PAR - Earnings call transcript Q1 2018 | PAR Technology Corporation

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, ladies and gentlemen, and welcome to the PAR Technology Fiscal Year 2018 First Quarter Financial Conference Call. [Operator Instructions] As a reminder today's conference is being recorded. I would now like to turn the call over to Chris Byrnes, Vice President of Business and Financial Relations.

You may begin.

Chris Byrnes

Thank you, Mark, and good afternoon. welcome Quarter to Financial to PAR's call like First XXXX Results also you the today for I'd review. today The can complete X:XX issued be results P.M. at found in disclosure our press of our release related our in as well Form furnished SEC. to X-K the as and press of the section financial details, website at www.partech.com. To Investor release please and Relations access the the News our see At in call the regards this today. time, I'd like to take to care of certain details that available we and Participants playback. are the on be the afternoon, be call call it aware will for should this recording Also, we conference the call via the Web. are broadcasting World Wide

forward-looking it please be conference based expectations if So of like conference advised, you available statements be currently future on includes participants any in ask the live that a our reflect remind question, I'd also this to will management's both recording. data. use included that and call

results information The this statement or relied in However, the annual safe to and to to on our afternoon forward-looking the this subject SEC. upon statements with actual quarterly events projections earnings call and release may in be our related subject other future uncertainties. filings and are and included conference harbor

Don? Sammon, PAR's Joining Financial CEO, Dr. which be Don for Menar, President portion the me Officer; remarks today of and to Q&A. the Foley; followed I'd call, Bryan will and call on PAR's Donald now Staff. over to call is Chief by Karen like the of Chief turn the general formal

Donald Foley

afternoon to and of good you, Thank Chris, each you.

software value domain add the in a scaling balance industry and April existing and Before Directors. experience Board was investing will our opportunity complement and immediate as welcome to in appointed of added begin, to Savneet Singh, I like will XX, Software companies, who, knowledge our on to has to I'd Service this board. deep PAR take Savneet's add of Savneet's and to

usual, call results then the over provide questions. I'll then our first an routine. the our by for highlight at turn business. call take taking closer the conclude who'll financial to a Turning of And the overview normal your look the we'll as to I'll Bryan, quarter and financials.

Now to review the first quarter.

income $XX.X to hardware a XX.X% compared of attributed in X half of decrease First to the the quarter first is an call. the last and projects a the the $X.XX for On These Bryan and reported income not in of quarter net X will to duplicated detail will lapping restaurant additional compared net This completed On of net $X.X year. a earnings decrease the specific in basis, reported diluted on quarter first in were per first large quarter revenues were GAAP and in of income first in of projects customer earnings $XX,XXX, XXXX. quarter the million we non-GAAP basis, the share add QX we of per XXXX, later XXX,XXX of Tier a $X.XX. XXXX. XXXX. be earnings share of million, of share per

XXX% increase Brink PAR's an this the a restaurants Starting we solution. activated over year. had from to customer new the At quarter In X,XXX the Now XXX operating first update the quarter, last first end quarter, with on business with of review quarter's of highlights. we sites, Brink.

be increase a of backlog bookings totaled have of first end X,XXX the March. as Brink restaurants, prior now of We quarter XXX installed year's New the an to from in quarter. of XX% the stores

across a minimum, flexible our for software application continues hardware PayPal. we app, in our in especially payment is benefits PAR capital delivery the that partners release Pay processing announced cloud to customers, call, interface module a solution all solution our of modern APIs; Apple and our Since own Pay ecosystem investment; Pay, is, and to consistent with Google that solution deliver Brink Our and a That on-premise, provides. Samsung of point-of-sale numerous Pay, infrastructure; and interfaces reduction PAR a platform the stores. an last important Checkmate, supports Pay Brink. to

our ensuring organization customers the maximize solution. success committed Brink that our benefits customer unique Our by provided is to

