Par Technology Corp Q3 FY2021 Earnings Call

Good day and thank you for standing by. Welcome to the FY 2021 Third Quarter Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. Please be advised that today’s conference is being recorded. I’d now like to hand the conference over to your first speaker today, Chris Byrnes, Vice President of Business Development. Sir, please go ahead.

Thanks, Chris, and thanks everyone for joining us to review PAR’s third quarter results. There’s a lot I want to share with all of you today in our prepared remarks. So let’s get started. As a company, we delivered a strong third quarter, reported total Q3 revenues of $77.9 million, a 42% increase from one year ago. This revenue was driven across all business lines and specifically around our software recurring revenues, resulting in $82.5 million of Live ARR at quarter end and year-over-year growth of 35% when compared to Q3 last year, which includes Punchh performance from Q3 2020. This increase was driven by 46% growth in ARR by Punchh and 29% from Brink from Q3 last year. But very encouraging is that Contracted ARR now totals approximately $97 million as of September 30th. Our strong results this quarter were driven by a high level of execution across the business and continued demand for PAR’s Unified Commerce Cloud Platform. In Q3, we activated 1,739 new Brink sites, a single quarter record for PAR. On a net basis after churn, our active store count now totals nearly 14,900, a 35% increase from one year ago. Brink’s bookings totaled 780 stores in the quarter as we manage supply chain issues plaguing the industry today. We expect for this rebounding Q4 and ARR growth to continue to accelerate sequentially as well. In Q3, we were successful in activating some of our oldest backlog, many of whom were legacy PAR’s customers with modestly lowered ARPU across our network. Customers were offset by very strong activations. We expect these impacts to balance out next quarter as new customers are signed at higher subscription rates. Punchh continues to outperform, having added more than 4,500 Live sites in the quarter that now total more than 52,900, a 54% increase in the last 12 months. We signed 14 new customer logos in Q3, which include over 3,000 stores, and went live with Jack in the Box and their network of restaurants. New mobile experience and pickup products are seeing traction from customers and I also want to reiterate that we are beginning to see momentum within the C-store segment as the industry seeks a more robust loyalty solution. We added six important new integration partners in the quarter, and our business outlook and pipeline remain very strong. Data Central added 168 stores in Q3, and we are beginning to see renewed interest in our leading back office application. Active sites now total almost 6,200 and ARR totals $9.1 million at the end of the quarter. Our PAR Payment Services pipeline grew significantly in the quarter, and we expect to announce new wins in our next quarterly call. We see Payments Excess broadly in Brink, Punchh, and non-existing PAR customers. Our Product and Hardware business continues to perform well in a challenging environment. Product revenues in the quarter continue to strengthen year-over-year and improve sequentially as well. Product sales were recorded at $30.3 million in this recently ended quarter, a 48% increase. The capital purchase environment for restaurants is always tricky and that has been even more so with the pandemic and the global supply chain difficulty thrust upon several end markets. As I mentioned last quarter, we are not immune to these challenges around supply chain and we have experienced some margin impact due to costs associated with the current realities, including the dramatic growth in shipping charges. We are taking direct steps to mitigate these issues including price increases and other actions, and already reported product margin improvements in Q3, which I expect to continue in Q4. Regarding the supply chain specifically, we will continue to diligently manage our partners and vendors throughout any shortages, price inflation, and increases in freight charges. Our Government business reported revenues of $18 million in the quarter, a 3% increase when compared to Q3 last year. Last week, we announced the largest award in our company's history by the U.S. Air Force Research Laboratory Information Directorate, which awarded a $490.4 million IDIQ contract for counter small unmanned aircraft system work on software, hardware, and technical documentation. This award has a contract term of six years and an additional two-year period of performance beyond the original six years. We will recognize revenue as task orders are assigned, but we are seeing immediate impact on contract backlog which grew to $192 million at the end of Q3, a significant $51 million increase from three months ago. We are gratified by the confidence the Air Force has shown in PAR with this