PAR Technology Corp. 2026 Q2 Earnings Call

Good afternoon, everyone, and thank you for joining us today for PAR Technology's 2026 second quarter financial results call. Earlier today, we released our financial results. The earnings release is available on the investor relations page of our website at partech.com, where you can also find the Q2 financials presentation, as well as in our related Form 8-K furnished to the SEC. Before we begin, please be advised that our remarks today will contain forward-looking statements. These forward-looking statements are subject to risks, uncertainties, and other factors which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. For additional information on these factors, please refer to our earnings release and other reports filed with the SEC. Today, we'll be discussing or providing certain non-GAAP financial measures, which we believe will provide additional clarity regarding our ongoing performance.

For a full reconciliation of the non-GAAP financial measures discussed in this call to the most comparable GAAP measure in accordance with SEC regulations, please see our press release furnished as an exhibit to our Form 8-K filed this afternoon and our supplemental materials available on our website. Joining me on the call today is PAR's CEO, Savneet Singh, and Bryan Menar, PAR's Chief Financial Officer. I'd now like to turn the call over to Savneet for the formal remarks portion of the call, which will be followed by general Q&A.

Savneet? Thanks, Chris. Thank you all for joining us today.

On our first quarter call, we established clear financial and AI adoption targets and laid out what success looks like for PAR in 2026. Since then, we've been heads down executing against our three-pronged growth strategy, namely to 1, extend our competitive platform advantages in core markets, 2, reinvest in product efficacy via powerful AI functionality, and 3, aggressively expand our total addressable market in areas where we can continue to leverage our inherent platform advantage. As Ben Graham famously said, "In the short run, the market is a voting machine, but in the long run, it's a weighing machine." We plan to continue to stack weights on the scale. At PAR, we're always on offense.

This is evidenced by our strong Q2 results and highlights, which I'll start with today before handing the call to Bryan to discuss our financial results in more detail and provide our outlook for the remainder of the year. Q2 was a starting shot in the show me market. We delivered results ahead of expectations, expanded our platform footprint across both restaurant and retail, grew our PAR Intelligence user base to roughly 20,000 sites, greenlit material TAM expansion initiatives in both restaurants and retail sectors, overhauled our cost structure, and strengthened our outlook for the remainder of the year. Most central to the PAR thesis, we continue to prove the value and staying power of our platform strategy. Our customers are expanding their adoption across our portfolio, creating larger and more strategic partnerships.

Our momentum is reflected in our ARR performance, our improving margin profile, and our growing pipeline of enterprise opportunities across both restaurant and retail markets. Let me start with a few highlights. We exited the quarter at approximately $338 million of ARR, representing over 17% year-over-year growth and 12.3% organic growth, and setting us up for a meaningful acceleration in the second half, as communicated earlier this year. We generated adjusted EBITDA of $14.3 million in Q2, an improvement of nearly $9 million from Q2 last year. The $14.3 million of adjusted EBITDA includes $1.3 million of overperformance in the quarter, driven by a specific hardware initiative by a large legacy enterprise restaurant customer. Without this project, the Q2 normalized number is $13 million in adjusted EBITDA against a previously forecasted range of $9.5 million-$11.5 million.

Our profit acceleration was done the right way, by leveraging the fixed scale of our operations while continuing to improve the unit economics of each product. As an example of this, across our core product base, the three-year blended ARPU CAGR sits at 8%, while the average platform deal term length is roughly double that of a point solution. These strong Q2 results reinforce our confidence that we can continue balancing growth and profitability while investing in the strategic opportunities in front of us. Looking across the business, we're seeing encouraging momentum in nearly every major product category. Our restaurant vertical delivered a strong second quarter, securing the pipeline and backlog for the back half acceleration we spoke about on our last call. What stands out most is the continued success and durability of our platform strategy. Customers select PAR for its integrated solutions rather than purchasing individual products.