Ideal in sleek continue solution hardware Brink by the We new functionality of Brink small technology meet our and, by EverServ short, and This growing local XXX in of features introduced and businesses our for to the we our to platform the and In supports market. demands a the invest versatile both enhancing value-driven design. underlying multi-chain customers. everything platform with adding ergonomic concepts, lightweight between. in platform many quarter,

quarter, task plan SaaS-based and customers management you to digital with working the on safety their X as an grow. and number customers, -- food deploy particular, we updating initiative. restaurant are food increase company from our the new In solution, opportunities saw are SaaS-based enterprise-licensed closely we they SureCheck. PAR's In we of Tier multinational a Now safety seeing revenue digital in

that and These truck a center C-store of span travel We opportunity network, additional upscale X,XXX pilots with an clients. pilot opportunities additional SaaS grocery two are large stop represent currently over in chains. four four

SureCheck, successful locations will be will generally and Android our and and available in in of be of compatible newest second pilot Our Version version XXXX. the iOS XX.X, has half proven

on initiatives XX% fact revenues We SaaS and quarter proud of accomplishments, grew basis. our are that our the supporting a year-over-year software key our

report the as strong review quarter Government revenue segment our a versus grew revenues quarter revenue year. I first prior pleased segment the strong XX.X% -- to to Now am performance. in

by revenues in our mission the line Intel systems quarter, grew while grew business Our XX% X%. solutions

backlog a XXXX. As the returned million million increase end predicted, reported at to $X from a multi-year million, of QX over PAR more than normalized more contract $XXX Government XXXX the QX a margins $XXX.X closed contract a X.X%. with of

business to that allow reiterate in to are you, being and have and forth and to I shareholder already staying thank in believe I we to for scratch to increase to made like our us received our our develop forward to like my his on year I on for globe foster strategic during you, financials, the and company's want value. the of our with would employees in continues continue be specific also that set look to the communications goals our fact, potential. gratitude and We These gives company details have these shareholders, Bryan the executing past future. I to would with to investments our that our order our we our from have sharing Before to the we the you dedicated accomplish shareholders. all objectives plan. started to extend objectives, In goal, as continue progress technology stakeholders. goals in focused around our achievements to the to only and company to the we support further achieving our develop. relationships necessary invest to X surface

will I over review the to Now Bryan? for Bryan the turn his of call financials.

Bryan Menar

Reconnaissance the compared you, the $XX.X Software increase Thank Brink as XX.X% offset did revenue million. quarter lapping for was million, versus and hardware as X% a results XXXX. services, revenue line for a $X.X to million, of Don, XXXX decrease the QX $X.X in in million Service good quarter Software $X.X include up our by $XX.X million, million million, project a in our hardware-related of up XX% of Tier QX increase and Software and hardware afternoon, Product compared Surveillance was Mission customers compared installations QX business $XX.X our support $X.X The line. recurring $X.X $X.X software, driven solutions We to million, for as Service, XXXX. deployments revenue contracts, The with segment. offset as This revenue increase QX in to revenue down the was XXXX. with our by increase $X.X decrease Recurring prior compared an quarter Contract driven to hardware Service approximately Service year. product a QX down was to million. contracts compared a a decrease down increase Government our business million, a down continued everyone. Restaurant/Retail $X.X of $X.X by associated a primarily our XXXX. XXXX. compared in million in deployments increase $X.X business Intelligence annual decrease of exited was $X.X QX a million, $X.X quarter Due million December was million, our XX.X% up up by $X.X $XX.X Momentum XXXX. with major noting revenue million, from Systems XXXX to for by increase X a primarily million of driven X% was Brink, million QX from the with to

performance was for offerings. offset growth $XXX to prior-year compared primarily contract range the a margin driven trended backlog March XXXX. of for backlog to outpacing is service margin be of the mentioned, XX, compared regards year-over-year partially rates segment. in Those continuing In within in lapping rate mix, the Product over closed included favorable The business was margin margin high compared XX% the million SaaS XXXX. the was by QX for period by was quarter rate out the Systems driven contracts as With QX Don current for continues mix favorable total XX.X% in Service rates are in favorable historically the were Government quarter. in unfavorable the XXXX. that XX.X% Mission be product XXXX. to line. healthy, other QX Government normal product quarter contract for a quarter in noting XX.X% XXXX. in As a X.X% improvement shifting the of margin of margin compression. The XX% year that rates The the by later variance to margin driven margins by X.X% with to to for

