Earnings Call: Q1 2021

May 10, 2021

Good afternoon, ladies and gentlemen, and welcome to the Fiscal Year 2021 First Quarter Financial Results Conference Call. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time. As a reminder, this conference is being recorded. I would now like to turn the call over To your host, Mr. Chris Burns, Vice President of Business Development. Sir, you may begin. Thank you, Sarah, and good afternoon. I'd also like to welcome you today to the call for PAR's 2021 Q1 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 ks 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 be sure all participants today have access to our earnings presentation and business review slide deck that we will 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 afternoon. For those just dialing in on the conference call this afternoon, the presentation can be accessed on the Investor page of our website and we also included it as an attachment on the 8 ks we filed this afternoon also. 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 are recording the call this afternoon and it will be available for playback. Also, we are broadcasting the conference call via the World Wide Web. I'd 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 Parr's CEO and President, Savneet Singh and Brian Menar, Parr'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 and A. Savi? Thanks, Chris. Good afternoon, everyone, and thank you for joining our call today. Following the strong finish to 2020, we posted what I believe to be our best Q1 to date and our optimism continues to build around the coming quarters and years for our business. The progress being made to distribute COVID vaccines, The decline in infection numbers and the general reopening of the economy should lead to a strong 2021 for Par. We began 2021 with strong bookings in Q1, Continuing the strong momentum from Q4 and ended Q1 with our largest backlog of all time, which sets the groundwork for accelerated activations for the balance of 2021. While the last 12 months presented many difficult obstacles for Par and our restaurant customers, many of those challenges created opportunities that Par was well positioned to take advantage of. We invested in our software platform, introduced new product innovations, added top talent to our team, completed a significant acquisition And we're able to improve our financial and competitive position. While we'll touch on the financials a bit later, I wanted to touch on our recent acquisition of Punch. I'm personally very excited about this deal and Punch is a game changer for Par and our customers. Punch is a market leading customer engagement platform that provides cutting edge software applications, including loyalty, promotional campaigns and marketing artificial intelligence for the restaurant and retail industries. We signed and closed the acquisition simultaneously on April 8. Punch has more than 200 brand customers, 40,000 customer locations Currently has $53,000,000 in contracted ARR and 115% net dollar retention. Punch is a very high quality business with a very high quality team. On a pro form a basis, Punch ended Q1 with approximately $35,000,000 ARR And continues to accelerate growth even with the headwinds of COVID. There are many reasons we are excited by this deal. Punch Extends, Par's cloud for enterprise restaurants. The addition of the industry leading loyalty product now makes Par a unified commerce cloud platform for enterprise restaurants and our combined company further expands the industry's largest integration ecosystem. This deal creates a unique opportunity to improve value within shared and targeted customers and significantly deepens our tech development team and increases our innovation horsepower. Adding Punch positions PAR to fast track new customer wins with integrated point of sale, back office, payment and guest engagement solutions and is an exciting step in the evolution of both PAR and the restaurant industry. Customer loyalty and CRM SaaS has rapidly evolved from being a novelty for restaurants Our existing PAR customers I've been very positive regarding our acquisition of Punch and look forward to reaping the benefits of the enterprise class unified cloud commerce platform. Restaurants are living through a dramatic change in their operating and business model. Technology will be at the center of that change. It is a specific reason that we believe PAR's new unified As technology continues to be deployed within the restaurant and in store environments become more and more complex, Enterprise restaurants are seeking true technology partners to manage this complexity. There's no question software required by restaurants will grow tremendously over the next decade. While this software trend surging while software trend surging in restaurants, our company continues to focus on capital allocation and is directing our resources on transactions, Products and people that will have real impact upon are addressing this opportunity. Now to briefly review the Q1 reported numbers before Brian gives further detail. In Q1, we reported revenues of $54,500,000 Today, we also reported a GAAP net loss of $8,300,000 or $0.38 Compared to a GAAP net loss of $10,900,000 or $0.61 per share for the same period in 2020. On an adjusted basis, non GAAP net loss for the Q1 of 2021 was $7,600,000 or a loss of $0.34 