Ladies and gentlemen thank you for standing by and welcome to the PAR Technology 2020 Fourth Quarter and Year-End Financial Results Review Conference Call. At this time, all participants are in a listen-only mode. After the speakers presentation there will be a question-and-answer session. [Operator Instructions] As a reminder, today’s conference call is being recorded. I would now like to turn the conference to your host Mr. Chris Byrnes, Vice President of Business Development. Sir, you may begin.

Thank you, [Valerie], and good afternoon to everyone. I'd also like to welcome you today to the call for PAR's 2020 fourth quarter and year-end financial results review. The complete disclosure of our results can be found in our press release issued this afternoon, as well as in our related Form 8-K furnished to the SEC. To access the press release and the financial details, please see the Investor Relations and News section of our website at www.partech.com. I also want to ensure that all participants today have access to our earnings presentation and business review slide deck that we'll use later in the call to better communicate the momentum in our software business. Individuals on the webcast should have access to the deck when they logged on to the call this morning. For those just dialing in on the conference call, the presentation can be accessed on the Investor page of our website and we also included as an attachment on the 8-K we filed this afternoon. At this time, I'd like to take care of certain details in regards to the call today. Participants on the call should be aware that we're recording the call this afternoon and it will be available for playback. Also, we are broadcasting the conference call via the worldwide web. So please be advised, if you ask a question, it will be included in both our live conference and any future use of the recording. I'd also like to remind participants that this conference call includes forward-looking statements that reflect management's expectations based on currently available data. However, actual results are subject to future events and uncertainties. The information on this conference call related to projections or other forward-looking statements may be relied upon and subject to the safe harbor statement included in our earnings release this afternoon and in our annual and quarterly filings with the SEC. Joining me on the call today is PAR's CEO and President, Savneet Singh; and Bryan Menar, PAR's Chief Financial Officer. I'd now like to turn the call over to Savneet for the formal remarks portion of the call, which will be followed by general Q&A. Savneet?

Thank you, Chris, and good afternoon to everyone on the call today. I hope you and your families are well and healthy during these challenging times. As I communicated to you last quarter, 2020 presented incredible challenges for our company and the global economy as a whole and our thoughts go out to all those impacted by the global pandemic. As I look back on 2020, I feel humbled at how hard our team worked to not only deliver our plan, but serve our customers. Our focus on long-term return, customer obsession, and product development helped us end the year on a high note. We ended 2020 with the best bookings quarter in the company's history, continuing strong momentum from Q3. We enter the year with the largest backlog in our history, which should set the foundation for a very strong 2021. This rapid growth has encouraged us to continue to invest heavily into our product, and for the first time in my tenure make investments in sales and marketing. While the year presented a myriad of challenges, we view many of these challenges as creating opportunities that PAR is well-positioned to take advantage of. Our financial position is stronger than it was a year ago with more than $180 million in cash on our balance sheet at year-end. While we'll touch on the financials a bit later, I want to highlight up front on our EBITDA performance in 2020. As many of you know, capital allocation is a discipline at PAR owned by all. During the crisis, we radically changed our spend decided to focus almost all of our investment into our software product growth. This drove our results later in the year. The early on struggles of the pandemic, the almost full shutdown of our business for seven…

Thank you, Savneet and good afternoon everyone. Product revenue in the quarter was 21.8 million, an increase of 1.6 million or 8% in the 20.2 million reported in the prior year. During the quarter, the increase in product revenue was primarily driven by a 2.4 million increase of drive-through hardware sales. Additionally, the hardware associated with the deployments of Brink POS increased approximately 1.5 million or 28% versus the prior year fourth quarter. Offsetting these increases was decreased associated with our traditional Tier 1 hardware customers. Service revenue that includes revenue streams from our subscription software was reported at 18.3 million, an increase of 2.9 million or 19% from the 15.5 million reported in the prior year fourth quarter. The company continues to expand our recurring revenue base, which includes both software-related services and hardware support contracts. In total, the recurring software revenue streams contributed 3.1 million of the increase in service revenue. The company continues to gain momentum of its deployment of Brink POS and Restaurant Magic, noting a 3.2 million or 85% increase in software as of service revenues, as compared to prior year, including 2.2 million related to the restaurant magic acquisition. Of the 18.3 million of service revenue reported in Q4 2020, 14.7 million or 80% is comprised of recurrent revenue contracts, as compared to 10.9 million or 71% of service revenue in Q4 of 2019. Contract revenue from our government business was 18.4 million, an increase of 1.1 million or 6% from the 17.3 million reported in the fourth quarter 2019, as a result of an increase in value-add ISR contracts and subcontract revenues. Contract backlog continues to be significant, noting a total backlog of over 151 million as of December 31. Now, turning to margins. Product margins for the quarter was 17.4% versus 19.5%…

Thank you. [Operator Instructions] Our first question comes from Samad Samana of Jefferies. Your line is open.

Hi, good afternoon, and thanks for taking my question. So, maybe want to dive in a little bit just, you know, the acceleration comment for ARR really stuck out to me. And so, if you can maybe just help frame that a little bit better, how we should think about that, that would be helpful starting with?