our $X down in to with XXXX was million operating SG&A primarily Non-GAAP at QX associated $X.X decrease offices. of review by adjustments down for XXXX. GAAP million, $X.X driven versus conduct was QX investigation a our SG&A versus China million Singapore and XXXX. down decrease offset The Non-GAAP decrease was expenses. $X.X hardware included by expenses QX SG&A additional support China our investments $X.X million Now costs million, investigation Brink. to the R&D, related $X.X growth and development of at driven to million, versus and Research $X.X future million offices for in conduct QX by $X.X and current compensation. the were Singapore equity-based million and a in XXXX,

on position. sheet information flow cash Now and company's balance to the provide

versus period three net months enterprise XXXX, same the March ended million was disproportionate $X.X capitalized primarily cash ended ended the million, million months systems provided X improvements our to the months an XX, late three recognized million same software for our For planning down activities in costs XXXX. the resource XXXX, investments March $X working system, in was X XXXX, activities driven the for infrastructure March in cash quarter. in investing XXXX. months months owned for to for credit. implementation driven of ended XX, we ended operations associated made to borrowings decrease of the used was XXXX. Restaurant In was XX, the and Non-software primarily million period XXXX, compared million capital in $X.X platforms costs used of capital and $X.X our XXXX, with $X.X with under by by by leased in line months March increase financing CapEx was properties. needs million the primarily $X Cash $X.X amount million $X.X Cash revenue ended information three of March our related the associated segment X The XX, versus and Retail the a in was used XX, by

outstanding remarks. March as days to XXXX XXXX. The million, days days of XXXX, due an amount increased as million domestic turns sales XX, XXXX, XX or December days of XX ended as of increased days to the Government for quarter. recognized This XX times of segments increased for revenue primarily XX, XX, our XXXX.Inventory primarily The was days receivable the operations. balance $X.X March the late my amount increase inventory December segment disproportionate formal to, later once of million March XXXX. the and And now December Accounts were call XXXX the $XX.X by will of as the Restaurant sales concludes turn sales months from outstanding driven compared XX Retail outstanding in March Don again, for recognized the for and to revenue was I of disproportionate both days of quarter. increase X from XX.X% X Q&A. As $X.X in over International

Operator

first from [Operator Our of the Howard line comes Brous Securities. question Instructions] from Wunderlich

Howard Brous

the on A the out? for congratulations First question of When all, in bookings. is coming significant Q increase Bryan.

Bryan Menar

The out tomorrow Q will expect early be opening. before -- it the

Howard Brous

ROIC have global I the just the company? what's ROE a question, and of

Bryan Menar

after right, for -- quarters two quarter, -- at being just -- it's this the it's right, So the X.X%, past negative. two

Howard Brous

ROIC? And

Bryan Menar

here. what basically in flat it's to Well, as have well you

Howard Brous

broken Have division down division? by you it have

Bryan Menar

in down hold broken It's that our have as not consolidated we do segments. not capital up. by segment, do We the

Howard Brous

where most that. just at one and in I not No, would amount that's question? to But defense, realize was focus, capital I of allocation, why look looking the certainly asking spend the the

Bryan Menar

correct. Well, Sure.

time contract, service at the to to at is Restaurant/Retail. immaterial made to So our the and to is and, CapEx our in right, investments which Government for the place R&D, that they're look investments contracts point right, portion when all able I it's the Minimal and are In be in as R&D, around all all you Government of those. regards mentioned, CapEx Restaurant/Retail primarily, directly there are that directly being our segment. business, business, also,

Donald Foley

that capital we last the in a It new a I note Deltek the Howard, you're Government side, invest would is the, for did yes. is system. most in the was right. of I ERP that system, which believe restaurant year I mean, system

