Corner of Berkshire & Fairfax Message Board

General Category => Investment Ideas => Topic started by: whatdadil9 on June 27, 2018, 10:01:32 AM

Title: PAR - PAR Technology Corporation
Post by: whatdadil9 on June 27, 2018, 10:01:32 AM
Anyone looked at this?

ADW just filed in it.

They had some interesting commentary on the last qtrs. conference call....seems very assymetric.
Title: Re: PAR
Post by: KJP on June 27, 2018, 12:03:19 PM
Yes.  As usual, I sold too soon, largely because of concerns about management.  There's a VIC writeup about it from 2016 that hits the highlights.   
Title: Re: PAR
Post by: Foreign Tuffett on June 27, 2018, 12:35:21 PM
Anyone looked at this?

ADW just filed in it.

They had some interesting commentary on the last qtrs. conference call....seems very assymetric.

Can you elaborate on what seems "assymetric" here? Also, is the 2nd "s" an understated commentary on management's abilities (or lack thereof)?
Title: Re: PAR
Post by: wisowis on June 27, 2018, 01:54:43 PM
Voss Capital is a big investor in this (owns ~7% of the company). They do value investing in the software space - see Southpaw's posts on the board.

Here is the long thesis that they posted on their twitter last year - "PAR: A Framework for $30". Attached.
Title: Re: PAR
Post by: whatdadil9 on June 27, 2018, 02:02:16 PM
I think the VOSS analysis applies roughly as it relates to unit count ( perhaps is conservative).

I think what they miss that ADW points out on the call is payments. Toast their closest competitor has a 100 pct capture rate on payments. Given Par is tilted towards enterprise its unlikely they get a 100 pct capture rate but 50 pct is not unreasonable.

If PAR has 30k boxes in 2020 at 1.5mm of AUV thats 45bn of transaction value. Say they get 22.5bn of it and make 50 bps NET that's almost 120 mm of EBITDA in payments....Put a 10x multiple on that and its 1.2bn alone.

SAAS at 30k units is 60m assuming no additional modules or ARPU growth... 60mm of SAAS at 10x is worth 600mm. Public market multiples for those growth rates prob render higher.

Govt is probably worth 100 ( alot of corp allocation making results look lower than are)

Hardware has a good amount of WC and prob could be liscenced to Asia. I think we could take 75mm out of that biz. You will also sitll have the liscencing, support and maintenance revenue. Not sure what that is woth.

Surecheck prob worth 20

RE prob worth 20-30.

If you add up all the legacy businesses you get to the company's existing market cap --- ascribing zero value to brink / payments which are enormous...

Title: Re: PAR
Post by: KJP on August 12, 2018, 09:06:39 AM
I think the VOSS analysis applies roughly as it relates to unit count ( perhaps is conservative).

I think what they miss that ADW points out on the call is payments. Toast their closest competitor has a 100 pct capture rate on payments. Given Par is tilted towards enterprise its unlikely they get a 100 pct capture rate but 50 pct is not unreasonable.

If PAR has 30k boxes in 2020 at 1.5mm of AUV thats 45bn of transaction value. Say they get 22.5bn of it and make 50 bps NET that's almost 120 mm of EBITDA in payments....Put a 10x multiple on that and its 1.2bn alone.

SAAS at 30k units is 60m assuming no additional modules or ARPU growth... 60mm of SAAS at 10x is worth 600mm. Public market multiples for those growth rates prob render higher.

Govt is probably worth 100 ( alot of corp allocation making results look lower than are)

Hardware has a good amount of WC and prob could be liscenced to Asia. I think we could take 75mm out of that biz. You will also sitll have the liscencing, support and maintenance revenue. Not sure what that is woth.

Surecheck prob worth 20

RE prob worth 20-30.

If you add up all the legacy businesses you get to the company's existing market cap --- ascribing zero value to brink / payments which are enormous...

Adam Wyden drilled home many of these points to management in the latest call.  It's not clear they understand his point about how raising capital at the Brink level may be the best way to fund the business or, more broadly, that they're in a land grab situation so more capital now could be very valuable long term. 

Transcript here:  https://seekingalpha.com/article/4198254-par-technology-corporation-par-ceo-donald-foley-q2-2018-results-earnings-call-transcript?part=single
Title: Re: PAR
Post by: wisowis on August 12, 2018, 05:31:10 PM
I think the VOSS analysis applies roughly as it relates to unit count ( perhaps is conservative).

I think what they miss that ADW points out on the call is payments. Toast their closest competitor has a 100 pct capture rate on payments. Given Par is tilted towards enterprise its unlikely they get a 100 pct capture rate but 50 pct is not unreasonable.

If PAR has 30k boxes in 2020 at 1.5mm of AUV thats 45bn of transaction value. Say they get 22.5bn of it and make 50 bps NET that's almost 120 mm of EBITDA in payments....Put a 10x multiple on that and its 1.2bn alone.

SAAS at 30k units is 60m assuming no additional modules or ARPU growth... 60mm of SAAS at 10x is worth 600mm. Public market multiples for those growth rates prob render higher.

Govt is probably worth 100 ( alot of corp allocation making results look lower than are)

Hardware has a good amount of WC and prob could be liscenced to Asia. I think we could take 75mm out of that biz. You will also sitll have the liscencing, support and maintenance revenue. Not sure what that is woth.

Surecheck prob worth 20

RE prob worth 20-30.

If you add up all the legacy businesses you get to the company's existing market cap --- ascribing zero value to brink / payments which are enormous...

Adam Wyden drilled home many of these points to management in the latest call.  It's not clear they understand his point about how raising capital at the Brink level may be the best way to fund the business or, more broadly, that they're in a land grab situation so more capital now could be very valuable long term. 

Transcript here:  https://seekingalpha.com/article/4198254-par-technology-corporation-par-ceo-donald-foley-q2-2018-results-earnings-call-transcript?part=single

Just listened to the call, and wow, Adam really spent a lot of time and effort in driving that point home. I am worried that his understanding and vision of the company sounded more articulate than management's. Several times, management just responded with "we hear ya".

Title: Re: PAR
Post by: walkie518 on August 13, 2018, 11:13:04 AM
I think the VOSS analysis applies roughly as it relates to unit count ( perhaps is conservative).

I think what they miss that ADW points out on the call is payments. Toast their closest competitor has a 100 pct capture rate on payments. Given Par is tilted towards enterprise its unlikely they get a 100 pct capture rate but 50 pct is not unreasonable.

If PAR has 30k boxes in 2020 at 1.5mm of AUV thats 45bn of transaction value. Say they get 22.5bn of it and make 50 bps NET that's almost 120 mm of EBITDA in payments....Put a 10x multiple on that and its 1.2bn alone.

SAAS at 30k units is 60m assuming no additional modules or ARPU growth... 60mm of SAAS at 10x is worth 600mm. Public market multiples for those growth rates prob render higher.

Govt is probably worth 100 ( alot of corp allocation making results look lower than are)

Hardware has a good amount of WC and prob could be liscenced to Asia. I think we could take 75mm out of that biz. You will also sitll have the liscencing, support and maintenance revenue. Not sure what that is woth.

Surecheck prob worth 20

RE prob worth 20-30.

If you add up all the legacy businesses you get to the company's existing market cap --- ascribing zero value to brink / payments which are enormous...

Adam Wyden drilled home many of these points to management in the latest call.  It's not clear they understand his point about how raising capital at the Brink level may be the best way to fund the business or, more broadly, that they're in a land grab situation so more capital now could be very valuable long term. 

Transcript here:  https://seekingalpha.com/article/4198254-par-technology-corporation-par-ceo-donald-foley-q2-2018-results-earnings-call-transcript?part=single

Just listened to the call, and wow, Adam really spent a lot of time and effort in driving that point home. I am worried that his understanding and vision of the company sounded more articulate than management's. Several times, management just responded with "we hear ya".

they seemed to do that on the last call as well

ADW appears to have filed a 13D
https://www.sec.gov/Archives/edgar/data/708821/000138713118003839/0001387131-18-003839-index.htm
Title: Re: PAR - PAR Technology Corporation
Post by: wisowis on October 21, 2018, 01:38:29 PM
ADW and Voss Capital have now both publicly called for the company to be sold. Combined they own ~18% of the company (?)

ADW letter: https://www.prnewswire.com/news-releases/adw-capital-seeks-strategic-alternatives-process-to-pursue-immediate-sale-of-par-technology-300729472.html
Voss letter: https://mma.prnewswire.com/media/769201/Voss_ADW_Letter.pdf

The ADW letter is particularly scathing.
Title: Re: PAR - PAR Technology Corporation
Post by: walkie518 on October 22, 2018, 10:23:22 AM
ADW and Voss Capital have now both publicly called for the company to be sold. Combined they own ~18% of the company (?)

ADW letter: https://www.prnewswire.com/news-releases/adw-capital-seeks-strategic-alternatives-process-to-pursue-immediate-sale-of-par-technology-300729472.html
Voss letter: https://mma.prnewswire.com/media/769201/Voss_ADW_Letter.pdf

The ADW letter is particularly scathing.
To be fair, I'm not sure why mgmt is so hesitant to the idea...every conf call they say, "we understand," but do not seem to budge in any direction. 

