Good day and thank you for standing by. Welcome to the FY 2021 Third Quarter Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded.

[Operator Instructions] I’d now like to hand the conference over to your first speaker today, Chris Byrnes, Vice President of Business Development. Sir, please go ahead..

Thank you, Peter, and good afternoon. I’d also like to welcome you today to the call for PAR’s 2021 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 page of our website at www.partech.com. I also want to be sure all participants today have access to our Earnings Presentation and Business Review slide deck to better communicate the momentum in our software business.

Individuals on the webcast should have access to the deck when they logged on to the call this afternoon. For those just dialing in on the conference call this afternoon, the presentation can be accessed again on the Investor Page of our website and we also included as an attachment on the 8-K we file this afternoon.

At this time, I’d like to take care of certain details in regards to the call. Participants on the call should be aware that we are recording this call this afternoon and it will be available for playback. Also, we are streaming the conference call today on the internet.

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 statement 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 thanks everyone for joining us to review PAR’s third quarter results. There’s a lot I want to share with all of you today in our prepared remarks. So let’s get started. As a company we delivered strong third -- we delivered a strong third quarter, reported total Q3 revenues of $77.9 million, a 42% increase from one year ago.

This revenue was motivated across all business lines and specifically around our software recurring revenues resulting in $82.5 million of Live ARR at quarter end and year-over-year growth of 35% when compared to Q3 last year, which includes Punchh performance from Q3 2020.

This increase was driven by 46% growth in ARR by Punchh and 29% from Brink from Q3 last year. But very encouraging is that Contracted ARR now totals approximately $97 million as of September 30th. Our strong results this quarter were driven by a high level of execution across the business and continued demand for PAR’s Unified Commerce Cloud Platform.

We have established strong momentum and have continued to build on that throughout 2021. In Q3 we activated 1,739 new Brink sites, a single quarter record for Par. On a net basis after churn brings active store count now total nearly 14,900, a 35% increase from one year ago.

Brink’s bookings totaled 780 stores in the quarter as we manage supply chain issues plaguing the industry today. We expect for this rebounding Q4 and ARR growth to continue to accelerate sequentially as well.

In Q3, we were successful in activating some of our oldest backlog, many of whom were legacy PAR’s customers with modestly brought down ARPU across our network customers was offset by very strong activations. We expect these impacts to balance out next quarter as new customers are signed at higher subscription rates.

Now turning to Punchh, we continue to outperform with Punchh and added more than 4,500 Live sites in the quarter that now total more than 52,900, a 54% increase in the last 12 months. We signed 14 new customer logos in Q3 that include over 3,000 stores and went live with Jack in the Box and their network of restaurants.

New mobile experience and pickup products are seeing traction from customers and I also want to reiterate that we are beginning to see momentum within the C store segment as the industry seeks out a more robust loyalty solution. We added six important new integration partners in quarter and our business outlook and pipeline remained very strong.

Data Central added 168 stores in Q3 and we are beginning to see renewed interest in our leading back office application. Active sites now total almost 6,200 and ARRs at $9.1 million at the end of the quarter. Our PAR Payment Services pipeline grew significantly in the quarter and we expect to announce new wins in our next quarterly call.

We see Payments Excess broadly in Brink, Punchh and non-existing PAR customers. Our Product and Hardware business -- our Product Hardware business continues to perform well in difficult and challenge environment. Product revenues in the quarter continue to strengthen year-over-year improve sequentially as well.

Product sales were recorded at $30.3 million in this recently ended quarter, a 48% increase. The capital purchase environment for restaurants is always tricky and that has been even more so with the pandemic and the global supply chain difficulty thrust upon several end markets.

As I mentioned last quarter, we are not immune to these challenges around supply chain and we have experienced some margin impact with the cost associated with the current realities, include the dramatic growth in shipping charges.

We are taking direct steps to mitigate these issues including price increases and other actions already reported -- and already reported product margin improvements in Q3, which I expect to continue in Q4.

Regarding the supply chain, specifically, we will continue to diligently manage our partners and vendors throughout any shortages, price inflation and increase in freight charges. Now to briefly report on our Government business. In the quarter, we reported revenues of $18 million, a 3% increase when compared to Q3 last year.

