PAR 9.26.25

That's a really good general description. Over the last four or five years, since the CEO, Savneet Singh, took over, they've gone from a single software product POS solution, to a much broader platform. This includes everything from Punchh, a loyalty app many large customers use, to what they originally called Data Central, now PAR Ops, which is more back-office software. They've tacked on some other acquisitions to beef that up and expanded into convenience stores. They also bought Task, which is their international play, to take some of their larger customers on an international journey and sign up additional large customers. So, they have a lot of different growth vectors, much of it from acquisitions. They've also added a payments platform.

If I look at the stock now, it has dropped from the low 80s fairly recently, even at the beginning of the year, to under 40, a 50% drawdown. Even using relatively conservative growth assumptions for 2026, you have a stock around 5 times ARR, 4 times sales, and around 7 times gross profit. To level set, the best comp we have, in my opinion, is Agilysys, which is growing at roughly the same rate as PAR, maybe a little lower, if you look at its total recurring revenue growth. Agilysys is trading at 14 times gross profit, so double the gross profit multiple.

As an added data point, Olo, which I view as more of a point solution and not a platform, and hence growing more slowly, not as disruptible, and with a pretty penetrated customer base, was bought out by Thoma Bravo recently for about 7.5 times 2026 consensus gross profit, maybe a little under that, at 7.3. So, PAR is now cheaper than that. To me, with the stock at 40, it's very close to a bear case outcome unless the market just implodes further and these stocks radically derate. You have to think that because PAR wanted to buy Olo, Thoma Bravo would hence be interested in PAR for the same reasons that PAR was interested in Olo, and that there are massive cost synergies. I would have to believe that Thoma Bravo would pay at least the multiple they paid for Olo on a gross profit basis. That's kind of how I think Thoma Bravo thinks about these acquisitions.

So, that's the general point, fleshing out some of the particulars Analyst 2 was just bringing up. I do think the stock has been weak for a few different reasons. There have certainly been discussions of a larger holder potentially selling some of his stake. General restaurant malaise has hurt the business. You look at Toast, which has gone from low 50s to low 40s, even maybe under 40. QSR in general has been struggling, and it seems for the first time to have impacted PAR a little bit in delaying some of their POS rollouts.

The other thing that has hurt the stock recently is Savneet went to Goldman Sachs recently, I think two weeks ago now. After they had a really tough Q2 because of some of those delays, he was not being quite as upbeat and aggressive as he normally would. So, people were taking that to mean that maybe Q3 and Q4 are also at risk, and then you maybe add some tax loss selling as well.

I'd be interested in how you're thinking about it. I certainly have my own numbers and thoughts, but I'd love to hear your thoughts.

What was the first one?

For those who don't know, RBI is a restaurant group with four brands, including Burger King, Popeyes, and Firehouse Subs. It seems fairly logical that, since Burger King is going well—by all accounts from our conversations and feedback from management—PAR would be in the driver's seat to win Tim Hortons. I heard that Savneet was the only non-Burger King person to speak at a recent Burger King event, so I think that relationship is going quite well. You just don't know; politics can get into this, and they only want a piece of Popeyes, allegedly, and part of it is going with Oracle. So, you don't really know, but I think that one would be fairly likely, and by all accounts, is in the RFP process.

I've also heard Chipotle. These are large customers that they publicly stated are not part of the stated $100 million-plus pipeline that they currently have. So, they have $100 million of ARR in their pipeline, plus $20 million plus of POS contracted revenue that hasn't been rolled out, plus these mega customers. If you believe they're not just completely making some of this stuff up, there is a pretty large, massive, and growing opportunity that they don't need to win all of for the stock to do pretty well, in my opinion.