Splitting the businesses apart makes a lot of sense considering where public markets are trading...though I don't understand why the market is so negative on the stock when there is so much underlying value and there is attention...maybe ADW and Voss are simply not well known enough
Title: Re: PAR - PAR Technology Corporation
Post by: DamienC on October 29, 2018, 07:22:07 AM
https://www.sec.gov/Archives/edgar/data/708821/000114036118041403/s002470x1_s3.htm

Some people can't accept being wrong! Why can't they just accept Adam's proposals?
Title: Re: PAR - PAR Technology Corporation
Post by: walkie518 on October 29, 2018, 07:55:09 AM
https://www.sec.gov/Archives/edgar/data/708821/000114036118041403/s002470x1_s3.htm

Some people can't accept being wrong! Why can't they just accept Adam's proposals?
just astounding... are they doing this on purpose?  what's the underlying value of this transaction? 

maybe it's all preferred? 
Title: Re: PAR - PAR Technology Corporation
Post by: wisowis on October 29, 2018, 04:42:56 PM
Hey all -- sorry, I am still wet behind the ears, could someone confirm that this is normal language? Or are they deliberately putting in measures to screw over shareholders?

Quote
Anti-Takeover Effects of Delaware Law, Our Certificate of Incorporation, as Amended and Our Bylaws, as Amended

Certain provisions of Delaware law and our Certificate of Incorporation and Bylaws could make the acquisition of the Company more difficult.  These provisions of the General Corporation Law of the State of Delaware (the “DGCL”) could prohibit or delay mergers or other takeover or change in control attempts and, accordingly, may discourage attempts to acquire us.  These provisions, summarized below, are expected to discourage certain types of coercive takeover practices and inadequate takeover bids and are designed to encourage persons seeking to acquire control of us to negotiate with our board of directors.

Stockholder meetings.  Under our Certificate of Incorporation, only the board of directors, or the chairman of the board of directors or the president pursuant to a resolution approved by a majority of the then authorized number of directors of the Company may call special meetings of stockholders.

Requirements for advance notification of stockholder nominations and proposals.  Our Bylaws establish advance notice procedures with respect to stockholder proposals and the nomination of candidates for election as directors.

Action by written consent.  Pursuant to our Certificate of Incorporation, any action required or permitted to be taken by the stockholders of the Company must be effected at an annual or special meeting of stockholders of the Company, and no action required to be taken or that may be taken at any annual or special meeting of stockholders of the Company may be taken without a meeting except by the unanimous written consent of all stockholders entitled to vote on such action.

Election and removal of directors.  Nominations for the election of directors may be made by the board of directors or a committee appointed by the board of directors, or by any stockholder entitled to vote generally in the election of directors who complies with the procedures set forth in our Bylaws.  All directors (other than those who may be elected by the holders of any then outstanding preferred stock, voting as a separate class) shall be elected for a one-year term expiring at the next annual meeting of stockholders.  Each director shall serve until his or her successor is duly elected and qualified or until his or her death, resignation, or removal. The board of directors has the exclusive right to increase or decrease the size of the board, provided such number will not be less than a minimum of three and more than a maximum of fifteen.Vacancies and newly created directorships resulting from any increase in the authorized number of directors, and any vacancies on the board of directors resulting from death, resignation, disqualification, removal or other cause shall be filled by the affirmative vote of a majority of the remaining directors then in office, even if less than a quorum of the board of directors, or by a sole remaining director, and the directors so chosen shall hold office, subject to the limitations set forth in the Bylaws, until the next annual meeting and until their respective successors are elected and qualified.  Subject to the rights of the holders of any then outstanding preferred stock any director may be removed from office, with or without cause, by the affirmative vote of the holders of a majority of the voting power of all shares of the Company entitled to vote generally in the election of directors, voting together as a single class. This system of electing directors may discourage a third‑party from making a tender offer or otherwise attempting to obtain control of us, because it generally makes replacing a majority of directors more difficult for stockholders.

Undesignated preferred stock.  The authorization of undesignated preferred stock makes it possible for the board of directors, without stockholder approval, to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to obtain control of us.  These and other provisions may have the effect of deterring hostile takeovers or delaying changes in control or management of the Company.

Amendment of provisions in the Certificate of Incorporation. The affirmative vote of the holders of at least 66 2/3% of all of the shares of the Company entitled to vote generally in the election of directors, voting together as a single class, is required to amend the provisions of our Certificate of Incorporation relating to calling special meetings of stockholders, stockholder actions by written consent, the number and election of directors, and director liability.

Title: Re: PAR - PAR Technology Corporation
Post by: walkie518 on October 30, 2018, 06:54:40 AM
Hey all -- sorry, I am still wet behind the ears, could someone confirm that this is normal language? Or are they deliberately putting in measures to screw over shareholders?

Quote
Anti-Takeover Effects of Delaware Law, Our Certificate of Incorporation, as Amended and Our Bylaws, as Amended

Certain provisions of Delaware law and our Certificate of Incorporation and Bylaws could make the acquisition of the Company more difficult.  These provisions of the General Corporation Law of the State of Delaware (the “DGCL”) could prohibit or delay mergers or other takeover or change in control attempts and, accordingly, may discourage attempts to acquire us.  These provisions, summarized below, are expected to discourage certain types of coercive takeover practices and inadequate takeover bids and are designed to encourage persons seeking to acquire control of us to negotiate with our board of directors.

Stockholder meetings.  Under our Certificate of Incorporation, only the board of directors, or the chairman of the board of directors or the president pursuant to a resolution approved by a majority of the then authorized number of directors of the Company may call special meetings of stockholders.

Requirements for advance notification of stockholder nominations and proposals.  Our Bylaws establish advance notice procedures with respect to stockholder proposals and the nomination of candidates for election as directors.

Action by written consent.  Pursuant to our Certificate of Incorporation, any action required or permitted to be taken by the stockholders of the Company must be effected at an annual or special meeting of stockholders of the Company, and no action required to be taken or that may be taken at any annual or special meeting of stockholders of the Company may be taken without a meeting except by the unanimous written consent of all stockholders entitled to vote on such action.

Election and removal of directors.  Nominations for the election of directors may be made by the board of directors or a committee appointed by the board of directors, or by any stockholder entitled to vote generally in the election of directors who complies with the procedures set forth in our Bylaws.  All directors (other than those who may be elected by the holders of any then outstanding preferred stock, voting as a separate class) shall be elected for a one-year term expiring at the next annual meeting of stockholders.  Each director shall serve until his or her successor is duly elected and qualified or until his or her death, resignation, or removal. The board of directors has the exclusive right to increase or decrease the size of the board, provided such number will not be less than a minimum of three and more than a maximum of fifteen.Vacancies and newly created directorships resulting from any increase in the authorized number of directors, and any vacancies on the board of directors resulting from death, resignation, disqualification, removal or other cause shall be filled by the affirmative vote of a majority of the remaining directors then in office, even if less than a quorum of the board of directors, or by a sole remaining director, and the directors so chosen shall hold office, subject to the limitations set forth in the Bylaws, until the next annual meeting and until their respective successors are elected and qualified.  Subject to the rights of the holders of any then outstanding preferred stock any director may be removed from office, with or without cause, by the affirmative vote of the holders of a majority of the voting power of all shares of the Company entitled to vote generally in the election of directors, voting together as a single class. This system of electing directors may discourage a third‑party from making a tender offer or otherwise attempting to obtain control of us, because it generally makes replacing a majority of directors more difficult for stockholders.

Undesignated preferred stock.  The authorization of undesignated preferred stock makes it possible for the board of directors, without stockholder approval, to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to obtain control of us.  These and other provisions may have the effect of deterring hostile takeovers or delaying changes in control or management of the Company.

Amendment of provisions in the Certificate of Incorporation. The affirmative vote of the holders of at least 66 2/3% of all of the shares of the Company entitled to vote generally in the election of directors, voting together as a single class, is required to amend the provisions of our Certificate of Incorporation relating to calling special meetings of stockholders, stockholder actions by written consent, the number and election of directors, and director liability.

Mgmt doesn't want to get fired...likely it gets ugly
Title: Re: PAR - PAR Technology Corporation
Post by: wisowis on October 31, 2018, 03:23:51 AM
ADW Capital has released a second letter to PAR management in response to their S-3: https://www.prnewswire.com/news-releases/adw-capital-seeks-immediate-sale-of-par-technology-300740825.html
Title: Re: PAR - PAR Technology Corporation
Post by: wisowis on December 06, 2018, 04:05:43 PM
Donald Foley stepping down as CEO, Savneet Singh named interim CEO: https://www.businesswire.com/news/home/20181206005901/en/

Great news for shareholders. I recall listening to Savneet Singh's interview on Patrick O’Shaughnessy's podcast: http://investorfieldguide.com/savneet/

Quote
PAR Technology Corporation (NYSE:PAR) (the “Company”) announced today that Savneet Singh, a member of the Company’s Board of Directors since April 2018, has been appointed Interim Chief Executive Officer (“CEO”) and President of the Company, effective December 4, 2018. The Company also announced that Dr. Donald H. Foley has stepped-down as CEO and President, and as a director of the Company. The Board’s Nominating and Corporate Governance Committee has initiated a search process to identify a permanent CEO and has retained a leading executive search firm to assist in its efforts.

