10-Q 1 par-20240331.htm 10-Q par-20240331
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 
For the Quarterly Period Ended March 31, 2024
OR
 TRANSITION REPORT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the Transition Period From __________ to __________
Commission File Number: 1-09720
New PAR Logo.jpg
PAR TECHNOLOGY CORPORATION
(Exact name of registrant as specified in its charter)

Delaware16-1434688
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
 
PAR Technology Park, 8383 Seneca Turnpike, New Hartford, New York 13413-4991
(Address of principal executive offices, including zip code)
(315) 738-0600
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, $0.02 par valuePARNew York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ☑
Accelerated Filer ☐
Non-Accelerated Filer ☐
Smaller Reporting Company
Emerging Growth Company 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  No ☑

As of May 7, 2024, 33,991,085 shares of the registrant’s common stock, $0.02 par value, were outstanding.



PAR TECHNOLOGY CORPORATION
TABLE OF CONTENTS
PART I
FINANCIAL INFORMATION
Item
Number
DescriptionPage
   
Item 1.
   
 
   
 
   
 
   
 
   
 
   
Item 2.
   
Item 3.
   
Item 4.
PART II
OTHER INFORMATION
Item 1.
   
Item 1A.
   
Item 2.
Item 5.
   
Item 6.
   

“PAR®,” “Brink POS®,” “Punchh®,” “MENUTM,” “Data Central®,” "Open Commerce®,” "PAR® Pay”, “PAR® Payment Services”, "StuzoTM," and other trademarks identifying our products and services appearing in this Quarterly Report belong to us. This Quarterly Report may also contain trade names and trademarks of other companies. Our use of such other companies’ trade names or trademarks is not intended to imply any endorsement or sponsorship by these companies of us or our products or services.



Unless the context indicates otherwise, references in this Quarterly Report to "we," "us," "our," the "Company," and "PAR" mean PAR Technology Corporation and its consolidated subsidiaries.

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q for the quarter ended March 31, 2024 contains “forward-looking statements” within the meaning of Section 21E of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not historical in nature, but rather are predictive of PAR's future operations, financial condition, financial results, business strategies and prospects. Forward-looking statements are generally identified by words such as “anticipate,” “believe,” “can”, “could”, “continue,” “expect,” “estimate,” “future”, “goal”, “intend,” “may,” “opportunity,” “plan,” “should,” "strive," “target”, "vision," “will,” “would,” “will likely result,” and similar expressions. Forward-looking statements are based on management's current expectations and assumptions that are subject to risks and uncertainties, many of which are beyond PAR's control, which could cause PAR's actual results to differ materially from those expressed in or implied by forward-looking statements, including statements relating to and PAR's expectations regarding: the plans, strategies and objectives of management for future operations, including PAR’s service and product offerings, its go-to-market strategies and the expected development, demand, performance, market share or competitive performance of its products and services; PAR's ability to achieve and sustain profitability; projections of net revenue, margins, expenses, cash flows, or other financial items; PAR's annual recurring revenue, active sites, subscription service margins, net loss, net loss per share and other key performance indicators and non-GAAP financial measures; PAR's expectations about the availability and terms of product and component supplies for our hardware; the timing and expected benefits of acquisitions, divestitures, and capital markets transactions; PAR’s human capital strategies and engagement; current or future macroeconomic trends or geopolitical events and the impact of those trends and events on PAR and its business, financial condition, and results of operations; claims, disputes or other litigation matters; and assumptions underlying any of the foregoing. Factors, risks, trends, and uncertainties that could cause PAR’s actual results to differ materially from those expressed in or implied by forward-looking statements include: PAR's ability to successfully develop or acquire and transition new products and services and enhance existing products and services to meet evolving customer needs and respond to emerging technological trends, including artificial intelligence; PAR's ability to add and maintain active sites, retain and manage suppliers, secure alternative suppliers, and manage inventory levels, manufacturing disruptions or logistics challenges, including shipping delays and cost increases; PAR's ability to successfully attract, develop and retain necessary qualified employees to develop and expand its business, and execute product installations and respond to customer service level needs; the protection of PAR's intellectual property; PAR's ability to retain and add integration partners, and its success in acquiring and developing relevant technology for current, new, and potential customers for its service and product offerings; macroeconomic trends, such as a recession or slowed economic growth, fluctuating interest rates, inflation, and changes in consumer confidence and discretionary spending; geopolitical events, such as effects of the Russia-Ukraine war, tensions with China and between China and Taiwan, the Israel-Hamas conflict and other hostilities in the Middle East; risks associated with PAR's international operations; the effects of global pandemics, such as COVID-19 or other public health crises; changes in estimates and assumptions PAR makes in connection with the preparation of its financial statements, or in building its business and operational plans and in executing PAR's strategies; disruptions in operations from data breaches and cyberattacks, including heightened risks due to the rapid development and adoption of artificial intelligence technologies globally; PAR's ability to maintain proper and effective internal control over financial reporting; PAR's ability to execute its business, operational plans, and strategies and manage its business continuity risks, including disruptions or delays in product assembly and fulfillment; potential impacts, liabilities and costs from pending or potential investigations, claims and disputes; and other factors, risks, trends and uncertainties that could cause PAR's actual results to differ materially from those expressed in or implied by forward-looking statements contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the Securities and Exchange Commission (“SEC”) on February 27, 2024, in this Quarterly Report, and in our other filings with the SEC. Given these risks and uncertainties, readers are cautioned not to place undue reliance on forward-looking statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required under applicable securities law.