Last week, we announced the largest award in our company history by ADEX. The U.S. Air Force Research Laboratory Information Directorate awarded the similar award of $490.4 million IDIQ contract for counter small unmanned aircraft system work on software hardware and technical documentation.

This award has a contract term of six years and an additional two-year period of order perform -- of two-year order of performance beyond the original six years.

We will recognize revenue as task orders are assigned and but we are seeing immediate impact upon contract backlog that grew to $192 million at the end of Q3, a meaningful $51 million increase from three months ago.

We are gratified by the confidence the Air Force has shown in PAR with this award and we have always prided ourselves on the critical role we play in supporting our operational customers and the requirements. Let me now talk a bit about where we see things going forward for the business -- from a business perspective.

Last week, we spent time meeting with dozens of customers and partners.

I love hearing directly from our customers and users which we will -- which we call our voice of the customer sessions, because it helps us to validate and sharpen our strategic plan, as well as providing the PAR team with direct feedback on the trends and issues our customers are seeing today.

The foundational belief of our thesis is built on the idea of creating a Unified Commerce Platform, one that delivers power back into the hands of the restaurant. Today, we see many restaurant tech companies winning at the expense of restaurants rather than in service to them.

We believe technology should be built to serve operators and their end customers. But today, in our industry, it’s become extractive. The challenge is rooted not in something dubious, but from a structural flaw in the restaurant technology stack, the absence of an integrated platform.

Dozens of disparate applications are being cobbled together in the hope of building a simple and beautiful experience. But unfortunately, that premise has challenged the experience of operators and their customers experience is suboptimal.

As a result, the job of the restaurant CEO -- CIO today has become one of getting dozens of different products to work seamlessly, rather than focusing on growing market share and delivering differentiated guests experiences.

What is perhaps worse is that all the operational customer data insights that might otherwise be available to brands is being trapped in the silos of these disparate applications. This is a problem PAR is working to solve and the greatest opportunity for our clients. We are moving from a world of bodies to bits.

Historically, every challenge of a restaurant was solved by the addition of more labor. If you have too many cars and your drive thru lane, you send out a line buster. If you have too many orders, you add a line chef, too any quality issues, you add a spot checker, every challenge could be solved with more bodies.

But in a world where restaurants are expected to not only deliver great in-store experiences and also deliver Amazon like digital experiences off-premise, the model of running multiple platforms breaks down. Enterprise restaurants need a truly unified platform to make this work and this is what we are building PAR.

One that natively brings all transactions in-store and off-premise along with all customer data into a unified open cloud platform with enterprise scale.

Our goal is to be the foundational technologies that provides our customers the organizations we are built to serve with the ability to fill their own technology destinies and to build differentiation and competitive advantage through unique experiences.

Such technologies remain open to working with other vendors and allow our clients to choose which features to turn on and off to build their own op proprietary capabilities and to manage and support their own limitations.

With the exception of decision, our new CPTO, Raju Malhotra is driving this platform vision and have immense confidence in his abilities to deliver on transforming PAR, Punchh and Data Central.

Alongside this internal development is a highly focused M&A program nearing in a couple key gaps we are looking to fulfill in short order, as witnessed by our recent capital race. While all markets are competitive, PAR occupies a very unique place.

We serve as customer a customer base, above the size of our most of the venture capitalist flowing into restaurant technology. On a daily basis, we compete against more traditional competitors from those that are still building on-premise to those who believe that a platform is the equivalent of a bundled solution.

Our ability to grow in this market is completely supply driven, not demand. Our ability to grow at current level is almost -- our ability to grow at current levels is driven by store count. Today we are around 15,000 stores, have a TAM that’s almost 3x the size, yet our ability to grow higher rates will be driven by the deployment of new products.

This is the next leg of our transformation and our major focus in 2022. In closing, I’d like to thank the entire PAR team for their contributions.

At PAR, we live by four values; one, speed, we like to say, we look for those who don’t wait for the elevator; two, ownership, we look for those that are owners not renters at PAR, people who treat part like their own car and not a rental car; three, focus, we always try to remember the 80/20 wins; and four is winning together, this is the belief that all stakeholders of PAR must win, our team, our customers, our suppliers, our community and our shareholders.