Mr. Singh is a partner of CoVenture, LLC, a multi-asset manager with funds in venture capital, direct lending, and crypto currency. He has served as a partner of CoVenture since June 2018. From 2017 – 2018, Mr. Singh served as the managing partner of Tera-Holdings, Inc., a holding company of niche software businesses that he co-founded. In 2009, Mr. Singh co-founded GBI, LLC (f/k/a Gold Bullion International, LLC (GBI)), an electronic platform that allows investors to buy, trade and store physical precious metals. During his tenure at GBI, from 2009 – 2017, Mr. Singh served as GBI’s chief operating officer, its chief executive officer, and its president. In 2018, Mr. Singh joined the board of directors of Blockchain Power Trust (TSXV: BPWR.UN; TEP.DB); he also serves on the boards of directors of LottoGopher Holdings, LLC, Produce Pay, Inc. and EcoLogic Solutions, Inc.

On behalf of the Board, Cynthia Russo, Lead Independent Director, commented, “Don helped guide the Company through a period of significant transition and development. We thank Don for his service. Looking ahead, the search to identify a permanent CEO is well underway and we will work diligently to identify the best candidate to lead the Company and drive stockholder value. We are pleased to have an executive of Savneet’s caliber lead the Company during this interim period and expect his technology and business experience will ensure a smooth transition period.”

Mr. Singh commented, “I am looking forward to working closely with the Board and management team to move the Company forward during this transition period.”

Title: Re: PAR - PAR Technology Corporation
Post by: walkie518 on December 06, 2018, 04:13:01 PM
Donald Foley stepping down as CEO, Savneet Singh named interim CEO: https://www.businesswire.com/news/home/20181206005901/en/

Great news for shareholders. I recall listening to Savneet Singh's interview on Patrick O’Shaughnessy's podcast: http://investorfieldguide.com/savneet/

Quote
PAR Technology Corporation (NYSE:PAR) (the “Company”) announced today that Savneet Singh, a member of the Company’s Board of Directors since April 2018, has been appointed Interim Chief Executive Officer (“CEO”) and President of the Company, effective December 4, 2018. The Company also announced that Dr. Donald H. Foley has stepped-down as CEO and President, and as a director of the Company. The Board’s Nominating and Corporate Governance Committee has initiated a search process to identify a permanent CEO and has retained a leading executive search firm to assist in its efforts.

Mr. Singh is a partner of CoVenture, LLC, a multi-asset manager with funds in venture capital, direct lending, and crypto currency. He has served as a partner of CoVenture since June 2018. From 2017 – 2018, Mr. Singh served as the managing partner of Tera-Holdings, Inc., a holding company of niche software businesses that he co-founded. In 2009, Mr. Singh co-founded GBI, LLC (f/k/a Gold Bullion International, LLC (GBI)), an electronic platform that allows investors to buy, trade and store physical precious metals. During his tenure at GBI, from 2009 – 2017, Mr. Singh served as GBI’s chief operating officer, its chief executive officer, and its president. In 2018, Mr. Singh joined the board of directors of Blockchain Power Trust (TSXV: BPWR.UN; TEP.DB); he also serves on the boards of directors of LottoGopher Holdings, LLC, Produce Pay, Inc. and EcoLogic Solutions, Inc.

On behalf of the Board, Cynthia Russo, Lead Independent Director, commented, “Don helped guide the Company through a period of significant transition and development. We thank Don for his service. Looking ahead, the search to identify a permanent CEO is well underway and we will work diligently to identify the best candidate to lead the Company and drive stockholder value. We are pleased to have an executive of Savneet’s caliber lead the Company during this interim period and expect his technology and business experience will ensure a smooth transition period.”

Mr. Singh commented, “I am looking forward to working closely with the Board and management team to move the Company forward during this transition period.”
this is a fabulous development...

Title: Re: PAR - PAR Technology Corporation
Post by: peterHK on December 06, 2018, 05:21:06 PM
What can ADW really do? I've spoken with Adam and he's sharp, takes big positions, and is loud about them, but I've yet to see him actually affect any change anywhere, especially when dealing with a founder.

I find the whole thing odd. We have an activist saying that Brink is worth $2 billion in 2020 (3x the share price today), but that same activist wants to have the company sold today? Why would you do that? What PE firm looking for a bargain is going to give you say a 100% premium today to make this worthwhile?

We have another firm saying that shares are at least worth $30, but what PE firm is going to want to pay fair value for the assets? I'd see a buyout at $25 maybe, but that's 30% upside for me as a shareholder coupled to a company with no EBITDA, low gross margins, etc. Don't see how that's so asymmetric.

If it were me, I'd be asking for new management and a new board, and get some smart people on it who can build this business.
Title: Re: PAR - PAR Technology Corporation
Post by: walkie518 on December 07, 2018, 08:59:54 AM
What can ADW really do? I've spoken with Adam and he's sharp, takes big positions, and is loud about them, but I've yet to see him actually affect any change anywhere, especially when dealing with a founder.

I find the whole thing odd. We have an activist saying that Brink is worth $2 billion in 2020 (3x the share price today), but that same activist wants to have the company sold today? Why would you do that? What PE firm looking for a bargain is going to give you say a 100% premium today to make this worthwhile?

We have another firm saying that shares are at least worth $30, but what PE firm is going to want to pay fair value for the assets? I'd see a buyout at $25 maybe, but that's 30% upside for me as a shareholder coupled to a company with no EBITDA, low gross margins, etc. Don't see how that's so asymmetric.

If it were me, I'd be asking for new management and a new board, and get some smart people on it who can build this business.
you don't think Singh fits the bill?

or do you see his appointment as a means to effect that change? 
Title: Re: PAR - PAR Technology Corporation
Post by: peterHK on December 07, 2018, 11:36:37 AM
What can ADW really do? I've spoken with Adam and he's sharp, takes big positions, and is loud about them, but I've yet to see him actually affect any change anywhere, especially when dealing with a founder.

I find the whole thing odd. We have an activist saying that Brink is worth $2 billion in 2020 (3x the share price today), but that same activist wants to have the company sold today? Why would you do that? What PE firm looking for a bargain is going to give you say a 100% premium today to make this worthwhile?

We have another firm saying that shares are at least worth $30, but what PE firm is going to want to pay fair value for the assets? I'd see a buyout at $25 maybe, but that's 30% upside for me as a shareholder coupled to a company with no EBITDA, low gross margins, etc. Don't see how that's so asymmetric.

If it were me, I'd be asking for new management and a new board, and get some smart people on it who can build this business.
you don't think Singh fits the bill?

or do you see his appointment as a means to effect that change?

He is a temporary CEO.
Title: Re: PAR - PAR Technology Corporation
Post by: walkie518 on December 10, 2018, 07:00:45 AM
What can ADW really do? I've spoken with Adam and he's sharp, takes big positions, and is loud about them, but I've yet to see him actually affect any change anywhere, especially when dealing with a founder.

I find the whole thing odd. We have an activist saying that Brink is worth $2 billion in 2020 (3x the share price today), but that same activist wants to have the company sold today? Why would you do that? What PE firm looking for a bargain is going to give you say a 100% premium today to make this worthwhile?

We have another firm saying that shares are at least worth $30, but what PE firm is going to want to pay fair value for the assets? I'd see a buyout at $25 maybe, but that's 30% upside for me as a shareholder coupled to a company with no EBITDA, low gross margins, etc. Don't see how that's so asymmetric.

If it were me, I'd be asking for new management and a new board, and get some smart people on it who can build this business.
you don't think Singh fits the bill?

or do you see his appointment as a means to effect that change?

He is a temporary CEO.

I don't think that makes a difference?

Singh was on the board and has experience building.  Even if it's temporary, he will see through the first fund raise and finding his replacement. 
Title: Re: PAR - PAR Technology Corporation
Post by: wisowis on April 10, 2019, 06:19:55 PM
Market isn't happy they are offering $70 million in convertible notes: https://www.businesswire.com/news/home/20190410005919/en/PAR-Technology-Corporation-Announces-Pricing-70-Million/

I listened to their 2018 year-end conference call and thought it was good: https://edge.media-server.com/m6/p/8kidrzre

Savneet talks about capital allocation, incentives, etc. Andrew from ADW Capital asks some questions after noting "...this [conference call] is going a lot different [better] than the last one."
Title: Re: PAR - PAR Technology Corporation
Post by: tripleoptician on April 10, 2019, 09:38:05 PM
I bought more today

Been a holder of this company since Voss Capital wrote it up about 2 years ago.
I pared back on the holding once old management (Foley/Sammons) looked like they were going to underfund the Brink opportunity. They ducked out of a conference call having Q and A for having to deal with Wyden asking legitimate questions on their poor capital allocation decisions and not sourcing more capital to speed up the Brink transition.
 
