PAR Technology Corp (PAR) 2Q24 Result

Profit inflection draws nearer

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PAR 2Q24 Result

Last week, PAR reported a strong 2Q24 result that showed continued momentum towards achieving profitability, with the company reiterating its guidance for positive adjusted EBITDA in 3Q24. There were some clues within the result that gave us increased confidence around: 1) the magnitude of the opportunity PAR is going after; 2) PAR’s advantaged position in capturing that opportunity; and 3) insights around the resilience of PAR’s growth profile during a time when some customers are reporting weakening consumer demand.

As a recap, PAR’s 2Q24 annual recurring revenue (ARR) of $192.2 million grew by 56.9% year-over-year (including acquisitions) and increased by 23.9% year-over-year organically. This is strong growth and within the company’s 20% to 30% targeted ARR growth range. The company reported adjusted EBITDA of -$4.3 million, but this number is inclusive of $2.5 million of one-time charges related to customer credits and Stuzo acquisition purchase price accounting adjustments.

Excluding these charges, PAR achieved Q2 adjusted EBITDA of -$1.8 million, and this is after the company divested its Government business which was producing over $10 million of annual EBITDA. There are some quirks around why PAR is loss-making which we detailed in our deep dive. CEO Savneet Singh on the earnings call flagged “tremendous confidence in our previously communicated goals of inflecting to adjusted EBITDA positive in Q3”. Everything appears to be tracking well for the profit inflection next quarter.

The market opportunity PAR is chasing down is very large. The company is winning new customers and gaining market share, but it is also charging existing customers more via like-for-like price increases, as well as expanding ARPU via cross-selling. PAR’s ARPU increased by 14% year-over-year in the quarter, with the company citing higher value deals, API monetization, upsell, price increases, and PAR Payment Services going live.