PAR Technology Corporation (PAR) Earnings

Management highlights

### Overall Growth Strategy - Executing against a three-pronged growth strategy: extend competitive platform advantages in core markets, reinvest in product efficacy via AI functionality, and aggressively expand total addressable market (TAM) leveraging existing platform advantages. - Ended Q2 with ~$338 million in Annual Recurring Revenue (ARR), representing 17% year-over-year growth and 12.3% organic growth, with expected acceleration in the second half of FY2026. - Generated $14.3 million in adjusted EBITDA, up 158% year-over-year and up $5.3 million sequentially from Q1 FY2026; normalized adjusted EBITDA excluding a one-time hardware project was $13 million, above the prior guidance range of $9.5 to $11.5 million. ### Product and Operational Highlights - **Platform & Multiprodcut Strategy**: Near 100% multiproduct attachment on new Q2 engagements, with average platform deal terms roughly double that of point solutions, and three-year blended ARPU CAGR of 8% across core products. LTV:CAC ratio for platform deals is more than double that of point solution deals. - **AI & PAR Intelligence**: Grew PAR Intelligence live user base to ~20,000 sites at quarter-end, with another 20,000 sites scheduled to go live in Q3, keeping the company on track to hit its full-year 2026 target of 50,000 live sites. AI leverages existing connected platform data across POS, inventory, labor, and guest systems to deliver actionable, real-time operational optimization that standalone AI solutions cannot replicate. 2026 is focused on adoption and value demonstration, with 2027 expected to be the revenue inflection point for AI. - **Recent Bridge Acquisition**: Closed the Bridge acquisition in late March 2026, and has already added more than $1.3 million in new committed ARR from two signed customers (including one existing PAR restaurant customer), with contracts extending through 2029. Bridge is a core component of PAR's long-term AI data foundation. - **Operational Efficiency & Cost Structure**: Overhauled the company's cost structure via restructuring completed earlier in 2026, delivering a structural step-down in operating expense run rate. 100% of full-time employees use internal AI tooling, generating an estimated $14.9 million in annual time savings across sales, support, product, engineering, and finance functions. Non-GAAP operating expenses as a percentage of total revenue improved 1000 basis points year-over-year to 38% in Q2. - **TAM Expansion**: Greenlit new TAM expansion initiatives, including launching an AI-native kitchen display system and AI-powered drive-through audio technology for restaurants, and expanding forecourt/backcourt system orchestration offerings for retail.

Guidance

- Management raised full year 2026 guidance after Q2 results exceeded the high end of prior guidance ranges: - Total full year 2026 revenue is now guided to $516 to $523 million, upwardly revised from the prior range of $500 to $515 million. - Full year 2026 adjusted EBITDA is now guided to $50 to $53 million, upwardly revised from the prior range of $44 to $47 million. - Q3 2026 guidance calls for total revenue of $128 to $132 million and adjusted EBITDA of $13.5 to $14.5 million. - ARR growth is expected to meaningfully accelerate in the second half of 2026, with total incremental second half ARR expected to exceed the 2025 second half level, driving full year organic ARR growth higher than the 12.3% recorded in Q2. The growth phasing matches the 2025 pattern, with larger share of full year ARR growth realized in the second half. - Hardware revenue is expected to normalize after a record Q2 driven by elevated tier one refresh activity, with hardware margins expected to stabilize in the low 20% range as pricing actions offset component cost pressures. - Professional service margins are expected to return to the mid-to-upper 20% range going forward after Q2 was impacted by timing of hardware-related service contracts. - Operating expenses are expected to stay relatively flat with only modest growth in the second half, as operational efficiency gains offset reinvestment in high-return AI and platform opportunities.

Segment performance

PAR Technology reports three revenue segments for Q2 FY2026: 1. **Subscription Service Revenue**: $83 million, up 16% year-over-year, representing 63% of total company revenue. GAAP subscription margin was 55.2%, while non-GAAP subscription margin was 65.1%. 2. **Hardware Revenue**: $35 million, up 31% year-over-year, representing 26% of total company revenue. Hardware margin was 20% for the quarter. 3. **Professional Service Revenue**: $15 million, up 10% year-over-year, representing 11% of total company revenue. Professional service margin was 23% for the quarter. By vertical segment: - **Restaurant Vertical**: Delivered strong results, with near 100% multiproduct attachment on new Q2 engagements. Burger King POS activations remain ahead of plan, Papa John's platform development milestones are complete and implementation will launch later this year. ParOps had its strongest ever quarter with nearly 700 location activations, and Par ordering recorded a >50% win rate, its highest of any product line. - **Retail Vertical**: Continued strong performance, with PAR Intelligence footprint expanding to ~17,000 retail sites this quarter, surpassing initial adoption targets. Full agentic AI rollout to all retail R&D developers was completed to boost engineering productivity.

Risks & headwinds

No explicit material new risks or operational failures were discussed on the call. Management noted that forward-looking statements are subject to general risks and uncertainties that could cause actual results to differ materially from projections, and referenced additional risk factor disclosure in recent SEC filings. Key known uncertainties include unproven commercial adoption and monetization of new AI capabilities, and supply chain/tariff pressures that continue to impact hardware margins.

Analyst Q&A

• Q: With the second half ARR ramp already largely tied to signed deals, how has deal visibility changed since last quarter? What competitive position does PAR Intelligence hold relative to peers?

  A: Visibility for full year ARR has increased since last quarter across all business segments, supporting management's confidence in the second half growth ramp. PAR Intelligence rollouts are proceeding faster than expected, and PAR's integrated end-to-end platform gives it a unique competitive advantage, as AI value requires cross-operational data that few competitors can offer. No major competitors have yet meaningfully scaled comparable AI platform offerings, and 2027 will be the focus for full commercialization.

• Q: How will PAR Intelligence be commercialized, and what should investors expect for ARR growth timing in the second half? Is there upside to guidance if execution stays strong?

  A: PAR Intelligence will almost certainly be commercialized as a subscription add-on product, primarily for back office and loyalty offerings where customer demand and ROI are clearest. 2026 is being used to test pricing and value fit before full rollout. Second half ARR growth will accelerate steadily through Q3 and Q4, and will exceed 2025's strong second half performance. If current execution pace continues, there is potential for upside to the new guidance range.

• Q: After PAR stopped disaggregating ARR and site counts between legacy segments to reflect growing multi-product bundling, what metrics should investors use to track go-to-market health?

  A: Investors should track overall ARR growth (which reflects multi-product expansion) and average ARPU (which tracks attachment rate growth). Consolidated reporting eliminates double-counting of sites that appear in multiple legacy segments, giving a clearer view of available cross-sell white space in the existing customer base, which is very large.

• Q: What is the size of the existing base cross-sell opportunity, what products does PAR typically lead with, and how does PAR drive PAR Intelligence adoption?

  A: The average existing customer currently uses ~2 PAR products, up from 1.5 products a few years ago, leaving a 2x to 3x incremental cross-sell opportunity within the current core customer base. PAR typically leads with point-of-sale or loyalty products to "plant the flag" with new customers, then upsells the rest of the suite. A dedicated customer success team engages with early PAR Intelligence users, tracks usage patterns, and iterates the product based on customer feedback to maximize value before full commercialization.