Savneet not only had a good conference call, his background IS SAAS and optimizing capital allocation. His mindset appears quite focused on why Saas/sticky costumer products are one of the optimal businesses to run.
I think this convertible debt deal is a good move because it allows adequate capital to fund the transition to on-board big Tier 1 players onto Brink POS. There is no way to take on a huge # of franchises from a Tier 1 when your staffing for the transition is suboptimal and takes 2-3 years to process them.

Once a Tier 1 has picked Brink, they won’t be changing their POS again unless it is woefully underperforming. All signs point to Brink being an above average product with Tier 1 relationships from its legacy hardware business and operating on a PC/Windows infrastructure like all the entrenched Tier 1 ‘s will be on.

As a CSU long, I really appreciate someone like Savneet at the helm who has studied Leonard and appears thoughtful on capital allocation. This deal will prove fruitful in the long term.
Title: Re: PAR - PAR Technology Corporation
Post by: whistlerbumps on April 11, 2019, 11:39:09 AM
Agreed and bought more as well.  Converts almost always hammer the price in the ST due to convert buyers hedging.  This debt allows them to get out from the restrictive credit facility and gives them capital to more aggressively build Brink.  Signing more Tier 1s for Brink will add tremendous value and they were resource constrained previously so I believe this is a very good deal.
Title: Re: PAR - PAR Technology Corporation
Post by: whatdadil9 on April 11, 2019, 04:12:14 PM
4m shares traded in two days. Thats 4x the most ever traded in Company's history on super positive news.

On 8300 locations installed and 2k ARPU that's 17mm ARR. DQ is 6k units. Its our understanding that ARPU on DQ is like 280 a month and they are giving 5k subsidies to adopt brink. Coca cola is also giving 2,500 a year for 10 years.. Pretty wild. So 3400 per year ARPU x 6k units is 20.4m SaaS right there... I think realistically this thing can be 25k restaurants installed year end 2020 at 3k ARPU.. Upside to payments. Upside to M&A. Stock flat for 9months...80mm of capital and outsider CEO too good to be true...
Title: Re: PAR - PAR Technology Corporation
Post by: wisowis on April 27, 2019, 07:10:17 AM
New position for Greenhaven Road Capital, written up in their Q1 letter: https://static1.squarespace.com/static/5498841ce4b0311b8ddc012b/t/5cc366e74442bb0001c72482/1556309735923/Greenhaven+Letter+%282019+Q1%29.pdf
Title: Re: PAR - PAR Technology Corporation
Post by: lotsofguts on April 27, 2019, 12:10:45 PM
I haven't looked deeply into PAR but I think what's interesting about PAR is that it seems to be more focused on restaurant chains.

The problem with many restaurant POS systems is the churn rate which is naturally high as ~60% of restaurants fail within the first 3 years. By focusing on established chains, I'd expect the churn rate to be much lower (higher LTV) but it comes at the expense of a much longer sales cycle.
Title: Re: PAR - PAR Technology Corporation
Post by: cameronfen on April 27, 2019, 12:52:29 PM
One question i had regarding chains is will they use Brinks payment platform?  My guess is large chains have robust payment platforms already compared to small chains so using the conversion rate for a company like Toast and applying to brink may be highly overestimating.  I havent researched this so I'm curious if anyone else has any information. 
Title: Re: PAR - PAR Technology Corporation
Post by: walkie518 on April 29, 2019, 05:02:50 PM
One question i had regarding chains is will they use Brinks payment platform?  My guess is large chains have robust payment platforms already compared to small chains so using the conversion rate for a company like Toast and applying to brink may be highly overestimating.  I havent researched this so I'm curious if anyone else has any information.
Right, but GRUB can provide that too and delivery services...why not sign up for Caviar, Doordash, or Ubereats?

Food is fragmented outside of the chains and this business has growing competition, but the market is growing rapidly and PAR has been installing an ever-increasing number of kiosks...
Title: Re: PAR - PAR Technology Corporation
Post by: cameronfen on April 29, 2019, 05:51:12 PM
One question i had regarding chains is will they use Brinks payment platform?  My guess is large chains have robust payment platforms already compared to small chains so using the conversion rate for a company like Toast and applying to brink may be highly overestimating.  I havent researched this so I'm curious if anyone else has any information.
Right, but GRUB can provide that too and delivery services...why not sign up for Caviar, Doordash, or Ubereats?

Food is fragmented outside of the chains and this business has growing competition, but the market is growing rapidly and PAR has been installing an ever-increasing number of kiosks...

I'm not sure im following.  Part of the bull thesis is proving a PoS payments service for restaraunts through Brink for Brink restaruants.  This is where the bulk of the valuation comes from in Brink's case correct?  My point is its easier for Toast to convert their PoS customers to payments because their target restauant is an independent operator with likely insufficient playment platform.  However it's likely that large chains will already have a payments platform they are confortable with and will not switch to Brink payements unless their payment service disrupts the payment industry in the same way their cloud PoS was an advancement over earlier hardware based PoS software (which seems unlikely as cloud/software based payment providers like square exist already). 
Title: Re: PAR - PAR Technology Corporation
Post by: walkie518 on May 01, 2019, 02:04:38 PM
One question i had regarding chains is will they use Brinks payment platform?  My guess is large chains have robust payment platforms already compared to small chains so using the conversion rate for a company like Toast and applying to brink may be highly overestimating.  I havent researched this so I'm curious if anyone else has any information.
Right, but GRUB can provide that too and delivery services...why not sign up for Caviar, Doordash, or Ubereats?

Food is fragmented outside of the chains and this business has growing competition, but the market is growing rapidly and PAR has been installing an ever-increasing number of kiosks...

I'm not sure im following.  Part of the bull thesis is proving a PoS payments service for restaraunts through Brink for Brink restaruants.  This is where the bulk of the valuation comes from in Brink's case correct?  My point is its easier for Toast to convert their PoS customers to payments because their target restauant is an independent operator with likely insufficient playment platform.  However it's likely that large chains will already have a payments platform they are confortable with and will not switch to Brink payements unless their payment service disrupts the payment industry in the same way their cloud PoS was an advancement over earlier hardware based PoS software (which seems unlikely as cloud/software based payment providers like square exist already).

I think the investment thesis is that Par needs to raise capital to build out the business but once it does the numbers look great. 

It appears that Singh is trying to address cash flow problems and shed light on the underlying value of the businesses.

Getting the boxes installed is where there has been a backlog to my understanding.  Adding functionality unlocks additional value and should be easier once the boxes are where they need to be or old boxes get converted.

My point on GRUB is that it's a competitor offering a delivery network or allowing restaurants to do it themselves but use its delivery platform.  This doesn't mean that restaurants won't do both but it's something to keep in mind when reviewing the space?

Probably fair to say that the Tier-1 customers don't have two boxes at each location (Toast and Par), but the restaurant business is highly fragmented and there are plenty of locations to install new boxes while enterprise is certainly best bang for the buck?
Title: Re: PAR - PAR Technology Corporation
Post by: cameronfen on May 01, 2019, 03:08:17 PM
^^ I think we are talking about different things. When I say PoS I mean Brink's current offering, namely scheduling tables putting in orders etc.  I did the modeling a while ago and even if you are very optimistic about PoS, based on ARPU numbers and reasonable margins, this does not justify PARs valuation (after adding the other parts as well).  The reason PARs valuation is so high, is because they are going to roll out a payments platform (ie processing credit cards and the like, like square).  Am I correct in reading this from there presentations?  Payments is much more lucrative than PoS mostly because Brink revenue per store is much higher (roughly 20k vs 5k and perhaps more for chains as they have higher transaction value per store). Additionally the bulls argue that since these stores are using Brink PoS they are sort of like captive customers for payments or at least have strong synergies.  And typically they cite Toast as an example of how quickly a payments platform can grow when you already are the PoS provider.  However Toast focuses on independent restaurants (ie not chains). Most of these large chains already have a robust payments provider and my guess is if the payments platform they are running is non competitive with something like square then they would switch to the enterprise version/equivalent of square (if that exists.  awesome for PAR if it doesn't).  Independant restraunts likely only have a terminal through mastercard and no other frills on their payment platform, my guess is mcDonalds or Dairy Queen already has a robust payment platform because these are large companies.  That means it may be much more difficult for Brink to cross sell these companies onto their payment platform compared to Toast. 

In my mind there is significant disynergies from using a Brink payment platform for some transactions and a legacy payment for others, which is why I dont understand the Grubhub comment.  The same holds for a PoS platform which I think you alluded to. 
Title: Re: PAR - PAR Technology Corporation
Post by: whistlerbumps on May 02, 2019, 07:15:38 AM
^^ I think we are talking about different things. When I say PoS I mean Brink's current offering, namely scheduling tables putting in orders etc.  I did the modeling a while ago and even if you are very optimistic about PoS, based on ARPU numbers and reasonable margins, this does not justify PARs valuation (after adding the other parts as well). 

