of these large POS deals lands and they take our payments offering, you know, then that would be an underestimate. But I think to be conservative, you know, I wouldn't I wouldn't go that that high.

Understood. Thanks. And then on MENU, it sounds like things are going well. Go ahead.

The deals aren't being pushed. The rollout was being pushed. So this is a quick clarification. It wasn't a deal being pushed. It was the deal signed, papered. It's the rollout that got slowed down.

Got it. Got it. Thanks. And then my second one on MENU. So can you it sounds like things are going really well there, I guess. Can you just provide any more context on how early conversations are going there and how far along you are in terms of building out those third party integrations that you had needed?

Yeah, it's a great question. So, you know, it's been surprising we had not planned to bring menu to the United States really until the second half of this year, as you suggested, because of, you know, desire for us to build out these integrations more fully and to focus on some of the international business that had already been signed. And essentially what happened was enough customers, you know, literally pulled us into their RFPs and then started giving us business that we sort of reassessed and said, this is clearly where the market opportunity is, where we can win customers, you know, against the biggest and the best rollout, you know, entire year and then create the opportunity for a real unified commerce experience where we are the POS loyalty and an online ordering. And so we have been retooling the business to focus on the US, which is creating an acceleration in those integrations. What's been amazing is that, you know, a number of these customers, as I mentioned, we've almost signed 500 stores already, which, you know, putting that in perspective, you know, we signed, you know, 1000 1100, 1200 Brink sites a quarter. We're already at 500 for MENU. You know, many of those are waiting for us to finish a specific point to point integration to go live. And I think that just highlights the quality of the product that the customers truly want the product and are waiting for us. So we're excited. You know, we could be wrong, but I think we now see enough pipeline and also, you know, candidly enough sign deals against, like I said, great competitors that, you know, it would behove us not to continue to push on the US and also be smart about how we stage that. You know we could win a lot more deals right now, but we need to go slower and make sure we service those deals, do a good job on those deals and then let our reputation kind of compound from there.

Got it. Thanks, Savneet. That's very encouraging and really helpful. Thanks for taking my questions.

Standby for our next question. And our next question comes from Mayank Tandon with Needham.

Thank you. Good evening.

Yes, go ahead.

Good evening. Savneet, could you sort of give us a sense of where you are on the journey, the cross-sell journey, and maybe share any data points in terms of how many customers are using multiple products versus where you could penetrate over time? And I guess the broader question is how much of the growth in ARR is coming from the land and expand versus new logos as we look out over 2023.

We have a long way to go on the cross-sell and upsell within our organization. In fact, I think it's the singular, most exciting and biggest opportunity we have is that the average brand customer has two to three modules. So that's the average. So usually a Brink customer on average has at least one of our other products. But we need to really take that into three, four or five products now. And it's clear that Brink is the land and expand product for us. But the amount of under penetration is enormous. You know payments is probably not even in 10% of brink customers yet. You know data central is not even half of Brink customers yet, MENU is obviously almost no Brink customers yet and so there's an incredible opportunity to push that forward not to mention the 70,000 stores that Punchh is in where MENU is a really, really perfect fit. And so the ability for us to grow revenue going forward will be as much driven by our ability to cross-sell and upsell as it will be for net new sites. Today, most of our growth though, is still net new sites, but we are seeing a continued pickup in driving cross-sell as being more and more of our revenue contribution and that will continue to get higher this year as menu gets rolled out and as payments gets rolled out because those are both upsell products.

Got it. And then I want to ask about the government business. Just given the pickup in revenue here, any sort of directional guidance on where we should see that trend, at least over the current year? And then if you could maybe give any updates on your plans for that business, if there's anything incremental that you can share with us.

No sort of public update yet. I think, you know, as we said, we're a year into, you know, one year into where we said we would be when we would look at the strategic alternatives again. And I think, you know, when we have an update, we'll come back to you. But the business has delivered as we expected. And in the event we wanted to do something, I think there would be no better time, both from what we're executing on internally and also the macro environment.

And just to follow up to that, you know, we talked about in the call, you know, the large growth year-over-year in there. A lot of that comes from Counter-UAS. We've now gotten to, I think, a big part of that task order critical mass, right. So we've seen that build up over the past five quarters. And I think the growth that you're going to continue to see is going to be solid. But, you know, having that 50% year-over-year is going to get down to a more muted level as we've gotten kind of critical mass within that real large contract that we have.