award, and we have always prided ourselves on the critical role we play in supporting our operational customers and their requirements. Let me now talk a bit about where we see things going forward from a business perspective. Last week, we spent time meeting with dozens of customers and partners. I love hearing directly from our customers and users in what we call our voice of the customer sessions, as it helps us to validate and sharpen our strategic plan, as well as providing the PAR team with direct feedback on the trends and issues our customers are seeing today. The foundational belief of our thesis is built on the idea of creating a Unified Commerce Platform, one that delivers power back into the hands of the restaurant. Today, we see many restaurant tech companies winning at the expense of restaurants rather than in service to them. We believe technology should be built to serve operators and their end customers. But today, in our industry, it's become extractive. The challenge is rooted not in something dubious, but from a structural flaw in the restaurant technology stack: the absence of an integrated platform. Dozens of disparate applications are being cobbled together in the hope of building a simple and beautiful experience. But unfortunately, that premise has challenged the experience of operators and their customers. As a result, the job of the restaurant CIO today has become one of getting dozens of different products to work seamlessly, rather than focusing on growing market share and delivering differentiated guest experiences. Today, our industry struggles with operational customer data insights that might otherwise be available to brands being trapped in the silos of these disparate applications. This is a problem PAR is working to solve and represents the greatest opportunity for our clients. We are moving from a world of bodies to bits. Historically, every challenge a restaurant faced was solved by the addition of more labor. If you have too many cars in your drive-thru lane, you send out a line buster. If you have too many orders, you add a line chef. If you have any quality issues, you add a spot checker. Every challenge could be solved with more bodies. But in a world where restaurants are expected to not only deliver great in-store experiences but also Amazon-like digital experiences off-premise, the model of running multiple platforms breaks down. Enterprise restaurants need a truly unified platform to make this work, and this is what PAR is building: one that natively brings all transactions in-store and off-premise along with all customer data into a unified open cloud platform with enterprise scale. Our goal is to be the foundational technology that provides our customers and the organizations we are built to serve with the ability to fulfill their own technology destinies and to build differentiation and competitive advantage through unique experiences. Such technologies remain open to working with other vendors and allow our clients to choose which features to turn on and off to build their own proprietary capabilities and to manage and support their own limitations. With the exception of Raju Malhotra, our new CPTO, driving this platform vision, I have immense confidence in his abilities to deliver on transforming PAR, Punchh, and Data Central. Alongside this internal development is a highly focused M&A program aimed at a couple of key gaps we are looking to fulfill in short order, as witnessed by our recent capital raise. While all markets are competitive, PAR occupies a very unique place. We serve a customer base above the size of most of the venture capital flowing into restaurant technology. On a daily basis, we compete against more traditional competitors from those that are still building on-premise systems to those who believe that a platform is equivalent to a bundled solution. Our ability to grow in this market is completely supply-driven, not demand-driven. Today, we are around 15,000 stores and have a TAM that is almost 3 times the size. Yet, our ability to grow at higher rates will be driven by the deployment of new products. This is the next leg of our transformation and our major focus in 2022. In closing, I’d like to thank the entire PAR team for their contributions. At PAR, we live by four values; one, speed, we like to say we look for those who don’t wait for the elevator; two, ownership, we look for those that are owners not renters at PAR; people who treat PAR like their own car and not a rental car; three, focus, we always try to remember the 80/20 wins; and four, winning together, this is the belief that all stakeholders of PAR must win: our team, our customers, our suppliers, our community, and our shareholders. We take these values seriously and every day we work hard to develop and hire based on these values so that we can deliver for all stakeholders. With that, I’d like to hand it off to Bryan, who will review our financial performance in greater detail.