per share compared to a non GAAP net loss of $4,700,000 or 0.26 dollars per share for the same period in 2020. Now moving to our business performance. If you jump to Slide 3 of the presentation, you'll see a snapshot of Brink's performance in Q1. I'm very pleased to report that we had 1345 new store bookings in the quarter, an 85% improvement from Q1 in 2020. I think this metric more than any other truly demonstrates the momentum and velocity of our cloud point of sale offering. And booking at par is a signed order from a store location pending rollout. The strong pace of Q1 Brink's bookings highlights the continued growth in demand for our modern software within the restaurant. As the slide shows, we reported our ARR at $25,600,000 a 15.3% increase from the same quarter last year. As As the pandemic continues to slow, we expect to see an acceleration in our activations as stores begin to open and normalize and return to our traditional activation pace. As restrictions have come down, we've seen activations pick back up, which will help us turning our signed backlog to revenue. I'm encouraged by the progress we've already seen in Q2. If you advance to Slide 4, you can see that we now have 12,141 active stores and our reported backlog and open order number at the end of the Q1 was 3,320 This record backlog sets the foundation for a very strong 2021. Again, as vaccination rollout continue to favorably impact restaurant customer traffic and reduce travel We'll see an acceleration in activations that will lower the backlog number and drive more normal book to bill pace. We installed 718 new Brink stores in Q1. We believe this is below where we want to be as installations earlier this year were being impacted by spikes and infections in specific regions and on state mandated travel quarantines. We We'll continue to work with our customers regarding implementation schedules along with enhanced infrastructure protocols to ensure our book to bill sequence is as seamless as possible. On Slide 5, you can see the ARR waterfall over the last 5 quarters as we continue to grow our ARR. Slide 6 shows the continued impact COVID related churn improves the nominal impact that COVID has had on store closures in our TAM and the inspiring strength of our customers. In Q1, COVID related churn was 4% annualized at our overall base and we'll continue to work to assist these affected customers to get back on and open their stores. These metrics are very positive signs for our business and this is down from a peak of 15% during the early stages of the pandemic. Slide 7 shows Restaurant Magic bookings in the quarter were $231,000,000 in AeroAire was reported at $9,000,000 Combined AeroAire and Restaurant Magic is now $34,600,000 at the end of the quarter. As I commented last quarter, Restaurant Magic and our data center application were impacted more by the pandemic than customer facing technologies like Brink and Punch. We're encouraged by the sequential improvement and expect a more normal bookings pace as 2021 progresses and similar to our expected growth in activations in Q2. We expect Data Central to also accelerate. Now I'd like to quickly review our product and hardware business in the quarter that is our point of sale platforms and drive thru communication systems business. Product revenues in the quarter were basically flat when compared to Q1 2020. Product sales were delayed in January February due to increased COVID spread As we are seeing favorable impact of the vaccine rollout, improving capital purchase environment for restaurants, we'll see higher sales throughout 2021. Now let's review our government segment. Our government business increased revenue by 3.2% compared to Q1 2020. Our contract backlog at the end of Q1 was $140,000,000 as of March 31, 2021. Our Intel Solutions business was a driving force behind the growth in the quarter as ISR revenues increased We continue to seek out contract opportunities where we can leverage our decade long experience and performance excellence, specifically in value added revenue contracts that include more direct labor and high-tech contract work within our Intel Solutions business lines. Now some takeaways for our company coming out of Q1. Restaurants are looking for a unified commerce platform to handle the rapid growth and digital transformation. Today, restaurants suffer from dozens of siloed different and disparate products that lack the modularity to make the solutions work. We've taken big steps in constructing that platform. 2nd, our acquisition of Punch and Marry is the guest to the transaction. Restaurants are realizing that they need that they don't need a singular loyalty program for their entire brand, but rather a loyalty program for each and every customer. While with the growth of digital and off premise ordering, restaurants now need to look at profitability and ROI at the guest level rather than the individual store level. Digital orders make it hard to measure ROI on a store basis. Guest engagement helps fill that hole. 3rd, with our strengthened balance sheet, we intend to continue our activity in the M and A space as we execute on our strategic initiatives. Our continued focus is on adding meaningful software products will allow us to increase our subscription rates and add additional functionality and features for our restaurant customers. Early returns from the Punch