PAR Technology Corporation (PAR)

Following up on the debt discussion after PAR’s Q3 results and 10-Q. Strong quarter: revenue $137.1M (+15%), ARR $354.5M (+18% YoY / +$16.5M sequentially), and adjusted EBITDA $17.1M. Cash ended the quarter at $94.5M. Guidance raise (from the prior Q2 outlook): • Full-year revenue: raised from $516–$523M to $532.5–$536.5M (~$16.5M higher at the midpoint). • Full-year adjusted EBITDA: raised from $50–$53M to $57.9–$59.4M (~$7M higher at the midpoint). • Q4 guide: revenue $138–142M and adjusted EBITDA $17.5–19.0M. Free cash flow improved meaningfully in the third quarter. Operating cash flow was negative in the first quarter (approximately –$17 million), driven by seasonal working-capital items, before turning positive in the second quarter at roughly $3 million. In the third quarter, operating cash flow rose to approximately $21 million, resulting in free cash flow in the mid-to-high teens after capital expenditures and capitalized software. Year-to-date free cash flow is now modestly positive. With fourth-quarter adjusted EBITDA guided to $17.5–19.0 million, full-year 2026 free cash flow is expected to finish clearly positive (roughly $10–15 million). Looking ahead, a base-case range for full-year 2027 free cash flow is $35–50 million, with a stronger scenario (sustained ARR growth plus continued margin expansion) closer to $55–70 million. This trajectory strengthens the company’s capacity to address nearer-term debt obligations with cash rather than relying primarily on refinancing or equity On the transparency point: In the non-GAAP diluted EPS calculation this quarter, PAR is now explicitly including the potential dilution from the 2031 convertible notes (~13.9 million shares). That brings the diluted share count used for non-GAAP EPS to roughly 55.8 million. The additional 467,000 shares are dilutive common stock equivalents — mainly stock options and restricted stock units that become dilutive under the treasury-stock method once the company is showing non-GAAP profitability. In other words, PAR is no longer showing the earnings number as if those notes (or the equity awards) don’t exist — the market can see the impact of a full conversion already baked into the diluted figure. On the debt path: • The $53M of 2027 notes are easily coverable with current cash. • The $115M of 2030 notes will depend on continued free-cash-flow progress; cash repayment is possible if execution stays on track, otherwise a refinance is available. • The $265M of 2031 notes can be addressed with shares. Starting March 20, 2029, if the stock holds above $24.73 for the required period, PAR can force conversion, retire the principal, and stop the 4% interest without a big cash outlay. The operating progress in Q3 (higher ARR, stronger profitability, rising free cash flow, and the raised guide) supports the idea that free cash flow should improve enough to handle the nearer-term notes in cash while the longer-dated 2031 notes can eventually be converted into equity. The fact that management is already showing the fully diluted share count (including both the converts and the 467k of equity awards) in non-GAAP metrics is a useful step in making that path clearer. Following up on the debt discussion after PAR’s Q3 results. Strong quarter: revenue $137.1M (+15%), ARR $354.5M (+18% YoY / +$16.5M sequentially), and adjusted EBITDA $17.1M. Cash ended at $94.5M. Guidance raise (from the prior Q2 outlook): • Full-year revenue: $516–$523M → $532.5–$536.5M (~$16.5M higher at the midpoint) • Full-year adjusted EBITDA: $50–$53M → $57.9–$59.4M (~$7M higher at the midpoint) • Q4: revenue $138–142M and adjusted EBITDA $17.5–19.0M Free cash flow improved meaningfully in Q3. Operating cash flow was roughly –$17M in Q1 (seasonal working capital), turned positive at ~$3M in Q2, and rose to ~$21M in Q3 (free cash flow in the mid-to-high teens after capital spending). Year-to-date free cash flow is now modestly positive. With the Q4 EBITDA guide, full-year 2026 free cash flow should finish clearly positive (~$10–15M). A base-case range for 2027 is $35–50M (stronger scenario $55–70M with sustained ARR growth and margin expansion). This trajectory improves the company’s ability to address nearer-term debt with cash. On transparency: In non-GAAP diluted EPS, PAR is now including the potential dilution from the 2031 convertible notes (~13.9M shares), bringing the diluted share count to ~55.8M. The additional 467k shares are dilutive equity awards (mainly options and RSUs). Management is no longer presenting the earnings number as if the converts or equity awards do not exist. On the debt path: • The $53M of 2027 notes are easily coverable with current cash. • The $115M of 2030 notes depend on continued free-cash-flow progress; cash repayment is possible if execution stays on track, otherwise a refinance is available. • The $265M of 2031 notes can be addressed with shares. Starting March 20, 2029, if the stock holds above $24.73 for the required period, PAR can force conversion, retire the principal, and eliminate the 4% interest without a large cash outlay. The Q3 results (higher ARR, stronger profitability, rising free cash flow, and the raised guidance support the view that free cash flow should improve enough to handle the nearer-term notes in cash while the 2031 notes can eventually be converted into equity. Showing the fully diluted share count in non-GAAP metrics makes that path clearer.