We take these values seriously and every day we work hard to develop and hire on these values so that we can deliver for all stakeholders. With that, I’d like to hand it off to Bryan who will review our financial performance in greater detail.

Bryan?.

Thank you, Savneet, and good afternoon, everyone. Total revenues were $77.9 million for the three months ended September 30, 2021, an increase of 42% compared to the three months ended September 30, 2020.

Net loss for third quarter 2021 was $31.9 million or $1.23 loss per share, compared to the net loss of $33.7 million or $0.20 loss per share reported for the same period in 2020.

Adjusted net loss for the third quarter of 2021 was $9.3 million or $0.36 loss per share, compared to an adjusted net loss of $2.4 million or $0.11 loss per share for the same period in 2020. Product revenue in the quarter was $30.3 million, an increase of $9.8 million or 48% from the $20.5 million reported in the prior year.

The strong growth was primarily driven by hardware refresh investments by our domestic and international Tier 1 accounts, in part from delayed hardware refreshes in 2020 due to COVID-19.

Service revenue that includes revenue streams from our subscription software was reported at $29.5 million, an increase of $12.6 million or 75% from the $16.9 million reported in the prior year.

The increase was primarily driven by revenues from Punchh of $9.7 million and an increase of $1.8 million for other software revenue and $0.8 million for repair services. The company continues to expand a recurring revenue base, which includes both software related services and hardware support contracts.

In total, recurring revenue streams contributed $11 million of the increase in service revenue. Of the $29.5 million of service revenue reported in Q3 2021, $25 million is comprised of recurring revenue contracts, as compared to $14 million in Q3 2020.

Contract revenue from our Government business was $18 million, an increase of $0.5 million or 3% from the $17.5 million reported in the third quarter of 2020. The increase in contract revenues was driven by a $0.7 million increase in our ISR solutions product line, partially offset by $0.3 million decrease in our product services product line.

Contract backlog, as Savneet mentioned, continues to be significant, noting a total backlog of $192 million as of September 30th, a $51 million increase from Q2 of this year. Now turning to margins, product margin for the quarter was 24.8% versus 21.9% in Q3 2020.

The increase in margin was primarily due to favorable product mix and favorable absorption of overhead costs due to increased sales. Service margin for the quarter was 29.6%, compared to 33.3% reported in the third quarter of 2020.

The decrease in margins was driven by an increase in amortization expense for acquired developed technology of $2.9 million recognize as a result of Punchh acquisition and incremental costs incurred while transitioning our field operations organization.

Service margin during the three months ended September 30, 2021, included $3.7 million of amortization of acquired intangible assets, compared to $2.9 million during the three months ended September 30, 2020.

Excluding the amortization of acquired intangible assets, Service margin for the three months ended September 30, 2021 was 42.3%, compared to 38.5% for the three months ended September 30, 2020. Government contract margins were 10.9%, as compared to 9% for the third quarter of 2020.

The increase was due to improve margins in both ISR and Mission Systems product lines. GAAP SG&A was $21.7 million, an increase of $5.9 million from the $10.5 million reported in Q3 2020.

These numbers include stock-based compensation and the increase was primarily driven by $7.2 million in total Punchh operational expenses, of which $1.9 million is stock-based compensation. Other drivers included increase of $2 million in corporate expenses,$0.6 million of variable compensation and $0.4 million for sales and marketing.

Net R&D was $10.1 million, an increase of $5.9 million or 140% from the $4.2 million recorded in Q3 2020. The increase is driven primarily by $2.2 million for Punchh and $2.7 million related to additional investments in our existing product development organization. Net interest expense was $5.4 million compared to $2.2 million recorded in Q3 2020.

The increase was primarily driven by the Owl Rock term loan. Net interest expense for the quarter included $2.1 million of non-cash accretion of debt discount and amortization of issuance costs compared to $1.1 million for the same period last year.