PART I – FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS (unaudited)
PAR TECHNOLOGY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
(unaudited)
AssetsMarch 31, 2024December 31, 2023
Current assets:  
Cash and cash equivalents$50,780 $37,369 
Cash held on behalf of customers12,558 10,170 
Short-term investments21,730 37,194 
Accounts receivable – net69,958 63,382 
Inventories25,054 23,594 
Other current assets14,205 8,890 
Total current assets194,285 180,599 
Property, plant and equipment – net15,356 15,755 
Goodwill619,632 489,654 
Intangible assets – net157,713 94,852 
Lease right-of-use assets3,627 4,083 
Other assets18,300 17,663 
Total Assets$1,008,913 $802,606 
Liabilities and Shareholders’ Equity  
Current liabilities:  
Accounts payable$39,832 $29,808 
Accrued salaries and benefits14,264 19,141 
Accrued expenses11,153 10,443 
Customers payable12,558 10,170 
Lease liabilities – current portion1,201 1,366 
Customer deposits and deferred service revenue14,710 9,304 
Total current liabilities93,718 80,232 
Lease liabilities – net of current portion2,519 2,819 
Long-term debt378,155 377,647 
Deferred service revenue – noncurrent3,296 4,204 
Other long-term liabilities4,825 4,639 
Total liabilities482,513 469,541 
Shareholders’ equity:  
Preferred stock, $0.02 par value, 1,000,000 shares authorized
  
Common stock, $0.02 par value, 58,000,000 shares authorized, 35,439,115 and 29,386,234 shares issued, 33,973,906 and 28,029,915 outstanding at March 31, 2024 and December 31, 2023, respectively
703 584 
Additional paid in capital844,210 625,154 
Accumulated deficit(293,244)(274,956)
Accumulated other comprehensive loss(3,653)(939)
Treasury stock, at cost, 1,465,209 shares and 1,356,319 shares at March 31, 2024 and December 31, 2023, respectively
(21,616)(16,778)
Total shareholders’ equity526,400 333,065 
Total Liabilities and Shareholders’ Equity$1,008,913 $802,606 

See accompanying notes to unaudited interim condensed consolidated financial statements
2

PAR TECHNOLOGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(unaudited)

Three Months Ended
March 31,
20242023
Revenues, net:
Hardware$18,226 $26,777 
Subscription service38,379 27,965 
Professional service13,468 13,842 
Contract35,424 31,853 
Total revenues, net105,497 100,437 
Costs of sales:
Hardware14,170 22,381 
Subscription service18,594 13,925 
Professional service11,251 11,366 
Contract32,919 29,572 
Total cost of sales76,934 77,244 
Gross margin28,563 23,193 
Operating expenses:
Sales and marketing10,926 9,398 
General and administrative25,608 18,080 
Research and development15,768 14,315 
Amortization of identifiable intangible assets932 464 
Adjustment to contingent consideration liability (5,200)
Total operating expenses53,234 37,057 
Operating loss(24,671)(13,864)
Other income (expense), net306 (59)
Interest expense, net(1,708)(1,667)
Loss before benefit from (provision for) income taxes(26,073)(15,590)
Benefit from (provision for) income taxes7,785 (315)
Net loss$(18,288)$(15,905)
Net loss per share (basic and diluted)$(0.62)$(0.58)
Weighted average shares outstanding (basic and diluted)29,51627,344

See accompanying notes to unaudited interim condensed consolidated financial statements

3

PAR TECHNOLOGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands)
(unaudited)

Three Months Ended March 31,
20242023
Net loss$(18,288)$(15,905)
Other comprehensive loss, net of applicable tax:
Foreign currency translation adjustments(2,714)(42)
Comprehensive loss$(21,002)$(15,947)

See accompanying notes to unaudited interim condensed consolidated financial statements
4

PAR TECHNOLOGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(In thousands)
(unaudited)

Common StockAdditional
Paid in
Capital
Accumulated DeficitAccumulated
Other
Comprehensive
Loss
Treasury StockTotal
Shareholders’
Equity
SharesAmountSharesAmount
Balances at December 31, 202329,386 $584 $625,154 $(274,956)$(939)1,356 $(16,778)$333,065 
Issuance of common stock upon the exercise of stock options107 2 1,103 — — — — 1,105 
Net issuance of restricted stock awards and restricted stock units329 4 (4)— — — —  
Issuance of common stock for acquisition (see Note 3)442 9 19,161 — — — — 19,170 
Proceeds from private placement of common stock, net of issuance costs of $5.5 million
5,175 104 194,386 — — — — 194,490 
Treasury stock acquired from employees upon vesting or forfeiture of restricted stock— — — — — 109 (4,838)(4,838)
Stock-based compensation— — 4,410 — — — — 4,410 
Foreign currency translation adjustments— — — — (2,714)— — (2,714)
Net loss— — — (18,288)— — — (18,288)
Balances at March 31, 202435,439 $703 $844,210 $(293,244)$(3,653)1,465 $(21,616)$526,400 

Common StockAdditional
Paid in
Capital
Accumulated DeficitAccumulated Other Comprehensive LossTreasury StockTotal
Shareholders’
Equity
SharesAmountSharesAmount
Balances at December 31, 202228,590 $570 $595,286 $(205,204)$(1,365)1,271 $(14,093)$375,194 
Issuance of common stock upon the exercise of stock options5 — 52 — — — — 52 
Net issuance of restricted stock awards and restricted stock units160 2 — — — — — 2 
Treasury stock acquired from employees upon vesting or forfeiture of restricted stock— — — — — 79 (2,478)(2,478)
Stock-based compensation— — 3,055 — — — — 3,055 
Foreign currency translation adjustments— — — — (42)— — (42)
Net loss— — — (15,905)— — — (15,905)
Balances at March 31, 202328,755 $572 $598,393 $(221,109)$(1,407)1,350 $(16,571)$359,878 

See accompanying notes to unaudited interim condensed consolidated financial statements
5

