PAR Technology Corporation (NYSE: PAR), a leading provider of restaurant and retail technology solutions, reported a robust second quarter for fiscal year 2024, demonstrating significant growth across its subscription services and successful strategic initiatives. The company's financial results were marked by a 48% increase in subscription revenue and a total revenue rise of 12% to $78.2 million compared to the same period last year. Despite a net loss from continuing operations, PAR Technology anticipates positive adjusted EBITDA in the upcoming third quarter.
Key Takeaways
- PAR Technology's subscription services revenue surged by 48% to $44.9 million.
- Total Q2 revenues increased by 12% year-over-year to $78.2 million.
- The company's Annual Recurring Revenue (ARR) grew organically by 24%, reaching $192 million.
- PAR Payments hit a record gross processing volume run rate of $2.5 billion.
- The company divested its government business to concentrate on foodservice technology.
- Net loss from continuing operations was reported at $23.6 million, but adjusted EBITDA is expected to turn positive in Q3.
Company Outlook
- PAR Technology is optimistic about the recent TASK acquisition and its integration.
- The company expects organic ARR growth to exceed 20%.
- Positive impacts from the Wendy's (NASDAQ:WEN) rollout are anticipated in Q3.
- PAR aims to focus on high ROI products and expand internationally.
Bearish Highlights
- Hardware revenue decreased by 24% to $20.1 million.
- The company experienced a net loss from continuing operations of $23.6 million.
Bullish Highlights
- Gross profit increased by 67% to $32 million, primarily driven by subscription services.
- The company managed to drive margin improvement while increasing operating expenses by only 15%.
- PAR's cash and cash equivalents stood strong at $114.9 million.
Misses
- If the government business had not been divested, the company believes it would have comfortably achieved EBITDA profitability this quarter.
Q&A Highlights
- CEO Savneet Singh discussed the potential of achieving the Rule of 40, combining ARR growth and company-wide margin.
- Singh highlighted the company's robust pipeline and ongoing discussions with mega brands.
- The company has improved its ability to scale operations to meet customer needs and is focused on value-driven pricing.
- Singh anticipates ARPU growth driven by net new locations and opportunities within the existing customer base.
PAR Technology's Q2 performance showcases its strategic focus on subscription services and technology offerings tailored to the foodservice industry. The company's divestiture of its government business and the integration of acquired entities like Stuzo and TASK underline its commitment to strengthening its core operations. With a growing ARR and positive customer responses, PAR Technology is positioning itself to capitalize on market opportunities and deliver value to its shareholders.
InvestingPro Insights
PAR Technology Corporation's recent financial reports underline its strategic growth in the foodservice technology sector. While the company's subscription revenue and total revenue have shown remarkable increases, it is essential to consider broader financial metrics and analyst expectations to gain a comprehensive understanding of PAR's financial health and future prospects.
InvestingPro Data highlights that PAR Technology has a market capitalization of $1.79 billion, suggesting a substantial market presence. However, the company's P/E ratio stands at an elevated 874.48, reflecting high investor expectations for future earnings growth. The revenue for the last twelve months as of Q2 2024 is reported at $425.93 million, with a growth rate of 8.82%, indicating a steady increase in sales. Yet, it's worth noting the quarterly revenue growth experienced a decline of 22.27%, which may raise concerns about the company's short-term revenue consistency.
InvestingPro Tips provide further insight, revealing that analysts expect a sales decline in the current year and do not anticipate the company will be profitable this year. This aligns with the net loss from continuing operations reported in the article. Moreover, while PAR Technology has strong liquid assets that exceed its short-term obligations, it has not been profitable over the last twelve months. On a positive note, the company has experienced a strong return over the last three months, with a price total return of 18.92%, and has had a high return over the last decade, which may interest long-term investors.
It's important to note that PAR Technology does not pay dividends to shareholders, which could be a significant consideration for income-focused investors. For those interested in a deeper analysis, there are additional InvestingPro Tips available, which can be found at https://www.investing.com/pro/PAR.
PAR Technology's focus on subscription services and technology offerings tailored to the foodservice industry, as highlighted in the article, is reflected in these metrics and tips. The company's strategic initiatives and market positioning must be weighed against analyst expectations and financial performance to understand its potential fully.
Full transcript - PAR Technology Corp (PAR) Q2 2024:
Operator: Good day, and thank you for standing by. Welcome to the PAR Technology Fiscal Year 2024 Second Quarter Financial Results Conference Call. [Operator Instructions] I would now like to hand the conference over to your speaker today, Chris Byrnes, Senior Vice President of Investor Relations and Business Development. Please go ahead.
Chris Byrnes: Thank you, Amy. Good morning everyone and thank you for joining us today for PAR Technologies 2024 Second Quarter Financial Results Call. Earlier this morning, 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 Q2 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 like to remind participants that this conference call may include forward-looking statements that reflect management's expectations based on currently available data. However, actual results are subject to future events and uncertainties. The information on this conference call related to projections or other forward-looking statements may be relied upon and subject to the safe harbor statement included in our earnings release this morning and in our annual and quarterly filings with the SEC. Finally, I'd like to remind everyone that this call is being recorded and it will be made available for replay via a link available on the Investor Relations section of our 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 Singh: Thank you, Chris. Good morning and welcome to everyone on the call. Q2 marked an inflection point for PAR. We delivered meaningful growth on a near flat OpEx base, launched our Burger King rollout, integrated Stuzo, completed the work to close the TASK acquisition and launched Wendy's in July. Equally important is that we divested our government business, clearing the way for us to be a pure-play foodservice technology business. We are marching towards becoming a very profitable business, while increasing our ability to effectuate change at our customers. Subscription services continues to be the growth engine of our company and subscription services revenue grew by 48% in the quarter versus the same period last year. Our relentless focus on customer success, along with the commitment to delivering best-in-class products continue to drive our results. Excluding Stuzo, now branded PAR Retail, second quarter ARR grew organically by 24% when compared to Q2 '23. This is an impressive number given we're just kicking off Burger King, launched Wendy's in July. And as you know, we recognized payments revenue on a net basis. At the end of Q2, ARR stood at $192 million, a 57% increase from the second quarter last year. Additionally, post Q2, we closed our acquisition of TASK, which will contribute an additional $40 million of ARR. Operator Cloud ARR grew by 37% to $84 million in Q2 when compared to the same period last year. Operator Cloud growth is being driven by increased win rates at Brink with stronger multiproduct attachment of data central on PAR payments, as well as continued ARPU improvement. ARPU increased by 14% from the same period last year, due to higher value deals, API monetizations, upsell price increases and PAR payment services go live. We expect the growth in ARPU to continue given current white space and existing high-value accounts, as well as a very robust pipeline of Tier one deals. To put this into perspective, the successful attachment of both Data Central payments into a Brink concept increases the ARR opportunity by over 3x. As I mentioned, we officially launched the Burger King rollout on April 1 and Burger King is extremely pleased with the progress made to date, including both from a product, as well as an implementation perspective. We feel confident that PAR can be the enabler of BK's digital success and are giving them every reason to accelerate our rollout and hopefully add additional products