In Q3, 2012, we recorded a loss on extinguishment of debt of $11.9 million as a result of the repayment of the Owl Rock term loan. There was no loss on extinguishment of debt during Q3 2020.

Now to provide information on the company’s cash flow and balance sheet position, for the nine months ended September 30, 2021, cash used in operating activities was $43.6 million versus $14.4 million for the prior year.

Cash used for the nine months ended September 30, 2021 was a promotion, driven by an increase in net loss, net of non-cash charges, and additional net working capital requirements, driven by an increase in accrued compensation and an increase in other current assets.

The increase in other current assets reflects an increase in our prepaid assets as the company took advantage of repricing opportunities with key strategic partners. Cash used in investing activities was $381.1 million for the nine months ended September 30, 2021 versus $6.9 million for the nine months ended September 30, 2020.

Investing activities during the nine months ended September 30, 2021 included $374.7 million of cash consideration in connection with the Punchh acquisition.

Capitalized software for the nine months ended September 30, 2021 was $5.5 million was associated with the investments from various restaurant software platforms versus $6.4 million for the nine months ended September 30, 2020.

Cash provided by financing activities was $444.3 million for the nine months ended September 30, 2021 versus $48.7 million for the prior year. On April 8, 2021, we received net proceeds of $155.7 million from the private placement of our common stocks to PAR Act III, LLC and certain funds and accounts advised by T. Rowe Price Associates.

In addition to net proceeds of $177 million from the Owl Rock term loan, on September 17, 2021, we received net proceeds of $256.8 million from our offering of the 2027 Notes and $52.5 million from the equity offering. We used approximately $187 million of the proceeds of these offerings to repay the Owl Rock term loan in the full.

Repayment of the Owl Rock loans in exchange for our convertible debentures will result in a $5.5 million annual reduction in cash interest. During the nine months ended September 30, 2020, we received net proceeds of $49.5 million from our offering of the 2026 notes, which reflects our use of $66.3 million to repurchase a majority of the 2024 notes.

Inventory increase from December 31, 2020 by $12.4 million, we increased our inventory on hand to mitigate supply chain shortages and delays will ensure we can meet our enterprise customers demand for installations.

Accounts receivable increased $5.9 million compared to December 31, 2020 due to increased sales volume, day sales outstanding improved within restaurants and retail from 74 days at December 31, 2020 to 50 days at September 30th 2021. This is tremendous progress and complements our team’s hard work and management’s focus on operational excellence.

Day sales outstanding increased within government from 51 days at December 31, 2012 to 55 days at September 30 2021. This concludes my formal remarks and we will now move to.

Thank you. [Operator Instructions] And your first question will come from George Sutton with Craig-Hallum. Your line is open..

Thank you. This is Adam [ph] on for George. Great results, guys. Savneet in the past, you have talked about PAR payments and even though potential for it to potentially become one of your largest revenue segments, would love to get an update on your thinking from what you have seen early on and what the initial feedback has been so far..

We are feeling very good about it. The pipeline grew tremendously in Q3, and I think on our next quarterly call.

We also announced some of the logos that we expect to sign, so we feel really good momentum there and then I think we have just started the push of using our payments product within Punchh customers and so we are seeing one or two test customers I think should lead to quite a bit more.

And then I think surprisingly, we have actually found a couple of non-existing Brink customer -- non-Brink customers, who we expect to account our payments product that will also be a good shoo-in for us than sell Brink or Punchh. Pipeline grew across all three of those categories on the next call, I think we will have some exciting announcements..

And then with respect to being a year focused on a product would love to get your updated thoughts post raise on internal versus external development. And then how the digital order management projects going and what else you think might fall in that internal roadmap..

Great. Yes digital order management is coming out in Q1. Very, very excited and we have got a pile of customers already lined up. So it will have great feedback and we will be there quickly to drive revenue and that’s our big new release, which is really the beginning of our foray into building the platform I talked about in call.

We will certainly look to be acquisitive. We raised money on that premise and we have got a couple of key holds we are looking at and so we have got a very, very active M&A team that works on this. And so, we will build both organically, inorganically.

And our goal is really to, have the discussions on the platform done by the end of next year, but start selling the platform in advance of that..

