PAR(PAR) - 2024 Q2 - Quarterly Results

PAR Technology Corporation Q2 2024 Earnings Release Financial and Operational Highlights PAR Technology reported strong Q2 2024 results, marked by significant ARR and subscription revenue growth, strategic divestitures, and the TASK Group acquisition, with improved Adjusted EBITDA despite a wider GAAP net loss - Annual Recurring Revenue (ARR) grew 56.9% year-over-year to $192.2 million, with organic growth contributing 23.9%[1] - Quarterly subscription service revenues increased by 47.7% compared to Q2 2023[1] - The company completed the sale of PAR Government Systems Corporation for $95.0 million and Rome Research Corporation for $7.0 million, and acquired TASK Group Holdings Limited[1] Q2 2024 Financial Highlights vs. Q2 2023 | Metric | Q2 2024 (Millions USD) | Q2 2023 (Millions USD) | Change | | :--- | :--- | :--- | :--- | | Revenue | $78.2 | $69.5 | +12.4% | | Net Loss from Continuing Operations (GAAP) | $(23.6) | $(21.8) | Worse by $1.7M | | Adjusted EBITDA (Non-GAAP) | $(4.3) | $(12.3) | Better by $7.9M | | Diluted Net Loss Per Share (GAAP) | $(0.69) | $(0.80) | Better by $0.11 | | Non-GAAP Diluted Net Loss Per Share | $(0.23) | $(0.60) | Better by $0.37 | Year-to-Date 2024 Financial Highlights vs. YTD 2023 | Metric | YTD 2024 (Millions USD) | YTD 2023 (Millions USD) | Change | | :--- | :--- | :--- | :--- | | Revenue | $148.2 | $138.1 | +7.3% | | Net Loss from Continuing Operations (GAAP) | $(44.0) | $(40.9) | Worse by $3.1M | | Adjusted EBITDA (Non-GAAP) | $(14.5) | $(24.5) | Better by $9.9M | | Diluted Net Loss Per Share (GAAP) | $(1.33) | $(1.49) | Better by $0.16 | | Non-GAAP Diluted Net Loss Per Share | $(0.66) | $(1.18) | Better by $0.52 | Business Segment Performance The company's subscription services, comprising Engagement Cloud and Operator Cloud, show Engagement Cloud leading in Q2 2024 ARR and active sites, indicating strong market penetration Engagement Cloud Performance (Q2 2024) | Metric | Value | | :--- | :--- | | ARR | $107.9 million | | Active Sites | 94.6 thousand | Operator Cloud Performance (Q2 2024) | Metric | Value | | :--- | :--- | | ARR | $84.2 million | | Active Sites | 27.7 thousand | Consolidated Financial Statements Consolidated financial statements reveal a strengthened balance sheet with increased assets driven by cash and goodwill, and an income statement showing strong subscription revenue growth offsetting hardware decline amidst rising operating expenses Condensed Consolidated Balance Sheets As of June 30, 2024, PAR's balance sheet strengthened, with total assets increasing to $1.06 billion driven by cash and goodwill, while total liabilities remained stable and shareholders' equity grew significantly Key Balance Sheet Items | Account | June 30, 2024 (Thousands USD) | Dec 31, 2023 (Thousands USD) | | :--- | :--- | :--- | | Cash and cash equivalents | $114,928 | $37,183 | | Goodwill | $623,875 | $488,918 | | Total Assets | $1,056,684 | $802,606 | | Long-term debt | $378,672 | $377,647 | | Total Liabilities | $468,363 | $469,541 | | Total Shareholders' Equity | $588,321 | $333,065 | Condensed Consolidated Statements of Operations Q2 2024 total revenues increased 12.4% to $78.2 million, driven by a 47.7% surge in subscription services, improving gross margin, yet net loss from continuing operations widened due to higher operating expenses Q2 2024 Revenue Breakdown | Revenue Stream | Q2 2024 (Thousands USD) | Q2 2023 (Thousands USD) | YoY Change | | :--- | :--- | :--- | :--- | | Hardware | $20,116 | $26,390 | -23.8% | | Subscription service | $44,872 | $30,372 | +47.7% | | Professional service | $13,162 | $12,767 | +3.1% | | Total revenues, net | $78,150 | $69,529 | +12.4% | Q2 2024 Profitability Metrics | Metric | Q2 2024 (Thousands USD) | Q2 2023 (Thousands USD) | | :--- | :--- | :--- | | Gross margin | $32,028 | $19,186 | | Operating loss | $(20,735) | $(19,876) | | Net loss from continuing operations | $(23,587) | $(21,839) | - The company reported significant net income from discontinued operations of $77.8 million in Q2 2024, related to the sale of its Government segment[14] Non-GAAP Financial Measures and Reconciliations The company presents non-GAAP measures like Adjusted EBITDA and non-GAAP diluted net loss per share to provide supplemental operating performance insights, with Q2 2024 showing improved results and a modified gross margin definition - The company uses non-GAAP measures like Adjusted EBITDA, non-GAAP diluted net loss per share, and non-GAAP subscription service gross margin percentage to facilitate period-to-period comparisons of business performance[7][15] - Beginning in Q2 2024, the definition of non-GAAP subscription service gross margin percentage was modified to exclude amortization, stock-based compensation, and severance costs, aligning it with other non-GAAP measures[17] Reconciliation of Net Income (Loss) to Adjusted EBITDA Adjusted EBITDA significantly improved in Q2 2024 to a $4.3 million loss from a $12.3 million loss in Q2 2023, driven by higher gross margin despite various adjustments Reconciliation of Net Loss from Continuing Operations to Adjusted EBITDA | Line Item | Q2 2024 (Thousands USD) | Q2 2023 (Thousands USD) | | :--- | :--- | :--- | | Net loss from continuing operations | $(23,587) | $(21,839) | | Depreciation and amortization | $8,834 | $6,817 | | Stock-based compensation | $6,286 | $3,601 | | Transaction costs | $1,573 | $— | | Adjusted EBITDA | $(4,348) | $(12,258) | Reconciliation of GAAP to Non-GAAP Diluted Net Loss Per Share Non-GAAP diluted net loss per share significantly improved to $0.23 in Q2 2024 from $0.60 in Q2 2023, after adjustments for acquired intangible assets amortization and stock-based compensation Reconciliation of GAAP to Non-GAAP Diluted Net Loss Per Share | Line Item | Q2 2024 (USD) | Q2 2023 (USD) | | :--- | :--- | :--- | | Diluted net loss per share from continuing operations (GAAP) | $(0.69) | $(0.80) | | Acquired intangible assets amortization | $0.20 | $0.16 | | Stock-based compensation | $0.18 | $0.13 | | Non-GAAP diluted net loss per share | $(0.23) | $(0.60) | Reconciliation of GAAP to Non-GAAP Subscription Service Gross Margin Percentage Non-GAAP Subscription Service Gross Margin Percentage improved to 66.4% in Q2 2024 from 60.9% in Q2 2023, primarily due to adjustments for depreciation and amortization expenses Reconciliation of Subscription Service Gross Margin Percentage | Line Item | Q2 2024 (%) | Q2 2023 (%) | | :--- | :--- | :--- | | Subscription Service Gross Margin Percentage (GAAP) | 53.1% | 43.3% | | Depreciation and amortization | 13.1% | 17.4% | | Stock-based compensation | 0.2% | 0.2% | | Non-GAAP Subscription Service Gross Margin Percentage | 66.4% | 60.9% | Forward-Looking Statements This section provides standard safe harbor language, cautioning investors about inherent uncertainties and risks that could materially impact future performance, including macroeconomic conditions, acquisition integration, component shortages, and geopolitical events - The report contains forward-looking statements that are predictive of future operations and financial results, which are inherently uncertain[9] - Key risks include the ability to develop or acquire new products, unfavorable macroeconomic conditions, uncertainties related to acquisitions (Stuzo, TASK), component shortages, and geopolitical events[9]