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PAR(PAR) - 2023 Q4 - Annual Report
PARPAR(PAR)2024-02-26 16:00
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Restaurant/Retail Segment - PAR's Restaurant/Retail segment serves over 70,000 active restaurant locations with omnichannel cloud-based software and hardware solutions[14] - PAR's subscription services include SaaS solutions and transaction-based payment processing, with over 500 integration partners[18][23] - PAR's hardware offerings include POS terminals, tablets, wireless headsets, and drive-thru systems, designed for harsh food service environments[24] - PAR's long-term relationships with McDonald's and Yum! Brands contribute 17% of total revenue[31] - PAR's SaaS solutions include PUNCHH for customer loyalty and MENU for digital ordering, enhancing customer engagement and operational efficiency[18][19] - PAR's omnichannel solutions aim to integrate data points for guest satisfaction and operational efficiencies across restaurant enterprises[16] - The Restaurant/Retail segment offers omnichannel solutions including point-of-sale, customer engagement, digital ordering, and payment processing[278] - The company's revenue in the Restaurant/Retail segment is derived from hardware sales, subscription services, and professional services, with revenue recognition governed by ASC Topic 606[307] - Hardware revenue is recognized at the point in time when the customer obtains control of the asset, typically upon delivery to a third-party carrier[309] - Subscription service revenue, including SaaS solutions, is recognized ratably over the contract period, which generally ranges from 12 to 36 months[311] - Software support revenue is recognized ratably over the contract term, typically 12 months, as the company satisfies its "stand-ready" obligations[312] - Transaction-based payment processing revenue is recognized net of refunds and reversals, with variable fees allocated based on ASC 606 allocation objectives[313] - Deferred revenue for the Restaurant/Retail segment was 7.3million(current)and7.3 million (current) and 4.2 million (non-current) as of December 31, 2023[371] - Total disaggregated revenue for 2023 was 124.9million(PointinTime)and124.9 million (Point in Time) and 151.8 million (Over Time) for the Restaurant/Retail segment[375] - Net accounts receivable for 2023 was 63.4million,with63.4 million, with 42.7 million from the Restaurant/Retail segment[378] Government Segment - PAR's Government segment provides advanced systems and software solutions for the U.S. Department of Defense and intelligence community[37] - PAR's ISR group focuses on mobile geospatial applications, C-sUAS, and data science, supporting tactical edge situational awareness[38][39] - PAR's ISR group is expanding through the development and implementation of C-sUAS systems, supporting force protection efforts[41] - PAR's MS group operates and maintains satellite communication and teleport facilities with ultra-high, super high, and extremely high frequency satellite communication earth terminals[42] - Approximately 70% of PAR's MS group footprint is outside the continental U.S., with contracts in Europe, Middle East, Africa, Australia, and U.S. commonwealths and territories[45] - PAR Government has an average contract duration of three to five years, with some contracts continuing for 20 years or more[46] - PAR Government offers three commercial software products: geospatial visualization (GV) image processing suite, Situation-X (Sit-X), and GVStreamer software[48] - PAR's MS group provides 24/7/365 support services for satellite communication systems, including satellite control center operations and mission planning[43] - PAR's MS group supports critical information systems for the National Command Authority, DoD, and other federal agencies, with a significant global presence[45] - PAR Government's commercial software business focuses on video streaming and replication technologies for unmanned aerial vehicle operators and tactical edge mobile device users[51] - The Government segment provides ISR solutions, mission systems operations, and commercial software products for defense and intelligence applications[278] - The company's Government segment revenue is predominantly recognized over time, with revenue generated from services, materials, software, hardware, and maintenance[322] - The government segment had a contract backlog of 326.0millionasofDecember31,2023,with326.0 million as of December 31, 2023, with 179.5 million expected to be recognized in the next 12 months[373] Financial Performance - Total revenues for 2023 increased to 415.8million,up16.9415.8 million, up 16.9% from 355.8 million in 2022[268] - Subscription service revenue grew to 122.6millionin2023,a25.7122.6 million in 2023, a 25.7% increase from 97.5 million in 2022[268] - Net loss for 2023 was 69.8million,slightlyhigherthanthe69.8 million, slightly higher than the 69.3 million loss in 2022[268] - Cash and cash equivalents decreased to 37.4millionin2023from37.4 million in 2023 from 70.3 million in 2022[266] - Total assets declined to 802.6millionin2023from802.6 million in 2023 from 854.9 million in 2022[266] - Research and development expenses increased to 58.4millionin2023,up2058.4 