Good morning and welcome to the 2021 Annual Meeting of PAR Technology Corporation's stockholders. I am Savneet Singh, Chief Executive Officer and President of PAR Technology Corporation, and I will be presiding as the Chair of this meeting. It's 10:00 A.M., and I call the Annual Meeting to order. I would now like to introduce Chris Burns, the Company's Vice President of Business Development, to provide you with the information about the Annual Meeting process and to conduct the business of the meeting.
Thank you, Savneet. Before turning to the procedural matters this morning, I'd like to introduce the members of the PAR Board at today's meeting: Directors John Sammon, James Stoffel, Douglas Rauch, Cynthia Russo, and Keith Pascal. Also at the virtual meeting are Narinder Singh, PAR's new Director Nominee; Bryan Menar, the Company's Chief Financial Officer; Thomas Teehan, Representative from Deloitte & Touche, LLP. Tom will be available during the question- and- answer session after the meeting to respond to appropriate questions. Also at the meeting this morning is Cathy King, the Company's Secretary and General Counsel. The Board of Directors has appointed Cathy to act as Inspector of Elections, and she has previously taken her oath to serve in such capacity. Cathy will also act as Secretary of this meeting. We will now begin by attending to the formal business of the meeting.
After the formal meeting is adjourned, Savneet Singh, PAR's Chief Executive Officer and President, and Bryan Menar, PAR's Chief Financial Officer, will provide brief presentations on our business. Following that, we will hold a question-and-answer session. Now to begin. Our Board of Directors fixed April 9th, 2021, as the record date for determining stockholders entitled to vote at this meeting. Stockholders of record as of that date and attending the meeting can vote their shares online from now through the closing of the polls by using the proxy ballot on the virtual shareholder meeting website. If you have previously voted by proxy and do not wish to change your vote, your vote will be cast as you previously instructed, and no further action is required.
Currently, we are in receipt of an affidavit of mailing establishing that notice of this meeting was duly given on or about April 19th, 2021, to all stockholders of record as of the record date, and a copy of the notice of the meeting together with the affidavit will be incorporated into the minutes of this meeting. The stockholder list shows that as of the record date, there were 25,163,803 shares of common stock outstanding and entitled to vote at this meeting. The Inspector of Elections has confirmed that there are more than a majority of those shares represented in person or by proxy at this meeting. Since the presence at this meeting of at least a majority of our common stock outstanding and entitled to vote on April 9th, 2021, constitutes a quorum, the business of the meeting can proceed.
There are six items of business before the meeting today. First, the election of six directors to serve until the 2022 Annual Meeting of Stockholders and until their successors are elected and qualified. The Director Nominees are Savneet Singh, Keith E. Pascal, Douglas G. Rauch, Cynthia A. Russo, Narinder Singh, and James C. Stoffel. Secondly, a non-binding advisory vote to approve the compensation of the Company's named executive officers. Third, approval of the Company's 2021 Employee Stock Purchase Plan. Four, approval of the issuance of up to 253,233 shares of the Company's common stock upon exercise of assumed unvested options in connection of the acquisition of Punchh, Incorporated. Approval of the issuance of up to 280,428 shares of the Company's common stock upon exercise of the warrant issued to PAR Act III, LLC. Finally, ratification of the appointment of Deloitte & Touche, LLP as the Company's independent auditors.
Because no further business is on the agenda to come before the meeting, we will move on to voting. Again, as a reminder, stockholders of record as of April 9th, 2021, attending the meeting can vote their shares online from now through the closing of the polls by using the proxy ballot on the virtual meeting website. We will now wait a few moments to allow you to conclude your voting. If you have previously voted by proxy and do not wish to change your vote, your vote will be cast as you previously instructed, and no further action is required. I now declare the polls closed at 10:08 A.M. today, June 4th, 2021, and ask the Inspector of Elections to report the results of the stockholder votes.
Thank you, Chris. The six Director Nominees have been elected. The compensation of the Company's named executive officers has been approved. The Company's 2021 Employee Stock Purchase Plan has been approved. The issuance of up to 253,233 shares of the Company's common stock upon exercise of assumed unvested options has been approved. The issuance of up to 280,420 shares of the Company's common stock upon exercise of the warrant has been approved. The appointment of Deloitte & Touche, LLP, as the Company's independent auditors for 2021 has been ratified.