Sure. So, we've had a, you know, in the last two quarters, we've had a tremendous growth in bookings. And remember at PAR, you know, bookings are signed orders. So they're a real commitment from customer. Those bookings have – generally are on a six to 8 week book-to-bill cycle. So, we historically have been able to turn a booking on into revenue within six to eight weeks. During the pandemic that's been elongated as we've got to work through not our own requirements, but the requirements of our customers to get into stores. And so as a result, you've had this very, very large backlog buildup of almost 2,500 signed orders waiting to be installed. As the pandemic wanes down, our ability to get into stores should become easier and easier, and we're getting just to see that right now. And so, you'll see this backlog burn down and ARR turn on very aggressively after that. So, you know, our goal over time is that our, you know our booking should, you know, relatively close to our ARR [add to the] [ph] following quarter, it's not always that linear, but right now, I think it's [indiscernible] the other way because of the pandemic. And so again, as the pandemic comes down, I believe the launch and activate stores, accelerates back to kind of historical cadence and we’ll be able to burn down some of this large backlog. And so to me, it's incredibly exciting. You know, we've got enormous amount of year already booked, and the year hasn't even kicked off. And so, we'll be able to, I think have a really, really strong 2021 as a result.

Great. And, you know, maybe just another follow-up on the bookings, obviously, just a really strong quarter there considering you add as many in 4Q as you did in the first half of both this year and last year, but can you help us maybe think about in terms of those bookings? How much of it was – was it the average number of either sides, you're just helping us double click into that? Was it more driven by larger QSRs? Was it more blended from across the spectrum? Just how should we contextualize that 1,500 plus bookings number?

Yeah, it's a fantastic question. So, I would say in Q4, we saw growth across all segments, obviously, when you have that type of growth, but we saw, you know, more accelerated growth kind of in our mid-market, the hundreds of stores as opposed to the thousands of stores, which has been an emerging segment for us and helps balances [indiscernible] actually. So, you know win there we had a couple multi-100 store unit chain wins. And so we saw a lot of growth there. And then I think if we were to talk pipeline, we saw the most growth in pipeline in the very large store, the thousand plus store, which I think bodes well for a strong 2021 on that end, but I would say we had growth across all segments, the biggest growth that was in that kind of mid-market of, you know, hundreds of stores versus thousands of stores.

Great, and maybe one last one on Brink, before switching gears, but I know payment is in your opportunity. And it's still early days, but any color around maybe TPV so far that's running through PAR payments, or the take rate that you guys are netting out at? I understand not wanting to give away the juice to potential competitors, but just how should we think about the early traction there?

Yeah, so I'd say it's – at the end of Q4 it’s probably truly saying that's instructive. You know, Q1 was really our first real quarter of actually selling the product. So, I would say that what we learned in Q4, I think was encouraging. We learned that the rates that we sell to our customers are attractive, so i.e., them switching to our payment products is not going to cost them more. Second, I think we think the TAM here is quite large. I think our ability to offset hardware costs with payments over time is a really powerful addition. And I think as we sort of indicate, I think our take rate here, if we were to sort of back into a take rate, you know, if we were to sort of look at the average set customer that we think would come on to our product line, it roughly doubles our ARPU per store. So, if the average store Brink today is around $2,100, we think we'll get another $2,100 to $2,500 per store that we turn on the payments. So, it's not so much a take rate, but a fixed fee per transaction model, which is how the enterprise operates versus down market where it is very much a spread business. And if you sort of back into – if you want to sort of back into basis points, you know that sort of 25-ish basis points to 30 basis points.

Understood, and maybe one more from me. You know, if I think about the Restaurant Magic, you know, obviously, it's been impacted by what's going on with the pandemic, can you maybe, I know, it's tough to look into a crystal ball, but how should we think about maybe what the durable growth there looks like? I know right now, there's, it's being depressed, but it'd be helpful to understand that.

Yes, if you look at the bookings, the Restaurant Magic bookings are very sensitive to the pandemic. And if you sort of look at, you know, we had good bookings in Q3 and, you know, that's sort of the result of the summer openings. And Q4, we had weak results, with obviously a lot of stress around November, December, and the pandemic coming back. So, I think this is, you know, as the pandemic slows down here, as the vaccines pick up, as soon as you get back to that normal cadence of, you know, it should be growing as fast as Brink. There's no reason it shouldn't. And one of things we've done is, you know, after the one-year completion of the transaction, and the earn-out that we had with the team - and the founders, we've now integrated Restaurant Magic fully. And so that sales notion is now coming out of the broader PAR sales team and so the [indiscernible] will have nice attachment, as opposed to treating out separate products. So, I think, as the pandemic hopefully comes down to an end or to a low base, this business should to be growing at the same rate of Brink, I can make it even faster. But this should not be growing any different than Brink in a sort of a normalized world.

Great. Thanks for taking all my questions, guys and congrats on the strong Brink bookings quarter.

Thank you. Our next question comes from Stephen Sheldon, William Blair. Your line is open.

Hey, thanks. First one, for some of the larger thousand plus site wins with Brink that you talked about in the pipeline. Can you may be roughly frame how long did it take those big brands to maybe push higher adoption of Brink within their own site base and their franchisee site base?

Yeah. So, I would say, in the large wins, their own site base comes very quickly. So, we were to sign a large customer we generally are able to start turning on their own stores, the corporate owned stores within a quarter. It’s relatively quickly. We've seen that with, you know, our big recent win, excuse me, that we announced last quarter. And I think we'll see that in the next quarter as we announce more of these wins. So generally, the corporate owned stores come very quickly, because a lot of the work to get us going is there. And then I think on the non-corporate owned stores, the franchise stores, depending on the size, you know, if it's a multi-1000 unit chain, it's a couple year process to get through most of them. You know, if I look back in our prior business, you know, five guys with a couple years, you know, I think some early customers are three years, but it is sort of a net two-year to three-year window, you can get to the rest of the franchisees. Now, the pandemic has changed things and changed things for the better. You know, our sort of next large customer that I think we'll sign, you know, I'd expect us to get through at a much more rapid pace than normal. Because again, this pull-through where we're seeing that it's not just about picking Brink it’s about bringing Brink live and they're kind of in that same bucket of us, like we both want to get live really, really fast. So historically, we say two to three years for a very large customer, for sort of a medium sized customer, it’s within the year, I think we'll see that two to three years on some of the new logos we sign, comes faster, because they've kind of jumped in because, you know, as a result of learning from the pandemic, and so I think that they're need is almost acute, as opposed to something we have to do, that is something we must do. So, I think we'll see some really potential for some of these sales cycles to get smaller.

