PAR TECHNOLOGY CORPORATION FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Financial Performance Highlights for Q1 2025

PAR Technology Corporation, a leading provider of software and hardware solutions for the restaurant and retail industries, has reported its financial results for the first quarter of 2025. The company saw strong growth across its business, with total revenues increasing by 48.2% year-over-year to $103.9 million.

The key highlights from the quarter include:

• Organic revenue growth of 18.1% and total revenue growth of 51.9% year-over-year
• GAAP gross margin improvement of 620 basis points to 46.5%
• Non-GAAP gross margin improvement of 340 basis points to 69.1% for subscription services
• Adjusted EBITDA improvement of $14.7 million year-over-year

“We are very pleased with our strong start to 2025, delivering robust organic growth and margin expansion across our business,” said Savneet Singh, PAR’s CEO. “Our strategic acquisitions and continued focus on operational efficiency are driving meaningful improvements in our financial performance.”

Revenue and Profit Trends

The company’s revenue growth was fueled by strong performance across all three of its business segments:

• Subscription service revenues grew 78.2% year-over-year to $68.4 million, driven by both organic growth and contributions from recent acquisitions.
• Hardware revenues increased 19.8% to $21.8 million, benefiting from price increases, customer hardware refresh cycles, and new Operator Cloud customer onboarding.
• Professional services revenues remained relatively flat at $13.6 million.

The significant improvement in gross margins was a key highlight of the quarter. Subscription service gross margin expanded to 57.8%, up 620 basis points, due to efficiency gains in hosting and customer support costs as well as improved margins from acquired product lines. Hardware gross margin increased to 24.6%, up 230 basis points, from a more favorable product mix and reduced compensation expenses. Professional services gross margin jumped 890 basis points to 25.4% on better cost management and lower third-party spending.

On the bottom line, PAR reported a net loss from continuing operations of $24.5 million, a 20.5% increase year-over-year. This was primarily driven by a $5.8 million loss on extinguishment of debt related to the early repayment of the company’s credit facility. Adjusted EBITDA, a key non-GAAP metric, improved by $14.7 million to $4.5 million, reflecting the strong operational performance.

Strengths and Weaknesses

PAR’s key strengths in the quarter included:

• Robust organic growth in both its Engagement Cloud and Operator Cloud subscription businesses, up 18.1% and 18.0% respectively.
• Successful integration of recent acquisitions like TASK Group and Delaget, which contributed meaningful inorganic revenue growth.
• Continued focus on operational efficiency, driving significant gross margin expansion.
• Strong cash generation, with cash used in operating activities declining by $6.4 million year-over-year.

However, the company also faced some challenges:

• The $5.8 million loss on debt extinguishment weighed on the bottom line.
• General and administrative expenses increased 16.3%, partially offsetting the gross margin improvements.
• Macroeconomic uncertainties, such as the impact of new tariffs, could pose risks to the hardware business going forward.

Outlook and Future Plans

Looking ahead, PAR remains optimistic about its growth prospects. The company recently completed a $115 million convertible note offering, which it used to repay its existing credit facility. This strengthens its balance sheet and provides additional financial flexibility to fund future acquisitions and investments.

“The proceeds from our convertible note offering give us the resources to continue executing on our strategic growth initiatives,” said Singh. “We are well-positioned to capitalize on the strong demand for our cloud-based solutions and drive further margin expansion in the business.”

Key focus areas for the company include:

• Accelerating organic growth in its Engagement Cloud and Operator Cloud subscription services through cross-selling, upselling, and new customer acquisition.
• Integrating and realizing synergies from recent acquisitions like TASK Group and Delaget.
• Expanding its product and service offerings to meet the evolving needs of its restaurant and retail customers.
• Closely monitoring the macroeconomic environment and implementing mitigation strategies as needed to address any supply chain or tariff-related challenges.

“We are confident that our strategic initiatives, combined with our strong financial position, will enable us to continue delivering value to our shareholders,” concluded Singh.

Overall, PAR’s Q1 2025 results demonstrate the company’s ability to drive profitable growth across its business segments. The company’s focus on operational efficiency, strategic acquisitions, and cloud-based solutions position it well for continued success in the dynamic restaurant and retail technology market.