million in 2023, up 20% from 48.6 million in 2022[268] - Gross margin improved to 98.3millionin2023,up10.198.3 million in 2023, up 10.1% from 89.3 million in 2022[268] - Weighted average shares outstanding increased to 27.6 million in 2023 from 27.2 million in 2022[268] - Net loss for 2023 was 69.8million,comparedto69.8 million, compared to 69.3 million in 2022 and 75.8millionin2021[274]−Cashusedinoperatingactivitiesdecreasedto75.8 million in 2021[274] - Cash used in operating activities decreased to 17.1 million in 2023 from 43.1millionin2022and43.1 million in 2022 and 53.2 million in 2021[274] - Cash used in investing activities was 7.8millionin2023,significantlylowerthan7.8 million in 2023, significantly lower than 66.7 million in 2022 and 383.0millionin2021[274]−Cashandcashequivalentsdecreasedto383.0 million in 2021[274] - Cash and cash equivalents decreased to 47.5 million at the end of 2023 from 77.5millionin2022and77.5 million in 2022 and 188.4 million in 2021[274] - Stock-based compensation expense was 14.4millionin2023,comparedto14.4 million in 2023, compared to 13.4 million in 2022 and 14.6millionin2021[274]−Depreciationandamortizationexpensesincreasedto14.6 million in 2021[274] - Depreciation and amortization expenses increased to 27.5 million in 2023 from 26.1millionin2022and26.1 million in 2022 and 21.4 million in 2021[274] - Total shareholders' equity decreased to 333.1millionattheendof2023from333.1 million at the end of 2023 from 375.2 million in 2022 and 504.3millionin2021[271]−Netlosspersharefor2023was504.3 million in 2021[271] - Net loss per share for 2023 was (2.53), compared to (2.55)in2022and(2.55) in 2022 and (3.02) in 2021[337] Acquisitions and Contingent Considerations - The fair value of contingent consideration for the MENU Technologies AG acquisition was adjusted to 0.6millionasofDecember31,2023[260]−TheMENUAcquisitionresultedinaninitialcontingentconsiderationliabilityof0.6 million as of December 31, 2023[260] - The MENU Acquisition resulted in an initial contingent consideration liability of 14.2 million in 2022, which was adjusted to 9.8millionbytheendof2022andfurtherreducedto9.8 million by the end of 2022 and further reduced to 0.6 million by the end of 2023[330][331] - The MENU acquisition in 2022 involved 18.4millionincashand18.4 million in cash and 6.3 million in company stock, with an additional 14.2millionearn−outpotential[342]−TheMENUearn−outfairvaluewasadjustedto14.2 million earn-out potential[342] - The MENU earn-out fair value was adjusted to 0.6 million as of December 31, 2023, down from 14.2millionatacquisition[342]−ThePunchhacquisitionin2021totaled14.2 million at acquisition[342] - The Punchh acquisition in 2021 totaled 507.7 million, including 397.5millionincashand1,493,130sharesofcompanystock[353]−Thecompanyincurred397.5 million in cash and 1,493,130 shares of company stock[353] - The company incurred 1.1 million in acquisition expenses related to the MENU acquisition[349] - The Punchh acquisition resulted in a 3.5millionreductionincashconsiderationduetoescrowaccountsettlements[356]−ThefairvalueofdevelopedtechnologyinthePunchhacquisitionwasreducedby3.5 million reduction in cash consideration due to escrow account settlements[356] - The fair value of developed technology in the Punchh acquisition was reduced by 3.6 million during 2021[358] - The total purchase price allocation for the Punchh Acquisition was 553.8million,withgoodwillaccountingfor553.8 million, with goodwill accounting for 415.1 million[361] - The Punchh Acquisition added 27.7millioninrevenuefortheyearendedDecember31,2021[369]−Thecompany′sunauditedproformatotalrevenuefor2021was27.7 million in revenue for the year ended December 31, 2021[369] - The company's unaudited pro forma total revenue for 2021 was 291.6 million, with a net loss of 79.1million[370]DebtandFinancialInstruments−AsofDecember31,2023,PARhad79.1 million[370] Debt and Financial Instruments - As of December 31, 2023, PAR had 120.0 million and 265.0millioninaggregateprincipalamountoutstandingonthe2026Notesand2027Notes,respectively[252]−Long−termdebtdecreasedto265.0 million in aggregate principal amount outstanding on the 2026 Notes and 2027 Notes, respectively[252] - Long-term debt decreased to 377.6 million in 2023 from 389.2millionin2022[266]−Thecompanyrepurchased389.2 million in 2022[266] - The company repurchased 66.3 million of 2024 Notes using proceeds from the 2026 Notes issuance, resulting in a loss on settlement of 8.1million[389]−The2027Noteswereissuedat8.1 million[389] - The 2027 Notes were issued at 265.0 million with a 1.500% interest rate, used to repay the 180.0millionOwlRockTermLoanandforgeneralcorporatepurposes[390]−Thecompanyacquired180.0 million Owl Rock Term Loan and for general corporate purposes[390] - The company acquired 13.75 million of 2024 Notes in exchange for 497,376 shares of common stock, resulting in a 0.6millionlossonextinguishmentofdebt[391]−The2026Notesareconvertibleat23.2722sharesper0.6 million loss on extinguishment of debt[391] - The 2026 Notes are convertible at 23.2722 shares per 1,000 principal amount, while the 2027 Notes are convertible at 12.9870 shares per 1,000principalamount[392]−Theimpliedeffectiverateoftheliabilitycomponentforthe2024Notes,2026Notes,and2027Noteswas10.21,000 