Good afternoon, ladies and gentlemen, and welcome to the fiscal year 2019 third quarter financial results. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host. Chris Byrnes, you may begin..

Thank you, JP, and good afternoon, everyone. I'd also like to welcome you today to the call for PAR's 2019 Third Quarter Financial Results Review. The complete disclosure of our results can be found in our press release issued this afternoon as well as in our related Form 8-K furnished to the SEC.

To access the press release and the financial details, please see the Investor Relations and News section of our website at www.partech.com. At this time, I'd like to take care of certain details in regards to the call this afternoon.

Participants on the call should be aware that we are recording the call this afternoon, and it will be available for playback. Also, we are broadcasting the conference call via the worldwide web, so please be advised if you ask a question, it will be included in both our live conference and any future use of the recording.

I'd like to remind participants that this conference call includes 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 statements included in our earnings release this afternoon 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 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, everyone, and thank you for joining us today to discuss our third quarter 2019 results.

In the third quarter, we continued to execute our strategy to deliver industry-leading cloud technology solutions to our restaurant clients globally with products, services and solutions that drive favorable business outcomes for our clients and, in turn, will result in improved performance for our business.

We're making progress improving on our customer product experience and it's paying off. We're excited about the momentum in our business and our opportunities to continue to create value as we finish out 2019 and aggressively begin 2020 and beyond.

In addition, we have exciting new initiatives, which we are eager to walk through detailing how we expect this to fuel our growth even further. At the top of that list, I am pleased to announce today our plans to acquire Restaurant Magic to strategically expand our scale and reach with new and existing restaurant clients.

We are building out PAR's technology stack with one of the leading back office cloud software providers for restaurants. We acquired the business for $42 million, consisting of $13 million in cash, $27 million in PAR stock and a $2 million seller note payable over three years.

Our strategy to acquire Restaurant Magic fit directly with our goal to expand in the enterprise restaurant technology space. Headquartered in Tampa, Florida, Restaurant Magic provides midsized and large enterprise restaurant organizations with inventory management, food management, labor scheduling, along with detailed reporting and analytics.

Restaurant Magic is an industry leader at solving complex customer requirements with complete back-office solutions for enterprise restaurants, and their entire team is very strong and experienced in the restaurant technology space.

These capabilities align well with our strategy to differentiate PAR as a solutions provider within the enterprise restaurant industry. With this acquisition, we expect to gain scale in the restaurant industry, bring and onboard an excellent team to understand selling to larger-sized restaurant customers with leading solutions.

We believe this acquisition will enable us to take the next step in our growth strategy. I look forward to welcoming the Restaurant Magic team to PAR. Restaurant Magic has a customer installed base of over 5,300 active restaurants.

This is -- there is a tremendous amount of synergies PAR shares with Restaurant Magic, and this is a significant addition for our company. We're working quickly to close the Restaurant Magic acquisition and integrate their business into ours. We expect end of year 2020 Restaurant Magic ARR to be in the range of $11 million to $13 million.

We're excited about the combined opportunities associated with the Brink Restaurant Magic solution and are confident this will accelerate new customer opportunities, as currently Restaurant Magic is in advanced conversations with several Tier 1 restaurant organizations that Brink has yet to penetrate.

Equally important in Q3 was the growth we're seeing in customer bookings and the growth we're continuing to see early in Q4. As we've said all year, our growth would begin in the second half of the year, and the growth in bookings is the best leading indicator for installs to come.

This growth is a direct result of breaking through technology bottlenecks that have -- that the company has struggled with for well over one year. As we continue to grow our team and become more agile, we expect to continue to scale faster.

Additionally, before leading into our third quarter review, we have recently signed our first legacy Tier 1 hardware customer to implement Brink point of sale in all their 3,600 restaurants. This once again validates Brink in the marketplace as the leading cloud point of sale provider for enterprise restaurants.