Great. Thank you..

And your next question will come from Stephen Sheldon with William Blair. Your line is open..

Hi. This is actually Pat on for Stephen. I wanted to ask, how does the recent Air Force contract you won impacts your thoughts and what you plan to do with the government business over the near term and just your thoughts and I going forward..

I can’t say anything too specific, but I’d say, it certainly makes the business more attractive which gives us optionality on what we want to do and certainly makes the business more valuable..

Okay. And then I also wanted to ask about the, PAR Phase hardware POS that you recently announced and just how that ties into the general hardware, software strategy, and how it might be complementary to the existing Brink offering..

Yes. Absolutely. It’s the next version of our internally designed terminals.

It’s gotten really strong customer feedback so far and I think the tie here is twofold, one is Brink runs on really anything that’s out there, any windows, if I said I think works fantastic, but we do think that on our own devices works a little bit better particularly on design. If you look at the Phase, it’s a beautiful product.

It’s not sort of copycat product and Brink works really elegantly there, but it also allows us to service a better, so you have got a challenge with the product, you can ship it back advance exchange, warranty, so on and so forth, allows us to give our customers the full solution which more and more of them want.

I think what we are finding is similar to our thesis on software. Our customers don’t want to, there’s enough value and then having a different hardware vendor if they are there different hardware contracts. So, and so forth and so you are seeing movements of things like SaaS, hardware as a service put together so, I think it helps.

And obviously, we have a new product to market. It helps build excitement with customers because while enterprise customers are different, there’s still that excitement getting new devices like when new products come out for consumers. Thanks..

That’s very helpful. Thanks..

[Operator Instructions] Your next question will come from Samad Samana with Jefferies. Your line is open..

Hey guys. This is actually Jeremy [ph]. I am on for Samad. So the question on activations, you guys are coming up with a record-high number of activations in Q3.

How should we think about the shape of the activations going forward? Does the company invest in more capacity to bring on new bookings or how should we think about that?.

So I think was worse in the remarks bookings will come back in Q4. Some of this is supply chain dependent, but we feel pretty good about that right where we are now a lot of years in building up the pipeline for next year.

So I do think we will see some bookings in Q4 and I think as with activations, we activated 500 stores in Q3 and we didn’t really expand the team and I think we feel pretty good about from a capacity perspective, our ability to handle spikes in activation volume..

Thank you. And so I know that we have a little more clarity on kind of the reopening following the pandemic, is there any change to your internal forecasting or targets are going to, can you provide any more color on that..

We don’t give great guidance or guidance at all. So I guess that’s not great guidance because there’s no guidance, but I think that from an internal perspective, we just feel really convicted in the belief that our vision of a Unified Commerce Platform is the way our interest going.

And so I think a lot of our success will be driven so much more by our customers adopting this idea where it sort of an easy to tell which is -- talk to any restaurants CIO and they will tell you, their life is managing vendors, it’s not about building great experiences and we are really trying to give the power back to them.

And I think that’s actually what’s driving -- will drive our internal forecast, but without question, we are not living in a world where the delta variant spikes and activations fall off the cliff. We feel like we are kind of at a level where we have got great visibility, but that can all change and that we have learned in the last year..

Great, guys. Thank you and congrats on the quarter..

Your next question will come from Anja Soderstrom with Sidoti. Your line is open..

Yes. Hi. Thank you for taking my questions and congratulations on the strong quarter. And I am just curious for the Punchh, you mentioned you had 14 new logos. Is that new logos to PAR technologies, that new logos for Punchh and result of the cross-selling..

It’s a mix. I don’t have the breakdown top my head, but it’s definitely a mix, we absolutely saw head customers that we brought from Brink over to punch, and then we had net new logos. So it’s a very healthy mix..

Okay. Thank you. And then also what are you seeing in Magic and now when we see this inflationary environment and labor costs going up and everything and on food, the prices are going up, you would think there would be a stronger demand for the company’s to -- other restaurants to run that more smoothly..

Yes. We are seeing that and you are going to and I think that’s why we saw good rebound here and that I think will continue. It’s just making it more of a priority. It also allows us to sell more within Restaurant Magic.