Got it. That’s helpful. On the – between Brink and Restaurant Magic, I think you talked about some integration on the go to market side, so maybe an update on that, and plans to better integrate on the product side. And what that could potentially look like from a client's perspective in terms of ease of use and functionality, just any detail on the integration process there?

Sure. So yeah, on the sales and marketing side, we are integrated. And so the team that drives the go to market is now one team. And so marketing is coordinated. And sales is run by the same account management team and the same go to market team that runs Brink. This creates incredible amount of simplicity for our customer, right. They're not talking to different account owners. They're not dealing with sort of different pricing, different billing, and all sorts of looks as one. But you know, I think equally important for us is that it doesn't allow an opportunity for a new account not to look at the product, not to sort of have the opportunity to bundle that product. And so I think there's just, you know, great logic there. On the product side, as we sort of move forward to the more modern infrastructure of Brink, the products have to speak to each other. We're not in the business of, sort of buying revenue, we're in the businesses, we're building great products, and these products will begin start talking to talking to each other. So, what does that mean? From the most simple of sense, these products, you'd have something like Single Sign On, right, using net [indiscernible] products, but over time, you should be able to take the data from both systems and have actionable insights to come back to the restaurant manager owner or the franchisee. And so we think that's the next level. And so we are beginning that sort of product integration. Literally, I think we kicked off a week or two ago. And so, we'll start to integrate the products more closely again in this year, which will help I think our customers see the value of bundling it upfront.

Great, thank you.

Thank you. Our next question comes from George Sutton of Craig-Hallum. Your line is open.

Thank you. Savneet you made a general technology, you know, future of restaurants technology statement. And obviously major chains have been laying out some new formats that integrate things like Drive-Thru and, and pick-up and delivery, I'm curious how you feel you're addressing that new area of opportunity relative to your legacy competitive players?

Yeah, I think that change is part of the, you know, the growth in bookings that we had. You know, I never would have dreamed, you know, six months ago, we'd have our best, you know, growth quarter ever in Q4. I think it's part – a lot of what you're saying is what's driving that, which is, if I'm the CIO or CEO of that restaurant organization, I always knew I had to upgrade because I needed you know, all the innovation, whether it's online ordering or QR code pickup or payments. I think what's changed though, is the format's are changing, and they're changing, and no one yet can perfectly predict that future. Is it going to be a [virtual kitchen], a ghost kitchen, a dark kitchen, a Drive-Thru kitchen? How is this all going to connect together? And so it's [creating an impedes], to which is, I have to have a very, very modern infrastructure, so I can be agile and adapt to whatever that change might be. So, I think it's definitely helping us. I mean, like I said, on the last call, again, continuation, the bookings we're getting are really just coming out as a pace that we're just trying to keep up with. And similarly, the pipeline is growing, because again, I think you as the restaurant owner, or concept owner, excuse me, are at a point now where you just can't wait. And so that's what's really pointing to a lot of the demand. So, I don't know if that’s specific to that demand, but I think it's part of the whole story.

Perfect. And as you talk about bringing ARR growth, the bookings growth and the ARR growth together, you mentioned one thing on the call constrained capital spend, and then we also have obviously, the COVID restrictions in terms of implementations, can you bifurcate how much of an impact both of those have been relative to that?

Sure. The capital spend was more tied to our hardware business where we were really encouraged that in this sort of market where our customers are definitely keeping their eye on their wallets, they continue to invest in our hardware solutions and our service solution. So, we've been very encouraged by that. As it relates to activation, this is just a matter of literally turning stores on and that's where we've had limitations where certain concepts you know, don't allow non-employees in-stores or they want a much more structured rollout schedule because again, controlling exposure to their end-markets. So that limits our ability to get the stores rolled out until we get there. Another example is, you know, a certain state-by-states had different regulations on, you know, quarantining or visiting. So, if we had an installer in New York who had to go install something in Massachusetts, he or she would have to come back to New York, they'd have to quarantine, get a COVID test, you didn't have the capacity as you normally would. As we've seen, these restrictions come down, as we've seen, states open, we'll see this sort of book-to-bill process come back to our more traditional sense, I believe. And so this backlog, which is, again, incredibly exciting, and will burn through it will start to, again turn into revenue very quickly. And so, you know, we still activate 885 stores, you know which is pretty tremendous in this environment. But as these limitations come down, you'll see that number continue to grow, and they are with it, and so, we're really excited by that.

Great stuff. Thanks Savneet.

Thank you. Our next question comes from [indiscernible]. Your line is open.

Hi, good afternoon. And thank you for taking my question. Great quarter and great year guys, given the circumstances of COVID-19. In the release Brink locations in ARR imply an incremental addition of 1,900 locations year-on-year and just over 100 million of ARR, which equates to about 53,000 of ARR for those incremental locations, that's obviously not going to be the correct way to think about it, as you have presumably had upsells and incremental increases in revenue from existing locations of Q4 2019. Can you give me a breakdown of what the new signings are going out, as well as how the existing locations have been upsold, in particular, how the PAR Payment Services has been working out, please?