PAR TECHNOLOGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
Three Months Ended
March 31,
20242023
Cash flows from operating activities:
Net loss$(18,288)$(15,905)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization7,226 6,933 
Accretion of debt in interest expense, net508 522 
Accretion of discount on held to maturity investments in interest expense, net(397) 
Current expected credit losses564 489 
Provision for obsolete inventory108 88 
Stock-based compensation4,410 3,055 
Adjustment to contingent consideration liability (5,200)
Deferred income tax(8,049) 
Changes in operating assets and liabilities:
Accounts receivable(5,090)(7,034)
Inventories(1,605)5,051 
Other current assets(4,552)(2,512)
Other assets(724)752 
Accounts payable9,521 4,063 
Accrued salaries and benefits(5,160)(7,647)
Accrued expenses(3,376)1,067 
Customer deposits and deferred service revenue(945)(343)
Customers payable2,388 216 
Other long-term liabilities(115)(343)
Net cash used in operating activities(23,576)(16,748)
Cash flows from investing activities:
Cash paid for acquisition, net of cash acquired(166,292) 
Capital expenditures(45)(823)
Capitalization of software costs(1,385)(481)
Proceeds from sale of held to maturity investments18,980 24,610 
Purchases of held to maturity investments(3,119)(25,073)
Net cash used in investing activities(151,861)(1,767)
Cash flows from financing activities:
Proceeds from private placement of common stock, net of issuance costs194,490  
Treasury stock acquired from employees upon vesting or forfeiture of restricted stock(4,838)(2,478)
Proceeds from exercise of stock options1,105 52 
Net cash provided by (used in) financing activities190,757 (2,426)
Effect of exchange rate changes on cash and cash equivalents479 (512)
Net increase (decrease) in cash and cash equivalents and cash held on behalf of customers15,799 (21,453)
Cash and cash equivalents and cash held on behalf of customers at beginning of period47,539 77,533 
Cash and cash equivalents and cash held on behalf of customers at end of period$63,338 $56,080 
Reconciliation of cash and cash equivalents and cash held on behalf of customers
Cash and cash equivalents$50,780 $48,659 
Cash held on behalf of customers12,558 7,421 
Total cash and cash equivalents and cash held on behalf of customers$63,338 $56,080 

See accompanying notes to unaudited interim condensed consolidated financial statements
6

PAR TECHNOLOGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(In thousands)
(unaudited)

Three Months Ended March 31,
20242023
Supplemental disclosures of cash flow information:
Cash paid for income taxes$340 $507 
Capitalized software recorded in accounts payable24 776 
Capital expenditures in accounts payable176 87 
Common stock issued for acquisition19,170  

See accompanying notes to unaudited interim condensed consolidated financial statements

7

PAR TECHNOLOGY CORPORATION
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

Note 1 — Summary of Significant Accounting Policies

Nature of Business

PAR Technology Corporation (the “Company” or “PAR,” “we,” or “us”), through its consolidated subsidiaries, operates in two segments - the Restaurant/Retail segment and the Government segment. The Restaurant/Retail segment provides leading omnichannel cloud-based software and hardware solutions to the restaurant and retail industries. Our product and service offerings include point-of-sale, customer engagement and loyalty, digital ordering and delivery, operational intelligence technologies, payment processing, hardware, and related technologies, solutions, and services. We provide enterprise restaurants, franchisees, and other restaurant outlets in the three major restaurant categories - quick service, fast casual, and table service - with operational efficiencies through a data-driven network with integration capabilities from point-of-sale to the kitchen, to fulfillment. Our subscription services are grouped into two categories: Engagement Cloud, which includes Punchh and Stuzo for customer loyalty and engagement and MENU for omnichannel digital ordering and delivery and Operator Cloud, which includes Brink POS for front-of-house, PAR Payment Services and PAR Pay for payments, and Data Central for back-of-house. PAR's Government segment provides technical expertise and development of advanced systems and software solutions for the U.S. Department of Defense ("DoD"), the intelligence community and other federal agencies. Additionally, we provide support services for satellite command and control, communication, and information technology systems at several DoD facilities worldwide. The Government segment has three principal contract offerings: intelligence, surveillance, and reconnaissance solutions ("ISR Solutions"), mission systems operations and maintenance ("Mission Systems"), and commercial software products for use in analytic and operational environments that leverage geospatial intelligence data ("Commercial Software"). The accompanying consolidated financial statements include the Company's accounts and those of its consolidated subsidiaries. All significant intercompany transactions have been eliminated in consolidation.

Basis of Presentation

The accompanying financial statements of PAR Technology Corporation and its consolidated subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements and the instructions to Form 10-Q and Regulation S-X pertaining to interim financial statements as promulgated by the SEC. In the opinion of management, the Company's financial statements include all normal and recurring adjustments necessary in order to make the financial statements not misleading and to provide a fair presentation of the Company's financial results for the interim period included in this Quarterly Report. Interim results are not necessarily indicative of results for the full year or any future periods. The information included in this Quarterly Report should be read in conjunction with the Company's audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (the “2023 Annual Report”).
Use of Estimates

The preparation of the financial statements requires management of the Company to make a number of estimates and assumptions relating to the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Significant items subject to these estimates and assumptions include revenue recognition, stock-based compensation, the recognition and measurement of assets acquired and liabilities assumed in business combinations at fair value, the carrying amount of property, plant, and equipment including right-to-use assets and liabilities, identifiable intangible assets and goodwill, valuation allowances for receivables, valuation of excess and obsolete inventories, and measurement of contingent consideration at fair value. Actual results could differ from those estimates.






8

Cash and Cash Equivalents and Cash Held on Behalf of Customers

Cash and cash equivalents and cash held on behalf of customers consist of the following:

(in thousands)March 31, 2024December 31, 2023
Cash and cash equivalents
Cash$48,593 $37,329 
Money market funds2,187 40 
Cash held on behalf of customers12,558 10,170 
Total cash and cash equivalents and cash held on behalf of customers$63,338 $47,539 

The Company maintained bank balances that, at times, exceeded the federally insured limit during the three months ended March 31, 2024. The Company has not experienced losses relating to these deposits and management does not believe that the Company is exposed to any significant credit risk with respect to these amounts.

Short-Term Investments

The carrying value of investment securities consist of the following:

(in thousands)March 31, 2024December 31, 2023
Short-term investments
Treasury bills and notes$21,730 $37,194 
Total short-term investments$21,730 $37,194 

The Company did not record any material gains or losses on these securities during the three months ended March 31, 2024. The estimated fair value of these securities approximated their carrying value as of March 31, 2024 and December 31, 2023.

Other Assets

Other assets include deferred implementation costs of $8.5 million and $8.8 million and deferred commissions of $3.1 million and $2.6 million at March 31, 2024 and December 31, 2023, respectively. Amortization of deferred implementation costs were $1.5 million and $1.0 million for the three months ended March 31, 2024 and 2023, respectively. Amortization of deferred commissions were $0.4 million and $0.2 million for the three months ended March 31, 2024 and 2023, respectively.