Thank you, Savneet, and good afternoon, everyone. Total revenues were $77.9 million for the three months ended September 30, 2021, an increase of 42% compared to the three months ended September 30, 2020. The net loss for the third quarter of 2021 was $31.9 million or $1.23 loss per share, compared to the net loss of $33.7 million or $0.20 loss per share reported for the same period in 2020. Adjusted net loss for the third quarter of 2021 was $9.3 million or $0.36 loss per share, compared to an adjusted net loss of $2.4 million or $0.11 loss per share for the same period in 2020. Product revenue in the quarter was $30.3 million, an increase of $9.8 million or 48% from the $20.5 million reported in the prior year. The strong growth was primarily driven by hardware refresh investments by our domestic and international Tier 1 accounts, in part from delayed hardware refreshes in 2020 due to COVID-19. Service revenue, which includes revenue streams from our subscription software, was reported at $29.5 million, an increase of $12.6 million or 75% from the $16.9 million reported in the prior year. The increase was primarily driven by revenues from Punchh of $9.7 million and an increase of $1.8 million for other software revenue and $0.8 million for repair services. The company continues to expand its recurring revenue base, which includes both software-related services and hardware support contracts. In total, recurring revenue streams contributed $11 million to the increase in service revenue. Of the $29.5 million of service revenue reported in Q3 2021, $25 million was derived from recurring revenue contracts, compared to $14 million in Q3 2020. Contract revenue from our Government business was $18 million, an increase of $0.5 million or 3% from the $17.5 million reported in the third quarter of 2020. The increase in contract revenues was driven by a $0.7 million increase in our ISR solutions product line, partially offset by a $0.3 million decrease in our product services product line. As Savneet mentioned, our contract backlog continues to be significant, noting a total backlog of $192 million as of September 30th, a $51 million increase from Q2 of this year. Now turning to margins, product margin for the quarter was 24.8% versus 21.9% in Q3 2020. The increase in margin was primarily due to favorable product mix and favorable absorption of overhead costs due to increased sales. Service margin for the quarter was 29.6%, compared to 33.3% reported in the third quarter of 2020. The decrease in margins was driven by an increase in amortization expense for acquired developed technology of $2.9 million recognized as a result of the Punchh acquisition, as well as incremental costs incurred while transitioning our field operations organization. During the three months ended September 30, 2021, service margin included $3.7 million of amortization of acquired intangible assets, compared to $2.9 million during the three months ended September 30, 2020. Excluding the amortization of acquired intangible assets, service margin for the three months ended September 30, 2021 was 42.3%, compared to 38.5% for the same period in 2020. Government contract margins were 10.9%, compared to 9% for the third quarter of 2020. The increase was due to improved margins in both ISR and Mission Systems product lines. GAAP SG&A was $21.7 million, an increase of $5.9 million from the $10.5 million reported in Q3 2020. These numbers include stock-based compensation, and the increase was primarily driven by $7.2 million in total Punchh operational expenses, of which $1.9 million was stock-based compensation. Other drivers included an increase of $2 million in corporate expenses, $0.6 million of variable compensation, and $0.4 million for sales and marketing. Net R&D was $10.1 million, an increase of $5.9 million or 140% from the $4.2 million recorded in Q3 2020. The increase is driven primarily by $2.2 million for Punchh and $2.7 million related to additional investments in our existing product development organization. Net interest expense was $5.4 million compared to $2.2 million recorded in Q3 2020. The increase was primarily driven by the Owl Rock term loan. Net interest expense for the quarter included $2.1 million of non-cash accretion of debt discount and amortization of issuance costs compared to $1.1 million for the same period last year. In Q3 2021, we recorded a loss on extinguishment of debt of $11.9 million as a result of the repayment of the Owl Rock term loan. There was no loss on extinguishment of debt during Q3 2020. Now to provide information on the company’s cash flow and balance sheet position, for the nine months ended September 30, 2021, cash used in operating activities was $43.6 million versus $14.4 million for the prior year. Cash used for the nine months ended September 30, 2021 was promoted by an increase in net loss, net of non-cash charges, and additional net working capital requirements driven by an increase in accrued compensation and an increase in other current assets. The increase in other current assets reflects an increase in our prepaid assets as the company took advantage of repricing opportunities with key strategic partners. Cash used in investing activities was $381.1 million for the nine months ended September 30, 2021 versus $6.9 million for the same period in 2020. Investing activities during the nine months ended September 30, 2021 included $374.7 million of cash consideration in connection with the Punchh acquisition. Capitalized software for the nine months ended September 30, 2021 was $5.5 million, associated with investments from various restaurant software platforms, compared to $6.4 million for the nine months ended September 30, 2020. Cash provided by financing activities was $444.3 million for the nine months ended September 30, 2021 versus $48.7 million for the prior year. On April 8, 2021, we received net proceeds of $155.7 million from the private placement of our common stocks to PAR Act III, LLC and certain funds and accounts advised by T. Rowe Price Associates. In addition to net proceeds of $177 million from the Owl Rock term loan, on September 17, 2021, we received net proceeds of $256.8 million from our offering of the 2027 Notes and $52.5 million from the equity offering. We used approximately $187 million of the proceeds of these offerings to repay the Owl Rock term loan in full. Repayment of the Owl Rock loans in exchange for our convertible debentures will result in a $5.5 million annual reduction in cash interest. During the nine months ended September 30, 2020, we received net proceeds of $49.5 million from our offering of the 2026 notes, which reflects our use of $66.3 million to repurchase a majority of the 2024 notes. Inventory increased from December 31, 2020 by $12.4 million; we increased our inventory on hand to mitigate supply chain shortages and delays to ensure we can meet our enterprise customers' demand for installations. Accounts receivable increased $5.9 million compared to December 31, 2020 due to increased sales volume; day sales outstanding improved within restaurants and retail from 74 days at December 31, 2020 to 50 days at September 30, 2021. This is tremendous progress and complements our team’s hard work and management’s focus on operational excellence. Day sales outstanding increased within government from 51 days at December 31, 2020 to 55 days at September 30, 2021. This concludes my formal remarks and we will now move to the question-and-answer session.