This builds out our pipeline of restaurants to deploy and drives our confidence in having a solid 2020 and beyond. Now to review the third quarter. This afternoon, the company reported third quarter revenues of $45.4 million compared to $46.4 million in the third quarter last year, a 2.2% decrease.

This decrease was primarily due to lower contract revenues associated with our government business, down 10.9% from the prior year. Partially offsetting the contract revenue decline was product revenue increasing nearly 3% in the quarter and service revenues growing 3.4% in the third quarter from last year.

We reported a GAAP net loss of $6.2 million and a loss per share of $0.38 in the quarter compared to a GAAP net loss of $16.7 million and $1.04 loss per share in last year's third quarter. On a non-GAAP basis, we reported a net loss of $4.6 million and a loss per share of $0.28 in the quarter.

This compares to a non-GAAP net loss of $1 million and $0.06 loss per share last year. The non-GAAP adjustments are detailed in our press release. I would now like to turn the call over to Bryan for a more detailed reporting on the quarter's financials.

Bryan?.

Thank you, Savneet. Good afternoon, everyone. I would now like to take this opportunity to provide some additional details surrounding our third quarter results.

Product revenues were $15.9 million for the third quarter ended September 30, 2019, an increase of 2.6% from the $15.5 million recorded for the same period in 2018, primarily driven by increased hardware attachment with Brink installations, partially offset by a decrease in core hardware.

Product revenues related to Brink were $5.1 million, an increase of 105% from $2.5 million for the same period in 2018. Service revenues were $13.9 million for the third quarter, an increase of 3.4% from $13.5 million reported for the same period in 2018 primarily due to the growth in SaaS, partially offset by a decrease in core service revenue.

Service revenues related to Brink were $5.8 million, an increase of 49% from $3.9 million for the same period in 2018. Brink's service revenue includes all recurring revenue, project management and installations. Contract revenues were $15.5 million for the third quarter, a decrease of 10.9% from $17.4 million reported in the same period in 2018.

The decrease is primarily driven by a reduction in ISR solutions due to contraction of contract funding and timing delays deliveries transitioning into Q4 2019. In regards to margin performance for the quarter. Our product margins in the quarter were 22.9% compared to 21.9% for the same period in 2018, primarily due to favorable product mix shift.

Service margins for the quarter were 33.7% compared to 23.9% recorded for the same period in 2018, primarily due to improved margins in SaaS and hardware services.

Government contract margins for the quarter were 5.8% compared to 11% for the same period in 2018, primarily due to lower margin ISR solutions and unfavorable contract mix within Mission systems. Now to operating expenses.

GAAP SG&A expenses increased to $9.5 million for the third quarter from $8 million for the same period in 2018, an increase of 18.8%. The company increased investments in Brink sales and marketing, $0.7 million in addition, increases -- in addition to increases in equity compensation.

SG&A expenses associated with the internal investigation for the quarter were $0.1 million as compared to $0.3 million for the third quarter of 2018. Non-GAAP SG&A was $8.4 million, up $1.3 million or 18% versus Q3 2018.

Non GAAP SG&A adjustments for Q3 2019 included $0.1 million related to the investigation of conduct in China and Singapore offices and $0.9 million for equity-based compensation.

Research and development expenses were $3.4 million for the third quarter, an increase of $0.4 million from $3 million for the same period in 2018 driven by $0.5 million increase in Brink software development. Now to provide information on the company's cash flow and balance sheet position.

Cash used in operating activities was $9.6 million for the nine months ended September 30, 2019, compared to $2 million of cash used by operations for the same period in 2018. The variance is driven by an increase in before tax losses.

Cash used in investing activities was $11.6 million for the first 9 months of this year versus $4.9 million for the first nine months of 2018. On September 30, 2019, the company acquired the assets of 3M's Drive-Thru Communications Systems business for $7 million in cash to broaden the company's restaurant technology portfolio.