There are parts of Restaurant Magic that modules that specifically address labor efficiency, even things like scheduling that we don’t sell today. I know it’s a lot of it will create some more module extension for us there. But I think on your, the rebound we have seen in Restaurant Magic is completely driven by the point that you mentioned.

That’s really what’s the point there..

Okay. And then just lastly on the supply chain. It seems like you built up some inventory to be able to contain on the pace you doing with installments, but how much of, what are you seeing in the supply chain.

Currently, is it easing or is it becoming worse?.

I would say -- we have thought a few quarters ago be better by the end of the year.

I would say where -- it’s not getting worse, but it’s, it’s kind of flat lines at the area where if you said hey I installed 500 stores in December we say that’s been very hard for us to get that to you, are now being our thousand and particularly for large customer orders are now -- Q4 we normally, sorry, excuse me, in mid-Q1 because the visibility on early on the challenges around shipping, getting cargo capacity, later it was around -- now it’s around the LCD screen.

So it sort of continues to be a challenging environment, but I think one of the smartest things we did this year from a capital allocation perspective was we advanced purchased and put deposits down.

And I think we are only company are safe to do that which allowed us to sell a lot of the product sales that you saw that great growth than when others weren’t didn’t have the supply available, but from our standpoint from Q2 to Q3, we saw no change. And when there are no changes, no visibility if it is getting better or worse..

Okay. Thank you. That was all from me..

And your next question will come from Adam Wyden with ADW Capital..

Hey, guys. Thanks for taking my call. Just kind of revisiting the Government contract. It sounds like you guys were talking about the backlog increased by $50 million, I mean how do we think about that incremental profitability.

Do we expect to earn similar margins, is it fair to assume that this contract over time kind of doubles the government business or how should we think about it..

Yes. The margin of this contract should be very similar to our existing direct and indirect labor margins. So we don’t expect it to swing margins anyway..

I noticed on your profitability obviously took some adjustments for the banking deals, but you guys lost about $4 million in the quarter, which given the scope of SaaS and the growth, I mean it looks like you guys are going to be profitable a lot sooner than the market expects.

I mean, I remember a time when I would buy shares and government was worth more than the entire market cap.

I mean, it seems like the business has gotten scale that between hardware and the SaaS that you guys could probably divest this and I read something in terms of record M&A multiples 13 times for defense contracting businesses, I mean why would you guys wait I guess is what I am saying like I guess you guys have communicated that that you guys had to get this contract on your belt and this is something you guys have kind of been waiting for the last two years or so.

I mean obviously you are not going to give it away, but I mean is there any reason today why you wouldn’t move with it given that the contracts behind you and multiples are at record highs..

I won’t say anything forward looking, but I would say in the past, we have talked about wanting to win this contract. And so I’d sort of go to those comments, We said in the past, which is -- and I think -- I think people understand now kind of while we had some pause, given that the enormous scale of this contract.

But I say anything forward looking that we have kind of communicated in the past that this was an important part of our process..

Right. And I guess you guys feel more confident. I mean, obviously from a profitability standpoint, you guys are probably ahead of schedule.

So that would probably make it easier in some capacity, would it not?.

Yes. I don’t think we have ever looked at it as dealing the profitability. I think we have always looked at it is -- it’s a business that has very little management distraction and let’s get it if we were on the verge of a large contract, it would be silly for us to sell given how valuable that one contract is right.

This one contract could grow our backlog beyond the existing backlog in a very short period of time and so it services as much as it doesn’t make sense for us to be under that sort of giving money away and so we didn’t make any sense. We look at our business very cleanly. And I don’t think the property restaurant business would have any impact.

We have got plenty of liquidity, and in our pleased also external M&A strategy. And so we have kept it not because we want the cash flow, but because there is, it would be leaving a ton of money on the table..

Sure. So just going back to it, I mean if you look at the business kind of pre-COVID Q1 2020, you guys did, call it, you guys were on pace for like doing close to 1,700 activations or 1,800 and you kind of got through that and that’s really powerful and exciting.

I mean today, you are still burdened I would think from some COVID restrictions in states and being able to get in and obviously from the semiconductor shortage in supply. I mean, I know you don’t give forward-looking guidance.