down the road. It is critical Burger King meets their implementation thresholds for the year and we are partnering closely to ensure that they do. As we mentioned in the last call, whatever we don't install this year, will get quickly rolled out in '25 and the early parts of 2026. Turning to PAR Payments. In Q2, PAR Payments achieved our highest ever gross processing volume run rate of $2.5 billion. Pipeline execution led to the signing of several new concepts such as Chow Time Canada, Wings Over and Miami Growth to name a few, which will be going live before the end of the year. In Q2, we went live with three new customer logos and continued our rollout with Smoothie King. Importantly, many of our new wins include processing for above-store transactions, not just our traditional in-store POS processing. Our pipeline of new customers is strong and we expect continued momentum following the launch of our Punchh wallet offering at the start of Q3. I'll give more details on Punchh wallet later in the call. Looking forward, the team is fully engaged on integrating payment capabilities into PAR Retail and TASK to unlock further growth. Adding payments to the PAR Retail sales bag is very exciting. Data Central also delivered a strong Q2. This quarter included the signing of seven new customers across the restaurant and C-store space, including pilot travel stops and the ongoing rollout of Love's Travel centers. We continue to build out a robust pipeline with four new Tier 1 concepts and see additional opportunities for Data Central to the attachment to Brink deals. Data Central is winning off the strength that brings tremendous growth and reputation, creating a road map for future upsell of new products. The enterprise market is seeing how the connection of the POS, back office and payments processing delivers improved operations, enhanced data capture and significant value to their business. This trend will continue. Our Engagement Cloud, which includes Punchh, Menu and now PAR Retail, continued a steady growth trajectory in Q2. After a period of rapid change, our near-term goal for Punchh is to drive stable new business wins of 500 to 1,000 new locations quarterly. Our exciting new product launch with Punchh wallet demonstrates Better Together innovation and is driving new revenue with Punchh for PAR Pay. This has amazing potential to enable Starbucks (NASDAQ:SBUX) like payment experiences for all Punchh brands. Punch Wallet is a clear demonstration of Par's Better Together strategy in providing improved outcomes for our customers. Features include safe payment options, store value balances, digital wallets and subscriptions. Punchh wallet allows for up to 2.5 times faster checkout times, a 23% increase in repeat store visits and an increase in customer lifetime value of more than 150%. Year-over-year ARR growth for engagement cloud was 11%, driven by the deals we signed at the end of 2023 and very early in 2024. This past quarter saw significant new customer growth with nine new brands launching on the Punchh platform, and we also saw 12 upsell deals to existing customers. In early July, we went live with Wendy's, a deal that we announced in Q1, record time for a go live for a large enterprise deal. Looking ahead, we expect Punchh to be a strong profit contributor to PAR. The newest part of Engagement Cloud is Stuzo, which has been rebranded as PAR Retail. PAR Retail is a leading digital engagement software provider to convenience and fuel retailers. The product is in 20,000 stores in over 20,000 stores and provides a beachhead to cross-sell additional products across like payments and back office. Our pipeline looks strong for the second half of the year. And importantly, we hoped to launch our first payment product for this market, which will continue to prove our Better Together strategy. Menu, our digital ordering application also delivered an impressive Q2. We continued launching new customers and officially reached more U.S. based active sites than our international base, highlighting key initiatives we had entering the year, which is getting Menu to be U.S. ready. We launched five new concepts in Q2, and every new customer is an existing customer of another PAR product, proving that our customers desire a more unified experience. Additionally, some of our customers continue to test additional modules of Menu. We were encouraged by the progress so far with Menu and expect a solid second half of 2024. Engagement cloud ARR now totaled $108 million at the end of Q2, and has approximately 95,000 foodservice outlets to utilizing our software. We continue to see PAR as uniquely positioned in the foodservice technology sector with best-in-class software across key operational and engagement pillars. Our ability to deliver better outcomes across our products, and producing a better-together experience with multiple products sets PAR up to be the industry standard. Q2 hardware revenue grew 10% quarter-over-quarter and is starting to claw back some of the challenges we had in Q1. Hardware is always hard to predict as 40% to 50% of our business is outside of Brink. But given the strong pipeline of Brink, we expect hardware to stabilize and hopefully start growing, while our team works to upgrade our base of long-term hardware-only customers. Stepping back to review our consolidated results, in Q2 our adjusted EBITDA was negative $4.3 million. This number, though, includes $2.5 million of onetime charges related to customer credits and Stuzo purchased price accounting adjustments. When further adjusting for these charges, our adjusted EBITDA came in at negative $1.8 million, giving us tremendous confidence in our previously communicated goals of inflecting to adjusted EBITDA positive in Q3. This fast slope in EBITDA is impressive, especially in light of the over $10 million of annual EBITDA we gave up as part of our government sale. The team is proving that our customer flywheel is leading to dramatic operating leverage. Our EBITDA swing is being driven by both subscription services revenue and stringent expense management. On the expense side, our non-GAAP operating expenses, including PAR Retail grew by only 3% year-over-year, continuing our trend of intense expense controls while scaling ARR quickly and simultaneously launching both Burger King and Wendy's. This is not easy to do, and I commend the team for their commitment to only spending in areas where we can improve ROI. I think it bears repeating that this is a sixth quarter in a row where operating expenses were near flat, while ARR grew organically greater than 20%. Drilling down into the components of expenses, subscription, sales and marketing expense as a percentage of revenue this quarter is 18%, a significant sequential 300 basis point improvement from the 21% we had in Q1. Sales and marketing expenses actually decreased $1.1 million organically. As I noted on the last call, we want this number to get to 15% or lower and are sprinting our way there. This is being driven primarily by our ability to take price and upsell while continuing to realize just how many products an individual AE can sell. Our subscription R&D expense as a percentage of revenue was 31%. This number improved 400 basis points sequentially, and our organic R&D spend actually decreased $1 million. We have our sight on eventually taking this number to 25% and lower. Brink, in particular, is leading the charge here, proving that we can launch large and diverse concepts off of one core platform. The work we did to retail Brink is now paying significant dividends. These numbers don't include TASK, which as most of you know, is a very profitable business that we're rapidly integrating into PAR. While the passive profitability is very clear, we understand that in the end our success will be dictated by the success of our customers. So while we've done a commendable job becoming efficient, our team will not lose sight of the fact that our ability to drive these unit economics is predicated on our customers winning. As I've said in the past, words like consolidation and bundling have had negative connotations and I think for the right reasons. The prior attempts to consolidate were not done around industry-leading products. It required customers to trade off functionality for simplicity. This is explicitly what we are not doing at PAR. Our products must stand on their own be best-in-class integrate natively and when unified deliver surprise and delight. This is what's truly driving the financial outcomes you are seeing today. To recap, Q2 was a very successful quarter across many fronts for our company. I'm energized by the Better Together experiences and what that means for our customer relationships and outcomes both existing and prospective. The combined effort of the PAR team around the globe has put us in a unique position to further our mission of fueling the future of food service and retail. We're at day one of a massive opportunity. Bryan will now review the numbers in more detail. Bryan?