Additional investing activities during the first nine months in 2019 included capital expenditures of $2.4 million primarily related to the implementation of our enterprise resource planning system.

And $2.3 million in costs associated with investments in our restaurant/retail software platforms compared to $3 million and $3.1 million, respectively, for the 9 months ended September 30, 2018.

Cash provided by financing activities was $65 million for the first nine months in 2019 versus cash provided by financing activities of $6.6 million for the same period in 2018.

The increase was primarily driven by the proceeds of the notes net of issuance costs and repayment in full of all amounts outstanding under the credit agreement, partially offset by the final payment related to the Brink acquisition. As of September 30, 2019, the inventory balance was $19.1 million, a decrease of $3.7 million from December 31, 2018.

Inventory turns were three times for both domestic and international operations. Accounts receivable of $28.6 million increased $2.4 million or 9% compared to December 31, 2018. The receivable balance is broken down between the Government segment of $9.5 million and the Restaurant/Retail segment of $19.1 million.

The Restaurant/Retail segment days sales outstanding increased from 52 days as of December 2018 to 58 days as of September 2019. Government days sales outstanding increased from 45 days as of December 2018 to 54 days as of September of 2019. I would now like to turn the call back to Savneet to review our business performance in the quarter..

Now to review our segment performance. ARR for Brink at the end of Q3 is now $17.9 million, an increase of $4.1 million and 30% from a year ago and a $1.4 million increase from sequential Q2 2019. This ARR number is built off restaurants being invoiced as at September 15, 2019.

In the quarter, we completed the implementation of 630 new stores with Brink. The total number of restaurants now active with PAR's leading cloud solution total over 9,300 sites as of October 14. New bookings in the quarter totaled 961 sites, a 41% increase from the sequential second quarter, and our open order backlog now stands at 682 stores.

ASP of monthly subscription rates signed by new customers in Q3 averaged comfortably over $200 per month. Importantly, we now feel that we have broken through our earlier bottlenecks and feel comfortable that we can book in excess of 1,000 stores per quarter going forward.

Hardware revenues associated with Brink deployment more than doubled from Q3 2018 as the integrated PAR solution continues to be valued by restaurant owners and operators.

At the recent Foodservice Technology Show, we introduced our PAR payment processing solution, PAR Payment Services, as PAR is now a payment facilitator, and will be aggressively marketing our processing solutions to new customers as well as up sell to existing brink users. It will take some time for this revenue stream to ramp and impact our results.

But we are eager to expand our revenue streams with our restaurant customers, and we believe this is an important offering as part of our integrated solution. We remain laser-focused on increasing velocity of our Brink implementation plans, and our current line of sight has accelerated in building throughout 2020.

We are investing in our product development organization to meet our aggressive growth plans and to penetrate additional segments of the industry, principally table service. We'll be introducing table service -- a table service Brink version in early 2020, that will immediately enhance our addressable market by two times.

Traditional table service restaurants now require a more detailed point of sale solution as their businesses are more complex. That complexity will drive higher subscription rates for Brink and Restaurant Magic, which is an exciting opportunity for us.

We are convinced this is a natural progression for our integrated software offerings, and I look forward to updating you on our progress. Now to review our hardware and services business. We recently closed on the acquisition of 3M's Drive-Thru Communications business and are pleased with the business to date.

In fact, the business has exceeded our initial expectations. We can now count Starbucks, Wendy's, Burger King and many other large Tier 1 concepts as current customers that we previously did not have a relationship with. These new relationships will be driving high-level customer conversations regarding the entire PAR portfolio with them.

This is an ideal opportunity for us to showcase Brink and now, Restaurant Magic, to these large Tier 1 organizations. For our restaurant segments, we are ending 2019 with momentum as we look to accelerate our bookings implementations.

In 2020, our priorities include the rapid growth of the now combined Brink-Restaurant Magic offering, leveraging PAR's unique infrastructure to achieve our financial objectives in transitioning our major accounts into additional new business opportunities globally.

