Summary
PAR Technology reported fiscal 2022 third quarter revenue of $92.8 million, up 19.1% from $77.9 million in the prior-year quarter. Revenue for the nine months ended September 30, 2022 reached $258.1 million, up 28.3% from $201.3 million. Software carried the growth. Annual recurring revenue ended the quarter at $106.6 million, a 29.2% increase from $82.5 million a year earlier. By product grouping, Guest Engagement ARR was $57.5 million, Operator Solutions ARR was $38.9 million and Back Office ARR was $10.2 million. Contracted ARR, which adds signed sites that have not yet activated, came in above $118.0 million.
Gross profit for the quarter was $21.4 million, up 17.5% from the prior-year quarter, but gross margin slipped to 23.1% from 23.4%. The nine-month picture was stronger: gross profit rose 45.1% to $63.1 million and gross margin expanded to 24.5% from 21.6%. Management tied the quarterly margin dip to product mix and higher excess and obsolescent inventory charges, partly offset by a richer service mix. Operating results moved the other way. The operating loss widened to $18.4 million from $14.1 million, and operating margin fell to -19.9% from -18.1%. For the nine months, the operating loss widened to $47.4 million from $37.1 million.
The bottom line improved at the quarter level. Net loss narrowed to $21.3 million from $31.9 million, and diluted loss per share improved to $0.79 from $1.23. Year to date the trend flips. Net loss widened to $55.8 million from $50.2 million, and diluted loss per share was flat at $2.06 against $2.05. Non-GAAP measures were less flattering. Adjusted EBITDA was a loss of $8.0 million for the quarter, wider than the $4.0 million loss a year earlier. Adjusted net loss was $11.9 million, or $0.44 per share, compared with $9.3 million, or $0.36 per share. EBITDA loss narrowed to $12.2 million from $20.4 million. Over the nine months, adjusted EBITDA was a loss of $16.0 million against a loss of $12.9 million.
Cash flow improved. The quarter used $1.99 million of operating cash flow, better than the $10.56 million used a year earlier, and the nine months used $33.6 million against $43.6 million. Capital expenditures were $0.31 million in the quarter, down 6.1%, and $0.81 million for the nine months, down 12.5%. Those are small outlays for a company spending to scale software. Two contract indicators moved the wrong way. The current portion of deferred revenue fell 18.1% to $12.7 million against the prior-year quarter, and remaining performance obligations fell 18.4% to $16.8 million.
Customer metrics stayed healthy. Guest Engagement active sites totaled 67,104 at September 30, 2022, Operator Solutions had 18,572 and Back Office had 6,668. Guest Engagement added 5,698 activations in the quarter, Operator Solutions added 985 and Back Office added 367. Operator Solutions bookings were 1,137 sites, and churn ran about 4.8% annualized. Management framed the outlook around leverage. The CEO said revenue from new unified experience products should let the company grow while leveraging prior investments, and that PAR expects to exit fiscal 2023 cash flow positive. That target is for the full fiscal year, and it rests on converting bookings and activations into recurring revenue.
The disclosed risks deserve attention. They include supply chain and component shortages, inventory management, manufacturing and logistics disruptions, inflation and higher interest rates, a possible recession, a decline in consumer confidence and discretionary spending, competition for talent, and COVID-19 related disruptions. Management said its available cash and cash equivalents should be sufficient to meet operating needs for at least the next 12 months. PAR also published its first Environmental, Social and Governance report alongside the results.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2022 | Q2 FY2022 | QoQ | Q3 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $92.8M | $85.1M | +9.0% | $77.9M | +19.1% |
| Gross profit | $21.4M | $21.1M | +1.4% | $18.2M | +17.5% |
| Gross margin | 23.1% | 24.8% | -1.7 pp | 23.4% | -0.3 pp |
| Research & development | $12.8M | $10.1M | +27.1% | $10.1M | +26.9% |
| Sales & marketing | $26.5M | $26.4M | +0.5% | $21.7M | +22.5% |
| Total operating expenses | $39.9M | $37.2M | +7.1% | $32.3M | +23.3% |
| Operating income (loss) | -$18.4M | -$16.1M | -14.6% | -$14.1M | -30.7% |
| Operating margin | -19.9% | -18.9% | -1.0 pp | -18.1% | -1.8 pp |
| Net income (loss) | -$21.3M | -$18.8M | -13.2% | -$31.9M | +33.2% |
| Net margin | -23.0% | -22.1% | -0.9 pp | -41.0% | +18.0 pp |
| Diluted EPS | -$0.79 | -$0.70 | -$0.09 | -$1.23 | +$0.44 |
Risks
Product margin fell to 18.8% in the quarter ended September 30, 2022 from 24.8% in the prior-year quarter, driven by product mix and higher excess and obsolescent inventory charges, while total gross margin declined 0.3 pp to 23.1%. Product margin for the nine months ended September 30, 2022 was 17.9% versus 22.8% in the prior-year period on the same inventory and mix pressures.
Current deferred revenue was $12.7 million at September 30, 2022, down 18.1% versus the prior-year period, and remaining performance obligations were $16.8 million, down 18.4%, so contracted backlog is shrinking even as total revenue rose 19.1% in the quarter and 28.3% year to date.
The company accrued a $0.4 million non-recurring expense in the quarter ended September 30, 2022 related to efforts to resolve a regulatory matter, an item management excluded from adjusted net loss and adjusted EBITDA.
Cash used in operating activities was $33.6 million for the nine months ended September 30, 2022, driven by the higher net loss net of non-cash charges and additional net working capital requirements primarily from increases in inventory and accounts receivable, even though the use of cash improved versus the $43.6 million used in the prior-year period.
SaaS KPIs
All quarters →ARR
Subscription Service Revenue
Customers using software products
Recurring Revenue
Summary, forecast, risks and KPIs are extracted from PAR TECHNOLOGY CORP's SEC filings for Q3 FY2022 (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.