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PAR’s strong Q1 revenue offset by operating costs

By Eric Reinhardt (


NEW HARTFORD, N.Y. — Last year’s acquisition of loyalty and guest-engagement platform Punchh paid off in double-digit sales growth in the first quarter of 2022 for PAR Technology Corp. (NYSE: PAR), but a number of factors still led to an overall net loss in the period.

PAR revenue increased 47.4 percent to $80.3 million in the quarter, up from $54.4 million in the year-ago period, with the 2021 purchase of Punchh contributing $11.2 million.

“This revenue growth was driven across all business lines and specifically around our software recurring revenues,” PAR CEO Savneet Singh said during a May 10 conference call with investors.

PAR’s net loss in the first quarter was $15.7 million, or 58 cents per share, compared to a net loss of $8.3 million, or 38 cents, in the same quarter in 2021. Adjusted net loss for the latest quarter was $7.1 million, or 26 cents a share, down from
$7.6 million, or 34 cents, a year earlier.

The loss was less than the 41-cent loss predicted by Zacks Equity Research. With a “hold” rating for PAR shares, the research report noted PAR’s revenue surpassed Zacks’ estimate by 5.62 percent. This is the fourth straight time the company has topped Zacks revenue estimates.

Zacks forecasts $78.73 million in revenue for PAR in the second quarter with a loss of 37 cents per share and full-year revenue of $319.3 million with a loss of $1.41 a share.

Speaking about the company’s revenue growth, Singh noted that PAR’s Brink cloud point-of-sale system and Punchh both contributed. 

In the first quarter, PAR activated 1,244 new Brink sites. The company increased its active Brink store count by 40 percent to 17,000, compared to last year.

“Brink continues to be the distinguished leader in cloud POS for enterprise QSR (quick-service restaurants) and fast casual restaurants,” Singh contended.

PAR added more than 1,500 new Punchh sites in the latest quarter and now has more than 58,800 active sites. 

“Digital loyalty programs are critical to the future of restaurant marketing,” Singh said. “Applications like Punchh make it easier for brands to connect with their most loyal customers and increase customer lifetime value or account book.”

Punchh currently has more than 200 million “loyalty guests,” each unique to a brand. Some guests are duplicated across brands, but the firm has more than 150 million unique guest profiles, which represents about 58 percent of adults in the U.S., Singh said. PAR acquired Punchh for $500 million in cash and shares in the spring of 2021.

PAR’s product revenue in this year’s first quarter was $25.1 million, up 35 percent from $18.6 million in the year-prior quarter. The growth was driven primarily by hardware-refresh investments, CFO Bryan Menar told investors.

Service revenue in the first quarter totaled $33.8 million, up 87 percent from $18 million in the year-ago period, fueled mainly by the $11.2 million in Punchh sales. Total subscription services’ revenue jumped to $21.7 million in the latest quarter from $8.4 million in Q1 2021 as the company works to expand its total recurring revenue base of both software-related services and hardware-support contracts.

Contract revenue from PAR’s government business rose 20 percent from $17.9 million year ago to $21.4 million in the latest quarter. “The increase in contract revenue was driven by a $2.7 million increase in our ISR solutions product line,” Menar said. PAR maintains a significant contract backlog, totaling $195.7 million as of March 31, 2022, compared with $140.1 million a year ago.

PAR also experienced an increase in operating costs of $7.9 million, bringing its costs to $22.4 million for the first quarter from $14.5 million in the year-ago quarter. That increase was primarily driven by $6.6 million in total Punchh operation expenses, Menar said.

PAR’s research and development costs totaled $10.8 million in this year’s first quarter, up from $5.8 million in the same quarter in 2021, with Punchh driving $3.4 million of that increase, he noted.

PAR also used $21.2 million cash in operating activities, up from just $3.4 million in the year-prior period. The increase was due to a $5 million rise in accounts receivable related to the government segment, a $5 million increase in inventory to ensure prompt product shipment in spite of supply-chain issues, and the payout of the company’s annual cash bonus.

Headquartered in New Hartford, PAR Technology develops and markets products for hospitality operators including software, hardware, and services. PAR also provides computer-based system design and engineering services to the U.S. Department of Defense and federal-government agencies.

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