PAR TECHNOLOGY CORP
For the period ended Jun 30, 2024. Filed Aug 8, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 8, 2024
PAR$20.55+7.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-09.
0000708821-24-000057
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-08.
0000708821-24-000078
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 70 previous paragraphs and 93 current paragraphs.
25 unchanged; 24 reworded; 41 added; 21 removed; 0 previous and 3 current paragraphs rearranged.
Tables are not compared: 17 previous and 30 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (41)
Current report
Q2 2024 Operating Performance Highlights
Current report
GAAP - Year-over-year 9.8% improvement
Current report
Non-GAAP - Year-over-year 5.5% improvement
Current report
Net Loss from Cont. Ops.Year-over-year decline of $1.7 million
Current report
Adjusted EBITDAYear-over-year improvement of $7.9 million
Current report
•Sale of PAR Government Systems Corporation: In June 2024, the Company sold PAR Government Systems Corporation for $95.0 million, before customary post-closing adjustments.
Current report
•After Period End - Completed Sale of Rome Research Corporation: On July 1, 2024, the Company sold Rome Research Corporation for $7.0 million, before customary post-closing adjustments.
Current report
•After Period End - Completed Acquisition of TASK: In July 2024, the Company secured a $90.0 million Credit Facility which was used to complete its acquisition of TASK Group Holdings Limited ("TASK"). TASK, an Australia-based entity, offers international unified commerce solutions, including interactive customer engagement and seamless integration, tailored for major brands worldwide. This has made TASK’s transaction management platform the platform of choice for some of the world’s most successful and recognized foodservice brands including, Starbucks and Guzman Y Gomez, while its loyalty customer engagement platform is used by McDonald’s in 65 markets. With the addition of TASK, the Company will be able to serve the top enterprise foodservice brands across the globe with a unified commerce approach from front-of-house to back-of-house.
Current report
Refer to “Note 15 – Subsequent Events” of the notes to interim condensed consolidated financial statements in "Part I, Item 1. Financial Statements and Supplementary Data" of this Quarterly Report for additional information about the sale of RRC, the Credit Facility, and the acquisition of TASK.
Current report
Consolidated Results (continued):
Current report
Total revenues were $78.2 million for the three months ended June 30, 2024, an increase of $8.6 million or
Current report
12.4% compared to $69.5 million for the three months ended June 30, 2023.
Current report
Subscription service revenues were $44.9 million for the three months ended June 30, 2024, an increase of $14.5 million or 47.7% compared to $30.4 million for the three months ended June 30, 2023. The increase includes increased subscription service revenues from our Engagement Cloud services of $9.1 million, of which revenues of $10.1 million were contributed by the business and products that we acquired in the Stuzo Acquisition, and now sold under PAR Retail. Refer to “Note 3 – Acquisitions” of the notes to interim condensed consolidated financial statements in "Part I, Item 1. Financial Statements and Supplementary Data" of this Quarterly Report for additional information regarding Stuzo and the Stuzo Acquisition. Our Operator Cloud services increased $5.3 million driven by an 18.4% increase in active sites and a 14.0% increase in average revenue per site equally driven by cross-selling initiatives, upselling, and price increases.
Current report
Total revenues were $148.2 million for the six months ended June 30, 2024, an increase of $10.1 million or 7.3% compared to $138.1 million for the six months ended June 30, 2023.
Current report
Hardware revenues were $38.3 million for the six months ended June 30, 2024, a decrease of $14.8 million or 27.9% compared to $53.2 million for the six months ended June 30, 2023. The decrease primarily consists of decreases in hardware revenues from terminals of $6.0 million, peripherals of $3.4 million, and kitchen display systems of $3.4 million. These decreases were all substantially driven by the timing of tier one enterprise customer hardware refresh cycles, onboarding of Operator Cloud customers buying hardware, and the Company's market launch of its next generation PAR headset.
Current report
Professional service revenues were $26.6 million for the six months ended June 30, 2024, which was relatively unchanged from $26.6 million for the six months ended June 30, 2023.
Current report
Hardware margin as a percentage of hardware revenue for the three months ended June 30, 2024, increased to 22.8% as compared to 19.2% for the three months ended June 30, 2023. The increase in margin primarily consisted of increased margins from terminals and kitchen display systems, both substantially driven by price increases.
Current report
Total gross margin as a percentage of revenue for the six months ended June 30, 2024, increased to 39.2% as compared to 29.0% for the six months ended June 30, 2023.