acquisition are very encouraging We're beyond excited to leverage our team's experience across all par. In summary, we start 2021 with considerable optimism. I want to reemphasize We will continue to make bold bets going forward on future growth that you can expect for and you can expect us to focus investments across product innovation, marketing and people initiatives. We believe this ambitious agenda at this time is warranted by the size of the market opportunity and where we stand today relative to it. In closing, I want to acknowledge the sacrifices being made by Our employees across the globe in these difficult times. Specifically, our current thoughts are with our New Punch colleagues based in India. India is presently in the midst of the worst phase of pandemic, And it's rare now to find a family that is not impacted by the disease in that country. Even in the face of the most difficult conditions, our business in India continues and our employees are finding creative ways to do their And with that, I'll turn the call over to Brian for more details on the Q1 numbers and then take your questions. Brian? Thank you, Savneet, and good afternoon, everyone. Product revenue in the quarter was $18,600,000 consistent with the 18.6 reported in Q1 2020. Service revenue that includes revenue from our subscription software was reported at $18,000,000 a decrease of $800,000 or 4.3 percent from the $18,800,000 reported in Q1 2020. The decrease was driven by a $1,800,000 decrease in implementation revenue, partially offset by $900,000 increase in software revenue. 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 $1,200,000 of the increase in service revenue. The company continues to gain momentum Elvix deployment of Brink POS and Restaurant Magic's data central application, noting a $1,100,000 or 18% increase in software as a service revenue as compared to Q1 2020. The quarter ended March 31, 2021 marked the 1 year anniversary of COVID related restrictions on restaurants. Those restrictions impacted the pace of which we were able to roll out our new sites. Of the $18,000,000 of service revenue reported in Q1 2021, $14,900,000 or 83 percent is comprised of recurring revenue contracts as compared to 13,000,000 We're 69% of service revenue in Q1 2020. Contract revenue from our government business was 17,900,000 An increase of $600,000 or 3.5 percent from the $17,300,000 recorded in the Q1 of 2020. This is a result of an increase in the value add ISR contract and subcontract revenues. Contract backlog continues to be significant, noting a total backlog of over $140,000,000 as of March 31, 2021. Now turning to margins. Product margin for the quarter was 19.8% versus 20% in Q1 2020. Service margin for the quarter was 29.6% compared to 32.6% reported in the Q1 of 2020. The decrease in margin was primarily due to the decrease in implementation revenue and increase in software related costs. Government contract margins were 6.7% as compared to 6.9% for the Q1 of 2020. This decrease was driven by our Mission Systems line of business impacted by higher labor costs compared to the Q1 of 2020. GAAP SG and A was $14,500,000 an increase of $2,900,000 from the $11,600,000 recorded in Q1 2020. The increase was primarily due to $1,100,000 of variable compensation and $700,000 of acquisition costs related to our acquisition of Punch on April 8, 2021. Net R and D was $5,800,000 up $900,000 or 18 percent from the $4,900,000 recorded in Q1 2020. The increase is driven by additional software investments from our Brake and Restaurant Magic Data Central product line. Also included in operating expenses for the 3 months ended March 31, 2021 It was $4,400,000 of proceeds received for a one time recovery of a legacy matter. There was no comparable reduction to expense for the Q1 of 2020. Now to provide information on the company's cash flow and balance sheet position. For the 3 months ended March 31, 2021, cash used in operating activities was 3,400,000 versus $15,100,000 for the 3 months ended March 31, 2020, primarily due to improvements in working capital requirements. Cash used in investing activities was $1,700,000 for the 3 months ended March 31, 2021 versus $2,000,000 for the 3 months ended March 31, 2020. Capitalized software for the 3 months ended March 31, 2021 was $1,500,000 as associated with investments for various hospitality software platforms versus the $1,900,000 for the 3 months ended March 31, 2020. Cash used by financing activities was $2,100,000 for the 3 months ended March 31, 2021. During the 3 months ended March 31, 2020, we received net proceeds $49,500,000 from the $120,000,000 issuance of the 20 26 notes, offset by the repurchase of a majority of the 2024 notes. Inventory increased from December 31, 2020 by $3,700,000 In preparation for planned installations with some of our enterprise customers, accounts receivable decreased 4,300,000 Compared to December 31, 2020, due to continued improvement in the restaurant and retail accounts receivable, Days outstanding improved within restaurants and retail from 74 days at December 31, 2020 to 63 days at March 31, 2021. Days outstanding increased within government from 51 days at December 31, 20 First question comes from the line of Samad Samana from Jefferies. Your line is open. You may ask your question. Hi, good evening and thanks for taking my questions. So maybe Savneet