How PAR clears the $19 convert wall, and the odds of the bull case? PAR’s $265M 4% notes due 2031 convert at $19.02. Arbitrage funds own the notes and short the stock against them. As the price approaches $19, their hedge ratio rises and they sell more shares, which is why rallies toward the high teens keep getting pushed back toward $13–$15. The stock gets through only when long-term buying is larger and more persistent than that automatic selling. In the base case (existing rollouts + mid-teens organic ARR, no new mega logo), the company improves but the hedge selling is usually enough to keep the stock choppy and capped near the conversion price. In the bull case (a new Tier 1 larger than Papa John’s signed in the next 12–18 months and installed through 2027–28), the ARR and free-cash-flow ramp attract enough new buyers to absorb the hedge supply, hold above $19, and open a path toward the mid-$20s call trigger after March 2029. Probability the bull-case mega Tier 1 is actually signed in the next 12–18 months: roughly 25–35%.

INTERESTING. Voss gets a Board Observer mid-April, and last week buys $10M of PAR stock and an option to purchase 46K shares at $25 (which expires mid-July). These trades were filed with the SEC last night. Today, PAR traded up 5% and closed at $14.71. What does Voss now know?

PAR Technology Q1 2026 ARR: CEO Pruning Is a Margin Win, Not a Red Flag PAR reports Q1 2026 results May 7. Investors should not misread any sequential ARR softness as weakness. CEO Savneet Singh has been explicit: the company is intentionally pruning legacy low-margin customers in Q1 — the same disciplined move made in 2025. In the Q4 2025 call, Savneet said the second half will be stronger “as we manage out some of our legacy low-margin customers in Q1.” He added that PAR is “leaving legacy brands that are generally not paying the value for the services that we have, which will lead to us having higher margins over time.” This is not lost contracts or competitive churn. It is proactive housekeeping to shed low-ARPU relationships and refocus on high-value, multi-product, AI-enabled customers — fully consistent with management’s “muted H1 / significantly stronger H2” guidance and mid-teens full-year organic ARR growth target. Q1 Impact 2025Q4 Organic ARR (actual): $313.4 million 2026Q1 Organic ARR (est.): $321.4 million Net sequential organic add: +$8.0 million (+2.6% QoQ). The low-margin churn drag is estimated at $8–12 million annualized (2.5–4% of ARR). Excluding pruning, gross adds from Tier-1 ramps, Bridg, PAR Intelligence, and >80% multi-product deals would have delivered +$16–20 million. Result: Organic ARR still grows a robust +46.7% YoY (easy comp from 2025Q1 pruning). Total ARR is modeled at $331.4 million (including modest Bridg lift). How to View Q1 ARR: Focus on gross adds ex-churn (management will provide color). Margin expansion is the real story — higher subscription margins + $15 million AI OpEx savings. H2 acceleration remains on track from Tier-1 go-lives, AI upsell, and international momentum. PAR is deliberately trading low-margin volume for higher-retention, higher-ARPU ARR, de-risking the full-year outlook and lifting run-rate profitability. Bottom Line: Savneet’s comments signal capital-allocation discipline. The May 7 call should confirm the pruning was contained and set up a clean H2 re-acceleration. Disclosure: The author is long PAR. Not investment advice.

This will be very interesting to PAR holders: On April 15, 2026, PAR Technology Corporation (the “Company”) entered into a Board Observer Agreement (the “Observer Agreement”) with the persons and entities listed on Schedule A thereto (Voss Value Master Fund, LP, Voss Value-Oriented Special Situations Fund, LP, Voss Advisors GP, LLC, Voss Capital, LP, Travis W. Cocke and Jon Hook, collectively, “Voss Capital”), pursuant to which the Company appointed Jon Hook (the "Board Observer") as a non-voting observer to the Company’s Board of Directors (the “Board”). Pursuant to the Observer Agreement, the Board Observer is entitled to attend, in a non-voting observer capacity, all meetings of the Board and certain committees and to receive the applicable meeting materials at substantially the same time and in the same manner as provided to members of the Board, subject to customary exceptions (including to preserve attorney-client privilege, comply with applicable law or exchange rules, protect third-party confidentiality, or avoid conflicts of interest).The Observer Agreement has a term of one year and may be terminated earlier upon specified events, including if Voss Capital falls below the minimum ownership threshold, upon an uncured material breach by either party (following notice and the applicable cure period), or if Voss Capital or its affiliates seek board representation or attempt to exert control or influence beyond the observer rights granted. The Board Observer has no voting rights and no fiduciary duties to the Company or its shareholders. Voss Capital is not entitled to any fees and the Board Observer is only entitled to the reimbursement of expenses if the Company requests he attend a Board meeting in person. The Observer Agreement also contains customary provisions regarding confidentiality and non-disparagement. The foregoing description of the Observer Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Observer Agreement, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference. Board Observer Agreement, dated as of April 15, 2026, by and among PAR Technology Corporation and the persons and entities listed on Schedule A thereto.

PAR Technology Files Shelf for Up to 1.5 Million Common Shares on Behalf of Selling Stockholders Date June 10, 2021   Time 3:12 AM

PAR technology 💕 Great aquisition of Punchh last week