PAR is on a path to accomplishing our long-term operating objectives of accelerated growth, predictable profits and enhancing shareholder value. Now to review our Government segment.

Our Government business continues to be impacted by the timing of certain contracts ending and the start-up of new contract awards, evidenced by the increase in our backlog at the end of Q3 to $160 million, an increase from $153 million at the end of Q2. We have confidence this significant backlog will provide a solid base for an improved 2020.

We continue to see contract opportunities where we can leverage our expertise in industry-known performance excellence, specifically in value-added revenue contracts that include more direct labor and high-tech contract work with our Intel solutions business line.

Our mission continues to be focused on solving complex problems for our government customers through our continued innovation, deep experience, passion and strong market reputation for excellence. As a company, I'm happy to report that we recently went live with our new ERP system.

This new operational system will significantly improve our execution capabilities and priorities as we begin to feel the positive impact immediately in this fourth quarter. Updating you on news we relayed to you last quarter. We recently closed on the divestiture of the SureCheck business line.

This is an important step for our company as we continue to heighten our company's focus on our restaurant technology platform and ensure all necessary resources are directed and available to execute our strategy. In closing, the third quarter was an important step forward in PAR's transformation.

We have momentum in our software business as Brink bookings have reaccelerated and will continue to do so. The acquisition of Restaurant Magic and our upcoming Payments business are the beginning of our growth plans to expand our wallet within the restaurant. Transformations are never quick and easy, and our transformation is no exception.

That said, I'm proud of the progress our team has made to date -- proud of the progress our team has made, and I'm particularly proud of the PAR team's focus, grit and resiliency. This concludes our formal remarks, and I'll now turn the call over to the operator to start the question-and-answer session..

[Operator Instructions] Your first question comes from the line of Samad Samana of Jefferies..

This is Anu on for Samad. A few questions. I guess just to start off with -- on the Restaurant Magic acquisition.

I guess you talked about the strategy behind it, but could you give us some idea of what the margins and the growth look like for this company on its own? And any impact you have on cash from operations going forward?.

Sure. Yes, absolutely. So Restaurant Magic is a very high-quality product. Today, I'd say, run rate is near $8 million. It's growing -- expected to grow somewhere to 11% to 13% by the end of next year. And we feel pretty confident in the business' ability to hit that near 50% or above 50% growth.

The gross margins of this business, our traditional software margins anywhere from 70% to 80%. And the operating margins, as we've always suggested, will sort of be dependent on growth. If there are growth opportunities, we'll continue to plow our OpEx back into sales and marketing.

And so from a gross margin perspective, though, they're very healthy traditional software margins, and as I said, the growth profile is quite exciting. And one thing we forgot to mention that I think is also interesting is that the churn is great. The churn is, right now, less than 3%. So a very, very high-quality business..

Okay. Great. And then could you -- I see that they have -- you guys have some common customers, you've worked together. Could you talk about how your footprint kind of differs, like how much is there an overlap? If you could just explain how the customer base look, PAR and Restaurant Magic kind of overlaps..

Sure. As we said, they have about 5,300 active sites, a little more than that. And after the call with a detailed breakdown of where we have overlap. But I'd say, at least a couple of thousand of those are direct overlap.

And I think what's important to highlight here is we've been working with Restaurant Magic for many years as one of our back-office providers for the Brink solution. And we've had a fantastic time working with them, operating with them and have been impressed the entire way.

And so our history and having shared customers paved probably the road map for this deal. But I suggested, they are in a number of conversations that we are not, which is part of our excitement around the deal..

Okay.

And I guess, you went through some of the merits of the acquisition, but could you delve into how you think of go-to-market approach? And you're kind of talking about it now, but how does their -- how do you think it changes when you -- when the two companies have kind of integrated together?.

Sure. So Brink will always be an open platform. We will not go to our customers and force them to take Restaurant Magic or and/or any of the products for that matter.