Why do you think current offering doesn't justify PAR's valuation.... 20k units by end of 2020 at 2.5k ARPU (which could be low) is 50mln of SaaS revs.... 10x revs given continued growth opportunity and low churn is 500mln or $26 per share just for Brink.... low-mid 30s when you add in the other parts.  I'd be interested where you differ.
Title: Re: PAR - PAR Technology Corporation
Post by: cameronfen on May 02, 2019, 10:45:32 AM
^^ I think we are talking about different things. When I say PoS I mean Brink's current offering, namely scheduling tables putting in orders etc.  I did the modeling a while ago and even if you are very optimistic about PoS, based on ARPU numbers and reasonable margins, this does not justify PARs valuation (after adding the other parts as well). 

Why do you think current offering doesn't justify PAR's valuation.... 20k units by end of 2020 at 2.5k ARPU (which could be low) is 50mln of SaaS revs.... 10x revs given continued growth opportunity and low churn is 500mln or $26 per share just for Brink.... low-mid 30s when you add in the other parts.  I'd be interested where you differ.

So as of their most recent most recent ir presentation they grew new PoS adds by 800 in Q4.  In order to get net adds by 2020, multiply by 8.  That results in only 14.1k in restaurants.  Note that is being agressive, because they added around 4k restraunts this year which comes out to 1k per quarter so net adds are declining over time.   I know dairy queen is going to be big in terms of arpu and adds, however I was pretty aggressive in assuming no decline in net adds.  Also I think ARPU at 2.5k is aggressive as that implies 40% growth in arpu in 2 years. 

Further more the 10x multiple is too high.  I think as their SaaS gross margin is only 23%.  Shave off 10% (arbitrarily but conservative) for operating expenses and you have something that has a net profit margin of 15%ish.  That means you are paying something like 70x earnings for something growing at 15-25% a year (depending on how slow net adds decline).  You also have to discount that price back to current day which subtracts 15% off the value.   All in fair value 14.1k×2.25k = 32m.  At 15% net profit = 5 million.  At 50x pe = 250 million.  Discounted back to today: 212 million.  Leaves about 180 million for defense + payments. 

This thing still could be fairly valued or slightly undervalued.  But I dont have confidence in my numbers up or down.  The other thing to take into account is that they likely dont have capital to grow without either taking more leverage or shares, so you have to factor in EV dilution and interest costs in the model too.
Title: Re: PAR - PAR Technology Corporation
Post by: whatdadil9 on May 02, 2019, 11:12:04 AM
SAAS gross margin is not 25 percent.

Second of all. Onboards were slowed down because they needed to some replatforming to scale up --- happens in SAAS all the time. Company has made it clear growth will re accelerate. Pricing will happen.. Also believe Raising prices on core customers will happen too. Think steady state operating margin assumptions are wrong and this makes more sense to DCF longer term. TAAM, Penetration, steady state margin, dicsount back.
Title: Re: PAR - PAR Technology Corporation
Post by: whistlerbumps on May 02, 2019, 11:14:57 AM
^^ I think we are talking about different things. When I say PoS I mean Brink's current offering, namely scheduling tables putting in orders etc.  I did the modeling a while ago and even if you are very optimistic about PoS, based on ARPU numbers and reasonable margins, this does not justify PARs valuation (after adding the other parts as well). 

Why do you think current offering doesn't justify PAR's valuation.... 20k units by end of 2020 at 2.5k ARPU (which could be low) is 50mln of SaaS revs.... 10x revs given continued growth opportunity and low churn is 500mln or $26 per share just for Brink.... low-mid 30s when you add in the other parts.  I'd be interested where you differ.

So as of their most recent most recent ir presentation they grew new PoS adds by 800 in Q4.  In order to get net adds by 2020, multiply by 8.  That results in only 14.1k in restaurants.  Note that is being agressive, because they added around 4k restraunts this year which comes out to 1k per quarter so net adds are declining over time.   I know dairy queen is going to be big in terms of arpu and adds, however I was pretty aggressive in assuming no decline in net adds.  Also I think ARPU at 2.5k is aggressive as that implies 40% growth in arpu in 2 years. 

Further more the 10x multiple is too high.  I think as their SaaS gross margin is only 23%.  Shave off 10% (arbitrarily but conservative) for operating expenses and you have something that has a net profit margin of 15%ish.  That means you are paying something like 70x earnings for something growing at 15-25% a year (depending on how slow net adds decline).  You also have to discount that price back to current day which subtracts 15% off the value.   All in fair value 14.1k×2.25k = 32m.  At 15% net profit = 5 million.  At 50x pe = 250 million.  Discounted back to today: 212 million.  Leaves about 180 million for defense + payments. 

This thing still could be fairly valued or slightly undervalued.  But I dont have confidence in my numbers up or down.  The other thing to take into account is that they likely dont have capital to grow without either taking more leverage or shares, so you have to factor in EV dilution and interest costs in the model too.

Hi Cameron,  Thanks for the thoughts but I disagree with most of your numbers. 

1) Units.  8k total +6k DQ + 6k from another tier 1 that they expect to transition in 2019 (Q4 18 CC) is ~20k by 2020 without any other wins.  The company also notes that the concepts they have signed have ~17k total sites which doesn't include SMB or the 2nd tier 1. Historically, Brink has been resource constrained under Sammon family leadership but now with Savneet and the capital raise, they are well resourced to more aggressively go after the 300k+ unit TAM.
2) ARPU is currently artificially low due to Arby's deal being below normal ARPU because it was a huge reference deal for them.  Savneet has noted (Jan 2019 pres) that DQ deal will have higher ARPU. Normalizing ARPU and adding on new modules (Par Pay, payment processing etc) can easily get you to $2500+.
3) Brink is a high quality SaaS business with normal SaaS gross margins  (~70% currently with an aim towards 80% as the company reaches scale).  Not sure where you got the 23% number.
Title: Re: PAR - PAR Technology Corporation
Post by: NoCalledStrikes on May 02, 2019, 11:22:08 AM
I am a little dubious on the Dairy Queen numbers.  The total store count sounds right (7000 or so), but only 70% are U.S. based and of those many have 50+ year old franchise agreements which give the store owners leeway to say no to corporate initiatiaves.  My guess is that at most only half of the 4900 stores would sign-up.  2450 is still a nice sale, but its not 7000.
Title: Re: PAR - PAR Technology Corporation
Post by: cameronfen on May 02, 2019, 11:45:56 AM
^^ I think we are talking about different things. When I say PoS I mean Brink's current offering, namely scheduling tables putting in orders etc.  I did the modeling a while ago and even if you are very optimistic about PoS, based on ARPU numbers and reasonable margins, this does not justify PARs valuation (after adding the other parts as well). 

Why do you think current offering doesn't justify PAR's valuation.... 20k units by end of 2020 at 2.5k ARPU (which could be low) is 50mln of SaaS revs.... 10x revs given continued growth opportunity and low churn is 500mln or $26 per share just for Brink.... low-mid 30s when you add in the other parts.  I'd be interested where you differ.

So as of their most recent most recent ir presentation they grew new PoS adds by 800 in Q4.  In order to get net adds by 2020, multiply by 8.  That results in only 14.1k in restaurants.  Note that is being agressive, because they added around 4k restraunts this year which comes out to 1k per quarter so net adds are declining over time.   I know dairy queen is going to be big in terms of arpu and adds, however I was pretty aggressive in assuming no decline in net adds.  Also I think ARPU at 2.5k is aggressive as that implies 40% growth in arpu in 2 years. 

Further more the 10x multiple is too high.  I think as their SaaS gross margin is only 23%.  Shave off 10% (arbitrarily but conservative) for operating expenses and you have something that has a net profit margin of 15%ish.  That means you are paying something like 70x earnings for something growing at 15-25% a year (depending on how slow net adds decline).  You also have to discount that price back to current day which subtracts 15% off the value.   All in fair value 14.1k×2.25k = 32m.  At 15% net profit = 5 million.  At 50x pe = 250 million.  Discounted back to today: 212 million.  Leaves about 180 million for defense + payments. 

This thing still could be fairly valued or slightly undervalued.  But I dont have confidence in my numbers up or down.  The other thing to take into account is that they likely dont have capital to grow without either taking more leverage or shares, so you have to factor in EV dilution and interest costs in the model too.

Hi Cameron,  Thanks for the thoughts but I disagree with most of your numbers. 

1) Units.  8k total +6k DQ + 6k from another tier 1 that they expect to transition in 2019 (Q4 18 CC) is ~20k by 2020 without any other wins.  The company also notes that the concepts they have signed have ~17k total sites which doesn't include SMB or the 2nd tier 1. Historically, Brink has been resource constrained under Sammon family leadership but now with Savneet and the capital raise, they are well resourced to more aggressively go after the 300k+ unit TAM.
2) ARPU is currently artificially low due to Arby's deal being below normal ARPU because it was a huge reference deal for them.  Savneet has noted (Jan 2019 pres) that DQ deal will have higher ARPU. Normalizing ARPU and adding on new modules (Par Pay, payment processing etc) can easily get you to $2500+.
3) Brink is a high quality SaaS business with normal SaaS gross margins  (~70% currently with an aim towards 80% as the company reaches scale).  Not sure where you got the 23% number.