first, just As we look at the bookings number, I mean, that still is basically just a hair shy of the record levels we saw in 4Q. Can you Maybe help us understand what's driving that sustained strength. Normally in 1Q, you see a little bit of a seasonal downtick and then you mentioned in cases spiking. So just How should we think about the bookings in the quarter? And were there any particularly large deals that accounted for a meaningful portion of that record or near record level number? No large deals that sort of swung it. It's that continued momentum, Q3, Q4, we just continue to have amazing momentum. I would say though one of the things that I think we've gotten really good at is after we sign a large logo, we've gotten much better at signing up the stores To carve up the whale, if you will. So historically, it's taken us 2, 3 years to roll out a big concept. Now it's coming much earlier. I actually think that as these COVID restrictions have come down and we see our activations pick back up, which will obviously drive ARR. It will also help us, I think, on the booking side because As that backlog comes down, I think we can push even more aggressively on these existing logos that we haven't totally penetrated yet. Got you. And then I'm going to apologize for making you do a bit of a math question here. But if I just think back to last quarter, I think you'd mentioned that Brink ARR growth should continue to accelerate. And in this quarter, it actually decel against the prior year. So maybe just Help us think about what the shape of that should look like. I know it's tough to pin down because you can't control social Regulations and a pandemic, but just maybe help us think about how we should think about that acceleration on a full year basis Just given the quarter to quarter variance we might see. Yes. I don't think we're going to have the quarter to quarter variance anymore unless COVID picks back I think us having 3,300 stores in backlog creates a really, really strong foundation for 2021. It will be hard for us to screw it up So I think you'll see acceleration in Q2, again provided the pandemic doesn't come back. We've already seen, as I mentioned, activations picking up. And I think that will continue in Q3 and hopefully Q4. So I think this will be the low point because I don't expect COVID to come back and these restrictions to come Restrictions that we had in January February were pretty significant. And so that really limited what we could do. I think we'll see really nice expansion in Q2 and in Q3. What does that mean dimensionally by the end of the year? I think our AR growth by the end of the year should be in line where we've been historically. Again, I think just having that backlog, these are signed orders. These aren't like booking with we've got to go build software for. These are orders that are signed to be rolled out. So I expect by the end of the year, we're back to more traditional growth than we've had over the prior years. It's small, but I would just add one other piece to what Savneet mentioned there. Right. You mentioned the year over year growth, but this year being in essence the end of March of this year was the 1 year from what the restrictions hit last year. And so this will be our toughest lapping period in regards to post COVID. As last year, Q2 of last As you recall, we basically had a pause in installations in Q2 of last year. That's helpful color. Thank you for And then just switching gears maybe on Punch, I know it hasn't been that long since the acquisition was announced, but Have you had maybe any interesting early reactions from either your existing customers and feedback Hey, that was really interesting. We were looking at it or vice versa, where maybe Punch customers that weren't using Par Suddenly are taking your phone call, anything in that regard would be interesting as well. Yes. So Categorically, I'd say that the feedback was very positive. I think a lot of our customers understood the industrial logic of it. I think they have a lot of respect for the Punch team's ability to get product and ship it quickly. And obviously, the part they know part well. So category is very positive. Specifically, we've had a number of customers that I think we hadn't Planned to that sort of weren't deep in the pipeline that came back and said, hey, this is really interesting. Let's take a good look at par. And then we've had a category of customers that I'd say, it's slept on par. I don't think they knew all the change that was happening and this sort of brought them into the funnel as well. I'd say the best news though is that we didn't have any massive customer anger. We didn't have any customers think we're coming in to screw them. And so in general, it was very positive. Our customers have been really supportive. And obviously, I think living through the pandemic, they understand the why behind this, which makes it so much easier. Helpful. And then, Brian, maybe this one might be for you, but just I know that you're not giving guidance, But when should we think about, like or how should we think about Punch impacting the numbers going forward? And will that be broken Separately like Restaurant Magic is or will it all be integrated together in one recurring revenue line, Just kind of getting out ahead of that. Sure. What you're going to see in the 10 Q that's going to be coming out in