But what we have realized over time is that as we get into conversations about changing the point of sale product at a restaurant, we're often asked or suggested to push them to other products out there. And with the Brink solution, we've always found the Restaurant Magic product to be a nice fit.

And so as we've seen at some of our largest customers when we have upgraded the point of sale system, they've also updated the back office and a number of other products. And so we think going to market together will help accelerate growth. And I think Restaurant Magic as a company has a limited sales and marketing footprint today.

And our -- and we have a much larger one. And so we expect some immediate revenue synergies as our team gets out there and starts letting the world know about the Restaurant Magic product. We expect some uplift there. But our go-to-market is not too dissimilar with what we got today, except now that we have another product in our bag.

And so that our customer acquisition costs can now be spread over two products..

And I guess you've mentioned you guys are already working together.

So are these products kind of already integrated together?.

They are..

They are. Okay.

So there isn't a huge ramp-up as far as on the technology stack?.

I would say that the ramp-up will be in the sales and marketing. Restaurant Magic has been incredibly efficiently run. And so the sales and marketing there is relatively limited, and that's where we'll see most of our efforts early on. And then down the road, we think there's a lot of room for product innovation.

Our team is very excited to see what we could come up next with these two solutions. And I think it wouldn't be an exaggeration to say, between the point of sale and the back office, you're running the two most important or likely the two most important products within the restaurant.

And I think there's an opportunity to create some more down the road..

Just a few more, if you may. On this like deal on -- just in general, like on M&A. Could you talk about, like, i.e.

what -- how are you thinking about it now? Like this is a sizable deal, are you done with making major acquisitions? Or you still have an appetite? Or do you see gaps in your portfolio post this deal?.

capturing that footprint and that market share. But there's no question there's more opportunity for us to expand our product portfolio. And that expansion may come through M&A as we did here, but it may also come through our partnership program with other products or it may come from us building product.

And 1 of our great hopes is, as we continue to work through the backlog that you've heard over this last year from our customers, we'll also start creating new product. And so we see a lot of interesting opportunities out there for further M&A. But I'd say goal one, two and three is to scale our existing product..

Okay. And then on the hardware side, could you just talk about some of the factors that -- the win you said, the large hardware client. Could you talk about some of the factors that drove that win? Who did you compete with? And then I have 1 follow-up..

Yes. And just a clarification. So this was a, what we call, legacy hardware customer or a long-time customer of our hardware business that we now transitioned to a Brink customer, which is the first example of that happening in our portfolio. I think I can say we competed against everybody in the point of sale space.

Given the size of the customer, you can assume that everybody really tried to participate in like three or four firms that we compete with the most, we're in there. I think we won for a number of reasons. Obviously, that was a many-year relationship built off of trust.

We've done a really good job servicing this customer for a long time, and so there was a level of trust there. And then most importantly, our product won.

And I think the combination of having a very long-term relationship built on trust, built on mutual respect and service, combined with what we think is the best product for them, made that possible..

Okay. And the final question, just in general, like now that you have put the companies together, but how should we just generally think about the core business of Brink as far as organic growth for Brink going into 2020? Like if you could give us some idea of how do you -- what do you think like what level it will be..

Yes. So I think you're going to see a continued acceleration. So bookings are a great way to track our future installs, and bookings this quarter were almost 1,000. I think it will continue to expand next quarter and in all through 2020. And so we expect next year to be significantly faster growth than this year.

And we're not providing formal guidance, but we feel pretty confident in our ability to accelerate the growth from where we are today. I think this quarter's bookings were just the beginning of that..

[Operator Instructions] Your next question comes from the line of Adam Wyden of ADW Capital..

Savneet, great job on the quarter. So can you give us a little update on the pipeline of new logos deals? We've heard through scuttlebutt that many large brands are either piloting or have signed on with Brink recently, some of which you actually guys shared booths with at conferences.