On 1: see nocalledstrikes comment and note on the q4 presentation that they only have roughly 50% or less of most of the big chains.  They are only in 50% mcdonalds etc.  So while Scott Miller made this assumption that they would be in all DQs unless he knows something I dont/overlooked, this is not a valid assumption to make.  Thus I think being aggressive with net adds projection is the way to go to model this as it is the base rate.  Note if I assume 800 net adds a quarter for 8 quarters this implies a bump up the next couple quarters assuming some decline. 

2.  I have no idea on what actual arpu is but my guess is if the DQ deal is large then Arpu will be lower and same vice versa as DQ probably has bargining power like Arby's.  Further more i am only modelling Brink PoS valuation and i put payments basically in the residual and too hard catagory.  This is basically my point origionally that payments conversion rate may be much lower for Brink than Toast.  But again I dont know and considering there is no revenue: too hard. 

3.  The 23% number comes from the annual report.  Total revenue from product and service is 132 million dollars.  I assumed from a quick look at the notes that these were PoS revenue but even if the mix is different doesnt change much (product has 23% gm and services has 24%).   total cogs for product and service is 102 million dollars.  Thus gross margin is roughly 23%.  Maybe there are some fixed costs and gm will get better, but I think I was quite conservative on the opex margin.  Keep in mind this is pretty competitive industry as well.  Also note the revenue is quite large already so its not as if fixed costs should take a innordinate amound of cogs. 

4.  Regarding what's comment about acceleration of growth maybe you are right, but my experience is with SaaS companies less than half the time can they reaccelerate growth but they promise to reaccelerate growth every time.  If you want to add in the extra 5k adds.  After taking into account the extra captial required to fund this and the origional growth you may get 40m in value.  If payments is good then it is undervalued.  If payments is bad its fairly valued.  I think 20k is very agressive but if you think that its either 40/60 dead money, slightly higher than market beating irr (imo).   

edits:  Added point four and minor clarification of points
Title: Re: PAR - PAR Technology Corporation
Post by: whistlerbumps on May 02, 2019, 01:42:16 PM
On units you can believe what you want.  I would argue that they are still signing up more Arby's and other existing logos.  Also DQ is offering a lot of corporate promotions to get franchisees to switch because having everyone on one system will lower costs and improve systemwide data analysis.  Also assumes that they don't sign any other new chains.   Also remember this is an EOY 2020 number we are talking about so there is still a lot of time for implementation.  I think 20k is a reasonable estimate but that';s me.

On ARPU, I would direct you to Savneet's comments from the Jan 2019 Needham Conference.
"Our ARPU per store is around $1,900. We expect this to actually increase as we grow. The average is actually lower because we do a large deal with Arby's, which was below our historic ARPU but our next large chain, which is much larger than Arby's, is actually going to be higher. And as I mentioned, it will grow because we're also adding new modules to what we're doing. "

23% is just wrong .  Its taking the margins of a low-margin hardware and services business (majority of PAR's historical revs) and applying it to a SaaS business.  It's complete apples-oranges.

You may be right although I believe Brink actually having capital will be a major factor in the re acceleration. 
Title: Re: PAR - PAR Technology Corporation
Post by: cameronfen on May 02, 2019, 03:11:30 PM
On units you can believe what you want.  I would argue that they are still signing up more Arby's and other existing logos.  Also DQ is offering a lot of corporate promotions to get franchisees to switch because having everyone on one system will lower costs and improve systemwide data analysis.  Also assumes that they don't sign any other new chains.   Also remember this is an EOY 2020 number we are talking about so there is still a lot of time for implementation.  I think 20k is a reasonable estimate but that';s me.

On ARPU, I would direct you to Savneet's comments from the Jan 2019 Needham Conference.
"Our ARPU per store is around $1,900. We expect this to actually increase as we grow. The average is actually lower because we do a large deal with Arby's, which was below our historic ARPU but our next large chain, which is much larger than Arby's, is actually going to be higher. And as I mentioned, it will grow because we're also adding new modules to what we're doing. "

23% is just wrong .  Its taking the margins of a low-margin hardware and services business (majority of PAR's historical revs) and applying it to a SaaS business.  It's complete apples-oranges.

You may be right although I believe Brink actually having capital will be a major factor in the re acceleration.


1.  Look penetration for big chains averages 65% or so.  This is slide 24 on the q4 presentation.  These were also the numbers management wanted us to see.  Based on the TAM of 4900 DQ stores (I'm going on NoCalledStrikes unverified by me numbers), you have something like 3000 stores.  That's nice but not 7k.  Furthermore, net adds declined something like 33% from Q1 2018 to Q4 assuming 1k average net adds a quarter average, as if the quarter starts off at 1.2k stores adds a constant decline rate results in 800 adds in q4.  Maybe the management can turn this around a bit, but in order to get to your 20k number you need 1.5k a quarter for the next 8 quarters (which is EOY 2020) which is higher than the net adds in q1 2018.  That's quite heroic. 

2.  I feel like on ARPU we are arguing about 2.5k vs 2.25k.  There are more important things to argue about. 

3.  Yes mea culpa.  I forgot Brink included legacy.  I'm not sure what the cost structure will be but you are right gross margins will certainly be higher than 23%. 

Alternative thoughts on modeling:

On the one hand, Square subscription revenue does have 70% gross margin (and yes I get Square is in payments not PoS but I'm guessing to design and sales of the app requires the same costs (they break out transaction revenue too in a different bucket)).  This gets slightly lower if you include hardware sales which are done at a loss.  Note that while this bodes positively, if you look at net profit for Square after taking out 100m of the 133m in marketing costs somewhat arbitrarily and taxing at 20%, you have a net profit margin of +5% only. 

Looking at Toast which is the closest comp (and is not public), from this site: https://reformingretail.com/index.php/2018/07/19/toasts-115m-raise-should-worry-them-more-than-it-worries-their-competitors/.  Note I use their numbers as a baseline but I modified them somewhat to be more conservative/accurate imo.  They peg 12.5k PoS for Toast, which I don't have any insight into but it seems in the right ball park as I know Toast is somewhat bigger than Brink.  At 2.5k ARPU this comes out to 30m in revenue now. They already have 1000 employees and hired 500 more for growth.  Assuming only the 1k employees and assume 200 are engineers with an all in cost (salary + benefits + necessary capital + rent + software...) of 200k.  The other 800 are sales and support at 70k all in cost (this might be low but the 200k might be high.  I'm not sure).  This comes out to be 96m in total costs.  They are losing tons of money according to this model.  Say they only need 50% of the 1k staff to maintain 12.5k Pos locations (or alternatively cost per employee cut by 50%), this is still losing 18m a year.  The economics aren't great, obviously if Brink or Toast scale they will grow employees at a slower rate, but again growth looks already to be slowing down for Brink so I'm not sure if they will reach the scale necessary to have great Saas economics.  I don't remember how I modeled it when I sold out a couple of months or a half year ago, but my guess is its something similar to this. 
Title: Re: PAR - PAR Technology Corporation
Post by: wisowis on August 15, 2019, 05:37:53 PM
Looks like 3G Capital opened a position in PAR in Q2: https://whalewisdom.com/filer/3g-capital-partners-ltd#tabholdings_tab_link

Pretty interesting given their ownership of Tim Hortons, Burger King, and Popeye...
Title: Re: PAR - PAR Technology Corporation
Post by: walkie518 on August 16, 2019, 08:58:07 AM
Looks like 3G Capital opened a position in PAR in Q2: https://whalewisdom.com/filer/3g-capital-partners-ltd#tabholdings_tab_link

Pretty interesting given their ownership of Tim Hortons, Burger King, and Popeye...

I think timing may prove prescient here too as PAR starts to accelerates on the plan that has just been put into place
Title: Re: PAR - PAR Technology Corporation
Post by: wisowis on August 22, 2019, 05:35:11 PM
Voss Capital's updated model: https://www.dropbox.com/s/3qvooi8elmlkjgg/Voss%20Capital%20-%20PAR%20Path%20to%20%2480%20-%20August%2022nd%202019.pdf?dl=0
Title: Re: PAR - PAR Technology Corporation
Post by: Casey on October 01, 2019, 11:34:09 AM
I think that the 12x multiple used in Voss' base case scenario is a bit much, but you don't need to use a 12x multiple to get to something compelling.
Title: Re: PAR - PAR Technology Corporation
Post by: Casey on October 10, 2019, 01:50:31 PM
Some notes on what I like about this:

- the Voss writeup is good
- Savneet comes off as smart and pre-meditated, like he's thought a lot about how to roll out the expansion of business in believable ways... adding modules, payments, internationalization, divesting a couple things. Can't see why they wont able to do some number of these, raise ARPU, sign more customers.
- Payments first iteration is coming soon
- none of the POS I've read about seem particularly intimidating: Toast, Lightspeed, Aloha, square, oracle
- I like that 3G capital recently bought some, while also owning a bunch of QSR
- I like that there are some pseudo-activist investors spreading the good word on the company
- mentioned on conference calls getting to the point where they're rolling out 1200 new units a quarter soon
- get organic growth as fast casual restaurants that they've sold into expand locations
- like CRM, HUBS, other platform-y software businesses, I think they're strategically in a great position within the restaurant

So end of 2020, what does it look like? They have 16,000 units at 2400 in annual revenue, and they've added payments in some small number of customers and are continuing to add 1,200 a quarter to that total units number, continued to do core software work and tacked on a couple modules and revenue partnerships. I think that sounds great. ARPU will start trending up as they build those out, and they'll keep building out.