Sure. So, I would – the [store signed] and Q4 are, I'd say in-line with our continued sort of price point of roughly $170, $175 a month per store. That number has grown, you know, over the last two years, and I think will continue to grow over time. And I don't know the exact number, but it's around the same price. I think over time, that number will continue to grow as we've had this expansion in the mid market, where price is higher than our traditional tier one. So, I think we'll continue to see that, that growth has all been price driven, hasn't been module driven yet. And so we've grown that price from, you know, $158 to whether a [375 or 380], all through price. In time it will be module-based. We haven't had a module to upsell. Historically, Restaurant Magic is really the first upsell product that we've got going on. And as I said, now that we've just combined the sales forces, earlier this year, we'll see some nice, traditional ARPU expansion there. On Payment Services, I just answered that in the last question or two questions ago, but we're – in Q4 we have launched our beta, we had great success with the beta, obviously not a ton of customers, purposely so. But we saw that our rates were competitive, we saw that we can make money with it. We saw that there's value to the end customer. And we learned a lot, we learned that our ability to offset that hardware cost is a real advantage to our customers. So, instead of taking the CapEx to upgrade your hardware, we can take that on, provided we will [indiscernible] in payments. And that deal is incredibly high, ROIC for PAR. So, I think the path in 2021, is exactly what you're suggesting, which is, we've got an incredible amount of just backlog and revenue that has to come out the door. We'll see really strong revenue growth. And then that revenue growth will come not just from sites, which has historically been completely – our revenue growth has been 100% tied to site growth. That’ll start changing to site growth, plus, what module do we upsell, whether it was payments, whether it was back office, and hopefully more and more as we acquire or build along that that framework?

Great, thank you very much. Just one follow-up. Do you have a view on when you might get to EBITDA positive or get positive net income?

So I think it's going to be very dependent on our growth. If we deliver our growth projections in 2021, you know, I would suggest we should continue to burn. I don't think we're going to burn a lot of money, you know, particular relative to our cash balance. But if our growth slows down, we can quite quickly turn the business back to breakeven, The levers are there already for us to get to break even. We are making a tremendous amount of investment in R&D spending. As I mentioned, we should have just made our first investment in sales and marketing spend, which is leading to, obviously some of the great results that we have now. So, we could turn that on if we needed to. But I think for the next year or so we want to continue that dramatic investment. Because we're seeing, you know great results from it. And given how low churn the base is, how much we think we can upsell, I just think the LTV continues to expand, you know, pretty considerably, right. Our LTV, you know in 2019 and 2018 and 2020, I mean it's the lowest it will ever be because it was a single product company that didn't have the product and service capabilities to actually serve that customer base. Now we're, you know a multi-product company with the ability to actually upsell and handle the ability. And so, you know I think it's there's a, the LTV CAC equation is incredible. We will invest along that. Again, if it ever turns or if whoever will not keep up this growth, we can [indiscernible]. So, I wouldn't be surprised if the business as of today is profitable in 2022, but at same time, if revenue growth accelerates, as I think it will, you know, there might be an argument for us to not do that. So, I think we're dynamic with how we allocate capital. And I think we'll sort of, you know, see how the first couple quarters ago and can potentially give some guidance on that. But I’d say, we can turn this business profit by the end of the year, if we need to. I'd argue if we see the growth that I think we're going to see, we'd probably, you know, wait to push on that goal.

Thanks very much for taking my questions. I completely agree, focusing on the growth, should it be there as a way to go forward and you know, increasing the market share. That's what you should be doing. Thanks so much.

Sure.

Thank you. Our next question comes from [indiscernible] of Sidoti. Your line is open.

Hi, thank you for taking my questions, and congratulations on a great quarter. A lot of good questions asked already, but I'm just curious to see in the sales and marketing the progress you made there? And do you have more changes to be made there to capture or?

Hi. We do. We are, you know, in Q3, we restructured our department in Q4, we put in a new head of sales and you had a marketing, you know, we've seen, you know, tremendous results from already, we just went through a rebrand. And, you know, I think for the first time we'll start to see, you know, it's a nice investment spend there. I'm really encouraged by this. You know, as I said, I did not expect the results to come so quickly. And I think we'll continue that. Part of that sales and marketing spend is not sort of what you think of go sign the next big logo or go to big brand marketing campaign, it's also just getting much more aggressive about our existing customers. We have, not only do we have sort of these 2,500 plus stores that are waiting to be installed, I think these are signed orders waiting to be installed. And then, we also have an enormous amount of whitespace in our existing logos that we have yet to sort of mine, if you will. So, we have a number of customers that we are, you know, 50% penetrated in that we need to get to 100%. And so some of our investment is also going to be how do we attack those customer bases more effectively. And now that our product is finally, you know, to the point where we feel comfortable turning on that spend, you know, we are focusing the result of that spend. And you know, I think Q4 was a great demonstration of that.

Okay, thank you. And you were alluding to the rebranding, have you got any initial feedback on that?

We have. So we focused most of our initial rebrand, you know, we put it out publicly a week or two ago. And we've focused on it first internally, to our customers and our partners. In the next quarter, we'll go out externally, and we can share some feedback. But so far, the feedbacks been quite positive. You know, I would say, it's not as much about the optical rebrand, but it's also sure what does that brand mean to our customers? What does that brand promise, what are we looking to achieve? PAR means a lot of things, a lot of people, that's not the recipe for success. We sort of need to sort of say, this is what PAR stands for, and help drive that change. And so a lot of work is going into getting that out there. So, I would expect us to expect for you to see a lot of stuff coming out in Q2, the month of the quarter of Q2 externally, that helps kind of lay out what does that brand promise me and what do our customers think when they see it, but so far, it's been really positive. And we also engage our partners, suppliers or employees, and it made it a little bit more of a collective endeavor.