the MD and A We are breaking out now away from where we had product lines in the past. We saw Core and Brink and looked at all the various different Revenue streams related to those customers that may have had those products to now we're actually going to be having in there within the segment revenue you're going to see pure just Hardware, software and services. And so the punch side that will be rolling up into the software component and a little bit into the services. Both software then services rolls into the services line on the financials. So that's what you're going to be able to see a little more transparency going forward now. Great. I'll turn it over to the next person. But thanks again for taking my questions and nice to see that strong bookings performance. Your next question comes from the line of Stephen Sheldon from William Blair. Your line is open. You may ask your question. Hi, thanks. I wanted to dig a little deeper on the visibility you have into the pace of activations For Brink, as we think about the next few quarters, I know you expect them to pick up, but can you maybe just help frame expectations around what we should expect in terms The activation cadence over the next few quarters, if you have visibility into that? Yes, sure. So I think before the pandemic, We sort of suggested that we kind of want our bookings and activations to kind of match and at the time we said, hey, it should be around 1,000. I think we'll definitely get back to that and hopefully well beyond that as the restrictions continue to come off. We've seen our restaurant Customers, now in the month of April and now May, lighten up more and more, which will help us accelerate. The second thing we've done is, I think we put some of our on this problem to really say, hey, how do we make this go faster? How do we change what we do to make it better? So, I'd expect us to like I said, I think this is the trough. This was the last this is I don't think I think Q2 2021 will be the Q1 that we haven't Had restrictions sorry, we didn't have immense restrictions. We still have some chains of ours that are limiting what we do until they get to the point that they can lift restrictions. But for the most part, this is the Since the pandemic happened that we can really push activations like we did before the pandemic. So, I'd expect just to get back to at least where we were Pre pandemic and hopefully accelerate beyond that as things get better and better. Got it. That's helpful. And then what traction have you seen so far on the payments facilitation side? How interested do your existing customers seem to be about exploring using your PayFac capabilities? Yes, I think my hope is by the end of the year we have real traction. I think we've learned a lot early I think we've actually been excited by some of the, receptivity we had from some larger chains. The key thing I think we've learned is our ability to Package, hardware and the rest of our services at the time of payments is very powerful to the end customer. We can provide more ROI, Provide them a lower cost of ownership. And so that's really what we're working on. And so while we're still really early, we had our sales kick off in February. I'm pretty encouraged by what we're seeing. And as I said, it will take us some time to get into these deals. Payment deals are on average 3 years. So But we are seeing good progress and particularly when we sell the full solution hardware, software and payments. I think we're making it hard for customers right now. So We're early, but I'm not I'm encouraged. And then I think the other part of payments that will be exciting was how do we think about Leveraging payments with what we have at Punch and what we're building in the future where historically selling payments from point of sale, Your real value is again the ability to package your bundled solutions. But when you're the front end guest solution, you actually kind of control the payments flow. So puts us in a different conversation. Great. Thank Your next question comes from the line of Stuart Sutton from Craig Hallum. Your line is open. You may ask your question. Thank you. Savneet, just another Way to ask about the backlog of sites to install and the opportunity there. Is there can you just give us a sense of what your Structural ability to implement would be if there were no COVID restrictions, your team was free to do As much as they could do, how significant could that be? So it's all about us staffing in front of it. So I think could we do 1,000 a quarter? Of course, we'll all set to do that. Can we do 1500? Absolutely. Can we do 2,000? We could. We'd have to sort of hire more around it and then so on and so forth. So it's very manageable for us to do this. And we are staffing up in advance of that. So We've made some hires specifically to prepare that activation again. As we've seen that activation pick up This month, we've you can see our website, we pushed for it. So I expect whatever that cadence we need to get to, we can get And today I'd say where do we max out? It's probably $1,000,000 $2,000 a quarter where it is sort of depends, but I'm not that wouldn't be Don't worry, I think we can step up for that quickly. Got you. On the Restaurant Magic So if we think about what Chipotle and others are saying about the cost of labor, when we think about supply chain costs going up, Restaurant