Thank you. And your first question will come from George Sutton with Craig-Hallum. Your line is open.

Thank you. This is Adam on for George. Great results, guys. Savneet in the past, you have talked about PAR payments and even the potential for it to become one of your largest revenue segments. Would love to get an update on your thinking from what you have seen early on and what the initial feedback has been so far.

We are feeling very good about it. The pipeline grew tremendously in Q3, and I think on our next quarterly call we will also announce some of the logos that we expect to sign, so we feel really good momentum there, and then I think we have just started the push of using our payments product within Punchh customers, and so we are seeing one or two test customers that should lead to quite a bit more. Surprisingly, we have actually found a couple of non-existing Brink customers, who we expect to account for our payments product that will also be a good fit for us. The pipeline grew across all three of those categories, and on the next call, I think we will have some exciting announcements.

And then with respect to being a year focused on a product, would love to get your updated thoughts post raise on internal versus external development. And then how is the digital order management project going and what else do you think might fall into that internal roadmap?

Great. Yes, digital order management is coming out in Q1. We are very excited and we have got a pile of customers already lined up. So it will receive great feedback and we will be there quickly to drive revenue and that’s our big new release, which is really the beginning of our foray into building the platform I talked about in the call. We will certainly look to be acquisitive. We raised money on that premise and we have a couple of key holes we are examining and so we have a very, very active M&A team that works on this. Our goal is to really have the discussions on the platform done by the end of next year, but start selling the platform in advance of that.

Great. Thank you.

And your next question will come from Stephen Sheldon with William Blair. Your line is open.

Hi. This is actually Pat on for Stephen. I wanted to ask, how does the recent Air Force contract you won impact your thoughts and what you plan to do with the government business over the near term and just your thoughts going forward?

I can’t say anything too specific, but I’d say it certainly makes the business more attractive, which gives us optionality on what we want to do and certainly increases the business’s value.

Okay. And then I also wanted to ask about the PAR Phase hardware POS that you recently announced and just how that ties into the general hardware and software strategy and how it might be complementary to the existing Brink offering.

Yes. Absolutely. It’s the next version of our internally designed terminals. It’s received really strong customer feedback so far. The tie here is twofold: Brink runs on really anything that’s out there; any Windows device works fantastically, but we do believe that our own devices work a little bit better, particularly in terms of design. If you look at the Phase, it’s a beautiful product. It's not a copycat product, and Brink works really elegantly there. It also allows us to service better, so if you have a challenge with the product, you can ship it back for advanced exchange warranty, and so on. This allows us to give our customers the full solution which more and more of them want. I think what we are finding is similar to our thesis on software: our customers don’t want to deal with different hardware vendors if they have different hardware contracts and so forth. You are seeing movements of things like SaaS and hardware as a service put together, so I think it helps. And obviously, we have a new product to market, which builds excitement with customers because while enterprise customers are different, there’s still that excitement when new products come out, similar to consumer products.