I think you were with Restaurant Magic, with Church's Chicken, Hardee's and Carl's Jr., Yogurtland, Burger King, Panda Express, A&W, these are all things we've kind of seen through some of our channel work.

Can you talk about the pipeline, the competitive landscape? Why these Tier 1s are choosing Brink? And we also heard in the Q, one of your competitors is actually seeing some customers leave their platform to sign up with Brink.

I mean can you talk a little bit about the landscape in enterprise and the pipeline of new logos?.

Sure. I can't talk about any specific logos or wins that we haven't disclosed yet, but I'll focus on the core of your question, which is why. Brink, from day one, was built for that community.

These large enterprise customers have always appreciated the design and I think the workflow of the Brink product and hence, we've continued to win those large logos amongst increased competition. The reason I think we're seeing some acceleration is not that it's new demand. I think it's demand that was always there.

It was actually our ability to access that demand. I'd say for the last year or so, we haven't been nearly as aggressive as we wanted to be on the sales and marketing side because we had a relatively large backlog of development, a very large backlog on infrastructure.

And so we've been climbing aggressively out of that, starting with our capital raise, which led to a lot of hiring, a lot of changes. And so I think we are not through all of that yet.

But as we continue to climb out of that, you'll see not only growth in new large signings, like the one we had this last quarter, but you'll also see some acceleration in the logos we've already signed that we haven't fully penetrated.

But at it's core, the Brink product was really built for that enterprise market, and we continue to win because the product is -- differentiates itself. It's not much more than that.

I think the other thing that we're taking advantage of is that our customers have continued to come to us on this idea of wanting to be their partner, wanting to be the solution provider. And there's a great deal of trust.

PAR has been in business in this space for over 40 years, and that really matters to the enterprise customer, that we're going to be here for another 40 years. And so we have this great reputation of service.

We have this great reputation on product, and now we're just, honestly, unleashing our teams to actually go after that where, I'd say for the last year, we've had to hold back..

Got it. And this is a follow-up, I think, to Anubhav's question from Jefferies. Some of the larger Tier 1s that we've spoken to, like Pizza Hut and -- have said, look, they want to go with Brink, and they haven't gone with anyone else because they haven't had the functionality yet. Now one of the things they talked about was back of the house.

Can you talk a little bit about the M&A pipeline? I mean I know, obviously, you want to grow organically.

But I think in one of your medium articles and podcasts, you talked a lot about your appreciation for what Mark Leonard has done at Constellation and obviously, M&A at Brink and PAR will look different, we think better, more like Salesforce.com in being vertical, with real cross-selling synergies, what you're seeing with Restaurant Magic in terms of having similar customers.

I mean can you talk a little bit about the pipeline? And can you talk -- I mean, look, I'm just doing some back of the envelope math.

But I mean it seems as if you guys could be $60 million ARR, not including payments at the end of this year? I mean, do you think it's possible with M&A that you guys could get kind of close to $100 million ARR by the end of next year or into 2020?.

So I think it's hard for me to share the pipeline because, as you know, it's a competitive market and -- but I'd say this, what we focus on first, amongst all else, is if we add a product to our solution, does it make the customer better? A lot of what I think we've brought ourselves back to is on the foundation of Brink, which is how do we serve our customers? And really underlying that word serve.

And we lost sight of that for some time. And so we would not have acquired Restaurant Magic if we did not think it made customers' lives better. And so I think a little bit different than an investment business where you're acquiring streams of cash flow. Here, it's all about serving our customers.

And I would tell you, in the restaurant industry, there's a lot of opportunity to expand what we do today. And we've talked about it in the past. But the point of sale product is not even 15% of the spend of an individual restaurant.

And so there's a lot of room for us to expand whether we build product, partner or acquire to be a lot more to that restaurant, not to mention all the products around the horizon.

And one of the things that I think is underappreciated about this market is that as the entire restaurant stack moves to the cloud, the entire restaurant stack becomes, call it, virtual. You had this -- the market continues to expand.