Magic Seems like an ideal solution as part of your equation. I'm curious if you're using that more as a lead weapon or How the reception is going relative to the restaurant magic piece of the business? It's more of a pull through. So we pull that through. And I think one of the things we're excited for is if you think about our Q2 and Q3, with the pandemic restrictions easing, it's It's pretty amazing that we'll be able to accelerate activations and also accelerate Restaurant Magic, which got hit during the pandemic harder than Brink. So I expect us to be hitting on all cylinders, but that product is much more of a pull through. When we sell brake, it's a lot easier to pull that through. And that's so it's not the brake is more the lead in. Okay. And then final question relative to how you've discussed Those units that have really the Brink offering versus those units that don't have the Brink offering within the same brand, Can you give us any update there from an ROI or perceived ROI perspective? There's absolutely a perceived ROI. I think one of the most exciting things we've seen is that some of the change we signed in the last Quarter or so, the pace at which we are signing new stores is much faster than anything we've done in the past. And that's going to continue. I think that's just us honestly having gotten smarter about how we Sell that product, which is, as you said, very ROI based. We come in and we say, hey, here's what we're here's why this makes sense, here's what we've learned. And I think oftentimes just being smart about how we Think about incentives, right? So, I'm just making it up. If we said, hey, you get a month of SaaS free for installing for booking in the next Couple of months. It's extremely ROI positive for par because if they wait a year to install versus doing now, we made that money back in space. So think we've done a lot smarter about how we kind of again start to sign up those stores And we saw it really play really well in Q1. All right. Thank you. Your next question comes from the line of Anja Soderstrom from Sidoti. Your line is open. Hi, and thank you for taking my questions. Actually, some of them have already been asked. But In terms of the Punching integration and the sales team there, how big is that sales team and how is that integration going with the cross selling and upselling in terms of training and ramping that up? Sure, absolutely. It's relatively small Advisors, a dozen or so co occurring folks. We're really early into this. So we've worked on what's going to be our playbook Cross sell was our playbook for cross account collaboration. We're really excited. I mean, I think it's As I mentioned, when we told our customers, there was quite a bit that came in, that some customers that we weren't expecting. Just thinking through the last month, There's a number of accounts where I'm actively involved from the par side and vice versa. So it's been incredibly positive early going. As we move forward, we'll see much deeper collaboration because we'll have better mapped out where's the overlap, We're the places we need to push Punch. We're the places we need to push Spring and the other products that we have. So I think that part will be of all the things that happened in integration that will be the part that We have the most success in because again, we're very much answering a customer need as opposed to creating a need. Okay. Thank you. That was good overview. That's all for me. Your last question comes from the line of Adam Waddan from ADW Capital. Your line is open. You may ask your question. Hey, Savneet. Congratulations On pulling out of COVID, it's super exciting and obviously love to see the strength in the backlog. So my question is, if you look back kind of the history of the company when it was Super Harry and I got involved, The company had no capital. We got you in there. You had to solve all the tech debt. You were on pace to have your Best bookings quarter and then this COVID happened. And if anything, obviously now everyone realizes they need that. But you've kind of solved all the tech debt. You talked a little bit about kind of getting the implementation team up so you can start activating it at Whatever, 1,000, 15 100, 2,000 although I think during RVs with Karen, I think we probably activated close to 2,000 units in a quarter. You made a comment That you thought that the company by the end of this year would be able to get back to historical organic growth rates. I mean, Just to try to put some parameters around that. I mean, is that like a 50% to 100% ARR growth kind of exiting this year? Is that what you think you can get to? We don't give guidance, but I think historically our business has grown at that 40% to 50% clip. And I think we've got the potential to do that depending on how we execute and COVID staying where it is. I think underwriting that for 2021 isn't is very much completely tied to our ability to roll out this backlog, right? If we I If we didn't sign any more stores for the rest of the year and just roll out our backlog, we'd be very close to hitting the targets. And so I've never been more optimistic of our ability to drive ARR growth from what we've got signed already. And it'd just be a matter of Executing. And I think, obviously, adding punches just helps us continue that acceleration. So I think it's again, I hope it's our last