That’s very helpful. Thanks.

Your next question will come from Samad Samana with Jefferies. Your line is open.

Hey guys. This is actually Jeremy. I am on for Samad. So the question on activations, you guys are coming up with a record-high number of activations in Q3. How should we think about the shape of the activations going forward? Does the company invest in more capacity to bring on new bookings or how should we view that?

I think as mentioned, bookings will come back in Q4. Some of this is supply chain dependent, but we feel pretty good about where we are now. A lot of work has gone into building up the pipeline for next year, so I do think we will see some bookings in Q4. With respect to activations, we activated 500 stores in Q3 and we didn’t really expand the team. I think we feel good about our ability to handle spikes in activation volume.

Thank you. And so I know that we have a little more clarity on kind of the reopening following the pandemic, is there any change to your internal forecasting or targets? Can you provide any additional insights on that?

We don’t provide guidance or any kind of forecasts. So I guess that’s not great guidance because there’s no guidance, but I think that from an internal perspective, we are really convicted that our vision of a Unified Commerce Platform is where our interest lies. A lot of our success will come from our customers adopting this idea, which is something that is easy to observe. Talk to any restaurant CIO and they’ll tell you their life is managing vendors; it’s not about building great experiences. We are truly trying to give the power back to them, and I think that’s what will drive our internal forecast going forward. However, we are not naive to the situation surrounding the delta variant. We feel we have great visibility but that can all change, and we are aware of that based on what we have learned over the last year.

Great, guys. Thank you and congrats on the quarter.

Your next question will come from Anja Soderstrom with Sidoti. Your line is open.

Yes. Hi. Thank you for taking my questions and congratulations on the strong quarter. And I am just curious for Punchh, you mentioned you had 14 new logos. Is that new logos to PAR technologies, or new logos for Punchh and a result of the cross-selling?

It’s a mix. I don’t have the breakdown off the top of my head, but it’s definitely a mix. We absolutely saw head customers that we brought from Brink over to Punchh, and then we had net new logos. So it’s a very healthy mix.

Okay. Thank you. And then also what are you seeing in Restaurant Magic now, when we see this inflationary environment and labor costs going up, and everything going up, you would think there would be a stronger demand for companies to help other restaurants run more smoothly.

Yes. We are seeing that, and I think that’s why we saw a good rebound here, and I think it will continue. It’s making it more of a priority. It also allows us to sell more within Restaurant Magic. There are parts of Restaurant Magic, modules that specifically address labor efficiency, including scheduling, that we don’t sell today. I think a lot of it will create some module extensions for us there. But the rebound we have seen in Restaurant Magic is completely driven by the point that you mentioned. That’s really the crux of it.

Okay. And then just lastly on the supply chain, it seems like you built up some inventory to contain the pace you are doing with installations, but what are you seeing in the supply chain currently? Is it easing or is it becoming worse?

I would say, we thought a few quarters ago it would be better by the end of the year. I don’t think it’s getting worse, but it’s kind of flatlining at this level. If you said, 'Hey, I installed 500 stores in December.' We would say that’s been very hard for us to get that to you. Now we are being asked to do a thousand, and particularly for large customer orders. So, in Q4, we normally, in mid-Q1, there’s visibility surrounding challenges around getting cargo capacity. Later, we were dealing with LCD screens, so it continues to be a challenging environment. From a capital allocation perspective, one of the smartest things we did this year was advance purchases and put deposits down. I think we are one of the few companies that were safe to do that, which allowed us to sell a lot of the product that contributed to the substantial growth seen while others weren’t able to meet the supply availability. From our standpoint, from Q2 to Q3, we saw no change, and we have no visibility on whether it is getting better or worse.

Okay. Thank you. That was all from me.