Later, arbitrary math: they can get to 60,000 installs which is a reasonably small amount of the market, and 4k in annual ARPU, well that would be a 1.2 billion dollar company at a 5x multiple of revenue. Voss says 12x of revenue. Maybe that's a lot.

I guess I don't really understand as much as I'd like about the process for ''rolling out" a large chain, how people intensive it is, and how much they'll be able to scale that as the numbers get a bigger base.
Title: Re: PAR - PAR Technology Corporation
Post by: stahleyp on October 10, 2019, 03:08:38 PM
Anyone know Voss capital's performance?
Title: Re: PAR - PAR Technology Corporation
Post by: spartansaver on October 10, 2019, 03:34:48 PM
This provides a decent list of POS competitors. Seems like there are a lot of decent ones (not all listed seem to be perfect comps). Why does Brink continue to grow at a fast rate amongst all the competition?

https://www.g2.com/categories/restaurant-pos

Title: Re: PAR - PAR Technology Corporation
Post by: wisowis on October 10, 2019, 04:36:27 PM
Anyone know Voss capital's performance?

Their 2017 pitch deck for PAR says their long portfolio has done 29% CAGR on since 2011.

One of their guys used to post on here as Southpaw (check out the QHR and QIS threads).
Title: Re: PAR - PAR Technology Corporation
Post by: ArminvanBuyout on October 11, 2019, 05:29:32 AM
This provides a decent list of POS competitors. Seems like there are a lot of decent ones (not all listed seem to be perfect comps). Why does Brink continue to grow at a fast rate amongst all the competition?

https://www.g2.com/categories/restaurant-pos

Been trying to wrap my head around that question too. From everything I read online, it actually seems like their product is worse vs. Toast / Revel. However, the bull argument is that the other competitors can't really scale on an enterprise level, whereas Brink is pretty much solely focused on that. If I recall, Toast's largest customer is JambaJuice, so there could be some merit to this argument.

The online articles are also probably catered to a mom-and-pop operator, so it could be true that Toast and Revel are better for them.
Title: Re: PAR - PAR Technology Corporation
Post by: Liberty on October 11, 2019, 06:18:47 AM
Some notes on what I like about this:

- the Voss writeup is good
- Savneet comes off as smart and pre-meditated, like he's thought a lot about how to roll out the expansion of business in believable ways... adding modules, payments, internationalization, divesting a couple things. Can't see why they wont able to do some number of these, raise ARPU, sign more customers.
- Payments first iteration is coming soon
- none of the POS I've read about seem particularly intimidating: Toast, Lightspeed, Aloha, square, oracle
- I like that 3G capital recently bought some, while also owning a bunch of QSR
- I like that there are some pseudo-activist investors spreading the good word on the company
- mentioned on conference calls getting to the point where they're rolling out 1200 new units a quarter soon
- get organic growth as fast casual restaurants that they've sold into expand locations
- like CRM, HUBS, other platform-y software businesses, I think they're strategically in a great position within the restaurant

So end of 2020, what does it look like? They have 16,000 units at 2400 in annual revenue, and they've added payments in some small number of customers and are continuing to add 1,200 a quarter to that total units number, continued to do core software work and tacked on a couple modules and revenue partnerships. I think that sounds great. ARPU will start trending up as they build those out, and they'll keep building out.

Later, arbitrary math: they can get to 60,000 installs which is a reasonably small amount of the market, and 4k in annual ARPU, well that would be a 1.2 billion dollar company at a 5x multiple of revenue. Voss says 12x of revenue. Maybe that's a lot.

I guess I don't really understand as much as I'd like about the process for ''rolling out" a large chain, how people intensive it is, and how much they'll be able to scale that as the numbers get a bigger base.

Thanks
Title: Re: PAR - PAR Technology Corporation
Post by: cameronfen on October 11, 2019, 06:32:51 AM
This provides a decent list of POS competitors. Seems like there are a lot of decent ones (not all listed seem to be perfect comps). Why does Brink continue to grow at a fast rate amongst all the competition?

https://www.g2.com/categories/restaurant-pos

Been trying to wrap my head around that question too. From everything I read online, it actually seems like their product is worse vs. Toast / Revel. However, the bull argument is that the other competitors can't really scale on an enterprise level, whereas Brink is pretty much solely focused on that. If I recall, Toast's largest customer is JambaJuice, so there could be some merit to this argument.

The online articles are also probably catered to a mom-and-pop operator, so it could be true that Toast and Revel are better for them.

Wherecyou getting your information that Brink is growing fastest?  Everyone else is basically private so its hard to compare afaik.  This might be a year or so ouy of date, but I wouldn't be surprised if Toast is growing faster than Brink.  I think its the land grab nature of the industry and the high growth rates of Brink just a symptom of industry-wide factors that are lifting all boats. 
Title: Re: PAR - PAR Technology Corporation
Post by: stahleyp on October 11, 2019, 07:19:59 AM
Anyone know Voss capital's performance?

Their 2017 pitch deck for PAR says their long portfolio has done 29% CAGR on since 2011.

One of their guys used to post on here as Southpaw (check out the QHR and QIS threads).

Interesting. Thanks!
Title: Re: PAR - PAR Technology Corporation
Post by: spartansaver on October 11, 2019, 10:19:12 AM
This provides a decent list of POS competitors. Seems like there are a lot of decent ones (not all listed seem to be perfect comps). Why does Brink continue to grow at a fast rate amongst all the competition?

https://www.g2.com/categories/restaurant-pos

Been trying to wrap my head around that question too. From everything I read online, it actually seems like their product is worse vs. Toast / Revel. However, the bull argument is that the other competitors can't really scale on an enterprise level, whereas Brink is pretty much solely focused on that. If I recall, Toast's largest customer is JambaJuice, so there could be some merit to this argument.

The online articles are also probably catered to a mom-and-pop operator, so it could be true that Toast and Revel are better for them.

Wherecyou getting your information that Brink is growing fastest?  Everyone else is basically private so its hard to compare afaik.  This might be a year or so ouy of date, but I wouldn't be surprised if Toast is growing faster than Brink.  I think its the land grab nature of the industry and the high growth rates of Brink just a symptom of industry-wide factors that are lifting all boats.

I never said that it was growing fastest, simply it is growing fast with a lot of competition. To assume high rates of growth, you have to assume Brink continues winning over large POS contracts. POS systems are nothing new, and there is plenty of competition; so why are these guys going to be the ones take share?
Title: Re: PAR - PAR Technology Corporation
Post by: cameronfen on October 11, 2019, 12:56:26 PM
This provides a decent list of POS competitors. Seems like there are a lot of decent ones (not all listed seem to be perfect comps). Why does Brink continue to grow at a fast rate amongst all the competition?

https://www.g2.com/categories/restaurant-pos

Been trying to wrap my head around that question too. From everything I read online, it actually seems like their product is worse vs. Toast / Revel. However, the bull argument is that the other competitors can't really scale on an enterprise level, whereas Brink is pretty much solely focused on that. If I recall, Toast's largest customer is JambaJuice, so there could be some merit to this argument.

The online articles are also probably catered to a mom-and-pop operator, so it could be true that Toast and Revel are better for them.

Wherecyou getting your information that Brink is growing fastest?  Everyone else is basically private so its hard to compare afaik.  This might be a year or so ouy of date, but I wouldn't be surprised if Toast is growing faster than Brink.  I think its the land grab nature of the industry and the high growth rates of Brink just a symptom of industry-wide factors that are lifting all boats.

I never said that it was growing fastest, simply it is growing fast with a lot of competition. To assume high rates of growth, you have to assume Brink continues winning over large POS contracts. POS systems are nothing new, and there is plenty of competition; so why are these guys going to be the ones take share?

The arent taking share with respect to players like Toast, Aloha etc.  Im not entirely sure of the dynamics because im not long so take that into account, but there is a secular migration from premise based systems like I assume companies that NCR probably offers, (and maybe non restaurant POS systems like Square) and cloud based solutions like Brink.  With cloud systems upgrading and adding new features only involves changing software and not actually going to each store and upgrading systems so they can push features quicker and less expensively. 

If you want to look at more mature examples of this same dynamic look at square disruption of general retail POS, or Stoneco and Pagseguro disruption of the Brazilian payments market.  I dont know for sure, but based on those market dynamics and some personal information with respect to toast, I think any cloud restaurant POS system with a heart beat is growing at least by low double digits as they take share from legacy players.  Brink is maybe more well known than many of the players, but the growth is by no means extraordinary for the business. 