Great. That's helpful color. Thank you so much.

And standby. Our next question comes from Adam Wyden with ADW Capital. Adam, your line is open. Please go ahead.

Okay. Three questions. I'll start with the easiest one. You had said, I guess inter-quarter or perhaps last quarter that PAR was going to have the greatest improvement in their rule of 40 score of sort of any mid SMID cap software company. And I guess you were basically talking about just the PAR software segment. Can you talk about sort of exiting the year at whatever X percent growth rate and X percent margin such that you're exiting the year at rule of 40 or close to it? Or sort of can you sort of elaborate sort of on the efficiency improvement throughout the year and whether you're on track or ahead of that?

Our guidance is relatively wide as it relates to revenue growth. So what I can say is, you know, we are executing on a plan to grow within the range. We said while holding our operating expenses flat. And as you saw, R&D actually came down quarter-over-quarter, which is our biggest line item. And so I do expect us to be able to have, you know, nice growth rate with a tremendously improving cost structure along that and be a large mover on the rule of 40 will be the largest or not. I don't know. You know, we have to look at everybody else. But, you know, I think we're executing on that plan. Nothing's really changed, which is continuing to grow the revenue between 20 and 30 and then keep the OpEx flat and hopefully we have some accretive M&A on there that accelerates revenue and or accelerates the profitability.

Okay. Good Second question, three second, question is around M&A. You know, when you first got in, you did the tuck in of restaurant magic, which is now Data Central. That's doing well, sort of was growing then slowed down, now growing again, sort of talks to the portfolio approach menu is an R&D box which you guys are excited about. I am as well. But I mean what is the timing and likelihood of sort of substantial M&A? I mean, you've done it in the past. You did Punchh. You have not done a meaningful RR slash EBITDA contributor in two years. Obviously, the market has changed from a public markets perspective. Is the issue cost of capital? What is sort of holding it back? I mean, there's lots of private market assets that are sort of up for sale. And I'm just trying to understand what the bottleneck is in terms of getting sort of what I would call more substantial ARR deals done sort of in the 10 to 50. And then there's obviously the larger public. Public companies that could be merger candidates.

Yeah. So as I said in my commentary, we think now is the time. You know, we see, I think what you see in the public markets and the private markets, you know, what I mean by that is there are a number of assets now where a year ago, you know, I wouldn't I wouldn't say it was the cost of capital problem. I think it was an expectation problem from 2020 and 2021 where people were sort of hoping for prices that we didn't feel were appropriate for the risk. I think today two really interesting things have happened. One is, I think partly or primarily because of our POS business, but broadly because of our unified platform, it is understood that our company deserves a premium multiple to any single product. What I mean by that is if you are a company that's solving one particular need within the restaurant industry, I believe we can very comfortably argue with you and your shareholders that we should deserve the premium multiple relative to you, given the resiliency of our business and the growth of that business. And so I don't think it's a cost of capital problem. I think the market actually now appreciates that. And in my conversations, we get very comfortable there. The second thing that's happened, which is I think clearly happened in the public markets, is the quantity of deals available has changed. There are many companies that we went after the last 18 months that, you know, it was a chase or today we see numerous companies not only be up for business but higher investment bankers and change the conversation. And so, you know, I think we feel excited about the M&A opportunity set primarily in actually the larger deals that you're talking about. Most of the small deals, I don't think you'd see us do a MENU like Deal. You know, that was a very unique product, but a very unique hole that we needed to fill. But I think we feel more excited about the larger deals than the smaller deals because the smaller deals are a ton of work and we don't have like a massive product gap we're trying to fill like we did with MENU. Here, we're trying to build market share, more cash flow and more growth.

Right. So let me build on that. This is the final part of my question. Obviously, this has been a long journey. When you joined on the company, it was subscription revenue of 7 million. Whether we finished the year at 140 or 150, government is bigger, hardware is now profitable. But the company arguably trades at the lowest. Multiple private equity firms are out there buying different businesses, you know, 20%, 25% growers, 30% growers at double digit revenue multiples. I mean, if you are unable to scale this business in the public markets, I mean, how do you think about creating shareholder value for folks? Because I mean, I would make arguments that this would be an amazing platform for any private equity firm or another sort of larger strategic public player, because there seems to be a very large dichotomy between sort of what private market value is for an asset like this or strategic market value and where you're trading. And so obviously, I appreciate your willingness and interest to sort of buy companies and be the consolidator. But if people don't want to dance with you, I mean, how do you think about sort of being the consolidated? Because right now interest rates are 5%. And, you know, if you're not trading $50 billion of revenue, you're trading at a fraction of what your private market or if you're not trading $50 million a day in the public markets, you're not Microsoft. You can't get value in the public markets. So I'm just sort of thinking, you know, what is your willingness to extract value for shareholders if you are unable to sort of do a transformational merger or acquire enough businesses to sort of get scale on the public markets?