Howard Brous

focusing Could goods have allocation, how why do currently? Karen? working Brink understand you you I'm because capital on on many

Karen Sammon

On our that development to organization. in XXX we close now are teams,

Our to sales is around our that organization steady and XX. XX services support to XX around XX organization Brink holding

with of is our most allocation Brink. capital So

Operator

Instructions] from next Adam question Our line Wyden from comes the Capital. [Operator of ADU

Your now open. line is

Adam Wyden

Hey, of a guys, here. couple just questions

or guys of XX,XXX historically, XX,XXX So you booked I by had end targeted the of XXXX. kind think, installed

somewhere as booked the Do XX around that? got of level and I to of XX,XXX is think, you'd You said XX booked of you booked. it's another kind said conversion and your March at what's you by from XXX still realistic between X,XXX installed this days. year, or previously, were think XX, installed And to have installed you've your confidence end

Karen Sammon

we're days looking big the Adam, in pretty these think XX is at than longer of the customers. a are with that that, to We're that end extended the growing, out bookings way strong. looking be I bookings The And year. goal for backlog the They're it, is little we'll XX XX,XXX of toward close. some of that the

Adam Wyden

saying XX,XXX it's you're days, whether you'll XX,XXX feel off the kind and larger So, of is you're longer, be of makes work what with. pretty booked which you XX number XX is But XX,XXX so or to confident, implementation clients installed, sense. saying, a takes good either to

Karen Sammon

at year. XX,XXX will by Yes, not -- Adam, won't we of and -- the we won't end we be installed the be

Adam Wyden

XX,XXX you But understand. I No, have the by end think year? of you the could booked

Karen Sammon

range of XX,XXX. -- the to XX,XXX within be We'll X,XXX

Adam Wyden

So just that. on

revenue, is customer follow-up back implementing So just kind envelope this all of the payments, money doing But, some since modules, you're hasn't not is started is mean, including and it there, I out SaaS mean, new support single backwards, of math, you're money my of company competitor I million $XX and working if But installation booked closest roughly rest. the I lost which question. raising a I'm revenue. XXx and certain mean, at raising XX,XXX

raising assume your competitor even this churn at no your logo So $XXX that on year, I of revenue. trades valuation, would to -- kind a be XXx a Brink's money -- million pretty and mean, closest XXx revenue at business end it's that the fair of has at million. that $XXX company for yet company at competitor is

assets have of are efforts of got we business. is saw value business, You've for got are. inside our last X to estate, someone great capital is large my value it concern stock valued biggest sold PAR? year, to as in in capital. and that think, in we're it of going think, of going isn't market properly of your to value some the concern kind whatever and going maximize for the the the I that what Government going kind you've personal money proper And Brink internally pushed that relates I And got Because, was. a appreciation -- be a being doesn't the value shareholders What that money real XX you're for lot hardware of get working and either you've of get company to in your in cost is your to stock sort the direction to off have this like in and/or made to not

the SureCheck to capital in to efficiently. capital extent invest markets not so, or And more accessing Brink, want the that you're you

private see these your So to property it I'd are to is assets. getting a inside curious as and there of be the public market of kind kind of what between value thoughts of internally divergence huge valued the SaaS market the value because

Bryan Menar

we highlight, increase of we're and we okay. how our in we yes, where continue regards to actually access pure can continue and find in What we a just that evaluate is, -- we in areas execute we to in make capital best position to the versus play And you SureCheck use one I brought with you that Brink the Yes, and to the on competitors, defend to that. to continue are there as can up have valuation our believe not the of that. say to those opportunities to investment ways that

hitting capital, what continue you're we how Brink is us do and areas, following the to internally Howard to right. did, and ourselves. question, the additional invest to for up yes, same business and thing to continue we discuss those with we in So grow for find SureCheck The the us continue how the that -- priority importance of forms and