Current report
Professional service margin as a percentage of professional service revenue for the six months ended June 30, 2024, increased to 21.9% as compared to 13.0% for the six months ended June 30, 2023. The increase primarily consists of an increase in margin for hardware service repair and field operations.
Current report
S&M expenses were $9.8 million for the three months ended June 30, 2024, a decrease of $0.3 million or 2.6% compared to $10.1 million for the three months ended June 30, 2023. The decrease primarily consists of a decrease in organic S&M expense of $1.1 million due to decreases in marketing expense and commissions, partially offset by an increase in inorganic S&M expense of $0.8 million stemming from post-acquisition operations of PAR Retail.
Current report
S&M expenses were $20.7 million for the six months ended June 30, 2024, an increase of $1.3 million or 6.5% compared to $19.5 million for the six months ended June 30, 2023. The increase primarily consists of an increase in inorganic S&M expense of $1.0 million stemming from post-acquisition operations of PAR Retail. Organic S&M expense remained flat for the six months ended June 30, 2024 compared to the six months ended June 30, 2023.
Current report
G&A expenses were $25.4 million for the three months ended June 30, 2024, an increase of $8.9 million or 54.4% compared to $16.4 million for the three months ended June 30, 2023. The increase primarily consists of a $2.7 million increase in stock-based compensation and a $1.7 million increase in costs related to transaction due diligence, which are both classified as non-GAAP adjustments for management reporting. Please refer to "Non-GAAP Financial Measures" below for additional information regarding non-GAAP adjustments.
Current report
The residual increase was primarily driven by inorganic G&A expense of $1.2 million stemming from post-acquisition operations of PAR Retail and higher organic compensation costs of $2.2 million.
Current report
G&A expenses were $50.5 million for the six months ended June 30, 2024, an increase of $15.1 million or 42.8% compared to $35.4 million for the six months ended June 30, 2023. The increase primarily consists of increases of $5.0 million in costs related to transaction due diligence, $4.5 million in stock-based compensation, $0.6 million in severance, and $0.5 million in depreciation and amortization, which are classified as non-GAAP adjustments for management reporting. Please refer to "Non-GAAP Financial Measures" below for additional information regarding non-GAAP adjustments.
Current report
The residual increase was primarily driven by inorganic G&A expense of $1.5 million stemming from post-acquisition operations of PAR Retail and higher organic compensation costs of $2.5 million.
Current report
R&D expenses were $16.2 million for the three months ended June 30, 2024, an increase of $1.3 million or 9.1% compared to $14.9 million for the three months ended June 30, 2023. The increase primarily consists of an increase in inorganic R&D expense of $2.3 million driven by post-acquisition operations of PAR Retail, partially offset by a decrease in organic R&D expense for our other Engagement Cloud offerings of $0.8 million as we right sized our headcount associated with our early stage product offerings.
Current report
R&D expenses were $32.0 million for the six months ended June 30, 2024, an increase of $2.8 million or 9.6% compared to $29.2 million for the six months ended June 30, 2023. The increase primarily consists of an increase in inorganic R&D expense of $2.9 million driven by post-acquisition operations of PAR Retail. Organic R&D expense remained flat for the six months ended June 30, 2024 compared to the six months ended June 30, 2023.
Current report
Gain on insurance proceeds was $0.5 million for the three months ended June 30, 2023, which consists of $0.5 million in proceeds received from the settlement of a legacy insurance claim. There was no comparable gain for the three months ended June 30, 2024.
Current report
Amortization of identifiable intangible assets was $2.9 million for the six months ended June 30, 2024, an increase of $1.9 million as compared to $0.9 million for the six months ended June 30, 2023. The increase was primarily driven by an increase in amortizable intangible assets stemming from the Stuzo Acquisition.
Current report
Gain on insurance proceeds was $0.5 million for the six months ended June 30, 2023, which consists of $0.5 million in proceeds received from the settlement of a legacy insurance claim. There was no comparable gain for the six months ended June 30, 2024.
Current report
Other (Expense) Income, Net
Current report
Interest expense, net was relatively unchanged at $3.3 million for the six months ended June 30, 2024 as compared to $3.4 million for the six months ended June 30, 2023.
Current report
Provision for income taxes was $0.6 million for the three months ended June 30, 2024, an increase of $0.2 million as compared to $0.4 million for the three months ended June 30, 2023. The change was substantially driven by an increase in foreign jurisdiction tax obligations.