Other assets also include the cash surrender value of life insurance related to the Company’s deferred compensation plan eligible to certain employees. The funded balance is reviewed on an annual basis. The balance of the life insurance policies was $3.3 million and $3.3 million at March 31, 2024 and December 31, 2023, respectively.

Other Long-Term Liabilities

Other long-term liabilities include amounts owed to employees that participate in the Company’s deferred compensation plan. Amounts owed to employees participating in the deferred compensation plan were $1.2 million and $1.4 million at March 31, 2024 and December 31, 2023, respectively.

Operating Expenses Presentation Changes

Beginning with the 2023 Annual Report, we have retroactively split our historical "Selling, general and administrative" financial statement line item ("FSLI"), presented in the condensed consolidated statements of operations under "Operating expenses" into two FSLIs, "Sales and marketing" and "General and administrative", to provide clearer insight into these operationally and economically different operating expenses. This split did not change our total historical operating expenses previously reported.
9

Related Party Transactions

During the three months ended March 31, 2023, Ronald Shaich, the sole member of Act III Management LLC ("Act III Management"), served as a strategic advisor to the Company's board of directors pursuant to a strategic advisor agreement, which terminated on June 1, 2023. Keith Pascal, a director of the Company, is an employee of Act III Management and serves as its vice president and secretary. Mr. Pascal does not have an ownership interest in Act III Management.

As of March 31, 2024 and December 31, 2023, the Company had zero accounts payable owed to Act III Management. During the three months ended March 31, 2024 and 2023, the Company paid Act III Management zero and $0.1 million, respectively, for services performed under the strategic advisor agreement.

Recently Adopted Accounting Pronouncements

There were no recent accounting pronouncements or changes in accounting pronouncements during the three months ended March 31, 2024 that are of significance or potential significance to the Company.

Note 2 — Revenue Recognition
Deferred Revenue
Deferred revenue attributable to each of the Company's reporting segments is as follows:
March 31, 2024December 31, 2023
Current under one yearNon-current over one yearCurrent under one yearNon-current over one year
Restaurant/Retail$12,897 $3,296 $7,250 $4,204 
Government    
Total$12,897 $3,296 $7,250 $4,204 

Most performance obligations greater than one year relate to service and support contracts, that the Company expects to fulfill within 36 months. The Company expects to fulfill 100% of service and support contracts within 60 months.

The changes in deferred revenue, inclusive of both current and long-term, are as follows:

(in thousands)20242023
Beginning balance - January 1$11,454 $13,584 
Acquired deferred revenue (Note 3)5,443  
Recognition of deferred revenue(6,398)(7,550)
Deferral of revenue5,694 7,668 
Ending balance - March 31$16,193 $13,702 
The above tables exclude customer deposits of $1.8 million and $1.6 million as of the three months ended March 31, 2024 and 2023, respectively. During the three months ended March 31, 2024 and 2023, the Company recognized revenue included in deferred revenue at the beginning of each respective period of $2.7 million and $3.1 million.

In the Government segment, the value of existing contracts at March 31, 2024, net of amounts relating to work performed to that date, was approximately $315.4 million, of which $72.0 million was funded, and at December 31, 2023, the value of existing contracts, net of amounts relating to work performed to that date, was approximately $326.0 million, of which $73.2 million was funded.





10

The value of existing contracts in the Government segment, net of amounts relating to work performed at March 31, 2024, is expected to be recognized as revenue over time as follows:

(in thousands)
Next 12 months$192,342 
Months 13-2487,865 
Months 25-3616,996 
Thereafter18,223 
Total$315,426 

Disaggregated Revenue

The Company disaggregates revenue from contracts with customers by major product line for each of its reporting segments because the Company believes it best depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by contract terms and economic factors.

Disaggregated revenue is as follows:
Three Months Ended March 31, 2024
(in thousands)Restaurant/Retail
point in time
Restaurant/Retail
over time
Government point in timeGovernment
over time
Hardware$18,226 $ $ $ 
Subscription service 38,379   
Professional service5,726 7,742   
Mission systems   8,247 
Intelligence, surveillance, and reconnaissance solutions
   26,756 
Commercial software  234 187 
Total$23,952 $46,121 $234 $35,190 
Three Months Ended March 31, 2023
(in thousands)Restaurant/Retail
point in time
Restaurant/Retail
over time
Government point in timeGovernment
over time
Hardware$26,777 $ $ $ 
Subscription service 27,965   
Professional service6,485 7,357   
Mission systems   9,383 
Intelligence, surveillance, and reconnaissance solutions
   22,216 
Commercial software  80 174 
Total$33,262 $35,322 $80 $31,773 
Note 3 — Acquisitions

On March 8, 2024, ParTech, Inc. ("ParTech"), acquired 100% of the outstanding equity interests of Stuzo Blocker, Inc., Stuzo Holdings, LLC and their subsidiaries (collectively, “Stuzo” and such acquisition, the “Stuzo Acquisition”), a digital engagement software provider to Convenience and Fuel Retailers (C-Stores), for purchase consideration of approximately $170.5 million paid in cash (the "Cash Consideration"), subject to certain adjustments (including customary adjustments for Stuzo cash, debt, debt-like items, and net working capital), and $19.2 million paid in shares of Company common stock. 441,598 shares of common stock were issued as purchase consideration, determined using a fair value share price of $43.41. The Company acquired Stuzo to expand our footprint in the C-Stores market vertical with an industry-leading guest engagement platform serving major brands in the space.

11

Consideration paid in cash on the date of acquisition included $1.5 million deposited into an escrow account administered by a third party to fund potential post-closing adjustments and obligations. The balance in the escrow account was $1.5 million as of March 31, 2024.

The Company incurred acquisition expenses related to its acquisition of Stuzo of approximately $2.9 million.

The transaction was accounted for as a business combination in accordance with ASC Topic 805, Business Combinations. Accordingly, assets acquired and liabilities assumed have been accounted for at their preliminarily determined respective fair values as of March 8, 2024, the date of acquisition. The fair value determinations were based on management's best estimates and assumptions, and with the assistance of independent valuation and tax consultants. Identified preliminary fair values are subject to measurement period adjustments within the permitted measurement period (up to one year from the acquisition date) as management finalizes its procedures and net working capital adjustments are settled.