Adam Wyden

anyone if can company think, they out it's mean, Brink. break and money at. matter. that you Yes. on out I I pure be if at extent I either. mean profits, play, losses you the a neither mean, is can you'd I internally know pure I that SaaS money selling payments. I think the Toast they money it's value out not a but mean, not break make -- for financials, make losing will cares l not is think segment I But think, and don't hardware, you're revenue I what the play surprised say Toast, people you to

you. enormous think may granular be, market you the on per capture they I communicative about are your our payments? XX,XXX Toast And if be $X.X payments, envelope points do I do basis understanding you at the billion. opportunity. margin And expect this the clearly, on second I surprised think of the more XXX% of you do what it's What that box has the our the be? is, XX back rate how but they that's capture going generation product mean, per to XXX%, as mean can give transparent you something about bps of dollar. the to business give of million you'd mean, kind But now, get more question So information will make, what a $XX XX close and kind can public revenue rate an and and you're not math, what to from I to understanding. booked my I scaling or be payments

Karen Sammon

first our is merchant solution, and services. Yes, I all, Pay up followed PAR well, by you're think, transaction protecting of we're -- processing

there'll And a pickup are the expecting be so in we that and mid-Tier X below.

the it them. we up are Pay, PAR not be really with positioning So to will we Xs necessarily anticipating pick Tier but

neighborhood capture in it --it's we're the we of to rate So would We'll just by would to start that pickup But, customers of see say launched as quarter. the this the XX%. end again, market. bring not at I being our be

-- the our As $XX well, not per margins, from $XX of from MRR. revenue neighborhood it perspective, that add a in margins, could to believe we

Adam Wyden

look as a you kind it module. So of guys at

get this $XX, -- $XX let right, me basically So to important. is this so

per $XX to box. month per $XX So

to simple. just call $XX So let's the math it make

generate would box minus each $XXX $XXX-plus saying -- year. or You're per

right, boxes, XX,XXX a $X -- that's have royal that's SaaS a that's you if dollar. million, and So

million incrementally that's So margin. $X potential -- $X or EBITDA $X.X you're saying gross that, or million in million

it like, billion guys on and thinking a going do -- the You it, do million. at think that's as net about about wrong and store, on not -- to points we're we're thing. $XX don't $XX the points XX basis way? like type mean, Am going I a we so it's basis to do I oh,

Karen Sammon

Yes.

things. think you're I So different about thinking two

we processing, it's when transaction launching about a So Pay, PAR it's solution... talk SaaS-based

Adam Wyden

It's a module...

Karen Sammon

we that that the the card we're transactions. towards already It's already debit, card, you're capturing augmenting does module what that and store capture piece, we credit value merchant which The are -- describing now. is services right working

of pieces two there's So it.

Adam Wyden

That's Yes. XX the basis points.

we I financial guess, I are that don't seem already transaction to of So kind reflected doesn't in building there's doing the is module, know I services, merchants' where the I that the nascent and mean, we're -- that's a out? Or still opportunity then statements.

Karen Sammon

while. It's been for around a

better are We rates. negotiating

half the year. So be in the that launching second we of will

Adam Wyden

Okay. Last question...

Karen Sammon

be We'll it. increasing

Adam Wyden

give -- this Last between is of mean, positive on ROI. hardware question. Can comment you is. of as the people to Restaurant in you afraid out there -- kind getting in losses kind hardware a -- owns of not as you're I Howard's hardware Brink, in mean, burning as I -- hardware just relates gains, afraid you you outs mean, on think EBITDA call is Brink can the I kind the more know cash I who And the improved? of kind mean, meaningful and break of the are I of kind anyone combine Is the seeing within to don't Retail within and But, think help their any of this there retail any I'm contribution? I of has improvement interpreting -- burning point it provide color but what I if mix I'm can at Brink color hardware the thinking? stock you

Bryan Menar

Yes.