Current report
Net Income from Discontinued Operations
Current report
Net income from discontinued operations was $77.8 million for the three months ended June 30, 2024, an increase of $75.6 million as compared to $2.1 million for the three months ended June 30, 2023. The increase was substantially driven by a $76.8 million gain from the sale of PGSC. The residual amount represents PGSC and RRC operating income, offset by a provision for income taxes relating to the gain from the sale of PGSC.
Current report
Net income from discontinued operations was $79.9 million for the six months ended June 30, 2024, an increase of $74.6 million as compared to $5.3 million for the six months ended June 30, 2023. The increase was substantially driven by a $76.8 million gain from the sale of PGSC. The residual amount represents PGSC and RRC operating income, offset by a provision for income taxes relating to the gain from the sale of PGSC.
Current report
*Inorganic Engagement Cloud ARR represents PAR Retail ARR only in the six months ended June 30, 2024. During the three months ended June 30, 2024, PAR Retail ARR was adjusted as of the acquisition date as a result of measurement periods adjustments to the purchase price allocation in accordance with ASC Topic 805, Business Combinations.
Current report
In addition to disclosing financial results in accordance with GAAP, this Quarterly Report contains references to the non-GAAP financial measures below. We believe these non-GAAP financial measures provide investors with useful supplemental information about our operating performance, enable comparison of financial trends and results between periods where certain items may vary independent of business performance, and allow for greater transparency with respect to key metrics used by management in operating our business and measuring our performance. Our non-GAAP financial measures reflect adjustments based on one or more of the following items below. The income tax effect of the below adjustments, with the exception of (provision for) benefit from income taxes, were not tax-effected due to the valuation allowance on all of our net deferred tax assets.
Current report
Our non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations from these results should be carefully evaluated. Additionally, these measures may not be comparable to similarly titled measures disclosed by other companies.
Current report
Beginning with this Quarterly Report, we have modified our definition of adjusted subscription service gross margin percentage and have renamed this non-GAAP measure to non-GAAP subscription service gross margin percentage. Non-GAAP subscription service gross margin percentage is adjusted to exclude amortization from acquired and internally developed software, stock-based compensation, and severance costs included within subscription service cost of sales. Our prior definition of adjusted subscription service gross margin percentage only excluded amortization from acquired and internally developed software. This change was made to conform with the methodology that we use to calculate other non-GAAP measures, including adjusted EBITDA outlined below, and to align with how management views our core operating performance.
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Removed paragraphs (21)
Previous report
Q1 2024 Performance Highlights
Previous report
•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.
Previous report
•Active sites expansion
Previous report
◦Engagement Cloud active sites expanded to 92.7 thousand - a 36.2% increase from the 68.1 thousand reported as of March 31, 2023.
Previous report
◦Operator Cloud active sites expanded to 27.0 thousand - a 20.7% increase from the 22.4 thousand reported as of March 31, 2023.
Previous report
•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.
Previous report
•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.
Previous report
•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.
Previous report
Segment Revenue by Product Line as Percentage of Total Revenue
Previous report
Total revenues were $105.5 million for the three months ended March 31, 2024, an increase of $5.1 million or 5.0% compared to $100.4 million for the three months ended March 31, 2023.
Previous report
Contract revenues were $35.4 million for the three months ended March 31, 2024, an increase of $3.6 million or 11.2% compared to $31.9 million for the three months ended March 31, 2023. The increase was substantially driven by the Government segment's ISR Solutions product line revenues due to continued Counter-small Unmanned Aircraft System tasks orders.
Previous report
Contract margin as a percentage of contract revenue for the three months ended March 31, 2024, was relatively unchanged at 7.1% as compared to 7.2% for the three months ended March 31, 2023.
Previous report
S&M expenses were $10.9 million for the three months ended March 31, 2024, an increase of $1.5 million or 16.3% compared to $9.4 million for the three months ended March 31, 2023. The increase was substantially driven by $0.8 million of higher compensation costs for salaries, bonus, and commissions, $0.3 million in purchased services for marketing events, and $0.2 million of severance as we continue to support the growth of our business.
Previous report
G&A expenses were $25.6 million for the three months ended March 31, 2024, an increase of $7.5 million or 41.6% compared to $18.1 million for the three months ended March 31, 2023. The increase was substantially driven by a $4.4 million increase in costs related to transaction due diligence. The residual increase of $3.1 million was driven by higher compensation costs for salaries and bonuses of $1.9 million, stock-based compensation of $0.7 million, and severance of $0.5 million as we continue to efficiently support the growth of our business.
