PAR(PAR) - 2025 Q2 - Quarterly Report

PART I FINANCIAL INFORMATION Item 1. Financial Statements (unaudited) Unaudited Q2 2025 financials show strong revenue growth, improved net loss, and slight asset increase from acquisitions Condensed Consolidated Balance Sheets Balance sheets show total assets at $1.39 billion, driven by goodwill, offset by lower cash, with rising long-term debt | Balance Sheet Items (In thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $85,122 | $108,117 | | Accounts receivable – net | $72,332 | $59,726 | | Goodwill | $906,361 | $887,459 | | Total Assets | $1,391,740 | $1,380,727 | | Liabilities & Equity | | | | Total current liabilities | $128,938 | $111,837 | | Long-term debt | $372,848 | $368,355 | | Total liabilities | $532,598 | $509,017 | | Total shareholders' equity | $859,142 | $871,710 | Condensed Consolidated Statements of Operations Q2 2025 operations show 43.8% revenue growth, driven by subscriptions, improving net loss to $21.0 million | Income Statement (In thousands, except EPS) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Total revenues, net | $112,404 | $78,150 | | Subscription service revenue | $71,903 | $44,872 | | Hardware revenue | $26,864 | $20,116 | | Gross margin | $50,992 | $32,028 | | Operating loss | ($17,307) | ($20,735) | | Net loss from continuing operations | ($21,040) | ($23,587) | | Net (loss) income per share (basic and diluted) | ($0.52) | ($0.69) | Condensed Consolidated Statements of Cash Flows Six months ended June 30, 2025, show improved operating cash usage, $7.7 million investing, and $11.4 million financing | Cash Flow Summary (In thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | ($23,798) | ($37,422) | | Net cash used in investing activities | ($7,693) | ($72,914) | | Net cash provided by financing activities | $11,441 | $191,503 | | Net (decrease) increase in cash | ($18,753) | $81,035 | Notes to Condensed Consolidated Financial Statements Notes detail the single Restaurant/Retail segment, recent acquisitions, debt restructuring, and key customer relationships - The company operates in a single segment, Restaurant/Retail, providing omnichannel cloud-based software and hardware solutions[31] - Completed the GoSkip Asset Acquisition for approximately $4.8 million in cash to expand its PAR Retail product offerings[45] - Acquired Delaget for a total consideration of $125.1 million, consisting of $16.9 million in cash and $108.2 million in equity, to complement its Operator Cloud solutions[51][52] - In January 2025, the company issued $115.0 million of 1.00% Convertible Senior Notes due 2030 and used the proceeds to repay its $90.0 million credit facility, resulting in a $5.8 million loss on debt extinguishment[81][82] | Customer | Q2 2025 Revenue % | YTD 2025 Revenue % | | :--- | :--- | :--- | | McDonald's Corporation | 18% | 18% | | Yum! Brands, Inc. | 9% | 9% | | All Others | 73% | 73% | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses strong Q2 2025 revenue growth, improved gross margin, narrowed operating loss, and sufficient liquidity Results of Operations Q2 2025 results show 43.8% revenue growth, led by subscription services, improved gross margin, and a narrowed operating loss | Revenue Breakdown (In thousands) | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Subscription service | $71,903 | $44,872 | 60.2% | | Hardware | $26,864 | $20,116 | 33.5% | | Professional service | $13,637 | $13,162 | 3.6% | | Total revenues, net | $112,404 | $78,150 | 43.8% | - The increase in subscription revenue was driven by $11.7 million from the Plexure and GoSkip acquisitions (Engagement Cloud) and $5.8 million from the TASK and Delaget acquisitions (Operator Cloud), supplemented by organic growth in active sites[110] | Gross Margin % | Q2 2025 | Q2 2024 | Basis Point Change | | :--- | :--- | :--- | :--- | | Subscription service | 55.3% | 53.1% | +220 bps | | Hardware | 27.3% | 22.8% | +450 bps | | Professional service | 28.7% | 27.5% | +120 bps | | Total gross margin | 45.4% | 41.0% | +440 bps | Key Performance Indicators and Non-GAAP Financial Measures KPIs show ARR up 49.2% to $286.7 million, active sites at 176,500, and Adjusted EBITDA improving to $5.5 million | Annual Recurring Revenue (ARR) (In thousands) | As of June 30, 2025 | As of June 30, 2024 | % Change | | :--- | :--- | :--- | :--- | | Total Engagement Cloud | $167,465 | $107,933 | 55.2% | | Total Operator Cloud | $119,194 | $84,235 | 41.5% | | Total ARR | $286,659 | $192,168 | 49.2% | | Active Sites (in thousands) | As of June 30, 2025 | As of June 30, 2024 | % Change | | :--- | :--- | :--- | :--- | | Total Engagement Cloud | 119.1 | 94.6 | 25.9% | | Total Operator Cloud | 57.4 | 27.7 | 107.2% | | Reconciliation to Adjusted EBITDA (In thousands) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net (loss) income | ($21,040) | $54,190 | | Adjustments (Discontinued ops, D&A, etc.) | $26,581 | ($58,538) | | Adjusted EBITDA | $5,541 | ($4,348) | Liquidity and Capital Resources The company holds $85.1 million in cash, with $23.8 million cash used in operations, and expects sufficient liquidity for 12 months - As of June 30, 2025, the company had cash and cash equivalents of $85.1 million[169] - Cash used in operating activities for the first six months of 2025 was $23.8 million, an improvement from $37.4 million in the prior year period, driven by improved profitability[170] - The company expects its available cash to be sufficient to meet its operating needs for at least the next 12 months, which includes funding $72.1 million in total contractual obligations[173] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company faces immaterial foreign currency and interest rate risks, with fixed-rate debt mitigating interest rate exposure - The company's primary foreign currency exposures relate to non-dollar sales and expenses in Canada, Europe, Asia, and Australia[178] - Interest rate risk is considered low as the company's Senior Notes ($20.0 million 2026 Notes, $265.0 million 2027 Notes, and $115.0 million 2030 Notes) all have fixed interest rates[179][180] Item 4. Controls and Procedures As of June 30, 2025, disclosure controls and procedures were effective, with no material changes to internal controls - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[181] - No material changes to the internal control over financial reporting were identified during the quarter ended June 30, 2025[182] PART II OTHER INFORMATION Item 1. Legal Proceedings The company is not involved in any pending litigation expected to materially affect its financial condition or operations - The company does not believe it has any pending litigation that would have a material adverse effect on its financial condition or operations[184] Item 1A. Risk Factors No material changes to the risk factors previously disclosed in the 2024 Annual Report on Form 10-K have occurred - No material changes to the Risk Factors described in the 2024 Annual Report have occurred[185] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company withheld 435 shares at $65.56 per share to cover tax obligations on vested restricted stock units - In June 2025, 435 shares were withheld at an average price of $65.56 to satisfy tax obligations on vested restricted stock units[186][188] Item 5. Other Information Bylaws were amended for director nominations, and a mandatory 'Sell-to-Cover' policy was adopted for RSU tax obligations - On June 2, 2025, shareholders approved amendments to the company's bylaws to enhance procedural and disclosure requirements for director nominations, including universal proxy rules[189] - On June 3, 2025, the board adopted a mandatory 'Sell-to-Cover' policy requiring the automatic sale of shares to satisfy tax obligations upon RSU vesting for all equity plan participants, including Section 16 Officers[194][195] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including amended bylaws and officer certifications - Lists exhibits filed with the report, such as the Restated Certificate of Incorporation, Amended and Restated Bylaws, and officer certifications[197]