An integrated product ecosystem is a perfect foundation to be the core restaurant AI partner of the future, as performant AI features require multiple systems working together in real time. A standalone AI wrapper or point solution cannot replicate a feature that bridges point of sale, inventory, labor, and guest data. PAR's end-to-end fully connected stack is the clear gold standard. Multi-product attachment on Q2 new engagements sits at nearly 100%. Wins included Guthrie's Chicken, Sarku Japan, Newk's, Burgerville, Phil Brady's, and Bad Ass Coffee. All included multi-products across point of sale, loyalty, ordering, payments, and back-office solutions. Operationally, our deployment teams executed at scale. On the PAR POS side, we remain ahead of plan on Burger King activations and continue to see potential upside beyond our current year-end target.

We completed key development milestones with Papa Johns' upcoming platform deployment and are well-positioned to kick off their implementation plan later this year. Separately, PAR OPS delivered its strongest quarter ever, activating nearly 700 locations. Looking ahead, we enter the back half of the year with substantial operator product backlog, identifiable expansion opportunities, and a healthy pipeline. Combined, these factors position us to reach our ARR targets with additional upside if execution continues at the current pace. Now to go over engagement and ordering. Within Punch, growth remains solid despite the planned churn we experienced in Q1. The business continues to showcase strong margins, expanding customer utilization, and generating opportunities through site expansion, pricing actions, and new products. We are highly confident in the long-term value proposition of Punch, as loyalty programs remain central to guest engagement and personalization strategies.

PAR Ordering, we delivered our best-ever quarter in Q2, closing six new deals. What's especially notable is that three of those wins came from customers migrating off the market's largest legacy ordering provider, reinforcing the competitive strength of our offering. Customers increasingly want fewer vendors, tighter integrations, and a simpler operating environment. Our single digital cockpit with PAR Ordering is exactly that, allowing you to manage all your digital menus in one place. Every ordering deal this quarter includes other PAR products, whether that was point of sale, Punch, payments, or a combination of all three. A specific highlight this quarter was seeing growing traction from our catering capabilities. Catering was a component of two of our six PAR Ordering wins, and that's particularly meaningful because catering was our largest roadmap investment last year.

We're now beginning to see those investments translate into customer demand and commercial results. It's a great example of how disciplined product investment can create new growth vectors over time, not only increasing ARPU, but separately enhancing overall product competitiveness. The relative competitive evaluability is evidenced by PAR Ordering delivering win rates above 50%, the highest success rate of any major product in our portfolio. Given the demand environment we're seeing, combined with the fact that payments is attached to every ordering deployment, we feel very confident in our ability to continue to grow this business consistently quarter after quarter. On the holistic product innovation front, we continue to meaningfully accelerate deployment across the organization. Compared to a year ago, we've increased delivery velocity roughly threefold.

We're building and shipping product faster than ever before, which allows us to respond more quickly to customer needs and extend our leadership position in the market. Another area where we are seeing progress is AI. Our strategy has always been to leverage the unique data workflows and operational context that already exists across the PAR platform. As customers adopt more of our products, the value of AI capabilities increases because they are trained in a richer and more connected view of restaurant operations. We're beginning to see that play out in the market. We're also preparing for a significant expansion regarding PAR Intelligence, with over 20,000 locations planned to go live in the third quarter. These deployments validate what we're hearing from our customers. They want practical AI that helps operators make faster decisions, improve guest engagement, and drive measurable business outcomes.

As previously expressed in our Q1 earnings, we view 2026 as an adoption year for PAR Intelligence, the focus remains on embedding AI into customer workflows, proving value at scale, and expanding usage across our install base. We're moving from a platform that reports what happens to one that optimizes in real-time. As an example, customer loyalty initiatives can quietly leak money through promo abuse, misconfigured offers, unproven renewals, unclaimed funding, silent customer drop-off, operators usually find out weeks later, if at all. We're building a system that catches this continuously and delivers a fix, not just the finding. This works because the data already lives in PAR, growing sharper with every order, every loyalty event, and every new site. The operator sets intent and approves the action, protecting margin and growing basket size, visits, and upsells without growing the team.