Bryan Menar: Thank you, Savneet. Good morning, everyone. Q2 was a successful quarter for PAR as we were able to drive both positive results and momentum while managing an efficient integration of PAR Retail, administer the closure of the TASK acquisition and effectively manage a smooth divestiture of PAR Government. To emphasize Savneet's earlier statement, Q2 represents a pivotal inflection point in PAR's journey from our beginnings as a quasi restaurant tech and government contractor company to a pure-play food service tech led organization. The construct of our Q2 2024 statement of operations is indicative of that inflection point, as I will highlight. Before moving forward, I'd like to properly call out that all 2024 and comparative 2023 results that we will discuss this morning, exclude any contributions from PAR Government. As those results including the gains on respective sale of PAR Government have been isolated within our discontinued operations results. Total revenues was $78.2 million for the three months ended June 30, 2024, an increase of 12% compared to the three months ended June 30, 2023, driven by subscription service revenue growth of 48%, partially offset by a decrease in hardware revenue of 24%. Net loss from continuing operations for the second quarter of 2024 was $23.6 million or $0.69 loss per share compared to a net loss from continuing operations of $21.8 million or $0.87 loss per share reported for the same period in 2023. Non-GAAP net loss for the second quarter of 2024 was $7.9 million or $0.23 loss per share, a significant improvement compared to a non-GAAP net loss of $16.3 million or $0.60 loss per share for the same period in 2023. Adjusted EBITDA for the second quarter of 2024 was a loss of $4.3 million. Once again, a meaningful improvement compared to an adjusted EBITDA loss of $12.3 million for the same period in 2023, driven by increased margin contribution from subscription services, partially offset by a reduction in hardware revenue and margin. As Savneet mentioned, our Q2 results included $2.5 million of one-time charges within subscription services. Excluding those items, adjusted EBITDA would have been a loss of $1.8 million. Now for more details on revenue. Subscription service revenue was reported at $44.9 million, an increase of $14.5 million or 48% from a $30.4 million reported in the prior year. Excluding PAR Retail, organic subscription service revenue grew 15% compared to prior year. The annual recurring revenue exiting the quarter was $192.2 million, an increase of 57% from last year's Q2 with Engagement Cloud up 77% and Operator Cloud up 37%. Excluding PAR Retail, total organic annual recurring revenue was up 24% year-over-year. Hardware revenue in the quarter was $20.1 million a decrease of $6.3 million or 24% from the $26.4 million reported in the prior year. Sequentially, compared to Q1 this year hardware was up $1.9 million or 10%. The continued interest from our legacy hardware customers as well as the continued high attachment of hardware sales within our expanding software customer base, gives us confidence that our hardware business will continue to contribute meaningful revenue and respective margin. Professional service revenue was reported at $13.2 million, an increase of $0.4 million or 3% from the $12.8 million reported in the prior year. Historically, our professional service revenue trend is correlated to our hardware revenue trend but we are pleased with our team's ability to grow professional service revenue while hardware revenue contracted. Our team has executed this by expanding our service contract base with successful demonstration of our service team's value proposition. $8.2 million of the professional service revenue in the quarter consisted of recurring revenue primarily from our hardware support contracts versus $7.2 million in 2023. Now turning to margins, gross profit was $32 million, an increase of $12.8 million or 67% from the $19.2 million reported in the prior year. The increase was driven by subscription services with gross profit of $23.8 million, an increase of $10.7 million or 81% from the $13.1 million reported in the prior year. Subscription Service margin for the quarter was 53.1% compared to 43.3% reported in the second quarter of 2023. The increase in margin is driven by a continued focus on efficiency improvements with our hosting and customer support costs, as well as accretive margin contributions from PAR Retail operations. Excluding the amortization of intangible assets, stock-based compensation and severance included in subscription service margin, total non-GAAP subscription service margin for the three months ended June 30 was 66% compared to 61% in the second quarter of 2023. Hardware margin for the quarter was 22.8% versus 19.2% in Q2 2023. In light of our year-over-year revenue decrease, we were still able to improve margins by taking price as we continue to demonstrate our value while also driving savings within our cost structure. Professional service margin for the quarter was 27.5% compared to 7.7% reported in the second quarter of 2023. Q2 2023 results were negatively impacted by one-time charges. Excluding those charges, Q2 2023 professional margin would have been 20% reflective of our normalized historical margin rates. We expect margins to be approximately 20% for the remainder of this year. In regard to operating expenses, GAAP sales and marketing was $9.8 million, a decrease of $0.3 million from the $10.1 million reported for Q2 2023, with organic sales and marketing decreasing $1.1 million year-over-year. GAAP, G&A was $25.4 million, an increase of $8.9 million from the $16.4 million reported in Q2 2023. The increase was driven by non-GAAP adjustment items for M&A transaction fees and stock-based compensation as well as post acquisition PAR Retail costs. GAAP R&D was $16.2 million, an increase of $1.3 million from the $14.9 million recorded in Q2 2023. The increase was primarily driven by post-acquisition PAR Retail expense while organic R&D decreased $1 million year-over-year. Q2 2024 operating expense excluding non-GAAP adjustments was $43.5 million, an increase of $5.7 million or 15% versus Q2 2023. And excluding the inorganic growth from post-acquisition PAR Retail, organic operating expenses only increased 3%. Our ability to manage our operating expenses while driving substantial margin improvement will continue to be the catalyst for continued consistent EBITDA growth. Now to provide information on the company's cash flow and balance sheet position. As of June 30, 2024, we had cash and cash equivalents of $114.9 million and short-term investments of $27.5 million. For the six months ended June 30, cash use in operating activities was $37.4 million versus $12.8 million for the prior year. $12 million of the variance was driven by cash activity associated with discontinued operations and the remainder primarily driven by change in net working capital. Cash used in investing activities was $72.9 million for the six month ended June 30 versus $6.2 million for the prior year. Investing activities during the six months ended June 30 included $166.3 million of net cash consideration in connection with the Stuzo acquisition and capital expenditures of $2.7 million for developed technology costs associated with our software platforms. Partially offset by $87.1 million of cash consideration received in connection with the disposition of PAR Government and $9.4 million of proceeds from net sales of short-term health maturity investments. Cash provided by financing activities was $191.5 million for the six months ended June 30 compared to cash used in financing activities of $2.5 million for the prior year. Financing activities during the six months ended June 30 was substantially driven by a private placement of common stock. I would like to take a moment to reiterate and thank our PAR team on continuing to execute our operating plan, while successfully managing the integration of the PAR Retail organization and also manage a smooth divestiture of PAR Government. As a result, we drove significant improvement in key financial metrics, with 24% organic ARR growth, $12.8 million or 67% improvement in gross margin, all while maintaining modest growth in operating expenses. This has resulted in meaningful adjusted EBITDA growth and positions us well to be adjusted EBITDA positive in Q3. I will now turn the call back over to Savneet for closing remarks prior to moving to Q&A