Thank you for attending today's meeting. The meeting is adjourned. Bryan Menar, our CFO, and I will now provide a brief presentation on the Company's business. Following this, we'll have a brief question-and-answer period. Before I begin, I'd first like to thank Dr. John Sammon, our longtime CEO, Founder, for his commitment to PAR. Today marks his last day on the board of PAR, and we wish him well on his future endeavors. Chris, can we move to the next slide? Before we start, I'd like to give a grounding of who we are at PAR. Early in our time, we defined three values that we think set the stage for the foundation of our employee growth. These are speed, ownership, and impact. To us, these three values act as not only guiding principles in how we hire, but the foundation of how we interact with each other.
We like to say we look for people who don't wait for the elevator. We look for people who are owners and not renters of PAR. While we care about the impact of results, not necessarily the output of those results. We believe if we act this way, we can run in an agile manner, run very decentralized, and allow our teams to own their decisions as opposed to senior management and be incredibly data-driven. Through these sets of values and these behaviors, we think we can push PAR forward and reach our 2030 BHAG. At PAR, we coined the phrase "food, people, nothing in between." We think this creates not only a tagline, but oftentimes a purpose for us at PAR.
Technology is often acted as not a disruptor, but a disintermediary for customers at the restaurant, where technology has become more of a wedge than a facilitator and a connection between the brand and its customers. We look at PAR's goal as bringing the customer closer to their brand. If we flip to the next slide, we can see where PAR stands today. The Company has gone through an incredible transformation in just a couple of years, where we now stand at almost $70 million of live ARR in thousands of sites across the country and world. Recently, upon our acquisition of Punchh, we've moved to now understand not only transaction data and payment data and back office data, but the front of house, i.e., the customer. As we move forward, you'll quickly see how synergistic the Punchh acquisition is alongside our existing products at Brink, Data Central, and Drive-Thru.
To quickly review 2020, our QSR and Fast Casual segment performed incredibly well. These businesses were resilient in the face of the pandemic and oftentimes formed a bridge to a community desperate in need. By luck and maybe by fortune, PAR's heavy focus on this market allowed us to succeed when others struggled. We were able to continue our investment in our next-generation platforms and complete two strategic financing transactions to give us a strong balance sheet, which allowed us to eventually push forward on our transaction for Punchh. Looking at 2020, we had continued store growth across the Brink platform. Brink is the foundational product of PAR and the key to our future success. Our footprint continues to grow, and by all means, we believe our market share as well. As we exited 2020, we ended with our largest backlog of all time, and that's continued in 2021.
This strong backlog provides a strong foundation for PAR to move forward with accelerated ARR growth in the coming years. With this accelerated growth, we've also been able to maintain a relatively low churn rate, which should create, again, the foundation for future upsells to our customers. Brink focuses on serving the QSR space, and as we've talked about, it's incredibly resilient. Across the U.S., there are about 700,000 restaurants, and we believe that we are applicable to about half of those restaurants. At the same time, that market is expanding tremendously because products sold into this market are at the beginning of a very, very long transformation. At PAR, we like to say that five years from now, the amount of software sold in a restaurant will be multiples of what it is today.
As software and workflow moves to the cloud, our customers will need more product to manage that workflow to allow for more efficient and streamlined operations. Flipping to the next slide is our pipeline. One of the unique things about the Brink business is that our model of MSA and then future bookings gives us great visibility into our future. Today, as we disclose at the end of Q1, we were active in 12,100 sites. However, our pipeline of existing signed MSAs is well over 10,000 additional stores. Essentially, we could stop all new enterprise sales and mine our existing base assigned contracts for our future growth. We, of course, would not do this, but I think it highlights how much ARR is still to come just from the execution of our existing customers.
The chart at the bottom looks at how many of our customers fit in Crossing the Chasm—excuse me—how they fit across Crossing the Chasm from the famous Geoffrey Moore book. I think what we've observed is that as Brink accelerates across the platform, that acceleration never stops because once a restaurant tastes the technology of the future, it's very hard for them to go back. As we look at our pipeline, we are spread pretty evenly across this chart. We have some customers that are now in the late majority, some in the laggards, but we have a number of them that are still just in the beginning of this adoption. Again, we think this provides great foundation for our future. At the end of Q1, Brink ARR posted around $2,100 annually per store.