Okay, thank you. And then with the firm backlog you have and as you say, you're going to be able to accelerate the installments of the pandemic, yeah, we're getting through the pandemic, do you have the capacity to do those installments? Or is that going to be like a slower progress?

We do have the capacity. As I said, most of the limitations of getting out has been, you know, purely pandemic driven. You know, in December, you know, January and February, we had, you know, many of our customers said, listen, we really need Brink, we'll sign the order form and commit to it. We just need a slower rollout because we're trying to limit the amount of non-employees in stores. And so, it was a little bit out of our control, as I think again stores opening is a huge, huge boon for us to sort of accelerate those activations coming forward. So, it's not so much our own capacity. It's very much right now at the limitation of our customers who I think, you know are looking to same data we're looking at as relates to pandemic and feeling more comfortable at it.

Okay, thank you. That was all for me.

Thank you. [Operator Instructions] Our next question comes from Adam Wyden of ADW Capital. Your line is open.

Hey guys, terrific quarter. Coming out of COVID, really excited about what you guys have in store. So, I'm going to take a step back, because I feel like a lot of these questions have been super short-term, and it's kind of pissing me off, but I had a couple of, kind of high level questions for you. You know, McDonald's announced that they were divesting dynamic yield. You guys are clearly piloting inside of Taco Bell, we've seen it in the stores. You know, I use this as an analogy, you know, what attracted us to bring in PAR initially, was the scalability and the ability to get, you know, bigger customers. And when we look at toast, you know, toast has grown 100, but, you know, they're getting [indiscernible]. And it's, you know, it doesn't scale, you know, once you get to, you know, 50,000 customers, you know, it's much harder to grow 50,000 customers when you're adding one restaurant at a time. You know, you've got five guys then which led to a bigger announcement with Arby's, which led to a bigger announcement with CKE, which lead to a bigger announcement to Dairy Queen. So, Dairy Queen is up 5,300 units, you know, you're doing 3,500, you know, [3,500 ARPU], you know, fabulous. You know, my question to you is now, you know, everyone said McDonald's was going to build their own point-of-sale system, they're clearly taking a step back and divesting, you know, you're in Taco Bell, you know, you're getting deeper and deeper within spire, you know, Jimmy John, Sonic, Buffalo Wild Wings all fair game? I mean, can you talk to me about the potential of winning, you know, I guess whether it would be a four, a four digit unit chain, you know, because right now you're at 11,700 units, we know that's going to grow, but I mean, you know, you can win a 7,000, 8,000, 9,000, 10,000 unit chain and double the company, you know, and that to me, is kind of the holy grail here relative to Toast, and then that, you know, please answer that, and I kind of have a follow-up around it.

Let me first say this, we’ll double the size of the company with the existing customers we have signed. You know, we're not, you know, going to a tremendous amount of stores that are in backlog or yet to be installed of our existing logos. And I think we'll double the company just from that. There's just a ton of whitespace, as I call it to get through. I'm reticent to use customer names. But you know, number of our large customers, we're not even halfway through, right, we got so much whitespace to, excuse me pull forward. So, I think we'll do that. As it relates to our competitive positioning and the industry dynamics, there's no question that there's never been a better time to sell the product that we have. Large restaurants, I think have made the decision that they need to build in partnership with people like ourselves to make their technology vision come through. 20 years ago, a company building its own software, its own point-of-sale, made tremendous sense because their competitors couldn't build a product as well, gave them a competitive edge. Today, software companies build better products than restaurants. On average, and I think we’ll be on average, I don't think that's debatable. And so, I think that the idea that you're going to keep a captive point of sale system, maintain the innovation for that system, on your own is a ton of cost and burden for an organization that doesn't focus on building software. You know, think of it this way, if I had a large restaurant organization, the technology development group would be an important part of it. But I don't know if the best talent, the best leaders are going to that part of the organization, as opposed to a software company where that's all the talent. And so, I think that shift is there. That shift in sort of desire to, sort of building partnership now sort of dominates the industry thinking, which wasn't there just a couple years ago. The last thing I'd say is, our position relative to competitors is getting stronger and stronger. Listen, us growing to 1,500 plus bookings in a quarter is incredible, but it’s as much a result of our success as much of our competitors not being able to keep up with the industry dynamics that we've seen. As we come to the next few weeks in, sort of start to get some more of our customer wins and talk more about our pipeline, a lot of this is that our large customers say, hey, I want this change in technology now, and then not being able to find provider that can give it to them in time or the flexibility and modularity that we can to a Brink. And so, the long-term [indiscernible].

No [indiscernible] has been really been implemented in the cloud. I mean, there's some legacy, [indiscernible] stuff like that, but from what we understand, you know, no one has there has been no real successful deployment in a purely cloud technology in over a couple 100 units. I mean, we know that Burger King, did an RFP and Toast basically said, you know, we can't do it, we can't do the customization. So, at least unless our channel checks are bad, our understanding is that there has been no successful, you know, fully cloud deployment in a chain more than you know, a few 100 units. So like, from what we understand you guys are literally competing with yourselves. Am I looking into this the wrong way?

I don't think so. I think the best way to say is when we compete against incumbency, it's very rarely against the competitive solution where we feel like we don't have the edge to win. When we lose its incumbency, and I think the pandemic has really sort of challenged that incumbency, which is can I really survive with a vendor that I've been with for the last decade that hasn't made these innovations. So, that's how I look at it, which is, we're competing in incumbency, more than we compete against any specific competitor.