There are products you couldn't dream of needing two years ago that could become absolutely needed now, and that will continue for a long time. And so I think there's a lot of opportunity for M&A. I think there's a lot of opportunity for us to build product. And I think we wouldn't be here if we didn't think we could continue to do that.

But first and foremost, again, our priority is we have to get Brink in more stores. We're obsessed with growing that footprint. And our expansion in table service is just part of that equation..

Okay. Just kind of following up on that. I mean obviously, think what you're trying to say is look, look at our deck, 9,000 is the stack and not including payments and obviously, as time progresses and restaurants grow and cloud kitchen, all the restaurants are going to be doing more AUV, they're going to need more SaaS.

And so 9,000 is what it is today. Obviously, payments is going to grow and we're going to be opportunistic. Maybe going down the line in terms of payments and table service. It seems to me that a lot of your competitors have basically been getting -- locking in their customers into payment contracts by giving away the hardware.

When we run some back of the -- obviously, each restaurant is different, but the ROIC of kind of giving away hardware or giving it discounted or entering into some sort of lease and earning 80 basis points net on a $1 million restaurant, I mean that's $8,000 a year. You run it out five years, that $40,000.

I mean the cash-on-cash returns of doing that in payments are pretty incredible. I mean can you talk about kind of your strategy to proliferate payments and maybe even -- maybe you can even pair payments with SaaS. So you get $3,000 on SaaS and you get $8,000 on payments, and you can start really cranking up the ARR.

I mean how do you think about that?.

There's a lot there. So I'd say this. I think us getting into the payment business, listen, it's something we should have done a long time ago and it's been a competitive disadvantage. We are now in it. I think it's important for a couple of reasons.

The first is, absolutely, we should be giving integrated payment solutions to restaurants, it's better for them. It's obviously a great business for us with not a lot of uplift on, call it, the customer acquisition cost, particularly in the, call it, the very franchised organizations or and are downmarket restaurants.

The second part of it is it gives us a lot of flexibility on how we can make the upfront cost to our customers lower, which is, right now, we -- there's CapEx to roll out Brink if you want to upgrade your hardware. You don't always need to, but many customers do.

And by locking in a payment stream, we're able to help that restaurant push off that CapEx. And so it's absolutely something we're looking to do, where we can offer effectively free hardware upfront for becoming a payment partner of ours.

And it just give us more flexibility to go after certain types of customers we haven't gone after, particularly in the table service market.

So we're very excited about it because I think it gives -- not only gives us a new revenue stream where our competitors have been, and we haven't, but it also gives us some flexibility for more accretive deals, particularly for some fast-growing chains where that CapEx really matters.

On the table service side, Brink is in the table service market today. We've got hundreds of stores running table service. And I think our new leadership for Brink identified early on was....

Pixel's mostly table service, right? I mean, you have like a lot of -- thousands of Pixel installed already, correct?.

That's right. And so I think we feel pretty excited about that we aren't as far from an incredibly high-quality table service product as we had originally thought we were. And so we've accelerated development in table service. We expect meaningful contribution from table service in 2020.

And as you suggested, there is -- there are opportunities because there are markets of the world where we have a very, very strong table service product that we think we should be able to convert over to Brink in time..

And from a pricing perspective, I mean, when we talk to people in table service restaurants. I mean some people could be paying $40,000 or some ridiculous number for a comparable table service product. I mean obviously, the AUVs are bigger and there's more terminals.

But I mean, those table service, I mean, not including payments, which you could probably bundle also, I mean, you're talking multiples of what you're charging for Brink, correct? I mean we're talking well into the four-digit thousands, no?.

Correct. So table service restaurants are significant -- priced significantly higher than quick service, fast casual, where the vast majority of our sales are today. Usually, at least a factor of two..