Previous report
R&D expenses were $15.8 million for the three months ended March 31, 2024, an increase of $1.5 million or 10.2% compared to $14.3 million for the three months ended March 31, 2023. The increase was substantially driven by an increase in R&D expense of $0.6 million driven by post-acquisition Stuzo R&D expenses and a $0.3 million increase in severance costs. The residual increase of $0.6 million was substantially driven by increases in R&D expense for our Operator Cloud offerings of $0.3 million and hardware offerings of $0.3 million, both driven by higher compensation costs for salaries and bonuses as we continue to improve and diversify our product and service offerings.
Previous report
Other Income (Expense), Net
Previous report
*Engagement Cloud ARR includes Stuzo ARR only in the three months ended March 31, 2024.
Previous report
Within this Quarterly Report, the Company makes reference to adjusted subscription service gross margin, EBITDA, adjusted EBITDA, adjusted net loss, and adjusted diluted net loss per share which are non-GAAP financial measures. Adjusted subscription service gross margin represents subscription service gross margin adjusted to exclude amortization from acquired and internally developed software. EBITDA represents net loss before income taxes, interest expense and depreciation and amortization. Adjusted EBITDA represents EBITDA as adjusted to exclude certain non-cash and non-recurring charges, including stock-based compensation, acquisition expenses, certain pending litigation expenses and other non-recurring charges that may not be indicative of our financial performance. Adjusted net loss and adjusted diluted net loss per share represents net loss and net loss per share excluding amortization of acquired intangible assets, certain non-cash and non-recurring charges, including stock-based compensation, acquisition expense, certain pending litigation expenses and other non-recurring charges that may not be indicative of our financial performance.
Previous report
The Company is presenting adjusted subscription service gross margin, adjusted EBITDA, adjusted net loss, and adjusted diluted net loss per share because we believe that these financial measures provide supplemental information that may be useful to investors in evaluating the Company's core business operating results and comparing such results to other similar companies. Management believes that adjusted subscription service gross margin, EBITDA, adjusted EBITDA, adjusted net loss, and adjusted diluted net loss per share, when viewed with the Company's results of operations in accordance with GAAP and the reconciliations to the most directly comparable GAAP measures provided in the tables below (refer to "Gross margin" discussion above for a reconciliation of subscription service gross margin to adjusted subscription service gross margin), provide useful information about operating performance and period-over-period growth, and provide additional information that is useful for evaluating the operating performance of the Company's core business without regard to potential distortions. Management also believes that adjusted EBITDA provides investors with insight into factors and trends that could affect the Company's ongoing cash earnings, from which capital investments are made and debt is serviced.
Previous report
The Company's results of operations are impacted by certain non-cash and non-recurring charges, including stock-based compensation, acquisition related expenditures, and other non-recurring charges that may not be indicative of the Company’s on-going or long-term financial performance. Management believes that adjusting its net loss and diluted net loss per share to remove non-recurring charges provides a useful perspective with respect to the Company's results of operations and provides supplemental information to both management and investors by removing items that are difficult to predict and are often unanticipated.
Previous report
Adjusted subscription service gross margin, EBITDA, adjusted EBITDA, adjusted net loss, and adjusted diluted net loss per share are not measures of financial performance under GAAP and should not be considered as alternatives to subscription service gross margin or net income (loss) as indicators of operating performance. Additionally, these measures may not be comparable to similarly titled measures disclosed by other companies. The tables below provide reconciliations between net loss and EBITDA, adjusted EBITDA, and adjusted net loss, as well as between diluted net loss per share and adjusted diluted net loss per share.
Reworded paragraphs (24)
Previous wording
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.
Current wording
Refer to "Key Performance Indicators and Non-GAAP Financial Measures" below for important information on key performance indicators and non-GAAP financial measures, including annual recurring revenue ("ARR"), non-GAAP subscription service gross margin percentage, and adjusted EBITDA. We use these key performance indicators and non-GAAP financial measures to evaluate our performance.
Previous wording
Hardware revenues were $18.2 million for the three months ended March 31, 2024, a decrease of $8.6 million or 31.9% compared to $26.8 million for the three months ended March 31, 2023. The decrease was substantially driven by decreases in hardware revenues from terminals of $3.2 million, peripherals (scanners, printers, payment devices) of $2.8 million, and kitchen display systems of $1.3 million, all substantially driven by the timing of enterprise customer hardware refreshes and the timing of the Company's market launch of its next generation PAR terminal and headset.
