Summary
PAR Technology closed its fiscal 2021 second quarter with revenue of $69.0 million, up 50.9% from $45.7 million in the same quarter a year earlier. The April 8, 2021 acquisition of Punchh, a SaaS loyalty and customer engagement provider, reshaped the mix. Software annual recurring revenue reached $76.7 million at quarter end, a 166% increase from $28.8 million a year earlier. Punchh contributed $40.3 million of that ARR, and Brink added $27.6 million. Excluding Punchh's contribution to the prior-year base, management said combined ARR growth would have been 42.5%. For the six months ended June 30, 2021, revenue was $123.4 million, up 22.9% from $100.4 million.
Gross profit rose 66.4% to $15.1 million from $9.1 million, and gross margin improved to 21.9% from 19.9%. The gain came mostly from better absorption of fixed overhead as hardware volumes recovered, though higher material costs and a $2.9 million jump in amortization of acquired developed technology weighed on service margins, which fell to 30.3% from 35.2%. Operating loss widened to $17.0 million from $5.7 million, and operating margin fell to -24.6% from -12.5%. Selling, general and administrative expense climbed 128.4% to $22.9 million, driven by $9.5 million of Punchh related costs, including $2.7 million of acquisition costs. Research and development rose to $8.6 million from $4.5 million.
Net loss for the quarter was $10.0 million, or $0.39 per diluted share, compared with a net loss of $9.0 million, or $0.49 per diluted share, a year earlier. A $12.3 million partial release of the deferred tax asset valuation allowance tied to the Punchh deal lifted the bottom line. Interest expense, net, rose to $4.9 million from $2.1 million on the new term loan. On a non-GAAP basis, adjusted EBITDA was a loss of $4.1 million versus a loss of $1.8 million, and adjusted net loss was $9.2 million, or $0.36 per share, versus $4.1 million, or $0.21 per share. For the six months ended June 30, 2021, net loss was $18.2 million, or $0.77 per diluted share, compared with $19.9 million, or $1.10 per diluted share, a year earlier.
Cash generation reversed sharply. Operating cash flow was -$29.6 million for the quarter, down from $1.5 million a year earlier, and -$33.1 million for the six months ended June 30, 2021 versus -$13.6 million. The company attributed the outflow to net operating losses and working capital needs, including an $8.8 million inventory build and an $11.0 million increase in other current assets. Capital expenditures were $0.45 million in the quarter compared with zero a year earlier.
Operationally, Brink recorded 1,099 new store activations and 1,012 bookings in the quarter, with open orders backlog of 3,119 sites and 13,234 active restaurants at June 30, 2021. Punchh added 2,774 activations and reached 48,376 active sites, with contracted ARR of $60.5 million. Deferred revenue was $14.6 million, up 51.5% from $9.6 million, and remaining performance obligations were $18.1 million, up 50.4% from $12.0 million. Management did not issue formal financial guidance for the third quarter or the full fiscal year. It said Brink activations for the third quarter started strong and that the acquisition pipeline remains active. Global supply chain constraints and the COVID-19 pandemic, including the Delta variant, remain named risks, and the company flagged uncertainty in U.S. defense procurement cycles for its Government segment.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2021 | Q1 FY2021 | QoQ | Q2 FY2020 | YoY |
|---|---|---|---|---|---|
| Revenue | $69.0M | $54.5M | +26.6% | $45.7M | +50.9% |
| Gross profit | $15.1M | $10.2M | +48.1% | $9.1M | +66.4% |
| Gross margin | 21.9% | 18.7% | +3.2 pp | 19.9% | +2.0 pp |
| Research & development | $8.6M | $5.8M | +48.8% | $4.5M | +90.5% |
| Sales & marketing | $22.9M | $14.5M | +57.8% | $10.0M | +128.3% |
| Total operating expenses | $32.1M | $16.2M | +97.8% | $14.8M | +116.8% |
| Operating income (loss) | -$17.0M | -$6.0M | -181.9% | -$5.7M | -196.9% |
| Operating margin | -24.6% | -11.1% | -13.6 pp | -12.5% | -12.1 pp |
| Net income (loss) | -$10.0M | -$8.3M | -20.4% | -$9.0M | -10.9% |
| Net margin | -14.4% | -15.2% | +0.8 pp | -19.6% | +5.2 pp |
| Diluted EPS | -$0.39 | -$0.38 | -$0.01 | -$0.49 | +$0.10 |
| Customers | 41,214 | 41,214 | ±0.0% | 41,386 | -0.4% |
Risks
The COVID-19 pandemic is expected to continue to adversely affect PAR's business, operations, and financial results, with resurgences including the Delta variant potentially leading to store closures, reduced services, delayed or canceled store implementations, decreased bookings, and payment delays or defaults. MD&A states the pandemic continues to challenge the Restaurant/Retail segment while the Government business has not been materially impacted.
PAR relies on third parties, including sole-source suppliers, for certain hardware products and components, and global supply chain shortages have caused significant price increases for materials and transportation costs. Late in the quarter ended June 30, 2021, PAR increased hardware product prices to offset some increased costs, which could make it less competitive and reduce sales, and it may be unable to source components on time, causing longer lead times and harming customer obligations.
The April 8, 2021 Punchh acquisition for approximately $509.6 million involves risks including difficulties and delays integrating Punchh's operations, technologies, and systems, distraction of management, challenges providing bundled products, unfavorable revenue recognition, and assumption of pre-merger equity awards that may deplete shares available under equity incentive plans. Failure to integrate and realize expected benefits could materially adversely affect PAR's business, financial condition, and results of operations.
The Punchh acquisition added significant debt: as of June 30, 2021, PAR had $314.8 million aggregate debt, including a $180.0 million Term Loan and $134.8 million of 2024 and 2026 Notes. Interest expense, net was $4.9 million for the quarter ended June 30, 2021 compared to $2.1 million in the prior-year quarter, and cash used in operating activities was $33.1 million for the six months ended June 30, 2021 compared to $13.6 million in the prior-year period, increasing the risk that PAR may not have sufficient cash flow to service debt.
PAR's Government segment depends on DoD and other Federal agency contracts and faces uncertainty in U.S. defense workforce policies, procurement cycles, and spending levels. For the quarter ended June 30, 2021, contract revenues were $17.8 million, a decrease of 1.7% or $0.3 million from $18.1 million in the prior-year quarter, driven by a $0.5 million decrease in ISR solutions partially offset by a $0.3 million increase in mission systems.
SaaS KPIs
All quarters →ARR
Punchh ARR
Punchh New Store Activations
Punchh Contracted ARR
Summary, forecast, risks and KPIs are extracted from PAR TECHNOLOGY CORP's SEC filings for Q2 FY2021 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 1, 2026.