But I mean, I guess the question is like, what would -- could you communicate a little bit about what the organic growth you expect out of these assets in kind of a normal environment and something that would be suitable to use, so people can kind of think about multi-year growth trajectory in terms of like what your expectation is, I mean obviously COVID can happen, things can happen, but I mean kind of like what your cost of capital is from a growth perspective.

When you acquire -- operate assets?.

So there’s a lot in that question. So I think from a cost of capital perspective, right? We are very conscious that we have used our stock to acquire businesses and raised capital by businesses, and we are sensitive to that. It does change the deal dynamics. If we don’t feel that there is a win there and so we are pretty careful there.

From an activation perspective, we are, I think we feel like we did a great job this quarter and we expect to continue to do great job. I don’t think these double overnight.

I think but we feel really good about how many we pull through this quarter and I think exciting next quarter, is that this quarter had a significant amount as we mentioned on our transcript of our legacy deals signed in 2016, 2017 very favorable pricing and as we go forward, we are now moving into our deals that are sort of our traditional price point or higher.

So you will see that the benefit of that as well..

Without getting too kind of ambitious, I mean if COVID continues to abate, do you think that the Punchh obviously different, but I mean do you think that Brink can return to doing a couple of thousand a quarter, is that unreasonable. I mean if the kind of supply chain semiconductor stuff abates, and kind of the COVID restrictions kind of cool down.

I mean, is that an unreasonable outcome?.

I don’t think it’s unreasonable outcome.

If we have got these restrictions and was particularly supply chain and we continue to build the pipeline, which we feel pretty good about, so I expect this to continue to grow at these rates are more for the next couple of years exclusive of M&A and I do think that as we look at M&A, very much do focus on something that’s accretive to growth.

So that’s probably give little color to..

Last question, I will let you go. If you read toast S1 they basically talk about the investment in the restaurant industry of about $80 billion to $100 billion.

And if you think about that, not that much of that is being spent annually on hardware because hardware lives a long time and so you kind of toast kind of has a back of the envelope calculation of somewhere between $60,000 and $80,000 of software spend per store and obviously we haven’t captured that. I mean is, I mean, when you think about the TAM.

I mean is that unreasonable that long-term that’s kind of the addressable market for PAR within their existing verticals?.

I think what we have always said is that our TAM of enterprise, Tier 1, Tier 2, Tier 3 -- fast casual is about half the restaurant market in United States. Whether that 700,000 or 800,000 restaurants, is to be debated.

And we have always believe that you from the -- a couple of years ago from Brink being at the time, $2000 per year that there is a clear path for from 2010 based on what we see in front of us, right? And so we have taken it up from 2000, we added Data Central, which is about 1500, we added Punchh, which is a 1000 to 1500 and then for now we came out with digital management system, a couple of more of our product enhancements, acquisitions and payments and you can really this is clearly about 10,000.

But for me, it’s exciting, a lot of it is suggesting in remarks on the call is that we are at the inception of this transformation of the restaurant, all of a sudden restaurants have this unfair proposition of like having a great in-store experience and then you are like, hey, we also want to be amazon.com and that is a really tough, tough thing without a lot more product, a lot more software and we got a unified platform and so today that’s how we look at it, but I wouldn’t be surprised of change a lot given how fast the market is moving and that would certainly probably means other more standard..

Right. Yes. Have you guys explored you guys talk about hitting, pinging your API. I mean have you guys explored adding a transactional element to it where other people plug into your point of sale and you start paying per transaction. I mean I just there is so much people are accessing our systems, so much.

I guess, I wonder if there is more in terms of other selling back-to-date or charging to access the API because you look at a $2 million restaurant, charging $40,000 a store across all subject doesn’t seem that crazy if it brings people the efficiencies and then clearly the software is driving a lot of efficiency at the restaurants.

I am curious how you think about other kinds of revenue mechanisms?.

Yes. So in the short line, we have got a couple of levers, right? We have got a new product, digital management systems, we have got payments.