At least a factor of two, but presumably more. Okay, that's great. We've been doing some channel work, and it looks like you guys have been making a lot of big hires and you're hiring like crazy. I get LinkedIn sending me messages asking me if I'd like to work at PAR.

Are there any other bottlenecks in terms of this being a much larger company? Or maybe said another way, I mean, if the new deal pipeline is so good and the JV pipeline is so good, I mean, what is standing in our way of installing a lot more units? I mean we talked a little bit about giving people, hardware and people -- there's the CapEx.

And so now that you have the balance sheet and the gross ARR, maybe you can start -- and look, a lot of these companies just look like financing businesses. You give a small restaurant $25,000 of hardware and you get the payment stream and the SaaS.

I mean how do you think about now that you've got the scale, capital, what is standing in your way in terms of really accelerating the installation of more units? Or is it kind of imminent?.

So I think we've removed a lot of the bottlenecks. And I think we're starting to see breakthrough. Are we anywhere near where we need to be? No. But from where we started the year, we're in a dramatically different place. How do we get there? We continue to hire very, very high-quality talent.

And we haven't announced those people yet, but when we do, I think our investors will be impressed; I think our customers have already been impressed. But it will be our ability to continue to attract and retain great talent will be the key for us to scale.

We have -- I believe we are at a point where that hurdle we had throughout this year is starting to release, and I think that's why we see our bookings accelerating this quarter. I think they're going to accelerate again next quarter. And we really feel confident 2020 will be a big year for us. So we feel we've removed a lot of those bottlenecks.

And every quarter, I get more excited about our opportunity to ramp because we have more talent, more bodies to help us actually get things done. But we still got a ways to go, and we're continuing to find great talent. So feel free to apply anytime..

Thank you. Last question. Look, Lightspeed and some of these other companies, I mean, you guys have traded I guess, historically, at a major discount to the rest of the group. And I would say some of that was related to legacy governance issues, and some of it was probably related to scale and personnel.

But I mean, think about it, right? We've got Dairy Queen. We probably just signed CKE, and we've got three major Tier 1 logos. We've got great staff. We've got you, we've got capital, we've got payments. We've got Restaurant Magic now.

I mean why is this thing still trading at a massive, massive discount to everyone else, given that we've got a huge runway in front of it and all this additional ARR and ARPU opportunity? I mean why do you think that is? Obviously, your cost of capital matters to the extent that you're going to continue to do M&A.

Do you guys feel like you guys have a path forward to kind of narrowing the valuation gap? Is it selling Government? I mean -- I don't know, I mean I'm just kind of curious, your thought processes kind of in terms of kind of narrowing your cost of capital. I mean obviously, Restaurant Magic is a wonderful deal, and it's going to be accretive.

But when you want to buy a $30 million SaaS company, it's going to cost more, and you're going to need a higher cost of capital.

I mean how do you think about getting there?.

Yes, listen, we're well aware of the importance of the cost of our capital, given the space that we're in and the competitors that we have, probably looking to buy the same assets we're looking to buy. So I think there's a lot there, and I'm going to narrow it and say we've come a really long way in a short period of time.

When we started the year, we were in a situation where we had, I'd say, customers who were very disappointed in us. We had a workforce that yet wasn't energized, wasn't empowered, and we didn't have money. And I think we've got a long way to rectify that.

And so I think our ability to close what might be a potential valuation gap is going to be us just executing. And I think as you saw this quarter, we're accelerating bookings.

I think if we continue to accelerate bookings, we continue to sign these new logos, and we prove out that one plus one equals three with Restaurant Magic, I think the stock price will take care of itself..

Very good. Well, look, I look forward to seeing you allocate the capital while kind of creating deals that have relevant cross-selling. It looks like a great opportunity, very excited for it..

I am showing no further questions at this time. I would like to turn the conference back to Savneet Singh for closing remarks..

Thank you all for joining. We look forward to updating you next quarter..

Ladies and gentlemen, this concludes today's conference. Thank you for your participation. You may all disconnect..