Current wording
Hardware revenues were $20.1 million for the three months ended June 30, 2024, a decrease of $6.3 million or 23.8% compared to $26.4 million for the three months ended June 30, 2023. The decrease primarily consists of decreases in hardware revenues from terminals of $2.8 million, kitchen display systems of $2.1 million, and peripherals (scanners, printers, and components) of $0.6 million. These decreases were all substantially driven by the timing of tier one enterprise customer hardware refresh cycles, onboarding of Operator Cloud customers buying hardware, and the Company's market launch of its next generation PAR headset.
Previous wording
Professional service revenues were $13.5 million for the three months ended March 31, 2024, a decrease of $0.4 million or 2.7% from $13.8 million for the three months ended March 31, 2023. The decrease was substantially driven by a $1.3 million decrease in hardware repair services and field operations, partially offset by a $1.0 million increase in installation services.
Current wording
Professional service revenues were $13.2 million for the three months ended June 30, 2024, an increase of $0.4 million or 3.1% from $12.8 million for the three months ended June 30, 2023. The increase was substantially driven by a $1.0 million increase in hardware repair services and a $0.5 million increase in field operations, partially offset by a $1.2 million decrease in installation services.
Previous wording
Subscription service revenues were $38.4 million for the three months ended March 31, 2024, an increase of $10.4 million or 37.2% compared to $28.0 million for the three months ended March 31, 2023. The increase was substantially driven by increased subscription service revenues from our Operator Cloud services of $5.9 million driven by a 20.7% increase in active sites and a 22.2% increase in average revenue per site, and from our Engagement Cloud services of $4.5 million, primarily driven by $2.7 million of post acquisition revenues from the Stuzo Acquisition. The residual increase of $1.8 million from our Engagement Cloud services was driven by a 5.8% organic increase in active sites and a 7.5% organic increase in average revenue per site.
Current wording
Subscription service revenues were $83.3 million for the six months ended June 30, 2024, an increase of $24.9 million or 42.7% compared to $58.3 million for the six months ended June 30, 2023. The increase was substantially driven by increased subscription service revenues from our Engagement Cloud services of $13.6 million, of which revenues of $12.7 million were contributed by the business and products that we acquired in the Stuzo Acquisition, and now sold under PAR Retail. The residual increase of $0.9 million from our Engagement Cloud services was driven by a 3.9% organic increase in active sites. Our Operator Cloud services increased $11.2 million driven by a 19.7% increase in active sites and a 17.8% increase in average revenue per site equally driven by cross-selling initiatives, upselling, and price increases.
Previous wording
Total gross margin as a percentage of revenue for the three months ended March 31, 2024, increased to 27.1% as compared to 23.1% for the three months ended March 31, 2023.
Current wording
Total gross margin as a percentage of revenue for the three months ended June 30, 2024, increased to 41.0% as compared to 27.6% for the three months ended June 30, 2023.
Previous wording
Subscription service margin as a percentage of subscription service revenue for the three months ended March 31, 2024, increased to 51.6% as compared to 50.2% for the three months ended March 31, 2023. The increase was substantially driven by a continued focus on efficiency improvements with our hosting and customer support costs for our Operator Cloud offerings as well as improved margins stemming from Stuzo's post-acquisition operations. Subscription service margin for the three months ended March 31, 2024, included $5.4 million of amortization of acquired and internally developed technology compared to $5.7 million of amortization of acquired and internally developed technology for the three months ended March 31, 2023. Excluding the amortization of acquired and internally developed technology, adjusted subscription service gross margin was 66% compared to 71% for the three months ended March 31, 2024 and 2023, respectively, primarily driven by higher maintenance and support costs for our Engagement Cloud offerings (refer to "Non-GAAP Financial Measures" below for important information regarding adjusted subscription service gross margin, a non-GAAP financial measure).
Current wording
Subscription service margin as a percentage of subscription service revenue for the three months ended June 30, 2024, increased to 53.1% as compared to 43.3% for the three months ended June 30, 2023. The increase was substantially driven by a continued focus on efficiency improvements with our hosting and customer support costs as well as improved margins stemming from post-acquisition operations of PAR Retail.
Previous wording
Professional service margin as a percentage of professional service revenue for the three months ended March 31, 2024, decreased to 16.5% as compared to 17.9% for the three months ended March 31, 2023. The decrease was substantially driven by a decrease in margin for hardware service repair, partially offset by an increase in margin for field operations.
