PAR Technology Corporation (NYSE:PAR) Q1 2024 Earnings Call Transcript

Adam Wyden: Wouldn’t your gross margins go up in your lower margin products as you drive better utilization? I mean, I guess if you’re at a 60% gross margin MENU, wouldn’t the incremental margin on a dollar of revenue be higher on MENU than a Brink? I mean, is that…

Savneet Singh: Once we clear the cost, yes. And so, remember, even when you add a MENU customer, as an example, we’re still firing up an Amazon instance. We’re still launching a — well, actually, there’s still incremental cost, but yes, over time, MENU should get to the same gross margins. I mean, I want MENU to get to a Punchh of gross margins, which are really exciting and growing a ton. And so, over time, yes, it will get there. But the actual revenue dollars have to come in. So, we launched these six or seven customers this quarter. In Q2, we get the full quarter of that revenue. And that’s, again, going to boost up those gross margins. So, I think what your point is, what is incremental gross margin of a customer? On MENU, it’s a little bit hard because we’re so early, right?

We’re a million, two million bucks into this thing. And so, we’re still not where I can say, oh, it’s 90% drop. But it should be no different than any other SaaS product because every incremental instance, as an example, is higher margin than the last.

Adam Wyden: Right. So, it’s a fair assumption that at minimum, our incremental gross margin should be around 70. And hopefully, they should be higher as we drive utilization in our lower margin products, right? So, if I take sort of 70 where we are, at 8 million, that’s 5.6, plus a full quarter of Stuzo, plus lower OpEx. I mean, assuming hardware doesn’t get worse, I’m seeing profitability in the second quarter. I guess you guys are just sort of being conservative with your guidance. Is that a fair way to walk away from this?

Savneet Singh: On those assumptions, it is. And I think your math is generally pretty directionally accurate on everything.

Adam Wyden: Okay. All right. That’s it. Thank you.

Operator: And there are no further questions at this time. I will hand the conference back to management for any further remarks.

Savneet Singh: Thanks, everybody, for joining our call. We look forward to updating you in the future and giving you more updates on our progress towards free cash flow profitability, but also some of these large great wins. Thanks.

Operator: Thank you all for joining the call today. You may now disconnect.