Okay, that makes sense. So, I just want to ask you something else. You know, there was a slide on Twitter, I think it was from one of, you know, toes kind of go to market and kind of test the waters deal, where they talk about the, the SaaS per restaurant of addressable market, like 40,000 to 50,000 not including payments. So, you know, obviously, you guys Karen Sammon gave you some real bonehead deals, and, you know, you're kind of waiting. But you know, you're seeing, you know, $3,000, ARPU on really great Tier 1 customers, you know, but even with Restaurant Magic, you know, 1,000, 1,500, you're still only looking at like 4,500 per box on, kind of what I would call new ads, you know, can you comment, you know, about your ability to penetrate? You know, that, you know, call it $20,000, $30,000, $40,000 number? And, you know, I guess my question is really like, it kind of seems asinine, that [Toast] says that they can get that, because it's much harder to cross-sell products to one's utilities. I mean, if you get, you know using the example, let's say you get Dairy Queen, and there's 5,300 units, and they all get on the Brink, you know, it's much easier for you to sell them restaurant magic or whatever loyalty or back office than it is to sell it to one unit. So, I mean, can you talk about kind of the strengths of this platform and your ability to capture that ARPU and TAM in a much more aggressive and efficient way than kind of your peers and how you think about the cadence of that because Toast basically said another thing that they’re going to get to 16,000 of ARPU, not including payments by 2024. And I'm like, doesn't even make sense to me. I mean, I think you guys can do it, but I'm just kind of curious how you think about all that?

Yeah, so I think the TAM, let me say this way, the TAM for restaurants is, whatever it is today, is going to be a fraction of it in the future? I don't think if you ask for any person in restaurant business that they expected to have as much software as they have today, that they would have ever dreamed. And I think if we did ask the same set of restaurants in five years, the same question, I think they'd again, be shocked. The reason why I'm here is, why our team is here is that we see that change where software is eating this industry in a good way. The idea that you might need computer vision, robotics, delivery, management, artificial intelligence, assuming all these things are just now hitting the restaurant industry. And so wherever that TAM is, whether it’s 20,000, or 10,000, it's expanding tremendously. And that's where we see this great opportunity, because the point-of-sale system is the foundational platform that much of this comes off of. The idea that just the 11,700-ish stores that we had, at the end of Q4, you know, takes on average half a billion things for API. I think [indiscernible] is just how important that product is, as again, the foundation of that platform. So, I expect us to rapidly grow into that TAM, both through new product. And again, as we grow somewhat through price, but growing through new product and acquisition. We see it I think, and more importantly, I think the industry sees it. I think the single product companies are coming back and realizing that their path to success is by partnering or being sold to a company like PAR as opposed to going at it on their own. Because it just doesn't makes sense if you're that restaurant operator to manage 15 or 20, or 10 products per store that is just asking for failure. And so, I think that our position there is incredibly strong. And whatever I tell you today, I think it's going to be a dramatic understatement of where it will go in the future.

I mean, look, if I look at Oracle, or salesforce.com, or the one that I like is market access, which shows fixed income pricing. I mean, you've seen a number of what I would call vertical SaaS companies cross-sell successfully. So, I mean, look, obviously, the playbook is there. I mean, look, Lightspeed does a deal every five minutes, and I don't know whether they're good or not. And obviously, it's SMB. And, you know, I think that the churn rate is much higher, but I mean, look, you know, I see that Toast is, you know, talking about going public at 20 billion. Lightspeed is trading at like 30 plus times revenue. I mean, you know, you guys basically have, I mean, if I can just kind of go backwards on that, you guys basically did 1,500 salon bookings, you've got a backlog of 2,500, that backlog is going to get worked down, you know, as stuff opens up, which it will, you know, it looks like you guys are probably on pace this year, you know, in Brink, at least to get to 2,000 bookings, or installs a quarter, you know, so I just kind of do back of the envelope math, you know, in conjunction with the line down on the backlog and getting to kind of 2000. I mean, if you do, you know, call it 8,000 installs this year at 3,000, that's 24 million, you know, you're talking about 50 million, 50 million Brink plus, you know, call it 10 million, 12 million wherever Restaurant Magic. I mean, you're looking at something that should be 60 million to 80 million of ARR not including acquisition. If I put a 30 multiple on that, that's [two to two to four] not including the hardware business, which is making money and government. So, the market is still kind of saying you're a loser. So, I mean, I guess my question to you is like, what do you think it's going to take to let people know that you're the winner here, that you're going to be the one that is going to basically become the vertical SaaS player because, I mean Lightspeed trade the double to multiple, and it's an inferior business, and they don't have the opportunity. I mean, neither Toast nor Lightspeed has the opportunity to cross sell through these deep networks. So, like, arguably, we should be, you know, trading at a much higher multiple, given our ability to upsell and cross-sell. So I just, I'm trying to figure out what I'm missing and how you're sharing [indiscernible]?

So, let me – I think, listen, I think our execution is catching up tremendously, right. Again, I don't again, I wouldn't have dreamed that we've had this type of bookings and backlogs enter the year, it's truly is incredible. And I've never been more excited about, you know, I'm always, you know, careful not to use [hyperbole], but to have 2,500 stores already signed going into a year, it's hard for us to screw up this year. So, I just think it's continued execution is really would deliver that. And as we sort of said, in our script, and we've always said, you know, the, the platform that we're building has tremendous value to our customers. And that's where I think every investment starts, which is actually delivering value we are. And I think we'll add more value than anyone else that we acquire and building products. So, I think it's us executing on that plan, like we've been doing and continue to do. And again, as the pandemic rolls off, it, you know, very much changes our lives to, you know, this can be a real acceleration in revenue growth. So, I think the pandemic has been interesting in the sense that we've, I think, proven that we are a unique product in this market. We've proven that we've got, sort of dramatic advantages for competitors, and how we've got this unique ability that as the epidemic winds down, we get the benefit of a tremendous amount of tailwind of revenue growth, because we've already signed all these stores. So, I think we get – I [hate to say] the best of both worlds with that opportunity. Adam, we we've got a couple more questions.