Savneet Singh: Thanks, Bryan. Let me wrap up with a few key messages, before we open the call for Q&A. While the macro environment has been and will always be volatile the end market, we're selling to continues to be strong. There is no doubt that macroeconomic shock will impact all businesses. What we love about our end categories, is that in times of duress they outperform, customer's trade down and demand more ways to access their food and fuel. Moreover, the products we sell are built to drive ROI, ostensibly helping our customers deal with whatever external pressures they are facing. We track this data very closely and are seeing not only resilience, but growth in our base. Same-store sales within our Brink base on average increased 5.5% this quarter, from a year ago suggesting that our customers are taking share from adjacent categories. We've seen this happen time and time again. I also think our recent results prove this out. In spite of an uncertain macro, PAR delivered its sixth straight quarter of greater than 20% growth, with almost no OpEx growth. What's more, during this time, we've launched our largest POS and loyalty customers respectively, without having to add tremendous cost or by offsetting any costs with internal efficiencies. We are funding tomorrow's growth engines without net new expense. In uncertain markets, customers aren't looking for speculative tech, but best-in-class products with proven ROI. This is where our multiproduct model wins. We're just starting to scratch the service of the white space in our TAM and are continuing to build a road map to programmatically earn a greater share of our customers' wallets. We're an ambitious team at PAR, and treat every day as day one. For the first time in our history, we are a pure-play foodservice technology business, providing greater focus and transparency to our investors and our employees. This focus will help us accelerate our innovation, deliver for our customers and create value for our shareholders. With that, I'll open the call for Q&A. Operator?
Operator: Thank you. [Operator Instructions] And our first question comes from the line of Mayank Tandon of Needham. Your line is now open.
Q – Mayank Tandon: Thank you. Good morning, Savneet, Bryan Chris. Congrats on the quarter. I wanted to start with a question around the integration of Stuzo and I know you just closed TASK, I would be curious to hear what the customer response has been, integration process, any surprises, positive or negative early in the process of integrating Stuzo. Then also, I know it's only been a few weeks, but any comments around cash as well?
Savneet Singh: Sure, on Stuzo, which we rebranded PAR Retail, it's gone phenomenally well. We've done a few of these M&A deals and this is probably the smoothest integration we've had. I think the reception for customers has been great. We've jumped in front of them. But I think more importantly, it's the response of our existing C-store customers that's been very encouraging. I expect many of them to sort of agree with -- be excited by the future road map the combined resources, but most importantly having dedicated industry focus is going to make a big difference there. So, it's gone very well. I think from a talent perspective, there are a number of people from the Stuzo team that are now working across all of PAR. So I think we also acquired a tremendous team -- and I think from a business results perspective, we're really excited for the second half. I'm personally jumping into a bunch of our go-to-market motions. We feel really good about this integration. And I think cultural fit, underlines everything in an M&A deal and that's been just really nice. On the tax side, we're a couple of weeks into it. So I don't want to get too excited, but I can say, categorically the quality of that senior leadership team is just so impressive. The ideas the insights they have on our category, expanding internationally. So the adjacent categories is going to be really instrumental on PAR. But I also think, their deep focus on efficiency is something we're going to continue to expand. I think we've done -- as you've seen the operating leverage in PAR, is really accelerating here. That team will help us push that forward. And then I think, it's too early yet, on the customer side, but nothing bad.
Q – Mayank Tandon: Great. That’s good color. And then Savneet also for Bryan, in terms of the financial impact of the two acquisitions, I think when you closed these deals back in March the contribution was expected to be $80 million in ARR from Stuzo in TASK, and I believe about $20 million in adjusted EBITDA. Is that still -- I know that's an annualized number, but is that still the forecast? Or do you think there's any change positive or negative relative to when you first announced these acquisitions?
Savneet Singh: That's, all right. Obviously, we're an ambitious team, so we assume there's a little bits of upside and opportunity there, but we're still really excited with those numbers, we feel really confident about.
Q – Mayank Tandon: Great. I’ll get back in queue. Thanks.
Operator: Our next question comes from the line of Stephen Sheldon of William Blair. Your line is now open.
Q – Stephen Sheldon: Hi, good morning. Thanks for taking my question. First, just looking at page nine of the presentation with the organic and total ARR breakdown, it seems like Stuzo's ARR might have been down just a touch sequentially. I think organic ARR was up over $7 million sequentially. Total ARR was up by less than $7 million. I just wanted to make sure, am I thinking about that right what would cause Stuzo's ARR to be down slightly sequentially? And just generally, how are you thinking about the growth outlook going forward now that it's integrated and rebranded for that asset?
Savneet Singh: Sure the purchase price accounting adjustment around Stuzo very normal course of business. So it wasn't churn. It was how we -- as we integrated the businesses, the accounting adjustments. So I wouldn't say, it's operational, more accounting. I just on the call -- I think we're really excited for the second half. We've already had three signings in July. I think we'll have more and what's powerful about Stuzo is that every single deal that we sign goes live when we sign it. And so you don't have to wait for a rollout period, you can pull that revenue in current quarter. And so we actually feel really, really good about it. And there are some very, very big opportunities in front of us. But even if we don't win those larger opportunities I still think we'll get to -- where we thought with on the deal which I think we'll get to teens 20% growth on this business like we do for the rest of PAR.
Chris Byrnes: And Steve, just to add what Savneet said, there. What that really was there from Q1 and Q2 was adjusting the actual beginning baseline right as we got in adjustment is as we dig into and get the actual balance sheet on our books? Was this -- it's a reset of that -- it's our new baseline that we're doing off of.
Stephen Sheldon: Got it. So then we should probably expect a step-up then in Stuzo from 2Q to 3Q?
Chris Byrnes: Got it. Exactly.
Stephen Sheldon: That's right. And then just wanted to dig in -- I know it's still very early with TASK. But just how are you thinking maybe just more detail on joint go-to-market efforts with your existing domestic capabilities TASK's international capabilities. And as you think about it are there a lot of cross-selling opportunities that you go after pretty quickly here? And just generally what do those cross-selling motions look like?