Current wording
Professional service margin as a percentage of professional service revenue for the three months ended June 30, 2024, increased to 27.5% as compared to 7.7% for the three months ended June 30, 2023. The increase primarily consists of increases in margins for hardware service repair and field operations.
Previous wording
Hardware margin as a percentage of hardware revenue for the three months ended March 31, 2024, increased to 22.3% as compared to 16.4% for the three months ended March 31, 2023. The increase in margin was substantially driven by improved inventory management resulting in lower excess and obsolescent inventory charges during the three months ended March 31, 2024.
Current wording
Hardware margin as a percentage of hardware revenue for the six months ended June 30, 2024, increased to 22.5% as compared to 17.8% for the six months ended June 30, 2023. The increase in margin primarily consisted of improved inventory management resulting in lower excess and obsolescent inventory charges, and improved margins from terminals and kitchen display systems, primarily driven by price increases.
Previous wording
Amortization of identifiable intangible assets was $0.9 million for the three months ended March 31, 2024, an increase of $0.5 million as compared to $0.5 million for the three months ended March 31, 2023.
Current wording
Amortization of identifiable intangible assets was $1.9 million for the three months ended June 30, 2024, an increase of $1.5 million as compared to $0.5 million for the three months ended June 30, 2023. The increase primarily consists of an increase in amortizable intangible assets stemming from the Stuzo Acquisition.
Previous wording
Included in operating expenses for the three months ended March 31, 2023, was a $5.2 million decrease to the fair value of the contingent consideration liability for certain post-closing revenue focused milestones from the MENU Acquisition. There was no comparable decrease to expense for the three months ended March 31, 2024.
Current wording
Included in operating expenses for the three months ended June 30, 2024, was a $0.6 million decrease to the fair value of the contingent consideration liability for certain post-closing revenue focused milestones from the MENU Acquisition compared to a $2.3 million decrease for the three months ended June 30, 2023.
Previous wording
Other income (expense), net was $0.3 million for the three months ended March 31, 2024, a decrease of $0.4 million compared to $(0.1) million for the three months ended March 31, 2023. Other income (expense), net substantially includes rental income, net of applicable expenses, foreign currency transactions gains and losses and other non-operating income/expenses. The change was substantially driven by sales and use tax expense and other miscellaneous expenses.
Current wording
Other (expense) income, net was $(0.6) million for the three months ended June 30, 2024, a decrease of $0.8 million compared to $0.2 million for the three months ended June 30, 2023. Other (expense) income, net primarily consists of rental income, net of applicable expenses, foreign currency transactions gains and losses and other non-operating income/expenses. The change was substantially driven by increases in sales and use tax expense and other miscellaneous expenses.
Previous wording
Interest expense, net was relatively unchanged at $1.7 million for the three months ended March 31, 2024 as compared to $1.7 million for the three months ended March 31, 2023.
Current wording
Interest expense, net was relatively unchanged at $1.6 million for the three months ended June 30, 2024 as compared to $1.7 million for the three months ended June 30, 2023.
Previous wording
Benefit from (provision for) income taxes was $7.8 million for the three months ended March 31, 2024, a decrease of $8.1 million as compared to $(0.3) million for the three months ended March 31, 2023. The change was substantially driven by a reduction of the Company’s valuation allowance which resulted from the establishment of deferred tax liabilities related to the Stuzo Acquisition.
Current wording
Benefit from (provision for) income taxes was $7.2 million for the six months ended June 30, 2024, an increase of $7.9 million as compared to $(0.7) million for the six months ended June 30, 2023. The change was substantially driven by a reduction of the Company’s valuation allowance which resulted from the establishment of deferred tax liabilities related to the Stuzo Acquisition.
Previous wording
Within this Quarterly Report the Company makes reference to annual recurring revenue, or ARR, and active sites, which are both key performance indicators. The Company utilizes ARR and active sites as key performance indicators of the scale of our subscription services for both new and existing customers.
Current wording
Within this Quarterly Report the Company makes reference to annual recurring revenue, or ARR, and active sites, which are both key performance indicators. The Company uses ARR and active sites as key performance indicators of the scale of our subscription services for both new and existing customers.