I have one last. If I take a step back, and I look at you guys with all these monster chains, right, is it unreasonable to think that several years out, you know, you have a million restaurants in the United States, and obviously, a lot of these chains are global? I mean, if I take a step back and say, you know, several years out, could this be 100,000 unit restaurant, you know, deployment and 40,000, including payments. I mean, that's 4 billion in SaaS, you know, at a, you know, 20, 30 multiple, you're talking about $100 billion company. I mean…

So I would say this, our [indiscernible] at PAR is to be the largest company in the industry, or just outside technology company by 2030. And within five years, you know, I think we'll be, you know, tremendously on the way they are there already. I think we're going to hopefully be at our targets. To get the numbers you talked about, I think they are very reasonable. There are a million restaurants in United States, 7.5 million globally that use point-of-sale systems. And we are building for that. I think we think this TAM is enormous. And again, I think the more important part of it is yes, that sort of volume count is high, which is the number of restaurants, but it's the ARPU side that I think is growing at a rate that the world under appreciate just how much software is being bought by restaurants. And how much of that is dependent upon the point of sale system, which is sort of our wedge in there. So, I do believe…

It's basically like rent, right? I mean, if I think about it, my grandfather was in the steel service center business. And he said, look, you have a few costs, right, you've got labor, and you've got rent, and you've got cost of goods. So, you know, your cost of goods are, that's your R&D in your software development costs, right? You have your labor costs, right, and then you have your rent, right. Now, if you're, you know, if you think about a restaurant, if they're, whether a ghost kitchen or a virtual kitchen, I mean, look, you know, you're not going to be on Fifth Avenue anymore. So, you know, for all we know, all these restaurants are going to be in these 10 sheds in the middle of [frickin nowhere], but at the end of the day, you know, if I can have your software, and that can eliminate the number of amount of labor that I need to do online ordering, and this anatomy, why can't I mean, the math I'm doing is you have $2 million restaurants growing with inflation, you have 2% of sales is $40,000. You know, that doesn't seem unreasonable. And that's not including payment. So like, you know, I there's so much economic waste in a restaurant. I mean, why isn't this just like rent? I mean, I just the math makes sense to me. And it doesn't make sense to me in the context of Toast and Lightspeed because they're going after restaurants that are doing 500,000 or 700,000, and they can't be cross sold into. So when I look at our store base, and I look at, you know, restaurant doing 2 million and growing, and, you know, the ability to cross sell, I mean, like, to me, it's like we're going to do it. So, I just, I don't know, it's silly to me that the market is gravitating to these SMB, you know, lower quality higher churn businesses …

Let me say this Adam and we do got to move to the last caller before time expires. But I'd say, we did the TAM is enormous. I think all of these companies are all fantastic. They're all going to grow at incredible rates. I've always said, we can be a really average management team, we’ll still have tremendous revenue growth. And if we're a great team, we'll have well above industry growth. You know, we're riding a wave and we happen to be lucky to be the beneficiary of it. We're not sort of, you know, there's no hubris and that we're actually that great. This is just a secular trend that's going to continue for a long, long time. And I think that's what you're touching on. Adam, I'm going to pause you, we're going to go to the next caller, just for the function of time.

Thank you. Our next question comes from [Amman Mahal], Investor. Your line is open.

Hi, guys. Just – I have a few questions. The first one was just on the, you talked about the accelerations here from the booking, sort of backlog, the 400 are closed doors or reopen, I'm just wondering about these existing 11,700 [indiscernible] on Brink, how many of those are kind of under earnings, I think have kind of partially limited hours, partially open stores, where there's – is it like a variable element to the Brink ARR, that you'll also see a benefit from as some of these stores reserved to come in normal operating hours.

So, at the moment, there's no variable element to it. So, if the store is open and running, we're billing them. And we've, you know, for stores that are down for your time, we don't build them. And so we take a conservative view on that. So, over time, though, there will be a variable element as payments becomes a bigger part of our base, which is transaction based, as opposed to, you know, [lights] being on. So, at the moment you don't have variability from stores being partially opened, it's, but again there is tail wind that these stores come back online, we start building them again. And you know, we'll start to see that I think, again, as the pandemic winds down, we'll see some nice pull-through there.

I mean, you look at our installed base, where do you see kind of most, look at the history there, where have you seen the most upsell and additional products on purchases coming from the demand installed base today [indiscernible], what's the main upsell that you're sort of generating right now?

Sure. So at PAR we've never upsold the product. So, it's historically been a single product, which is Brink point-of-sale. Now there have been small modular add-ons that were sort of bundled into Brink. Again, this is going back a decade, you know, some integrate loyalty solution, integrate [indiscernible] solution. But to most of our customers, they buy point of sale, and then they use our API to buy additional product, whether it be online ordering, or delivery, or loyalty or something else, it all sort of plugged into that point of sale system. We now are starting to just begin that upsell motion with our back office product and our payment products this quarter and I think you'll see us do more. The underlying trend underneath this though is very positive, which is our restaurant customers are not looking to manage 50 different vendors per store, they sort of want this platform impact, both of them to build on, but both of us to simplify their lives. And that's where I think that still happens. So, historically, we don't have data, it’s never, you know, as I say, you know, gross and net retention have been the same. We just have it – because there's never been an upsell. And I think that is like the excitement here, which is the last call or the TAM is just getting tapped into.