The following table presents management's preliminary purchase price allocation:

(in thousands)Purchase price allocation
Cash$4,244 
Accounts receivable2,208 
Property and equipment307 
Developed technology18,200 
Customer relationships39,000 
Trade name and trademarks6,600 
Non-competition agreements4,800 
Prepaid and other acquired assets774 
Goodwill132,140 
Total assets208,273 
Accounts payable317 
Accrued expenses4,459 
Deferred revenue5,443 
Deferred taxes8,349 
Consideration paid$189,705 

Intangible Assets

The Company identified four acquired intangible assets in the Stuzo Acquisition: developed technology; customer relationships; the Stuzo trade name and trademarks; and non-competition agreements. The preliminary fair value of developed technology and customer relationship intangible assets were determined utilizing the “multi-period excess earnings method”, which is predicated upon the calculation of the net present value of after-tax net cash flows respectively attributable to each asset. The Company applied a seven-year economic life and discount rate of 12.5% in determining the Stuzo developed technology intangible fair value. The Company applied a 7.0% estimated annual attrition rate and discount rate of 12.5% in determining the Stuzo customer relationships intangible preliminary fair value. The preliminary fair value of the Stuzo trade name and trademarks intangible was determined utilizing the “relief from royalty” approach, which is a form of the income approach that attributes savings incurred from not having to pay a royalty for the use of an asset. The Company applied a fair and reasonable royalty rate of 1.0% and discount rate of 12.5% in determining the Stuzo trade name intangible preliminary fair value. The preliminary fair value of the Stuzo non-competition agreements was determined utilizing the discounted earnings method. The estimated useful life of these identifiable intangible assets was preliminarily determined to be seven years for the developed technology, twelve years for the customer relationships, indefinite for the Stuzo trade name and trademarks, and five years for the non-competition agreements.





12

Goodwill

Goodwill represents the excess of consideration transferred for the fair value of net identifiable assets acquired and is tested for impairment at least annually. The goodwill value represents expected synergies from the product acquired and other benefits. It is not deductible for income tax purposes.

Deferred Taxes

The Company determined the deferred tax position to be recorded at the time of the Stuzo Acquisition in accordance with ASC Topic 740, Income Taxes, resulting in recognition of $8.3 million in deferred tax liabilities for future reversing of taxable temporary differences primarily for intangible assets.

The net deferred tax liability relating to the Stuzo Acquisition was determined by the Company to provide future taxable temporary differences that allow for the Company to utilize certain previously fully reserved deferred tax assets. Accordingly, the Company recognized a reduction to its valuation allowance resulting in a net tax benefit of $8.1 million for the three months ended March 31, 2024.

Pro Forma Financial Information - unaudited

For the three months ended March 31, 2024, the Stuzo Acquisition resulted in additional revenues of $2.7 million and net income of $0.4 million.

The following table summarizes the Company's unaudited pro forma results of operations for the three months ended March 31, 2024 and 2023 as if the Stuzo Acquisition had occurred on January 1, 2023:

Three Months Ended March 31,
(in thousands)20242023
Total revenue$113,070 $110,202 
Net loss(25,186)(8,158)
The unaudited pro forma results presented above are for illustrative purposes only and do not reflect the realization of actual cost savings or any related integration costs. The unaudited pro forma results do not purport to be indicative of the results that would have been obtained, or to be a projection of results that may be obtained in the future. These unaudited pro forma results include certain adjustments, primarily due to increases in amortization expense due to the fair value adjustments of intangible assets, acquisition related costs and the impact of income taxes on the pro forma adjustments. $2.4 million of acquisition costs have been reflected in the 2023 pro forma results.

Note 4 — Accounts Receivable, net

The Company’s net accounts receivables consist of:

(in thousands)March 31, 2024December 31, 2023
Government segment$23,698 $20,703 
Restaurant/Retail segment46,260 42,679 
Accounts receivable, net$69,958 $63,382 

At March 31, 2024 and December 31, 2023, the Company had current expected credit losses of $2.0 million and $1.9 million, respectively, against accounts receivable for the Restaurant/Retail segment.

Changes in the current expected credit loss for the three months ended March 31 were:

(in thousands)20242023
Beginning Balance - January 1$1,949 $2,134 
Provisions564 489 
Write-offs(557)(110)
Ending Balance - March 31$1,956 $2,513 

13

Note 5 — Inventories, net

The components of inventory, adjusted for reserves, consisted of the following:

(in thousands)March 31, 2024December 31, 2023
Finished goods$14,973 $13,564 
Work in process234 216 
Component parts9,203 9,147 
Service parts644 667 
Inventories, net$25,054 $23,594 

At March 31, 2024 and December 31, 2023, the Company had excess and obsolescence reserves of $9.1 million and $9.0 million, respectively, against inventories.

Note 6 — Identifiable Intangible Assets and Goodwill

The Company's identifiable intangible assets represent intangible assets acquired in acquisitions and software development costs. The components of identifiable intangible assets are:
(in thousands)March 31, 2024December 31, 2023Estimated
Useful Life
Weighted-Average Amortization Period
Acquired developed technology $138,000 $119,800 
3 - 7 years
4.80 years
Internally developed software costs37,346 36,876 3 years1.83 years
Customer relationships53,510 14,510 
7 - 12 years
10.50 years
Trade names1,410 1,410 
2 - 5 years
0.75 years
Non-competition agreements4,830 30 
1 - 5 years
5 years
 235,096 172,626  
Impact of currency translation on intangible assets581 1,399 
Less: accumulated amortization(94,590)(88,259) 
 141,087 85,766  
Internally developed software costs not meeting general release threshold3,826 2,886 
Trademarks, trade names (non-amortizable)12,800 6,200 Indefinite
 $157,713 $94,852 

Software costs placed into service during the three months ended March 31, 2024 and 2023, were $0.5 million and $0.9 million, respectively.