Savneet Singh: So I'll give you the theory. We'll see if we can execute on it and we usually do but it's pretty simple. So the first thing I think we're evaluating is I said to our team we figuring where to point the bazooka. The TASK product does everything and it's incredibly robust really well built cleanly built and as I said dynamic founders and team. So the immediate set of opportunities we have are what customers do we have in the United States that are looking for national solutions? And where do we want to -- what products of the TASK platform do you want to get them on. That's sort of step one and we know we're doing that work and figuring out how to do that. We're going to throw in some traditional power resources into the TASK go-to-market team to figure that out. The second aspect is there are select places in the United States where there are parts of the TASK platform that we want to bring to the US market. And I won't go into details here but we think there's some pretty significant opportunity there that we think are unique. The third thing I would say is there are adjacencies that TASK serves really well. So as an example TASK is I believe the leading stadium provider in Australia, and are being pulled into numerous deals all over the place. We're going to figure out, if that makes sense for us. But I think between our US base that needs to go international, the modules of TASK that can serve our US customers in areas that we don't today, we've got plenty with the job, and then I think we can explore other ideas down the road. But I think there's going to be no shortage of ideas to us it's going to be focusing on the one or two things we can actually prove out quickly.
Stephen Sheldon: Great to hear. Thanks for taking the question.
Operator: Our next question comes from the line of Eric Martinuzzi of Lake Street Capital Markets. Your line is open.
Eric Martinuzzi: It was interesting in your perspective on the competitive landscape specifically versus two of the larger competitors in the POS [indiscernible]. Now given the completion of the acquisition specifically TASK how does that change your -- the competitive landscape for international for you?
Savneet Singh: Well, I think before that we weren't international. So I don't think we had a solution. And at the time of the acquisition one of the things that I've sort of been observing is that, our big US brands are growing far faster outside the United States than in the United States. And over time the decision makers for those businesses will probably gravitate towards the international side because that's where they're deploying their capital. And I think that puts us at a point of weakness. So we may have the best solution in the US, but if somebody has a better global solution maybe the B+ product wins over the A+ product in the US because they want something more connected. And that was a big part of the rationale for the acquisition. So I think it makes us far more competitive on these mega large deals. Obviously, as you know TASK has got one or two mega brands already I think soon to be three and I think we will be able to help accelerate that. So I think it makes us more competitive holistically whereas before I think our large customers would sort of think of us as US only solution.
Eric Martinuzzi: Then a housekeeping item here post the dust settling on the -- I think it was July 18 close on TASK. Can you give us a sense for kind of a normalized rest of year interest expense and share count?
Savneet Singh: Absolutely, Bryan, do you want to run through interest on some of the Blue Owl and -- ?
Bryan Menar: So what you're referencing there Eric right is the fact that we did that acquisition with a combination of cash on the balance sheet a portion around 37% 38% equity. And then we also used about $90 million of a term loan from Blue Owl. That effective interest rate is roughly around 10%. We plan on that going to be a shorter-term loan within -- on our balance sheet. So what I would say is you could see the bump up from that as I as said the 10% but that -- I would not put that as a longer-term expectation for us. We'll be looking to properly adjust the balance sheet to go forward. That actually allowed us as everyone understands that actual loan. What it allowed us to do is really reduce the deal risk for us. And what do I mean by that? We signed a deal back in March right? We did not know exactly what the equity and cash ratio was going to be. We did not know the exact timing of when the PAR Government investiture was going to happen. So we wanted to make sure the deal the value of it was very strong to us as Savneet just explained that we had that locked in. This allowed us to do that in the way we were able to get that commitment from them. And then now we're going to make sure that we properly do our capital allocation like we always have appropriate for good ROI.
Eric Martinuzzi: Right. And the share count is going to…
Chris Byrnes: Referring to the 8-K I believe it's at right now we just had I think it's about another $2.3 million in shares on top of where we were versus what you see in the 8-K.
Eric Martinuzzi: Got you. Thank you.
Operator: Our next question comes from the line of Samad Samana of Jefferies. Your line is open.
Samad Samana: Good morning. Thanks for getting me on. First just really impressive the amount of change you guys have digested in the second quarter and really kind of clearing the path up for the company and just great to see all that -- maybe just you've given us some guardrails on organic growth and in terms of what would lead you to the upper bound that you've given historically versus maybe where you are. So can you maybe just help us think through now that you're done with this period of really, really big change in 2Q how we should think about organic ARR growth through the rest of the year? And if you feel more confident in maybe thinking about the upper end of that range? And then I have a couple of follow-ups.
Savneet Singh: Thanks, Samad. Appreciate the feedback. So listen as you know a lot of I think what had me so excited is our growth isn't decelerating. And we've cleaned up -- I think the government business made a pure-play. And as I hope we've communicated on the call our operating leverage is pretty tremendous. Our EBITDA was negative $1.8 million after we sold off over $10 million of EBITDA. So it's kind of exciting to see just how fast the financial profile is changing alongside all the business transformation you mentioned. From a growth perspective, we still feel super confident greater than 20%. We're in the mid -- 24%, 25% right now. As far as confidence on accelerating beyond that we're so early in the Burger King rollout. So we certainly -- if we can continue to execute and they get excited we have clearly a path to get to the higher end of that. But from where we sit today, I wouldn't want to change anything so I don't want to get ahead of ourselves but we feel pretty confident. As I said we've never -- I think this is very subjective but I don't think we've ever done a rollout as well as we're doing this one. And as such commitment to the customer and so I think we're giving no reason for that organization not to give us more and build more. But right now it's a very month-by-month process to figure out what we're doing next month from that side. And that's the one lever there. The other lever as I mentioned is on the PAR Retail business formerly Stuzo -- we've got a really strong pipeline right now some very big deals. And what's neat about that business which is so different than our historical path is you get one of those big deals and you start billing them immediately. And so we now have kind of a second lever to potentially get us to the higher end of the range but that will be very much a Q4 experience.
Samad Samana: Great. And then just on the Wendy's rollout it sounds like that implementation has gone much faster than expected. I know it happened in the third quarter. Can you just remind us and just maybe -- I don't know if it's Bryan if this is maybe more of a question for you but is that --is Wendy's already reflected in ARR or is it now that they live in the third quarter it will be actually in the 3Q numbers. We're just trying to get a sense of the magnitude there and where that contribution falls.
Bryan Menar: So it will be in the third quarter because we launched in July and we build when we launched. So this quarter even -- like I said we grew with 24% and it didn't include that Wendy's number. So again 3Q again nice boost. We unfortunately can't dimensionalize the size of that contract in public forums because of our relationship with the customer, but I think I feel really comfortable with one of our largest one of our top two largest Punchh customers.