And I guess maybe the follow up to some of the questions previously, on the Tier 1 customer, could you just talk a little bit more around and on the sales cycle to get some of those guys on and also how their demands and what their needs are different from kind of Tier 2 and Tier 3 customers that you've been trying to get more [indiscernible] Brink?

Sure. So, Tier 1 customers are generally a, sort of year long sales cycle to win the corporate mandate. Now that has, you know, changed during the pandemic, where we've had some real shortened sales cycles, which we'll talk about in our next quarter. But historically, it's around a year sales cycle. And then subsequent to that, you quickly roll out the corporate stores. And then as I mentioned, if it's a multi-1000 unit chain, it'll be a two to three year process to convert those franchise stores onto [entrepreneuring]. So, that's generally how we look at it. In the mid-market, it's, you know, three to six months. It's a very different program where it's generally mostly corporate-owned, and you can sign and turn the stores on very, very quickly, which is where we've seen a lot of the growth, as I mentioned in Q4. And then the very down market where we sell through resellers call it changed or less than 50 stores. You know, again, it's a sort of a couple month sales cycle. We have a lot less visibility down there, because we're not talking to the customer directly. And that is also the only part of the market that really has churn as I mentioned. We've never really lost a large chain since Brinks existed. And I think that against the durability of the business, but also the ability to upsell because they must like the product if they've never shut it off.

And then maybe just on gross margins on kind of your service revenues, on a consolidated [indiscernible] line items that are, kind of call it in the mid-30s now, the software elements I mentioned are substantially higher than that, but can you just give me a sense of how we should think about that trending going forward?

Yeah, absolutely. So, in our service line, we combine our software-related businesses, and then our service businesses which are anything from field service to warranty advanced exchange type repair work. That margin over time will expand. The software business is much higher margin than our attritional service business. And over time, we'll see a nice growth in the business. I think over time, we'll look to sort of give a lot more breakouts of that business line so you can sort of follow that margin growth. So, I think you'll see really nice margin growth in that business historically, because again, the mix shift is moving much to the higher margin business. The non-software side of business should stay consistent, should be nice margin, as it's been for, you know, 20 years, 30 years, but the growth will really be coming from the software side.

Can you give me a rough split between the gross margin and software versus gross margin and [indiscernible] to get a sense of the differential and profitability?

Yeah, so we historically haven't, in the MD&A, we'd give a lot more specificity here, but we haven't broken up, I would say that our software businesses will be very much like other software products that sell to the same ACV level that we do. We should be 70%, 80% gross margin in time with our product. We aren't there today, primarily, because as we've talked about in the past. The business is running incredibly and efficiently. And we've sort of got excess spend, but we see a really nice trajectory in gross margin growth in the next couple years. And I would expect this to be in that range over time, I don't expect us to not be in that range, as we, I don't see us being any different than any other software product that sells at the price point that we sell to. And so that's already happening. And again, the new products we’ve built. The new products that we've acquired have all come in at sort of 70%, 80% gross margin range. We should be no different. On the non-software side of our services revenue, you know, you're in the 30s of gross margin. And that is somewhat volume dependent. So, as we grow Brink, that business line sells more hardware. So, more services are affiliate with that. And I think it’s very true [indiscernible] sort of Harvard Business is a packaged software. Installation implementation is not a business that we make a ton of money in, on the gross margin level, but [warranty interchange], those Field Services actually will make nice margins. And so, as we grow, I think that business line will – that part of the margin line will stay relatively flat. As growth slows, you'll also increased margin there because you're doing less implementations where the gross margins are relatively low.

Yeah, I think it'd be great. If over time, you could [indiscernible] the software gross margin and sort of report [indiscernible] to see.

Absolutely.

Maybe just one last question for me, just on kind of competing with incumbency, when you're looking to gain customers, has COVID actually kind of helped, maybe drawing some of those, sort of lagging competitors [indiscernible] the products, they actually raise their game and kind of add online ordering or curb collection to their product, we seem sort of them raising their game, and then way over the last sort of six months?

You know, I'd say this has always seen. I think the younger, more dynamic companies that reacted, I think, well, during the pandemic focused on the down market part of the business. So, those that were trying to come up into our part of the world, which is the enterprise side. I think returns and said, hey, where are we going to be great, let's focus on the market, we're great, which is that sort of SMB customer base, as that removed a chunk of competition from our world today. On the traditional competitors, the older companies, I don't think we've seen a dramatic change. I think there's no doubt that everybody reacted to help their customer base. Nobody was, you know, trying to hurt their customers. But I think it's very hard to, you know, it’s the innovators dilemma, how do you turn a product line that's made a ton of money for you to sell a ton of cash and turn that into a dramatic reinvestment vehicle? You know, I think it's tough. And so I think there's a structurally challenged to make such a drastic change to their business. And so, again, I think our results sort of show it, I don't think we would have had this dramatic growth in bookings we see in the last couple of quarters, if the competitive response was, you know, very strong.

I guess that’s good. That’s very much. Congrats on a good quarter. I'm looking forward to seeing how it develops.

Thank you.

Thank you. I'm showing no further questions at this time. I'd like to turn the call back over to Mr. Savneet Singh for any closing remarks.

Thanks, everybody, for joining. I look forward to welcoming you on future calls.

Thank you. Ladies and gentlemen, this does conclude today's conference. Thank you all for participating. You may all disconnect. Have a great day.