Previous wording
Starting with this Quarterly Report, our key performance indicators ARR and active sites are presented as two subscription service product lines: Engagement Cloud (Punchh, Stuzo, and MENU) and Operator Cloud (Brink POS, PAR Payment Services, PAR Pay, and Data Central). Our subscription service product lines were adjusted to align with how management views our business after the Stuzo Acquisition.
Current wording
Our key performance indicators ARR and active sites are presented as two subscription service product lines: Engagement Cloud (Punchh, PAR Retail, and MENU) and Operator Cloud (Brink POS, PAR Payment Services, PAR Pay, and Data Central).
Previous wording
*Engagement Cloud active sites includes Stuzo active sites only in the three months ended March 31, 2024.
Current wording
*Inorganic Engagement Cloud active sites includes PAR Retail active sites only in the six months ended June 30, 2024.
Previous wording
Our primary sources of liquidity are cash and cash equivalents and short-term investments. As of March 31, 2024, we had cash and cash equivalents of $50.8 million and short-term investments of $21.7 million. Cash and cash equivalents consist of highly liquid investments with maturities of 90 days or less, including money market funds. Short-term investments are held-to-maturity investment securities consisting of investment-grade interest bearing instruments, primarily treasury bills and notes, which are stated at amortized cost.
Current wording
Our primary sources of liquidity are cash and cash equivalents and short-term investments. As of June 30, 2024, we had cash and cash equivalents of $114.9 million and short-term investments of $27.5 million. Cash and cash equivalents consist of highly liquid investments with maturities of 90 days or less, including money market funds. Short-term investments are held-to-maturity investment securities consisting of investment-grade interest bearing instruments, primarily treasury bills and notes, which are stated at amortized cost.
Previous wording
Cash used in operating activities was $23.6 million for the three months ended March 31, 2024, compared to $16.7 million for the three months ended March 31, 2023. Cash used for the three months ended March 31, 2024 was substantially driven by a net loss from operations of $18.3 million, net of non-cash charges of $4.4 million, and additional net working capital requirements substantially driven by an increase in accounts receivable of $5.1 million resulting from revenue growth.
Current wording
Cash used in operating activities was $37.4 million for the six months ended June 30, 2024, compared to $12.8 million for the six months ended June 30, 2023. Cash used in operating activities for the six months ended June 30, 2024 primarily consisted of a net loss from continuing operations net of non cash charges of $21.2 million and additional net working capital requirements substantially driven by an increase in accounts receivable of $8.0 million resulting from revenue growth.
Previous wording
Cash used in investing activities was $151.9 million for the three months ended March 31, 2024 compared to $1.8 million for the three months ended March 31, 2023. Investing activities during the three months ended March 31, 2024 included $166.3 million of cash consideration in connection with the Stuzo Acquisition (net of cash acquired), capital expenditures of $1.4 million for developed technology costs associated with our Restaurant/Retail software platforms, partially off-set by $15.9 million of proceeds from net sales of short-term held-to-maturity investments.
Current wording
Cash used in investing activities was $72.9 million for the six months ended June 30, 2024 compared to $6.2 million for the six months ended June 30, 2023. Cash used in investing activities during the six months ended June 30, 2024 included $166.3 million of cash consideration paid in connection with the Stuzo Acquisition (net of cash acquired) 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 PGSC and $9.4 million of proceeds from net sales of short-term held-to-maturity investments.
Previous wording
Cash provided by financing activities was $190.8 million for the three months ended March 31, 2024, compared to cash used in financing activities of $2.4 million for the three months ended March 31, 2023. Cash provided by financing activities during the three months ended March 31, 2024 was substantially driven by a private placement of common stock of $194.5 million (net of issuance costs), refer to "Note 8 – Common Stock" of the notes to interim condensed consolidated financial statements in "Part I, Item 1. Financial Statements and Supplementary Data" of this Quarterly Report for additional information. We do not have any off-balance sheet arrangements or obligations.
Current wording
Cash provided by financing activities was $191.5 million for the six months ended June 30, 2024, compared to cash used in financing activities of $2.5 million for the six months ended June 30, 2023. Cash provided by financing activities during the six months ended June 30, 2024 primarily consisted of a private placement of common stock of $194.5 million (net of issuance costs). We do not have any off-balance sheet arrangements or obligations.
Previous wording
We expect our available cash and cash equivalents will be sufficient to meet our operating needs for at least the next 12 months. Over the next 12 months our total contractual obligations are $31.4 million, consisting of purchase commitments for normal operations (purchase of inventory, software licensing, use of external labor, and third-party cloud services) of $22.8 million, principal and interest payments on long-term debt of $7.4 million and facility lease obligations of $1.2 million. We expect to fund such commitments with cash provided by operating activities and our sources of liquidity.