principal amount[392] - The implied effective rate of the liability component for the 2024 Notes, 2026 Notes, and 2027 Notes was 10.2%, 7.3%, and 6.5%, respectively[394] - Initial measurement of the 2024 Notes resulted in a liability of 62.4 million and an implied value of the convertible feature of 17.6million[395]−Initialmeasurementofthe2026Notesresultedinaliabilityof17.6 million[395] - Initial measurement of the 2026 Notes resulted in a liability of 93.8 million and an implied value of the convertible feature of 26.2million[395]−Initialmeasurementofthe2027Notesresultedinaliabilityof26.2 million[395] - Initial measurement of the 2027 Notes resulted in a liability of 199.2 million and an implied value of the convertible feature of 65.8million[395]−Issuancecostsforthe2024Notesamountedto65.8 million[395] - Issuance costs for the 2024 Notes amounted to 4.9 million, with 3.8millionallocatedtodebtand3.8 million allocated to debt and 1.1 million to equity components[395] - Issuance costs for the 2026 Notes amounted to 4.2million,with4.2 million, with 3.3 million allocated to debt and 0.9milliontoequitycomponents[395]−Issuancecostsforthe2027Notesamountedto0.9 million to equity components[395] - Issuance costs for the 2027 Notes amounted to 8.3 million, with 6.2millionallocatedtodebtand6.2 million allocated to debt and 2.1 million to equity components[395] Research and Development - Research and development expenses were 58.4millionin2023,upfrom58.4 million in 2023, up from 48.6 million in 2022 and 34.6millionin2021[36]−Researchanddevelopmentexpensesincreasedto34.6 million in 2021[36] - Research and development expenses increased to 58.4 million in 2023, up 20% from 48.6millionin2022[268]WorkforceandDiversity−PARGovernment′sU.S.employeepopulationconsistsof2748.6 million in 2022[268] Workforce and Diversity - PAR Government's U.S. employee population consists of 27% ethnically diverse employees and 28% women, while globally, the workforce consists of 26% women[59] Operational Risks and Mitigations - PAR's hardware supply chain faces risks from industry-wide shortages and pricing fluctuations, mitigated by expanded supplier networks[35] Accounting and Financial Reporting - The company retroactively split its "Selling, general and administrative" financial statement line item into "Sales and marketing" and "General and administrative" for clearer insight into operating expenses[325] - The company is evaluating the impact of new FASB standards ASU 2023-09 and ASU 2023-07 for future financial disclosures[338][339] - The company's provision for income taxes is based on pretax loss, with deferred income taxes provided for temporary differences between financial reporting and tax bases[335] Inventory and Asset Management - Inventories decreased to 23.6 million in 2023 from 37.6millionin2022,withfinishedgoodsdroppingto37.6 million in 2022, with finished goods dropping to 13.6 million from 22.0million[379]−Property,plant,andequipmentincreasedto22.0 million[379] - Property, plant, and equipment increased to 43.4 million in 2023 from 37.6millionin2022,withsoftwareassetsrisingto37.6 million in 2022, with software assets rising to 17.2 million from 12.4million[380]−Internallydevelopedsoftwarecostsincreasedto12.4 million[380] - Internally developed software costs increased to 36.9 million in 2023 from 32.3millionin2022,withaweightedaverageamortizationperiodof1.95years[382]−Goodwillincreasedto32.3 million in 2022, with a weighted average amortization period of 1.95 years[382] - Goodwill increased to 489.7 million in 2023 from 486.8millionin2022,primarilyduetoforeigncurrencytranslationadjustments[384]LeasesandContingentLiabilities−Thecompany′stotalleaseexpensefor2023was486.8 million in 2022, primarily due to foreign currency translation adjustments[384] Leases and Contingent Liabilities - The company's total lease expense for 2023 was 2.0 million, with future lease payments totaling 4.6million[376][377]−Warrantyprovisionsdecreasedto4.6 million[376][377] - Warranty provisions decreased to 650,000 in 2023 from 722,000in2022,with722,000 in 2022, with 112,000 in claims settled in 2023 compared to 224,000in2022[304]−ContingentconsiderationliabilityrelatedtotheMENUAcquisitionwasreclassifiedtoaccruedexpenses,withabalanceof224,000 in 2022[304] - Contingent consideration liability related to the MENU Acquisition was reclassified to accrued expenses, with a balance of 0.6 million in 2023 compared to zero in 2022[298] Insurance and Legal Settlements - The company received 0.5millionininsuranceproceedsduring2023and0.5 million in insurance proceeds during 2023 and 4.4 million in 2021, related to the settlement of a legacy claim[332] Shareholder Equity and Stock Options - The company had 920,403 anti-dilutive stock options outstanding as of December 31, 2023, down from 1,029,417 in 2022 and 1,305,881 in 2021[336] Miscellaneous - Payments to Act III Management for services decreased to 0.1millionin2023from0.1 million in 2023 from 0.6 million in 2022 and 1.3millionin2021[306]−InQ42023,thecompanyacquiredpaymentfacilitatorreferralcommissionsfor1.3 million in 2021[306] - In Q4 2023, the company acquired payment facilitator referral commissions for 2.2 million, increasing intangible assets[341]