COVID impacted quarter where we don't the bookings aren't so far ahead of the activations, and I think it will be. And so yes, I think it's we should be able to get to relatively exciting growth rate, because there's so much already signed. We don't need to sell too much rest of the year. That's going to hit a relatively high ARR growth number. Right. Okay. And then my follow-up question is, look, I Obviously, you've been in this company for a long time. We were sitting with a large franchisee, call it, about 100 units of what I would call a Tier 1 chain that is Probably larger than anything you already have. And we were sitting there and they said, well, we hate changing our point of sale because every single time we change, $50,000 of hardware and well, we both know that it's not $50,000 it's probably $6,000,000 $7,000,000 $8,000,000 $9,000,000 $9,000,000 which maybe is an education program. But But when I said to them, I'm like, well, what if Par could give you the hardware for free, would you do it? And they said, yes. And I guess my question really is, and it's kind of a 3 fold question. But I mean, if I look at the success of Punch, right, to me it feels like Punch integrated with restaurant chains that basically So we said, look, we're going to guarantee you this ARR. Now they're doing that through running the software expense for a lot of Change through the loyalty funds, these ad funds where the franchisee is already paying in the dollars. I guess my question to you is, You have a finite amount of implementations. How what do you see as kind of innovation in terms of rollout To Brink and Restaurant Magic visavis having these chains put into the loyalty funds or Making people take it with payment, I mean, or even just prioritizing who you're integrating with based on price. I It feels like we shouldn't be waiting on everybody else. Like this is a product that everybody needs. And so how do we think about kind of prioritizing the chains that are going to pay us the most ARPU and guarantee us the stores, Innovation in terms of payment either through payment processing or running it through the loyalty fund. I mean, it's clear like you said everyone needs this. It's almost I don't want to sound like a jerk, but like when someone says what's the ROI, I mean, I don't know if anyone on this call knows, but we were personally invested In CheckMaine, we think it's a wonderful asset, but I mean people are paying $100 a month, dollars 1200 a year that arguably generates anywhere from $100,000 in EBITDA per location based on reduced food waste. I mean, the fact that people are even asking if there's an ROI is kind of insane. So to me, this is like how do we educate the consumer that they need this and that the return is multiples on itself and then making people do it faster And making it easier, right? Making it easier, whether it's new payment or royalty fund. I mean, how do you think about those things? Yes. So listen, I think It's well underway, right? I mean, the bookings that we have are very much the result of getting out there and letting the story be known and understanding where we are. In addition to Punch, we'll accelerate that because now it's coming in and solving a much bigger problem, that end to end unified commerce platform. So I think it's well underway. I mean bookings are the best indicator for the health of our business. If our bookings were challenged, I would be nervous and they're not. Again, Q1 is our best Q1. And so I think it's well underway. I think it's happening. And I think specifically to the larger chains, it sounds like that you met. I would say, I always thought they would take longer to kind of morph the cloud because of the legacy infrastructure they have and how hard and potentially painful that is. I think the ROI now is so significant, whether it be the ability to have better online ordering, better loyalty, better kitchens, so on and so forth, but To do all the things that they are desperately looking to do and are doing in and having on a modern platform, I'd be shocked if it wasn't priority 1 or 2 on every CEO and CIO's So I think that those are that's all underway and we'll see more and more larger and larger chains kind of make that switch and make that decision. And again, we benefit a lot from Punch being in a lot of these brands already and not having a point of contact in a product that drives significant ROI. Yes. No, look, Punch being in with Yum! Brands and Taco Bell and all of these great companies is great. I mean, look, I don't know if it's lost On you, but McDonald's says they're putting up dynamic yield dynamic yield. I mean, they were the forerunner in terms of investment in restaurant tech. Now they're basically taking a step back. And For those of us who've studied this company, Parr was basically formed on developing the modern point of sale system for McDonald's. So look, if anyone's in pole position to sign on McDonald's, it's us. Look, I'm super excited. Dairy Queen's 5,300. I'm looking forward to the next the first 10,000 unit chain And taking over the rest. So thank you for working hard and that's it for me. I'm showing no further question at this time. I would like to turn the conference back to Mr. Samit Singh for closing remarks. Thank you everyone for joining. We look forward to talking to you next quarter. Ladies and gentlemen, this concludes today's