Adam, in So what's rate like businesses. we our at, hardware regards in our the to also on attachment look

trended historically a XX% So hardware we've rate. at

Adam Wyden

operating No, income question What asking is, Brink that's I'm not between consolidate the -- hardware. I'm and asking. I'm not you

Brink -- from if the see really is, SaaS. can't Brink EBITDA versus at my is hardware them, losing question so that's I hardware consolidate you fine. is contribution money, what so restaurant guess, you And

whatever relative inroads kind And Do kind rest. so relates Brink sales you're doing and kind all the trying to the I'm -- and as hardware you of contribution marketing, it just to are R&D making to understand Karen? of of EBITDA question, understand at of to you kind

Karen Sammon

Yes.

Bryan Menar

Correct.

investment it's to So we and and it's Adam, in space. is the support SG&A profitable, -- is hardware the R&D that additional there -- the actually have helping

Adam Wyden

Okay, I'm that's what asking. Exactly.

Bryan Menar

And right. where out, it's that's exactly. been Yes, allocated

that allocating it investment. contribution taking it's the margin and So to

Adam Wyden

more feel So the is in on I invest that's such you profitable? on question and we you I'm guess, is becoming generation Because had headwinds a -- mean margin kind do like on hardware it's that of are I improving of more I Are revenue -- it? curious, out -- kind Brink? directionally, getting side, just the my margin that costs is, you've margins generation we making it? mean, into sequentially, of better allowing hardware better to resources cutting

Bryan Menar

-- continue comments his we look, XXX. right, in -- EverServ had as other about the one mentioned, the at actually, So to Don so of earlier

to cost efficient, So customers. addressing The better more products we that. becoming for find better EverServ continue our of ways is XXX

a a So opportunity of commodity. a part very of in way that solution actually in being more provide and efficient good it's what become hardware provide it's general, more in and as of to we the customer, something us. But general, is, the for has that better we yes, more

We are [Indiscernible]. is not from away it margin walking it,

Karen Sammon

through we better our we look when from It's the important Tier can who see a negotiation. it our Brink when solution, is we what margins margins pricing than solution solution. have of the the and compress contribution the software-led the with hardware part And Brink, very at of Xs,

then total support the and peripherals look designed the it services when all with all the So that PAR go hardware, store, to the at that store. it's the we are

the our you so hardware And dealing -- a do margins. lot of average you're today's coming when over Tier customer, is average But see still then Brink with remember from improved Xs. that

to going expect foundation that with so margins see the will to that we Brink pull is. we positive not grow, apart our do And But improve. you're we continue impact hardware the see to hardware what as able to be that,

Adam Wyden

okay my the Right. I the -- I that think, tell in the I in other people the business. but mean, you can mind just about No, to to it's invest call, don't cloud extent know yes, software I on resources

right you've least my Blackberry with moving I name as head the been make the hardware think they in software black scratching seen think, of I at we're kind the has all that kind -- eye. sure do to because, I hardware business their to and of is licensed companies, other am and support. Huawei direction

I saying, look, watching a our think investment, but a people Howard probably And I good and how we're hardware. we that are I know Government, also getting return the on lot of do so just not to guys if closely on mentioned, the someone mean, great PAR too. support and license the brand good be the solution, brand, be to has software and about provider else and may solution a hardware you that a can and have worry when changes, think

I the you think breakout appreciate So can segments to give me. show of helpful. people of anything kind from the I would be But it. it that's

Operator

now further closing to like back this I call Don Foley to at turn for time. would the remarks. no questions showing I'm

Donald Foley

got just business, Tier X of hardware to it you insight much makes large the supplied the our it discussed do work you'll basis. about and Thank transaction listen. advice. on your have And for to new your time. more And be thank something do it's We and hearing for or was, when our reemphasize no And point, Singh, to software member, are when just we hardware difference the than and like services. I'd really more the really you We PAR your Pay. on a better our our share And later. bring modules with the which margins hopefully, very than board Karen's software we've core we to getting Savneet when we along add number and a software hardware customers. refer to we've you supply basically, for

Operator

gentlemen, and today's a does This conference. you the and in great disconnect. thank day. participating may Ladies all you Everyone, have conclude for program,

PAR Technology (PAR) 12 May 182018 Q1 Earnings call transcript