And your next question will come from Adam Wyden with ADW Capital.

Hey, guys. Thanks for taking my call. Just kind of revisiting the Government contract. It sounds like you guys talked about the backlog increased by $50 million. How do we think about that incremental profitability? Do we expect to earn similar margins? Is it fair to assume that this contract over time doubles the government business, or how should we think about it?

Yes. The margin of this contract should be very similar to our existing direct and indirect labor margins, so we don’t expect it to swing margins in any way.

I noticed on your profitability, obviously, it took some adjustments for the banking deals, but you guys lost about $4 million in the quarter, which given the scope of SaaS and the growth, it looks like you guys are going to be profitable a lot sooner than the market expects. I remember a time when I would buy shares, and government was worth more than the entire market cap. It seems like the business has reached a scale where, between hardware and SaaS, you guys could probably divest this. I read something about record M&A multiples at 13 times for defense contracting businesses. Why would you wait, I guess? You have communicated that you had to get this contract under your belt; this is something you have been waiting for the last two years. You are not going to give it away, but is there any reason today why you wouldn’t move given that the contract is behind you and multiples are at record highs?

I won’t say anything forward-looking, but I would say in the past we have talked about wanting to win this contract. This is an important part of our process as we previously stated, and I think people understand now why we have had some hesitation, given the enormous scale of this contract. This one contract could grow our backlog beyond the existing backlog in a very short period of time, and therefore it wouldn’t make sense to sell at this moment and leave significant value on the table.

Right. And I guess you feel more confident now. Obviously, from a profitability standpoint, you guys are probably ahead of schedule, so that would make it easier, wouldn't it?

Yes. I don’t think we have ever looked at it from the angle of profitability. We have always viewed it as a business that has very little management distraction. Let’s say we were on the verge of a large contract; it would be foolish for us to sell given the value that contract represents. This one contract could increase our backlog beyond the existing contracts in a very short period of time, and as much as it doesn’t make sense for us to be under that pressure of giving money away, and we didn’t make any sense to sell. We see our business in a very clear way, and I don’t see our restaurant business impacting this.

Sure. So just going back to it, if you look at the business before COVID in Q1 2020, you guys were on pace for doing about 1,700 to 1,800 activations and you have kind of gotten through that. That’s really powerful and exciting. Today, you are still burdened by some COVID restrictions in states, and you’re able to get in and obviously from the semiconductor shortage and supply issues. I know you don’t give guidance, but could you communicate a little bit about what organic growth you expect out of these assets in a normal environment and something reasonable to use so people can think about a multi-year growth trajectory in terms of like what your expectation is? I know COVID can happen; things can happen, but kind of what your cost of capital is from a growth perspective? For operating assets?

There’s a lot in that question. From a cost of capital perspective, we are very conscious that we have used our stock to acquire businesses and raised capital. We are sensitive to that; it does alter the dynamics of a deal. If we don’t feel that there's a win there, we are careful with the choices we make. From an activation perspective, we feel like we did a great job this quarter and we expect to continue doing great work. I don’t think these numbers double overnight. However, we feel good about how many we are able to pull through this quarter, and I think it’s exciting that this quarter included a significant portion of our legacy deals signed in 2016-2017, which were favorably priced. As we move forward, we are now moving into deals that are at our traditional price point, which are higher, so you will see the benefits of that as well.

Without getting too ambitious, do you think that Punchh is obviously different, but do you think that Brink can return to doing a couple of thousand activations a quarter? Is that an unreasonable outcome? If COVID restrictions and supply chain semiconductor issues ease?

I don’t think it’s an unreasonable outcome. We have got restrictions and particularly around supply chain, and we continue to build the pipeline, which we feel pretty good about. I expect this to continue to grow at these rates or more for the next couple of years, excluding M&A. I do believe that as we consider M&A, we very much want to focus on something that is accretive to growth.

Last question, I will let you go. In the recent Toast S-1, they basically discussed the investment in the restaurant industry of about $80 billion to $100 billion. I think not that much of that is being spent annually on hardware because hardware has a long life. If you consider Toast's back-of-the-envelope calculations of about $60,000 to $80,000 of software spent per store, that doesn’t seem crazy if it brings people efficiencies. I am curious how you think about the TAM. Is that unreasonable to consider that long-term that's the kind of addressable market for PAR within existing verticals?

