PAR TECHNOLOGY CORP Q1 FY2022 earnings

PAR Technology's fiscal 2022 first quarter revenue hit $80.3 million, up 47.4% from $54.5 million in the same quarter a year earlier. Gross profit more than doubled to $20.6 million from $10.2 million, a 102.1% gain, and gross margin climbed to 25.7% from 18.7%. The software mix explains most of that. Total annual recurring revenue ended March 31, 2022 at $94.4 million, up 172.8% from $34.6 million a year earlier, with Punchh at $50.2 million and Brink POS at $35.5 million. Contracted ARR, which includes signed sites that are not live yet, topped $116 million. Management said Punchh ARR grew 39% year over year and Brink POS ARR grew 35%.

The spread between gross profit and the bottom line is where the story turns. Operating loss widened to $12.8 million from $6.0 million, and net loss widened to $15.7 million from $8.3 million. Diluted loss per share came in at $0.58 against $0.38 in the prior-year quarter. Operating margin slipped to negative 16.0% from negative 11.1%. The prior-year quarter got help that did not repeat, a gain on insurance proceeds tied to a legacy claim. The company's own reconciliation shows the swing items: heavier stock-based compensation and amortization of acquired intangible assets separated the GAAP loss from the adjusted figure. Non-GAAP measures are kinder. Adjusted EBITDA loss narrowed to $2.9 million from $4.9 million, which management framed as a 42% improvement, and adjusted net loss was $7.1 million, or $0.26 per adjusted diluted share, against $7.6 million, or $0.34, a year earlier. EBITDA was a loss of $6.8 million versus a loss of $3.3 million.

Backlog metrics point to demand. Deferred revenue was $16.4 million at March 31, 2022, up 65.4% from $9.9 million a year earlier, and remaining performance obligations were $21.0 million, up 89.3% from $11.1 million. Brink POS activated 1,244 sites in the quarter against 1,090 bookings, leaving 1,621 open orders. Punchh activated 1,509 sites. Brink POS ended the period with 16,945 active restaurants and Punchh with 58,801, and Brink POS active sites were 39.6% above a year earlier. Data Central ARR of $8.7 million slipped 3.0% year over year, the one software line that moved backward.

Cash is the pressure point. Operating cash flow was negative $21.2 million for the quarter, against negative $3.4 million a year earlier, and capital expenditures of $0.3 million were up from $0.2 million. Management tied the outflow to a larger net loss, higher inventory, receivables from the Government segment and the payout of annual cash bonuses. It said available cash and cash equivalents will be sufficient to meet operating needs for at least the next 12 months. Listed risks include component shortages, manufacturing and logistics disruptions, competition for talent, the COVID-19 pandemic, and macroeconomic and geopolitical events such as the Russia-Ukraine conflict. The investor deck flagged a difficult and challenging supply chain environment, a headwind that lands hardest on the hardware business that still supplies much of revenue.

The release carried no numeric guidance for the second quarter or the full fiscal year. Management leaned on the ARR base instead, and on a unified commerce pitch that bundles Brink POS, Punchh and Data Central. Several large brands chose more than one PAR product during the quarter. The open question is whether the software mix can keep lifting gross margin fast enough to absorb an expense base growing faster than revenue. Adjusted losses are shrinking and ARR is compounding, but the GAAP losses and the cash burn both widened sharply. The demand side looks healthy; the cost side and the cash burn are what need to catch up.