Samad Samana: Great. And maybe just last question for me. I think on the call we've talked a lot about how much the business has grown and changed. I'm just curious from an operational standpoint how you're thinking about where you spend your time and maybe how are you thinking about organizationally kind of matching the scale that you've gained over the last -- let's call it year end change. And if you're spending your time differently and if you guys plan on evolving maybe the leadership to match the scale that you've gained?
Savneet Singh: That's a really good question Samad. It's the thing I think and I think our board obsesses on the most. So I spent a lot of time thinking about organizational design. If we want functional or if they're run through a business units how do we go to market, how do we get the most? And how do we most importantly build a bench of talents underneath it. And a lot of that work is studying the companies that have done this in generations past or current -- in the current market. And so we run relatively de-centralized. We have a business unit that runs our Engagement Cloud a business unit that runs our operator cloud. Those two leaders are both phenomenal. I mean you can see the growth in operator cloud. And I joke when I left running the day-to-day the business got better. And so I feel really good about the quality of talent there. And so to me the question is -- I answered the question twofold our organizational design is scalable. The acquisition of PAR Retail such a successful integration happened not because of me but because of the team underneath that and they're able to integrate -- make that team feel part of our team and our culture. And so that -- I think it's the organizational line combined with really, really high-quality talent. I say this all the time and I mean it sincerely there are four or five people at PAR that will be better CEOs than me and I bet my salary on it. And so it's a combination of adding great talent plus great flexible organizational design to do it. Where I'm spending my time, I'd say it's probably allocated in three or four buckets. The first is strategic. When we took over PAR, we were talking before the call our subscription service revenue was like $5 million in Q4 of 2018. Today we're almost -- well over 200 with TASK. And so our vision mission has to change with that. And we have all these ambitious people, but these ambitious people aren't going to stay around if our goal is to take 200 to 300. And so I spend a lot of time on what the strategic vision that we can align our organization such that it aligns with the customers that we're serving. And so I spent a lot of time on that. I am kind of the cheerleader for the company on our values and making sure we're hiring, firing, promoting based off the values that we signed up for. And being really tight on that and creating a lot of accountability and that means everything from -- if a customer has a problem I text them and text them back and make sure that our team knows that's what I expect of everybody. And then I spend a ton of time on recruitment of talent. So, I'm really active in trying to find great talent that we can add to PAR and keep us honest about it. And then lastly, it's on capital allocation. And so we have this constant debate which is we are holding our operating expenses very tight. And so where we decided to invest that budget is a very tough conversation. Do we put it more into payments? Do we put it more into PAR Retail? Do we put it more into Brink where we have this tremendous growth? Those are hard conversations with imperfect data. And so I spend a ton of time figuring out where do we want to make that incremental investment and then supplementing that with does M&A make more sense. And so we are kind of always having that conversation.
Samad Samana: Thank you. I appreciate the answer and congrats on all the success.
Operator: Our next question comes from the line of Adam Wyden of ADW Capital. Your line is open.
Adam Wyden: Hey guys. Super exciting and congratulation. I feel like I've been waiting six years to sort of have this phone call. So, I just -- I want to separate. I've got some qualitative questions and some quantitative questions. If I look at the $2.5 million of add-backs and those are truly add backs and Savneet you said minus $1 million of EBITDA that does not include government. If I look at sort of the contract revenue that you generated last quarter of 35% and obviously you have some corporate absorption, corporate allocation in the government segment. If I sort of put a 9% margin on that, it looks like to me like about $3 to $33 million of EBITDA. So, I know you said over 10% but I mean can you sort of dimensionalize, I guess like the quantum of that? And is it more like 12% 13%? Is there corporate G&A that you think you can take down associated with that you haven't yet to take down? And then I would say secondly can you sort of give us a sense of what you think sort of the ongoing EBITDA contribution is? I guess sort of where I would get at is high level you're sort of you were profitable in the second quarter without TASK. I mean it's sort of what I'm trying to get to. So, if you could unpack that and then I've got a couple of other questions about pipeline and qualitative but that would be helpful to sort of conceptualize.
Savneet Singh: So, I think if we have the government business we would have crossed EBITDA profitability really comfortably this year.
Bryan Menar: This quarter.
Savneet Singh: This quarter, sorry this quarter. With over $10 million EBITDA plus allocations and stuff like that I don't think it was a swing of $5 million if you will because that's too much. But I think if a few million dollars would have gone in the right direction and we would have crossed that infill. So, the point I was making on the call and I think you're suggesting is even with call that a headwind on EBITDA we still got to these numbers. And obviously it shows how much how efficient the core business is becoming. So, in short, I think we would have been EBITDA -- we would have crossed it this quarter we'll cross it next quarter. And I think my guess is probably a few million dollars. It's a little bit hard because there's rationalizing office expense and things like that. You're making allocations versus sometimes signs.
Adam Wyden: Right and then on the TASK side, do you sort of still expect to get $8 million to $10 million per year, I guess I mean you don't think that there's an additional huge investment on the TASK side from a G&A perspective. I mean is it fair to assume that you still think you're going to get sort of 2% to 2.5% on TASK per quarter?
Savneet Singh: I think post the cuts from -- post transaction, right? So, the public company costs that we're taking out I think that's reasonable. When we reported it we were in the 6% to 8% guidance, I think post moving things like everything from reporting fees to board fees and audit fees and things like that we'll pull out another couple of bucks we hope as we talked about on the announcement call. So, -- and then I think that assumes that we don't find ways to grow the business. So, let's assume that for now and obviously that will not happen but let's assume that for now. So, short answer is no different from when we reported back in March.
Adam Wyden: Right. So, I don't want to belabor this. But sort of in summary if you give the $3 million credit for or plus or minus on government that gets you to like $1 million, $2 million, plus another $2 million on TASK. I mean you are a solidly profitable company and which sort of leads me to my follow-up which is -- I look at sort of Agilysys (NASDAQ:AGYS) and I get it it's different you guys have multiple products. But now as engagement cloud is sort of integrated and your merged with Stuzo and with Punchh and you're getting those cost synergies and those revenue synergies and moving Punchh customers to Stuzo and getting higher ARPU. And now with Data Central integrated -- I mean you're really now starting to get to the point where your products are getting integrated. I mean, Agilysys is running at a 17% margin and it's a much smaller ARR company. I mean, can you talk a little bit about sort of how you think about Rule of 40 because at least from our calc, it looks like you're getting there a lot sooner than we thought. And do you think about that from an ARR growth plus company-wide margin rule of 40%? Do you sort of have a sense of when you're going to get there? Or any sort of thoughts in terms of like path to rule of 40, accelerated development based on this acquisition and cost? And anything you can sort of talk about your confidence of getting to Rule of 40 of and where you think that sort of lives?