The following table summarizes amortization expense for acquired developed technology and internally developed software:

Three Months Ended March 31,
(in thousands)20242023
Amortization of acquired developed technology$4,235 $4,078 
Amortization of internally developed software1,326 1,735 
Amortization of identifiable intangible assets recorded in cost of sales5,561 5,813 
Amortization expense recorded in operating expenses932 464 
Impact of foreign currency translation on intangible assets639 (129)

14

The expected future amortization of intangible assets, assuming straight-line amortization of capitalized software development costs and acquisition related intangibles, excluding software development costs not meeting the general release threshold, is as follows:

(in thousands)
2024, remaining$21,973 
202528,541 
202625,665 
202721,900 
202812,323 
Thereafter30,685 
Total$141,087 

Goodwill carried by the Restaurant/Retail and Government segments is as follows:

(in thousands)20242023
Beginning balance - January 1$489,654 $486,762 
Stuzo Acquisition132,140  
Foreign currency translation(2,162)321 
Ending balance - March 31$619,632 $487,083 
Note 7 — Debt

The following table summarizes information about the net carrying amounts of long-term debt as of March 31, 2024:

(in thousands)2026 Notes2027 NotesTotal
Principal amount of notes outstanding$120,000 $265,000 $385,000 
Unamortized debt issuance cost(1,628)(5,217)(6,845)
Total notes payable$118,372 $259,783 $378,155 

The following table summarizes information about the net carrying amounts of long-term debt as of December 31, 2023:

(in thousands)2026 Notes2027 NotesTotal
Principal amount of notes outstanding$120,000 $265,000 $385,000 
Unamortized debt issuance cost(1,811)(5,542)(7,353)
Total notes payable$118,189 $259,458 $377,647 
The following table summarizes interest expense recognized on the long-term debt:
Three Months
Ended March 31,
(in thousands)20242023
Contractual interest expense$1,856 $2,011 
Accretion of debt in interest expense508 522 
Total interest expense$2,364 $2,533 

15

The following table summarizes the future principal payments as of March 31, 2024:
(in thousands)
2024, remaining$ 
2025 
2026120,000 
2027265,000 
2028 
Thereafter 
Total$385,000 
Note 8 — Common Stock

In connection with, and to partially fund the Cash Consideration related to the Stuzo Acquisition, on March 7, 2024, the Company entered into a Securities Purchase Agreement (the "Purchase Agreement") with funds and accounts advised by T. Rowe Price Investment Management, Inc., ADW Capital, Voss Capital, Greenhaven Road Capital, Jane Street, Progeny 3, Fund 1 Investments LLC, Newtyn Capital, Ghisallo Capital Management and Burkehill Global Management (collectively, the “Purchasers”) to raise approximately $200 million through a private placement of PAR common stock. Pursuant to the Purchase Agreement, PAR issued and sold 5,174,638 shares of its common stock at a 10% discount to the Purchasers for a gross purchase price of approximately $200 million ($38.65 per share). Net proceeds from the Purchase Agreement were approximately $194.4 million, net of issuance costs of $5.5 million.

On January 2, 2024, the Company entered into a consulting agreement with PAR Act III, LLC ("PAR Act III") pursuant to which PAR Act III will provide the Company with strategic consulting, merger and acquisition technology due diligence, and other professional and expert services that may be requested from time to time by the Company’s Chief Executive Officer through April 8, 2026. In consideration for the services provided under the consulting agreement, the Company amended its common stock purchase warrant issued to PAR Act III on April 8, 2021 (the "Warrant") to extend the termination date of the Warrant to April 8, 2028, subject to the consulting agreement remaining in effect through April 8, 2026.

The issuance date fair value of the Warrant extension was determined to be $4.5 million based on using the Black-Scholes model with the following assumptions as of January 2, 2024:

Original WarrantModified Warrant
Expected term2.25 years4.25 years
Risk free interest rate4.33 %3.93 %
Expected volatility55.01 %63.39 %
Expected dividend yieldNoneNone
Fair value (per warrant)$7.36 $16.21 

In connection with the Company's March 2024 offering of its common stock, as a result of anti-dilution provisions of the Warrant, an additional 6,312 shares of common stock are available for purchase under the Warrant, at an exercise price of $74.96 per share. 100% of the shares available for purchase under the Warrant are exercisable at the exercise price of $74.96 per share.

The Warrant is accounted for as stock-based compensation to non-employees pursuant to ASC Topic 718, Stock Compensation, by way of ASC Topic 815, Derivatives and Hedging, due to the Warrant extension being in exchange for consulting services. The issuance date fair value of the Warrant extension of $4.5 million will be recognized as stock based compensation expense ratably over the requisite service period for the Warrant extension ending April 8, 2026.
Note 9 — Stock-Based Compensation

Stock-based compensation expense, net of forfeitures of $0.7 million and $0.1 million, was $4.4 million and $3.1 million for the three months ended March 31, 2024 and 2023, respectively.

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At March 31, 2024, the aggregate unrecognized compensation expense related to unvested equity awards was $35.5 million, which is expected to be recognized as compensation expense in fiscal years 2024 through 2027.

A summary of stock option activity for the three months ended March 31, 2024 is below:
(in thousands, except for weighted average exercise price)Options outstandingWeighted
average
exercise price
Outstanding at January 1, 2024920 $13.04 
Exercised(107)10.29 
Canceled/forfeited(11)9.94 
Outstanding at March 31, 2024802 $13.46 

A summary of unvested restricted stock units activity for the three months ended March 31, 2024 is below:
(in thousands, except for weighted average award value)Restricted Stock
Unit Awards
Weighted
average
award value
Outstanding at January 1, 2024839 $35.83 
Granted429 48.81 
Vested(329)32.88 
Canceled/forfeited(110)34.88 
Outstanding at March 31, 2024829 $44.38 
A total of 330,000 shares of Company common stock are available for purchase under the Company's 2021 Employee Stock Purchase Plan ("ESPP"), subject to adjustment as provided for in the ESPP. As of March 31, 2024, no shares of common stock were purchased.
Note 10 — Net Loss Per Share

Net loss per share is calculated in accordance with ASC Topic 260, Earnings per Share, which specifies the computation, presentation and disclosure requirements for earnings per share (“EPS”). It requires the presentation of basic and diluted EPS. Basic EPS excludes all dilution and is based upon the weighted average number of shares of common stock outstanding during the period. Diluted EPS reflects the potential dilution that would occur if convertible securities or other contracts to issue common stock were exercised. At March 31, 2024, there were 802,000 anti-dilutive stock options outstanding compared to 1,021,000 as of March 31, 2023. At March 31, 2024 there were 829,000 anti-dilutive restricted stock units compared to 634,000 as of March 31, 2023.
Note 11 — Commitments and Contingencies