Current wording
We expect our available cash and cash equivalents will be sufficient to meet our operating needs for at least the next 12 months. Over the next 12 months our total contractual obligations are $44.6 million, consisting of purchase commitments for normal operations (purchase of inventory, software licensing, use of external labor, and third-party cloud services) of $36.1 million, principal and interest payments on long-term debt of $7.4 million and facility lease obligations of $1.1 million. We expect to fund such commitments with cash provided by operating activities and our sources of liquidity.
Previous wording
Our non-current contractual obligations are $410.2 million, consisting of purchase commitments for normal operations (purchase of inventory, software licensing, use of external labor, and third-party cloud services) of $8.3 million, interest payments of $13.7 million and principal payments of $385.0 million related to long-term debt, and facility leases of $3.0 million. Refer to “Note 7 – Debt” of the notes to interim condensed consolidated financial statements in "Part I, Item 1. Financial Statements and Supplementary Data" of this Quarterly Report for additional information.
Current wording
Our non-current contractual obligations are $442.7 million, consisting of purchase commitments for normal operations (purchase of inventory, software licensing, use of external labor, and third-party cloud services) of $43.4 million, interest payments of $12.0 million and principal payments of $385.0 million related to long-term debt, and facility leases of $2.3 million. Refer to “Note 8 – Debt” of the notes to interim condensed consolidated financial statements in "Part I, Item 1. Financial Statements and Supplementary Data" of this Quarterly Report for additional information.
Previous wording
Our actual cash needs will depend on many factors, including our rate of revenue growth, growth of our SaaS revenues, the timing and extent of spending to support our product development and acquisition integration efforts, the timing of introductions of new products and enhancements to existing products, market acceptance of our products, and the factors described above in this "Part I, Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Quarterly Report and in the 2023 Annual Report and our other filings with the SEC.
Current wording
Our actual cash needs will depend on many factors, including our rate of revenue growth, growth of our SaaS revenues, the timing and extent of spending to support our product development and acquisition integration efforts, the timing of introductions of new products and enhancements to existing products, market acceptance of our products, and the factors described above in "Part I, Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations”, elsewhere in this Quarterly Report, in the 2023 Annual Report, and in our other filings with the SEC.
Previous wording
From time to time, we may seek to raise additional capital through equity, equity-linked, and debt financing arrangements. In addition, our board of directors and management regularly evaluate our business, strategy, and financial plans and prospects. As part of this evaluation, the board of directors and management periodically consider strategic alternatives to maximize value for our shareholders, including strategic transactions such as an acquisition, or a sale or spin-off of non-strategic company assets or businesses, including a sale of PAR Government Systems Corporation and/or one or more of its subsidiaries. We cannot provide assurance that any additional financing or strategic alternatives will be available to us on acceptable terms or at all.
Current wording
From time to time, we may seek to raise additional capital through equity, equity-linked, and debt financing arrangements. In addition, our board of directors and management regularly evaluate our business, strategy, and financial plans and prospects. As part of this evaluation, the board of directors and management periodically consider strategic alternatives to maximize value for our shareholders, including strategic transactions such as an acquisition, or a sale or spin-off of non-strategic company assets or businesses. We cannot provide assurance that any additional financing or strategic alternatives will be available to us on acceptable terms or at all.
Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
Subscription service margin as a percentage of subscription service revenue for the six months ended June 30, 2024, increased to 52.4% as compared to 46.6% for the six months ended June 30, 2023. The increase was substantially driven by a continued focus on efficiency improvements with our hosting and customer support costs as well as improved margins stemming from post-acquisition operations of PAR Retail.
Current report — wording carried from elsewhere
Included in operating expenses for the six months ended June 30, 2024, was a $0.6 million decrease to the fair value of the contingent consideration liability for certain post-closing revenue focused milestones from the MENU Acquisition compared to a $7.5 million decrease for the six months ended June 30, 2023.
Current report — wording carried from elsewhere
Other (expense) income, net was $(0.3) million for the six months ended June 30, 2024, a decrease of $0.5 million compared to $0.1 million for the six months ended June 30, 2023. Other (expense) income, net primarily consists of rental income, net of applicable expenses, foreign currency transactions gains and losses and other non-operating income/expenses. The change was substantially driven by increases in sales and use tax expense and other miscellaneous expenses.