Yeah. So I'll break it in pieces. I think there's three or four questions I jotted down. So the first is I think PA is a great platform, whether it's private or public, to have an incredibly successful run for a long period of time. As you heard in my comments, you know, while we've grown a lot, our pipeline has never been bigger. And I believe that, you know, we may not be the 100% grower, but the durability of long term, high quality growth is here for the long run. And so I think it's a very attractive whether it's public or private. You know, to your question of our ability to attract extract value, I believe, you know, PA is up for sale every single day. Every single day we are available for to create value for our shareholders. And if there's an opportunity for that to be where we are, not the consolidator and we are the consolidated, we're not running from that. I think we have to, you know, drive value wherever value can be found. And so we wouldn't run from that. Now, do I think it's the right long term fit for shareholders for you know, it would depends on price. And we see a really strong path for us to be the consolidator and to drive high returns on capital, but if someone comes in at a price that defeats that, no problem. We're not going to hold on to anything because our job is to create value for our shareholders. On your sort of last part about size. You know, you and I have debated about this, but I think that if we can get to the property numbers that we think we can get and become a rule of 40 company, the market will reward us. And I think there are good examples in the public markets of that. And so, you know, I would call that sort of the path we're going on with M&A alongside of that. But again, we're open to creating value in any which way we can. So, you know, I guess that would be my answer.

Okay. Thank you.

Okay. Stand by. Our next question comes from George Sutton with Craig-Hallum. George, your line is open.

Thank you. This is Adam on for George. Thanks for taking my questions. Savneet it's great to hear that MENU is off to such a strong start, but I'd be curious to know if there's anything specific you've heard from the sign customers that's really driving that enthusiasm and whether or not that's something you think is persistent through the industry landscape or if this is really more of a unique or operator specific move.

It's a product move. So I think when we show a demo of the back end of MENU. It reminds me of when I first became the CEO and people would see a demo of Brink and they would say, how did you crawl in my head and know exactly what I wanted? Menu was built to be the modern version of the legacy online ordering companies exist today, and what I see is our customers quickly see that our customers are moving from a world where from a templated online ordering site to something that configures and makes them feel like it's their brand. I've used examples. If you go to different large brand online ordering websites, they relatively look quite similar. And I think back in the day when online ordering was an acute problem, i.e. during the pandemic, it didn't really matter. But today we're competition is fierce. We're in a recession. You really need that online ordering presence to match the brand, the feel, the look, the ethos, the culture that you've built in store. And with MENU, you have that ability. It's beautiful, it's configurable, you control it, but the back end and makes your life so much simpler and tying that all together into Punchh and into Brink, you know, it really is a beautiful and winning combination. And so it's very much product led and I think that's very much being driven by PAR. And I do think we get credit from our customers for having done a good job on Punchh, having led this transformation of Brink and say, okay, we can we can kind of trust part to do this over time. We'll add other layers, the sort of unified service, unified contract, unified support, all of these things I think will come. But right now, I do believe we're winning because of the product. And over time, I think we'll add more layers to that. Now, there are amazing companies that are in this space that we look up to and have envy of, but in the end, we believe that our sort of gritty nature, our ability to empathize with the operator, not the CIO, but the actual operator on the ground, will continue to help us win business here.

That's great. And I was hoping you could also provide a little more detail on the pipeline. I know you mentioned that there's more large QSRs than ever before, but any other detail would be appreciated.