Savneet Singh: Sure. So we're growing call it mid-20s. Let's -- we acquired this $6 million to $8 million of tax EBITDA call it pre-synergy plus you haven't yet seen sort of the velocity we have as we win new PAR Retail deals. And again, the most important driver of our profitability is still the core business becoming so efficient. And we kind of messaging here we haven't really added costs in six quarters and barely any cost over the last seven or eight quarters, yet the revenue's there and that's still the biggest driver. And so I think we're not giving guidance on this call, but we are squarely focused on hitting Rule of 40 and our business units are all guided to hit the Rule of 40 independently. And so we're going to get there very quickly. I guess the slope to EBITDA has been so fast and we -- and I think it will continue to go there in 2025 as we roll out these big deals. So we're really focused on it. I think we'll be there -- we're working our way to get there as fast as possible. And maybe most importantly, the reason I break out the sales and marketing and R&D expense, as you can just -- as you can see again on an organic basis excluding tests in there how fast that's happening. So we're squarely focused on it, we're moving there fast. And what I'm really prioritizing Adam is, we get to Rule of 40 really quickly if we turn down the growth engine and just said "Hey let's ramp up the cash flow." We're not trying to do that. We want to capture as much market share to keep the growth high. And so that's how we're going to get there and I feel really good about that. The other part I would just say is really quickly, the white space within our TAM is meaningful. And I think as you're seeing in our numbers, one of the things we have figured out is how to attach more products. And so we're just at the beginning of that really, really honestly just at the beginning of that. And so you're seeing us become -- drive this growth by selling one, two, three, four products before there's one product wait a year add another product. Now it's getting them in faster and faster. And that model -- that we're just at the beginning of that white space. And so that's what I'm really excited about we're there. So we're excited -- I can't give a date yet because we're not giving guidance on this call but we'll come back with that on our next couple of calls.
Bryan Menar: And I just want to clarify one thing. Adam, I just want to clarify one thing because I want to understand it too. The Q2 numbers did not include PAR Government. So when we talk about that adjustment we talked about $1.8 million loss. That's the good baseline to go off of Q2. And it has that -- like we said, it's that pure foodservice tech than baseline and now we build off of any layer in the growth that we're expecting driven certain services and you layer in TASK.
Adam Wyden: Chris, I've got one last question.
Chris Byrnes: Okay.
Adam Wyden: On the pipeline Savneet you made a comment on two of super mega brands and then you said hope to get one-third. Can you talk a little bit -- I mean at the end of 2023 you talked about how the pipeline was the biggest it's ever been. And I know you're very sensitive to customers and I want the customers who are listening to this call to understand that like you're not telling us anything, but we're all sort of going to the trade shows and trying to figure out what's out there for RFP. But it appears to us that like there are many large mega brands that are out there sort of doing feasibility studies for point-of-sale and for vertical solutions. I mean I think Wendy's is an amazing proof point in that they went and took Punchh and they sort of have their own loyalty online ordering platform and it seems like they're moving away. Burger King is another example. Can you talk a little bit about that third mega brand for TASK. And then I think on a couple of calls you talked about Burger King sort of being a mega brand, but then like mega brands on top of that. Can you talk a little bit about that pipeline and then also table service and then I'm done.
Savneet Singh: Yeah. I can't talk about any of the brands unfortunately. And -- but let me answer it this way. We have again categorically never had so many pipelines, particularly within operator cloud as we have today. It's real, it's meaningful. It literally seems like every week I'm flying somewhere with a team member to try to get these deals over the finish line. And I don't think that's going to continue. I said in the call, this macro environment well, it might be scary, it's actually we think pretty exciting for us. Like for us we get to go on offense because our customers as I said, the average Brink in same-store sales across our customer base is up 5.5% this quarter. That's way more than the average restaurant. And so they're still making these investments. We have not seen a slowdown in that pipeline. And I think that -- maybe that's a better way to answer which is we have not seen any slowdown on the pipeline. And in particular, where I see the most pipeline expansion while Brink has great pipeline expansion, it's the expansion of pipeline in Data Central as an example that we're like wow that's really becoming exciting for us. As far as specifically the brands, I just can't talk about that stuff yet, but we feel really good about it. And listen if I was -- if we felt like the pipeline was getting smaller or we had -- we were feeling any of that I would tell you but this environment is really helping us right now.
Bryan Menar: But the prospect of mega brands beyond Burger King, do you think that that's on the table that's all I'm trying to get at. But there are mega brands larger than Burger King that you think are feasible in terms of selling more products. That's what I was trying to get at.
Savneet Singh: I would say we are actively in conversations with mega brands and I think many people are going to this constant debate of internal versus vendor base tech and I think they're going to move to vendors over time.
Adam Wyden: Okay. Thank you.
Operator: Our next question comes from the line of Mark Palmer of the Benchmark Company. Your line is open.
Mark Palmer: Yes, good morning. Thanks for taking my questions. Along the lines of what Adam actually just asked, I wanted to get your sense of what the company's current capacity is to take on new Tier 1 customers, given the ongoing Burger King rollout, which is on the front-end as well as launch of Wendy's. Where does capacity stand? Could you comfortably tuck in another Tier 1 at this point?
Savneet Singh: Absolutely. So I think we -- a lot of the model we changed within particularly the operator cloud segment all in the team has done this incredible job of making it dynamic. And so our ability to ramp up and ramp down is what's changed the most about PAR. Going back three to four years we just -- I don't think we managed it tightly. And I don't think we have that flexibility. Today we can ramp up and ramp down and do this partnership with our customers. And so the most important part is we align to the customers such that we can make sure we're there. And we worked really hard to make sure they pay for it too. And so it's been a change in how we do it. And again kudos goes to that team that's continuing standing ways to delay that. One of our emerging leaders she finds a way to get it done anything we will, you got the diversification and we will. On the engagement side as you mentioned when we launched Wendy's one of our largest accounts ever. And I encourage everybody to download the approximately, play around and see our functionality. It was amazing how fast we did it. It was complicated. And that gives me great confidence and when we get the next one, we'll be able to do that. And as I mentioned on the PAR retail side that seems an execution machine, and I have no fear that we -- if we land one or two of these big deals we'll be able to get it done as we promised.
Mark Palmer: Good. And just one follow-up. You just talked about the fact that PAR's business is somewhat countercyclical that restaurants -- enterprise restaurants see value in what you're offering in particular during a down market as they look to boost sales and gain efficiency. How does the company's effort to improve pricing fit into that mix with regard to the degree of receptivity that you're seeing, the degree of receptivity that you anticipate?