From time to time, the Company is party to legal proceedings arising in the ordinary course of business. Additionally, U.S. Government contract costs are subject to periodic audit and adjustment. Based on information currently available, and based on its evaluation of such information, the Company believes the legal proceedings in which it is currently involved are not material or are not likely to result in a material adverse effect on the Company’s business, financial condition or results of operations, or cannot currently be estimated.
Note 12 — Segment and Related Information
The Company is organized in two segments, Restaurant/Retail and Government. Management views the Restaurant/Retail and Government segments separately in operating its business, as the products and services are different for each segment. Information noted as “Other” primarily relates to the Company’s corporate operations.









17

Information as to the Company’s segments is set forth in the tables below:

Three Months Ended March 31,
(in thousands)20242023
Revenues:
Restaurant/Retail$70,073 $68,584 
Government35,424 31,853 
Total$105,497 $100,437 
Operating (loss) income:
Restaurant/Retail$(26,965)$(16,146)
Government2,294 2,282 
Total(24,671)(13,864)
Other income (expense), net306 (59)
Interest expense, net(1,708)(1,667)
Loss before benefit from (provision for) income taxes$(26,073)$(15,590)
Depreciation, amortization and accretion:
Restaurant/Retail$7,615 $7,340 
Government119 115 
Total$7,734 $7,455 
Capital expenditures including software costs:
Restaurant/Retail$1,503 $2,037 
Government127 130 
Total$1,630 $2,167 
Revenues by country:
United States$99,957 $95,437 
International5,540 5,000 
Total$105,497 $100,437 

The following table represents assets by reporting segment:

(in thousands)March 31, 2024December 31, 2023
Restaurant/Retail$894,236 $694,568 
Government29,469 24,475 
Other85,208 83,563 
Total$1,008,913 $802,606 

The following table represents assets by country based on the location of the assets:

(in thousands)March 31, 2024December 31, 2023
United States$978,952 $767,894 
International29,961 34,712 
Total$1,008,913 $802,606 

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The following table represents goodwill by reporting segment:

(in thousands)March 31, 2024December 31, 2023
Restaurant/Retail$618,896 $488,918 
Government736 736 
Total$619,632 $489,654 

Customers comprising 10% or more of the Company’s total revenues by reporting segment are summarized as follows:
Three Months Ended March 31,
20242023
Restaurant/Retail reporting segment:
Yum! Brands, Inc.8 %10 %
Government reporting segment:
U.S. Department of Defense34 %32 %
All Others58 %58 %
100 %100 %

No other customer within "All Others" represented 10% or more of the Company’s total revenue for the three months ended March 31, 2024 or 2023.
Note 13 — Fair Value of Financial Instruments
The Company’s financial instruments have been recorded at fair value using available market information and valuation techniques. The fair value hierarchy is based upon three levels of input, which are:

Level 1 — quoted prices in active markets for identical assets or liabilities (observable)

Level 2 — inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in inactive markets, or other inputs that are observable market data for essentially the full term of the asset or liability (observable)

Level 3 — unobservable inputs that are supported by little or no market activity, but are significant to determining the fair value of the asset or liability (unobservable)

The Company’s financial instruments primarily consist of cash and cash equivalents, cash held on behalf of customers, short-term investments, debt instruments and deferred compensation assets and liabilities. The carrying amounts of cash and cash equivalents, cash held on behalf of customers, and short-term investments as of March 31, 2024 and December 31, 2023 were considered representative of their fair values because of their short-term nature. Debt instruments are recorded at principal amount net of unamortized debt issuance cost and discount (refer to "Note 7 - Debt" for additional information). The estimated fair value of the 2.875% Convertible Senior Notes due 2026 (the "2026 Notes") and 1.50% Convertible Senior Notes due 2027 (the "2027 Notes") at March 31, 2024 was $149.1 million and $244.2 million respectively. The estimated fair value of the 2026 Notes and 2027 Notes at December 31, 2023 was $145.6 million and $236.1 million respectively. The valuation techniques used to determine the fair value of the Company's long-term debt are classified in Level 2 of the fair value hierarchy as they are derived from broker quotations.

Deferred compensation assets and liabilities primarily relate to the Company’s deferred compensation plan, which allows for pre-tax salary deferrals for certain key employees. Changes in the fair value of the deferred compensation liabilities are derived using quoted prices in active markets of the asset selections made by plan participants. Deferred compensation liabilities are classified in Level 2, the fair value classification as defined under FASB ASC Topic 820, Fair Value Measurements, because their inputs are derived principally from observable market data by correlation to the hypothetical investments. The Company holds insurance investments to partially offset the Company’s liabilities under its deferred compensation plan, which are recorded at fair value each period using the cash surrender value of the insurance investments.

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The cash surrender value of the life insurance policy was $3.3 million and $3.3 million at March 31, 2024 and December 31, 2023, respectively, and is included in other assets on the condensed consolidated balance sheets. Amounts owed to employees participating in the deferred compensation plan at March 31, 2024 were $1.2 million compared to $1.4 million at December 31, 2023 and are included in other long-term liabilities on the condensed consolidated balance sheets.

The Company uses a Monte Carlo simulation of a discounted cash flow model to determine the fair value of the earn-out liability associated with the acquisition of MENU Technologies AG (the "MENU Acquisition"). Significant inputs used in the simulation are not observable in the market and thus the liability represents a Level 3 fair value measurement as defined in ASC 820. Ultimately, the liability will be equivalent to the amount paid, and the difference between the fair value estimate and amount paid will be recorded in earnings. The amount paid that is less than or equal to the liability on the acquisition date will be reflected as cash used in financing activities in the Company's condensed consolidated statements of cash flows. Any amount paid in excess of the liability on the acquisition date will be reflected as cash used in operating activities.