Our ARR was $25.6 million, and our new install base grew by 17% over the last 12 months. New customer signs in Q1 averaged $187 per month. Data Central, our back office product, formerly referred to as Restaurant Magic, stood at ARPU of $1,490. Our ARR was around $9 million, and the install base grew by 282 new sites. As we talked about in our last call, we expect that as the pandemic subsides, Data Central to come back up to the historical growth rates that we observed prior to buying the business. Our business can build on our long 40+ years history in the business. While our business is anchored towards software and our capital allocation focused on our hardware business is still a key component of our future. This year, excuse me, last year, we released our Helix terminal, a modern and fast terminal with modular compute.
We believe it was purpose-built for our future HaaS models and gives our customers far more flexibility than existing terminals. We've had strong customer reception so far. Moving to Punchh. In April of this year, we announced the acquisition of Punchh, what we believe to be the market-leading enterprise platform for guest engagement. Punchh, similar to Brink, focused heavily on the enterprise customer base with penetration across most large restaurant chains in the United States. We paid around $500 million for the transaction, and Punchh at the time of the acquisition had $32 million in ARR, growing at a very healthy clip. We believe that the acquisition of Punchh builds out a key part of PAR's future unified commerce platform. Combining Brink with Punchh gave us what we believe to be the two leading cloud solutions of point of sale and guest, building upon our back office solutions.
We believe today that we are likely the only provider of a true cloud solution from end to end. The acquisition deepens our management bench, our engineering bench, and gives us domain and AI, something we have not historically invested in dramatically, all while doubling our ARR and hopefully maintaining and accelerating our growth rate. Along with the transaction, we added two significant investors, Act III Holdings, Ron Shaich's investment vehicle, and T. Rowe Price. We're excited to have them join us on this journey. Flipping to the next slide is an overview of PAR's ARR profile. ARR has grown tremendously, and we think is the most important metric in evaluating PAR. While we've grown, we've been able to maintain low gross churn without having a traditional upsell model, which will lead to stronger net retention in the future.
This SaaS growth will help us increase our margins as we move forward and become less reliant on hardware EBITDA. Moving to the next slide is the very beginnings of our unified commerce platform. Today, we provide customer information, payment information, menu and transaction information, and operational information. The building of this platform gives our customers the ability to have truly unified commerce, end-to-end operations, and we believe help them deal with the challenging environment of massive technology expectations from customers, data integrity issues at the corporate office, and a lack of insights across the platform. When we announced the Punchh acquisition, we were excited to find that our customers were happy. In fact, many of them stood up and clapped. These same customers are the ones who not only understand the vision of unified commerce but are pushing PAR to get there faster.
We look forward to delivering on these promises. The next slide gives us a bit about the challenges of the restaurant and hopefully the foundation of the PAR platform. Restaurants today are flooded with dozens of software products running around disparate systems, oftentimes products that were never meant to speak to each other. The PAR platform will be the platform that the enterprise restaurant builds its future on. We believe this platform will be configurable, modular, and completely open, eliminating the need for best-of-breed solutions and significant point-to-point integrations. Flipping to the next slide is what we believe our investment thesis is. The community that we serve today is incredibly underpenetrated in technology. The average restaurant organization spends 2%-3% of total revenue on R&D, well below the 7%-8% of the average U.S. industry.
As we mentioned earlier, the amount of software purchased in the restaurant today is just beginning. Restaurants are starting to move to artificial intelligence, machine learning, and making true insights of their data. We believe PAR is situated perfectly to capture that massive wave. Second is our unified commerce platform. This platform will be the foundation of our growth. Today, most cloud software sold to the restaurant is still based off the vestige of per-seat models, independent point-to-point integrations, and very, very little partnership. We believe a platform puts us in the same boat as our customers. If we deliver value, we capture value. If we do not capture value, we do not take value. Third is our ARR at scale. PAR's ARR has grown in just two years from less than $14 million to over $70 million.