It's hard to give detail on pipeline, but, you know, what I think we see happening is that every year I used to say we want to get one or two large customers. And today what we see is this, this, this pipeline fill up with, you know, very, very substantial brands that I would have thought would be the late adopters. That's maybe the best way to explain it. There are late adopters now that are active in evaluating upgrades to their to their technology infrastructure that are way ahead of the schedule I would have had. And, you know, so much so that stress just internally is figure out how do we service this best. And I think what's happened is that they've seen the success of other brands adopting the cloud. They've also seen the challenges of home grown systems and the ability to kind of build or loyalty on your own and how hard it is to maintain that in a world of the cloud where you're doing an update every month or every two weeks where before it was static, and then I think there is some ability where I think our reputation and you know, we may not be the greatest company in the world, but I do believe our customers know that they can trust us. They can call me at any time, and I will pick up the phone and we'll get to a solution. They can text anyone on our team. They'll get a response. And in the restaurant business, you know, it's a real time business. If something goes down, you need a response. You need someone to care for you. And I think we've done a really good job of while we've had, I think, good success and we feel like we've accomplished a lot. We haven't lost that gritty nature of, you know, when you're a store operator and you're in that store and POS that is down, the last thing you want to get want you to hear is, hey, we'll get back to you tomorrow. And so I think it's that combination of they're saying, all right, we're now at a scale where we can continue to operate, but they see the success of other people doing it. And I think they see the potential failures in trying to do it themselves, given how much technology has changed over the last decade.

Thanks. And I'm going to squeeze in one more, if that's all right. I'd be remiss if I didn't ask at least one question on AI. And I appreciate the tempered enthusiasm. Obviously, it's very early, but without getting ahead of ourselves, it'd be great to hear your thoughts on what may be the lowest hanging fruit for restaurant operators and how you think about that in terms of development.

You know, I don't know if I've got the perfect answer for that. I think we see test cases happening everywhere. I think the industry answer would be the highest area of artificial intelligence usage would be on voice AI. It's calling in for phone orders, using voice at the kiosk or using voice at the drive through, you know. But you know, that, I would say, isn't sort of industry wide, but I think that would be the most common answer you would see, because those solutions have kind of been out in the market for some time. And you're now sort of getting, I think, customer acceptance. That's just the way we operate. The stuff that I think could be a lot more interesting for our operators is actually leveraging this data to redo their scheduling, to manage their labor force, manage their inventory more efficiently, optimize their menu in ways that they didn't think about, maybe real time pricing of a menu, you know, things like, you know, maybe our burger prices changed $0.05, $0.10, $0.10 depending on the time we go to a store. You know, those are the areas I think that could be more interesting for the restaurant in the end. We operate in a market that is highly ROI focused, and so I don't see restaurants being the early adopters of AI until we can give them a use case that we can say this is the return on that investment we're giving you. And that was sort of my point, which is if I went to our customers and said, Hey, we're spending 20% of our budget on AI products, I think they would shoot me and they'd say, What are you talking about? Like, we want this stuff to work better in the store. We want more delivery. However, given that we are, I think have so much data gravity across all of our products, we have more data, I think, than anybody else in the enterprise. When that innovation happens, we are the perfect place for that to be built out of. And so we have a ton of initiatives internally to build great products, but we can't lose sight of the fact that we still need to deliver every single day. And so we're trying to walk that line carefully, which is we do have a lot of initiatives going on, but we have to do a great job on our core products on its own. I'd be remiss if I didn't add internally at PAR. I think you'll see really cool tools. We're going to use AI obviously for our things like our chat bots, our support for our customers, our support internally. We're using it to understand how we manage our own resources to make our developers more efficient. And so AI is it will be used within PAR, but I think we have to sort of watch how the industry ends up adopting and getting to a point where we can actually prove ROI.

Okay. We have time for one last question. Standby. We have Anja Soderstrom with Sidoti. Anja, your line is open. Please go ahead.

Okay. Thank you. And I actually only have one question. So most of my other questions have been addressed. But I'm just curious, when you upsell or cross-sell, do you often displace other providers or is it selling into an empty space?

Hey, Anja. Good evening. It is almost always displacing other providers. There's once in a while where I think Punchh is going into an organization that may not have a loyalty product or it may have something home built. But for the most part, we're displacing an existing vendor.

Again. Is it most often the same vendor or various or?

It's various, although if you think of the categories we operate in online ordering POS loyalty, there are you know, there are some large competitors that are probably we see more often, but it's various.

Okay. Thank you. That was all for me.

Thanks, Anya.

Okay. That does conclude our Q&A, I would like to turn it back to Savneet Singh, CEO, for closing remarks.

Thanks, everyone for joining. We look forward to updating you on your progress as we go forward.