Savneet Singh: Pricing to me is based on the value that we drive. And if we drive value we take price, if we don't, we don't. We're thinking deeply about this idea of adding outcomes to a big part of the PAR thesis, but we drive outcomes. I think we had a change of framework from our customer base thing we're not trying to hit SLAs. We're trying to drive business outcomes for you. And if we drive those outcomes and we take value off those outcomes, we're aligned and that's what we're seeing. ARPU was up 14% this quarter. It was up similar amounts last quarter. I expect that to continue. And all that's suggesting is that our customers are willing to pay if we can drive great outcomes. And in this environment as you suggested, if we're able to drive those outcomes and our customers are waiting alongside of us, I think we haven't felt pressure to push that forward and so we're excited. And I think, the point on cyclicality, the enterprise sort of foodservice business is just very durable. And I don't find them to make drastic changes to their plans because they don't have businesses that go up 20, down 20. And so once they have the time to address, they make investments in things like loyalty, they make investments in things like digital sales because they're trying to capture the share. But at the same time, they make investments in their back office because they got to run more efficiently. And so we are I think very well situated to be in that. And most importantly, because we're already in all these brands, the rub and the challenge and the friction to get going is far lower than if we were a net new customer – vendor, excuse me.
Mark Palmer: Thank you.
Operator: Our next question comes from the line of George Sutton of Craig-Hallum. Your line is open.
George Sutton: Thank you. Just one question for me, relative to the trend that we're seeing of OMS and POS players trying to bring their products together to market from separate companies versus your unified modality. Can you just give us a sense of how you think that ultimately wins in the market? Again it's going to the tangible examples of the better together concept?
Savneet Singh: Absolutely. So first of all say we play with both. We are the most integrated solution in our category by a long shot. Nobody has more integrations into more online ordering partners, loyalty partners, e-commerce partners than we do. So we support both. But our thesis and I think you can see that is that over time customers don't want to disjoint a tech stack. They don't want to take the risk that one vendor changes something and it screws up all the other vendors, which is literally what happens every single month. And so what we've observed and I think it's in our data; every MENU customer is an existing customer of a PAR product. And I think all that's suggesting is that if we can build a comparable product, our customers prefer to add on an additional product versus adding a net new vendor where they need to learn that vendor, you get to speed up that vendor. And then deal with all sorts of challenging things like having different menus, different pricing, different APIs like you just create more friction and more risk of things going wrong. And so I think generally our thesis is that our customers over time will prefer something more unified to be more deeply integrated. But we don't force that upon them and we give them complete flexibility to figure out what works best. But I think what we are seeing is that over and over again and this is to your last point, we're able to prove better together outcomes. So we can say when you take a second PAR product look at this outcome you got that you couldn't get before. You had the third product. Oh, my God, here's the third one. And we are finding ways to surprise and delight you. The example, I gave on this call was the Punchh Wallet which really is a cool feature that you only get if you've got Punchh in our payments product. If you had Punchh in different payments product it would be really hard to deliver that outcome to the customer. And so again, it all starts with the customers so if we can deliver great products our customers will buy it. And if we can't put that out, they won't.
George Sutton: Perfect. Thank you.
Operator: Our next question comes from the line of Anja Soderstrom with Sidoti. Your line is open.
Anja Soderstrom: Hi. Thank you for taking my questions, but they still haven't been addressed. I just had a follow-up on sort of adoption among your customers. Do you see them -- your potential customers being more urgent to take on your solutions now when they see their sales being a little bit more challenged?
Savneet Singh: I think, it's too early to say. Our customer base is diverse and so we definitely have customers that have struggled. But on average they've done relatively well particularly against the broader restaurant community. What I think we observed is -- and again, since I've been the CEO I haven't lived through a bunch of cycles. But I remember, in the pandemic we saw how quickly customers ran to add additional technology. And so I think that's the analog that I have when it was an acute problem they absolutely ran to it. I think when you have something that is honestly not yet in the numbers of our customers, but there's a fear that something might happen. I suspect, it might be similar to what we saw back then which is a greater push to get these tools out the door to prove that are live. And I think one of the beauties of great technology is that it's operating expense not CapEx. And it allows them to rollout a product to improve the ROI without having to tie up tons of budget upfront which is probably very hard to do right now. And so I think what we're seeing is this constant debate of our customers of which product can we prioritize first and we really help them kind of give our view of how that works in that rollout.
Anja Soderstrom: Okay. Thank you. That's all for me.
Operator: Our next question comes from the line of Andrew Hart of BTIG. Your line is open.
Andrew Hart: Hey. Just one for me, Savneet, you talked about how you're really excited about the white space within the existing customer base. And I think you answered it in a couple of questions so far today. But one of the things you talked about in prepared remarks was the 14% ARPU growth since last year. But I guess just can you kind of frame up for us or elaborate at least on how much upside is there inside the existing base today? And how do you see pricing evolving over the next one to two years? Thanks.
Savneet Singh: So I don't want to -- I think we think there's about -- within the existing base there's 3x the size of the current revenue we have today. And as you know, I hate hyperbole and massive numbers and so I keep chipping that number down. But there's just a ton of opportunity in the current base less than 10% of our customers on Brink have our payments products. Even though payments is growing so quickly like we have a long, long way to go there. Data Central has now got tremendous pipeline. We have excitement that Data Central could be our fastest-growing product next year. That's because we're mining that white space. And so now that we have a playbook I think we can do it. And as I said, all in the team have really figured out how to get this stuff going integrate it launch it quickly. And so we feel -- I think we feel really encouraged that we can attack that white space where I think in years past we were hopeful. Today it's much more programmatic much more focused. But I think let us demonstrate it and then we can give better guidance.
Andrew Hart: Thanks. And maybe a follow-up on that, when you think about the 20% to 30% ARPU growth longer term how do you parse that out between net new locations and ARPU opportunity?
Savneet Singh: So historically, it's been completely location-based. This is the first year that we've been able to demonstrate call it ARPU and ARPU being inclusive of price increase of modules. I think overtime, it would be great if we can create something more formulate like with 50-50 I think as they look into 2025, it will be heavily driven by net new store locations, because the wins that we have. And so we'll still be heavily based in new locations. But that doesn't mean we're taking our eye off the ball on price in new modules. It just happens to be that if we sign these large deals you got to get these stores out the door.
Bryan Menar: Yes. I think what it is too is we have more now tools in the toolbox for us to use, right? And so it allows us to flex one versus the other. So to Savneet's point we're setting for 2025 with some new logos which is going to help drive that which at the same time accelerate our growth with the ARPU. But in the past we felt predominantly we had to get the new logos but now that we have multiple products that are working very well together and we've got a sales motion those have to sell them together it's an additional tool in the tool box.
Andrew Hart: Great to hear all those lever. So thanks guys. Nice result.
Operator: And I'm showing no further questions at this time. I would now like to turn it back to Christopher Byrnes, for closing remarks.
Chris Byrnes: Well, thank you, Amy and thank you everyone for joining us today. And we certainly appreciate your time this morning and look forward to connecting with you over the next days, weeks, months. And we'll speak to you after the Q3. Thank you so much. And have a good day.
Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.
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