As a sidenote, you can look at other markets to understand other dynamics of the business like for example all the money (at least in adjacent markets) seems to be in payments and capital (AR loans etc).  Everything else seems like a loss leader to make the use of a company's playment platform more attractive. 
Title: Re: PAR - PAR Technology Corporation
Post by: Spekulatius on October 11, 2019, 02:44:01 PM
So I listed to Singh’s podcast  and he talks faster than an annuity salesman. Apparently has has done dozens of things already at his young age, so it’s save to assume he won’t stock around.

Current investor presentation appears to have plenty of grammar and spelling errors or maybe it’s just me:
 https://www.partech.com/about-us/investors/ (https://www.partech.com/about-us/investors/) (losing site or losing sight? Etc).

Raised money using convertible debt and company is cash flow negative. Wants to build the Berkshire of software - another yellow flag.

Just a grumpy man’s assessment. I will put this on my watchlist, it will be interesting to see how it does.
Title: Re: PAR - PAR Technology Corporation
Post by: stahleyp on October 12, 2019, 10:36:34 AM
anyone concerned that Singh only has about $500,000 worth of stock?

He makes almost that per year.
Title: Re: PAR - PAR Technology Corporation
Post by: whistlerbumps on October 14, 2019, 01:12:43 PM
anyone concerned that Singh only has about $500,000 worth of stock?

He makes almost that per year.

He also has 80k restricted stock that will vest based on performance (worth ~$1.8mln at current levels) and is eligible to receive 90k of restricted in both 2020 and 2021 (worth a total of $4mln at current levels).  If he pulls off the plan, I think those shares will have value worth multiples of his current salary.

Title: Re: PAR - PAR Technology Corporation
Post by: stahleyp on October 14, 2019, 02:43:16 PM
anyone concerned that Singh only has about $500,000 worth of stock?

He makes almost that per year.

He also has 80k restricted stock that will vest based on performance (worth ~$1.8mln at current levels) and is eligible to receive 90k of restricted in both 2020 and 2021 (worth a total of $4mln at current levels).  If he pulls off the plan, I think those shares will have value worth multiples of his current salary.

Thanks.

Hmmm...not sure how I feel about this. Though I know it's common for most companies. If he does well, he makes out like a bandit. If he fails, he won't be hurt much.
Title: Re: PAR - PAR Technology Corporation
Post by: BG2008 on October 14, 2019, 03:32:54 PM
So I listed to Singh’s podcast  and he talks faster than an annuity salesman. Apparently has has done dozens of things already at his young age, so it’s save to assume he won’t stock around.

Current investor presentation appears to have plenty of grammar and spelling errors or maybe it’s just me:
 https://www.partech.com/about-us/investors/ (https://www.partech.com/about-us/investors/) (losing site or losing sight? Etc).

Raised money using convertible debt and company is cash flow negative. Wants to build the Berkshire of software - another yellow flag.

Just a grumpy man’s assessment. I will put this on my watchlist, it will be interesting to see how it does.

Met him at the Sidoti conference.  He has ADHD and couldn't stop looking at his phone.  He literally would stop our conversation to make a call.  He's either a visionary or a wacko.  He does not live in middle ground. 
Title: Re: PAR - PAR Technology Corporation
Post by: Foreign Tuffett on October 14, 2019, 04:12:11 PM
So I listed to Singh’s podcast  and he talks faster than an annuity salesman. Apparently has has done dozens of things already at his young age, so it’s save to assume he won’t stock around.

Current investor presentation appears to have plenty of grammar and spelling errors or maybe it’s just me:
 https://www.partech.com/about-us/investors/ (https://www.partech.com/about-us/investors/) (losing site or losing sight? Etc).

Raised money using convertible debt and company is cash flow negative. Wants to build the Berkshire of software - another yellow flag.

Just a grumpy man’s assessment. I will put this on my watchlist, it will be interesting to see how it does.

Yeah, the presentation is oddly typo-ridden. This sentence from page 15 is a good example:

Our ability to acquire or partner which of these categories accelerates daily, as restaurant continue to update their tech stack

Definitely subPAR for a company with a market cap measured in the hundreds of millions.
Title: Re: PAR - PAR Technology Corporation
Post by: Casey on October 14, 2019, 04:19:49 PM
I have not met him. Searched for videos of Savneet based on a few of these comments about personality... Top couple:

* https://www.youtube.com/watch?v=0QotLYFYUqI (2 minutes)

* https://www.youtube.com/watch?v=0QotLYFYUqI (10 minutes)

Longer gold one is interesting. He does speak very quickly. Appreciate folks sharing what they think might be the negative aspects.
Title: Re: PAR - PAR Technology Corporation
Post by: Spekulatius on October 14, 2019, 04:43:56 PM
So I listed to Singh’s podcast  and he talks faster than an annuity salesman. Apparently has has done dozens of things already at his young age, so it’s save to assume he won’t stock around.

Current investor presentation appears to have plenty of grammar and spelling errors or maybe it’s just me:
 https://www.partech.com/about-us/investors/ (https://www.partech.com/about-us/investors/) (losing site or losing sight? Etc).

Raised money using convertible debt and company is cash flow negative. Wants to build the Berkshire of software - another yellow flag.

Just a grumpy man’s assessment. I will put this on my watchlist, it will be interesting to see how it does.

Met him at the Sidoti conference.  He has ADHD and couldn't stop looking at his phone.  He literally would stop our conversation to make a call.  He's either a visionary or a wacko.  He does not live in middle ground.

Thanks for the color on Singh. After listening to the podcast, I thought he might have ADHD, but didn’t want to overextend. This doesn’t mean that he isn’t successful, but if you combine this with the sloppy IR presentation, I think it elevates the risk that things may go wrong.
Title: Re: PAR - PAR Technology Corporation
Post by: BG2008 on October 14, 2019, 06:12:47 PM
So I listed to Singh’s podcast  and he talks faster than an annuity salesman. Apparently has has done dozens of things already at his young age, so it’s save to assume he won’t stock around.

Current investor presentation appears to have plenty of grammar and spelling errors or maybe it’s just me:
 https://www.partech.com/about-us/investors/ (https://www.partech.com/about-us/investors/) (losing site or losing sight? Etc).

Raised money using convertible debt and company is cash flow negative. Wants to build the Berkshire of software - another yellow flag.

Just a grumpy man’s assessment. I will put this on my watchlist, it will be interesting to see how it does.

Met him at the Sidoti conference.  He has ADHD and couldn't stop looking at his phone.  He literally would stop our conversation to make a call.  He's either a visionary or a wacko.  He does not live in middle ground.

Thanks for the color on Singh. After listening to the podcast, I thought he might have ADHD, but didn’t want to overextend. This doesn’t mean that he isn’t successful, but if you combine this with the sloppy IR presentation, I think it elevates the risk that things may go wrong.

Another way of thinking about his action is that he actually runs a company now that is undergoing a lot of change.  This is a fast moving business unlike a rock quarry where you collect a royalty check.  Par is trying to grow and add on services and deliver the functionalities that they promised their customers.  He might've literally been putting out fire with the phone calls.  But there is certainly a disdain for people who are not familiar with the story and a lack of understanding for shareholders who haven't done their homework which I admittedly isn't the most versed in their story and theme. 
Title: Re: PAR - PAR Technology Corporation
Post by: CookingByTheNumbers on October 18, 2019, 08:43:40 AM
For those of you questioning Savneet Singh's ability to grow PAR - this should be a good primer on his managing prowess.

http://investorfieldguide.com/savneet/

Yeah, he's probably got ADHD, but he is also highly successful at a relatively young age.
Title: Re: PAR - PAR Technology Corporation
Post by: roark33 on October 22, 2019, 09:00:48 AM
calling yourself the berkshire of anything seems to be a red flag. 
Title: Re: PAR - PAR Technology Corporation
Post by: Spekulatius on October 22, 2019, 03:54:50 PM
calling yourself the berkshire of anything seems to be a red flag.

+1
Title: Re: PAR - PAR Technology Corporation
Post by: Casey on November 08, 2019, 01:27:30 PM
Up about 14% today.

They also announced the acquisition of Restaurant Magic. Basically a laundry list of back-office functionality that they wanted:

-Inventory Management
-Food Management
-Labor & Scheduling
-Enterprise Reporting
-Enterprise Analytics

https://www.restaurantmagic.com/
Title: Re: PAR - PAR Technology Corporation
Post by: wisowis on November 08, 2019, 01:50:59 PM
They've also entered into an agreement to sell SureCheck: https://www.businesswire.com/news/home/20191030006166/en/Procurant-acquires-SureCheck
Title: Re: PAR - PAR Technology Corporation
Post by: ArminvanBuyout on November 09, 2019, 04:18:49 PM
Also said they signed their first legacy Tier 1 client as well as a re-acceleration of Brink installs. Overall strong quarter from a growth perspective and adds some foundation to the story.
Title: Re: PAR - PAR Technology Corporation
Post by: Casey on December 06, 2019, 07:46:04 AM
I was wondering what their approach to "cloud kitchens" would be. Hopefully this gets some traction.

https://finance.yahoo.com/news/par-technology-announces-release-brink-123000275.html