The following table presents the changes in the estimated fair values of the Company’s liabilities for contingent consideration measured using significant unobservable inputs (Level 3) for the three months ended March 31:

(in thousands)20242023
Balance at January 1$600 $9,800 
Change in fair value of contingent consideration (5,200)
Balance at March 31$600 $4,600 

The balance of the fair value of the liability was recorded within "Accrued expenses" in the condensed consolidated balance sheets. The change in fair value of contingent consideration was recorded within "Adjustment to contingent consideration liability" in the condensed consolidated statements of operations.

The following table provides quantitative information associated with the fair value measurement of the Company’s liabilities for contingent consideration as of March 31, 2024 and December 31, 2023:
Contingency Type
Maximum Payout (1) (undiscounted) (in thousands)
Fair ValueValuation TechniqueUnobservable InputsWeighted Average or Range
Revenue based payments$5,600 $600 Monte CarloRevenue volatility25.0 %
Discount rate11.5 %
Projected year of payments2024

(1) Maximum payout as determined by Monte Carlo valuation simulation; the disclosed contingency is not subject to a contractual maximum payout.
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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and the notes thereto included under "Part I, Item 1. Financial Statements (unaudited)" of this Quarterly Report and our audited consolidated financial statements and the notes thereto included under "Part II, Item 8. Financial Statements and Supplementary Data" of the 2023 Annual Report. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors, including those discussed under "Forward-Looking Statements".
OVERVIEW

Q1 2024 Performance Highlights

Annual Recurring Revenues ("ARR") grew to $185.7 million - representing total growth of 60.2% and organic growth of 24.8% from $115.9 million reported as of March 31, 2023.

Active sites expansion
Engagement Cloud active sites expanded to 92.7 thousand - a 36.2% increase from the 68.1 thousand reported as of March 31, 2023.
Operator Cloud active sites expanded to 27.0 thousand - a 20.7% increase from the 22.4 thousand reported as of March 31, 2023.

Q1 2024 Corporate Development Highlights

Private Placement of Common Stock: In connection with, and to partially fund the Stuzo Acquisition, on March 7, 2024, the Company issued and sold 5,174,638 shares of its common stock at $38.65 per share. Net proceeds from the private placement were approximately $194.4 million, net of issuance costs of $5.5 million.

Stuzo Acquisition: On March 8, 2024, the Company acquired Stuzo, a digital engagement software provider to Convenience and Fuel Retailers (C-Stores), for approximately $190 million. The purchase consideration was approximately $170.5 million paid in cash, subject to certain adjustments (including customary adjustments for Stuzo cash, debt, debt-like items, and net working capital), and $19.2 million paid in shares of Company common stock. The acquisition of Stuzo contributed $41.0 million in ARR and 20.7 thousand active sites included within Engagement Cloud as of March 31, 2024.

TASK Announcement: On March 8, 2024, the Company and TASK Group Holdings Limited, an Australian public company limited by shares and listed on the Australian Securities Exchange (“TASK”), entered into a Scheme Implementation Agreement, pursuant to which, subject to the satisfaction or waiver of certain conditions, the Company will acquire all TASK ordinary shares pursuant to a court-approved scheme of arrangement under Part 5.1 of Australia’s Corporations Act 2001. TASK is an Australia-based global food service transaction platform, that offers international unified commerce solutions, including interactive customer engagement and seamless integration, tailored for major brands worldwide. The acquisition of TASK is expected to contribute $40.0 million in ARR based on figures reported as of September 30, 2023. The closing of the TASK Transaction is expected to occur in the third quarter of 2024, subject to the satisfaction or waiver of certain conditions.

Refer to "Key Performance Indicators and Non-GAAP Financial Measures" below for important information on key performance indicators and non-GAAP financial measures, including ARR, active sites, and adjusted subscription service gross margin, used by us to evaluate Restaurant/Retail segment performance.






21

RESULTS OF OPERATIONS

Consolidated Results:
Three Months Ended March 31,Percentage of total revenueIncrease (decrease)
in thousands20242023202420232024 vs 2023
Revenues, net:
Hardware$18,226 $26,777 17.3 %26.7 %(31.9)%
Subscription service38,379 27,965 36.4 %27.8 %37.2 %
Professional service13,468 13,842 12.8 %13.8 %(2.7)%
Contract35,424 31,853 33.6 %31.7 %11.2 %
Total revenues, net$105,497 $100,437 100.0 %100.0 %5.0 %
Gross margin
Hardware$4,056 $4,396 3.8 %4.4 %(7.7)%
Subscription service19,785 14,040 18.8 %14.0 %40.9 %
Professional service2,217 2,476 2.1 %2.5 %(10.5)%
Contract2,505 2,281 2.4 %2.3 %9.8 %
Total gross margin$28,563 $23,193 27.1 %23.1 %23.2 %
Operating expenses:
Sales and marketing$10,926 $9,398 10.4 %9.4 %16.3 %
General and administrative25,608 18,080 24.3 %18.0 %41.6 %
Research and development15,768 14,315 14.9 %14.3 %10.2 %
Amortization of identifiable intangible assets932 464 0.9 %0.5 %100.9 %
Adjustment to contingent consideration liability— (5,200)— %(5.2)%(100.0)%
Total operating expenses$53,234 $37,057 50.5 %36.9 %43.7 %
Operating loss$(24,671)$(13,864)(23.4)%(13.8)%78.0 %
Other income (expense), net306 (59)0.3 %(0.1)%(618.6)%
Interest expense, net(1,708)(1,667)(1.6)%(1.7)%2.5 %
Loss before benefit from (provision for) income taxes(26,073)(15,590)(24.7)%(15.5)%67.2 %
Benefit from (provision for) income taxes7,785 (315)7.4 %(0.3)%(2571.4)%
Net loss$(18,288)$(15,905)(17.3)%(15.8)%15.0 %

















22

Segment Revenue by Product Line as Percentage of Total Revenue

Three Months Ended March 31,
Percentage of total revenueIncrease (decrease)
in thousands20242023202420232024 vs 2023
Hardware$18,226 $26,777 17.3 %26.7 %(31.9)%
Subscription service38,379 27,965 36.4 %27.8 %37.2 %
Professional service13,468 13,842 12.8 %13.8 %(2.7)%
Total Restaurant/Retail70,073 68,584 66.4 %