The way I look at it, going back to where the current valuation is, with the stock under $40 and trading at 5 times ARR and 7 times gross profit, I certainly think about the upside and the bull case, which includes McDonald's and some of these other large deals. But on the downside case, it's not that hard for me to put numbers together where they're still growing in the 15% range, adding pretty high incremental EBITDA margins. To me, this current valuation for an enterprise-level, very low-churn vertical software play is very low. The market is certainly not pricing in any of these large wins but may even not be pricing in just a continuation of mid-teens growth.

The one other thing to bring up, and I think this is now public on a couple of different transcripts of people from Inspire Brands who have suggested this, is that PAR, about six to nine months ago, was basically on track to winning all of Inspire Brands, which would include Sonic, Buffalo Wild Wings, Dunkin' Donuts, and Jimmy John's. From my understanding of these people on these expert call networks, the macro got so bad for QSR that they basically had to put that on hold. So, Buffalo Wild Wings re-upped with NCR.

I don't think that if you want to continue to think about what the longer-term upside for the name is, those things have just completely gone away. I think the idea is that Inspire Brands, with all these restaurant brands, will ultimately want to go public. It's a horrible environment to go public, so they delayed it, and they want to consolidate ultimately over the next four to five years around one POS. PAR would still be in the driver's seat for that.

Right. So, if they're ready, they could break with NCR and go right into Buffalo Wild Wings. I don't think NCR has discussed a four-year contract with Buffalo Wild Wings. That's slightly misleading in that, from what we understand, they're – is that what you’re talking about?

Even if they don't win all these big deals, I'm just trying to characterize the downside for people because some look at it and say, "Oh, it's still kind of expensive on an EBITDA basis." But by my calculations, they get to the end of the year, and they're at roughly $315 million of ARR. To get to 15% growth, you'd add about $47 million. There's probably roughly $8 million of Burger King left. If you look at some of the recent acquisitions like Stuzo, Task, and Punchh, Stuzo is growing in the 20% range and is going to be roughly a $50 million ARR business. They talked publicly about how they've held back multiple millions of Task implementation that they're planning to roll out in 2026. They had to delay them because they were working on these large opportunities. Punchh, they spent the first half of the year doing integration with their PAR Ops back-office business. So, I think Punchh probably exits the year around $23 million to $24 million. But if you start adding up reasonably reasonable growth rates for those three businesses and add the remainder of Burger King, you're already more than half, well, more than half of what you need to just get to that 15% growth rate.

So, if people are interested in the company, I'd encourage them to go through that bridge a little bit and think about what their underlying core POS and Punchh business would actually have to grow just to get to that baseline 15% rate. Because I think maybe people are starting to extrapolate that if they don't win these deals, growth will go to around 10% or lower. I mean, yes, you could look at Q2, which was just abysmal. I guess until they actually post Q3 and Q4 and show significantly better results that can't be erased, but given their last 12 months track record, taking Q2 aside for a second, adding $10 million to $12 million net new ARR a quarter isn't completely unreasonable, even if you don't have a mega deal. Granted, maybe you're getting some of the remnants of Burger King in 2026, but I still think 15% is still a reasonable baseline, even without big deals, that should protect the stock.

I do think if they don't win these big deals, management and some shareholders would then kind of say, "Well, maybe this company shouldn't be public," and maybe the public investors would be okay with a mid-50s outcome if it seems like they're not about to inflect imminently with a few major customers. I do think there are acquirers out there, Thoma Bravo being one, but also maybe some strategics as well, who would potentially be interested in owning PAR.

That's kind of a low-end POS.

DoorDash would probably love to just wipe out Olo.

If you were to try to get sold, you could have an interesting competing dynamic because PAR has its own Olo product.

Thoma Bravo raised $34 billion, and that's before adding leverage. I'm sure they're putting on a lot of their deals.

Yeah, and it's certainly speculation, but it's not like the company's at $80 now. We're talking about, what is the EV today? Like 1.8, 1.9, something like that. And again, now under the gross profit multiple of Olo. I think a lot of investors do see the potential upside, but they're struggling with how to think about it. At least some I've talked to have struggled to think, "Well, why can't it just go to 25 or something like that?"