I think what we have always said is that our TAM of enterprise, Tier 1, Tier 2, and Tier 3 fast casual restaurants is about half the restaurant market in the United States. Whether that is 700,000 or 800,000 restaurants is debatable. We have always reported that, two years ago, Brink was roughly at $2,000 per year and there is a clear path that we can increase that. From the engagement we see in the market, we have taken it up from 2000; we added Data Central at about 1500, and Punchh at about 1000 to 1500. Today, we are introducing a digital management system and a few additional product enhancements. When considering payments and the additional capabilities we are launching, we clearly see a path of expansion. It is exciting to realize that we are at the start of a transformation in the restaurant industry. Suddenly, restaurants are required to provide great in-store experiences while also wanting to be equivalent to an e-commerce giant. This creates a tough market - achieving both demands requires insightful software and products, and that’s where we have established a unified platform. This is how we analyze the landscape, and I believe there is plenty of opportunity given how fast-paced the market is. It's likely that we will see further shifts.

Have you explored the idea of possibly adding a transactional element to your API where others can plug into your point of sale and potentially pay per transaction? It seems like there’s tremendous access to your systems now, and I wonder if there are other revenue mechanisms available.

Yes. In the short term, we have got a couple of levers, right? We have got a new product, digital management systems, and payments. As mentioned, we are hopeful about making announcements soon. We have also implemented the first price increases on Brink in 10 years, so we will have the ability to drive prices up. As discussed in other calls, we are launching a new API product who is transactional. From the way I see PAR, we are not in a demand-constrained environment. We have been struggling with supply constraints, which has limited our ability to fulfill all customer demand. While we solve some of those issues through M&A, we are also building products organically. I feel excited because we are now into a 2.5 years journey. The first 1.5 years was about product stabilization and earning our customers' trust. The following year was spent developing operational motion, and COVID threw us a curveball. Now, it’s all about monetization while benefiting our clients. A key component of the Unified Commerce Platform is not for us to extract and bundle multiple products and push them to customers, but genuinely providing operators a platform to reclaim their power. I find the trend in restaurant technology dominant as those companies continue to extract value without adding real benefit to the operators. It is a challenge to uncover a restaurant manager or CEO saying their job has improved because of technology. It's a rough market, but we believe that the evolution we are pursuing will change that.

The last comment I will make is with Toast going public. Many individuals have questioned the difference between PAR and Toast. I have studied both sides and developed relationships across the ecosystem. Can you explain NCR’s abandonment of their Aloha product? It seems like large enterprises put out an RFP and practically give it to no one else. Would you agree that this narrative is unclear to individuals examining the story and that PAR holds a significant technical advantage?

I will talk generically instead of addressing anyone specifically. We occupy a unique space in the market. Most of the venture capital primarily focuses on small, small restaurant businesses, which makes sense given stable revenue models. However, we are firmly in the enterprise market with PAR and competing against traditional products. Most existing competitors are legacy systems, and while they are making efforts, they have not fully broken out yet. It is exciting because we are transitioning into this market where historical competitors are relatively weak. Such large enterprise customers actually face disparity since they spend significantly more towards these technologies. Yet, the offering is considerably weaker, so we aim to bridge that gap.

To add on to that, there are remarkable companies in restaurant technology, but not many have made their way into the specific category we operate in. Very few companies focusing on our category have significant growth commitments or robust R&D efforts like we do.

You remain attractive as an M&A player because you can acquire smaller businesses, increasing resources and scaling through your 40 years of relationships.

Exactly right, and we are just at the beginning of that journey. Now that we have worked through numerous challenges, we feel we are starting to hit that moment of acceleration.

I am seeing no further questions at this time; I will now hand it back over to Savneet Singh for any closing statements.

Thank you everyone for joining. I look forward to updating you on our Q4 results next quarter. Thank you.

This concludes today’s conference call. Thank you for participating. You may now disconnect.