As I mentioned, we are going to have some hopefully to make announcements come out, but we have also put the first price increases on Brink in 10 years and so will have ability to drive price and as we talked about on other calls, we are having a new API product launching that is transactional.

So the way I look at PAR is we are not in a demand-constrained environment. We have been in a supply-constrained environment where we as part have been unable to fulfill all the demand of our customers.

Yes and so we have solve that first two M&A, but now through organic product build and that’s what we like the engines at all excited because I think we are 2.5 years into this journey made little more than now. And the first year-and-a-half plus was just getting the products stable, getting the trust of our customers.

The next year was getting the motion together and then obviously COVID kind of curve ball and now it’s about monetizing at the benefit of our customers. The key part of the Unified Commerce Platform is not that we are trying to extract and bundle a bunch of products and cram it down your throat.

We are actually trying to give you a platform to take that back. And I think we are taking a rough turn when industries turning right where restaurant tech companies have gone the complete other way, it’s like bundle, bundle, bundle, extract, extract, extract, but they haven’t actually built something that the restaurant value.

I challenge anybody on this call to go find a restaurant manager or restaurant CEO who says the job is better, who says the ROI is better and says that the lifestyle of the restaurant place is better now than it wasn’t about technology, it’s extremely hard to find that case.

And so the technologies become extractive, it hasn’t been built to serve the actual constituents and so while at the midpoint, it’s what we believe. And if you can build out. And so, much of this journey is about giving them that platform. So it’s a long answer but it’s the way we look at the world..

The last thing I will get is the last one and there with Toast recently going public. A lot of people said, what is the difference between PAR and Toast and obviously, I have studied in developing relationships across the ecosystem. I mean, can you comment a little bit about NCR abandoning their Aloha product.

And basically that no large enterprises put out an RFP and actually given it to anybody else. I mean because I think it’s unclear to a lot of new people to the story that you know that you said that this is a supply constraint, not a demand constraint and that the large logos that are integrating Brink, it’s not like they are going somewhere else.

It’s just they have been elected to kind of cross the Rubicon yet or PAR has not prioritized them.

I mean if you are really important to kind of explain to people to the technical moat that the PAR universe has built?.

So I think I will talk about anybody specifically, but I will talk about categorically which is we occupy this very special space, which is all the dollars that have thrown into the space and primarily focused on small, small business, the restaurant down market and it make kind of sense right you can a bunch of payments and product to a small restaurant.

They don’t really know. And you are making $10,000 a box. We are in the enterprise market where it’s PAR and then primarily legacy products.

These are products like I said, that are almost half of them are on-premise, right? So, they haven’t really kind of the time or they sort of have been, again extracted to the customers, although the trust is not there. And so we have been very lucky that we going to swim in this pool, where our competitors are not Silicon Valley.

Yes, I am sure they are coming, but they are not broken out yet. And so we have been able to take share and continue to grow, partly because of good product, but also because the competition is quite weak. Now what’s exciting about our end market is that they are not a $10,000 out of the box.

Yet, but it’s coming because they are the ones who could use this technology, today there are single restaurants that exist, large restaurants are outspending, medium restaurants by so much, that it’s creating massive disparity and the technology listings were quite disparity there and what sort of fill that void..

But to answer your question specifically, they are amazing companies in restaurant technology, very few of them are in the category that we plan and very few of the ones that are in our category actually looking to grow and expand and make the commitment R&D that we are..

Right. Which makes you guys attractive as an M&A player, because you can buy these little companies and give them the resources and the sales and distribution. I mean if you look at Punchh and Restaurant Magic, I mean these are companies where you can deploy resources and help leverage you are 40 years’ worth of relationships..

I think that’s exactly right and that’s what we have done and we are just at the beginning, right, because now we have worked through a lot of the challenges that have further down, and we sort of feel like we are hitting that moment of acceleration..

Good. Well, look, I am on this thing for four years, and I look forward to owning it for the next 40 years. So keep up the good work..

Thanks, Adam. Thanks, everybody..

I am seeing no further questions at this time, I will now hand it back over to Savneet Singh for any closing statements..

Thank you everyone for joining. Look forward to updating you on our Q4 results next quarter. Thank you..

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