This ARR growth is key to driving stronger margins, all while maintaining very low gross churn. We're excited to have this number continue to grow. Before we end, I'll flip quickly to our government business. Our government business continues to be a strong provider of EBITDA and cash flow for our business, revenues of $71.3 million in 2020 and an increase of 11.5% from 2019. We've got a strong backlog of over $151 million, and our margins were 7.4% in 2020. Our team is committed to providing the excellent service they've had since our founding almost 53 years ago, and we thank the team members for continuing to support PAR in this massive transition. I'll now turn it over to our CFO, Bryan Menar.
Thank you, Savneet. Now, I'll provide you with a brief summary on the 2020 performance. Can we move to the next slide, please? Alexa, I'm having a little bit of a technical difficulty. Can you sub in there at slide 25? We're 26 at this point. Thank you. All right. As I said, we provide a brief summary on the 2020 performance. 2020 revenue of $213.8 million was up 14%. The segment revenue mix was 67% for restaurant retail and 33% for government.
On the next slide, as you can see, all three—wait for the next slide to move. Thank you. All three revenue streams experienced revenue growth, led by service up 22%. Product was up 11%, contract up 10%. We can go to the next slide. The increase in adjusted gross margin was led by the growth in the service with Brink and Restaurant Magic software. The increase in non-GAAP loss per share was due to the increased investment in Brink and recently acquired Restaurant Magic and Drive-Thru.
We can move on to the next slide. From a balance sheet perspective, regards to our financial position, the year-over-year change in the balance sheet was driven by the two capital raise transactions in 2020. In February 2020, we refinanced the majority of the 2024 notes with the issuance of the 2026 notes. We were able to push out duration two years, reduce the interest rate, and net $50 million in cash with minimal additional debt service. In the fall, in October 2020, we had the follow-on equity raise, which raised approximately $131 million. Both transactions strengthened the balance sheet and prepared PAR to continue to make strategic business initiatives. To the next slide. The first two bullets here just kind of reiterate what I just mentioned there in regards to the capital raises.
In addition to where we're at, Brink hardware pull-through continues to see sales at 70% pull-through of our Brink rollouts. Brink RPU was at $2,100 at the end of Q1 2021. Our ARR run rate totaled $34.6 million at the end of Q1 2021. As Savneet mentioned earlier, with the Punchh acquisition, we were able to double our ARR to $70 million on a pro forma basis as of Q1 2021. I believe we now move on to the next segment.
Thanks, Bryan. Just a reminder to all the attendees on the meeting this morning, you can submit your questions via the portal and type in the event, and we'll take them as they come. We'll get started here. First question is, Savneet , can you explain the importance of the point of sale going forward since new solutions offered by Olo and Xenial seem to be replacing the point of sale as the core platform for the restaurant?
Sure. I guess I'd challenge the premise. I don't think any external platform is yet challenging the point of sale. In fact, most of these products run through the point of sale. I believe almost—I expect for almost every enterprise restaurant, every transaction is still running through the point of sale. Very little happens outside the point of sale because it is that transaction record. It is that master data set that every brand builds every data model on top of. The point of sale, excuse me, is still vital to the foundation of every technology built in the restaurant.
The key—and I think this is the impetus or the spirit of the question—is how does that move forward? I think for us at PAR, it's moving that transaction out of the point of sale system. It's making it accessible to everyone outside of the restaurant. Today, restaurants are inundated by orders from third-party delivery companies, from online ordering systems, mobile apps. Tomorrow, it'll be all those things times two. We need to make sure that we can build a transaction engine that services across every existing order channel plus all the ones to come and provide the connectivity to the rest of the back of—excuse me—to the back of the restaurant.
It's that end-to-end platform, again, that I think will provide real value to the restaurant because anybody can pump a bunch of transactions. It's how do you serve that transaction from the point of acquisition to fulfillment that very, very few can do. I think that's where we see our place.
Next question. What does the opportunity currently look like to cross-sell across the client bases with our different cloud offerings?
We're just at the inception, but I think we've seen very strong receptivity to our Brink customers taking on Data Central as an example. We combined the Data Central sales force in Q1 and have seen strong pickup so far. I think that will continue and provides great foundation for our Brink—excuse me—our restaurant and Punchh teams to come together and push cross-sell. The key, I think, for us is not so much are we cross-selling effectively? I think we will.
It's are we able to sort of combine the products to create value that they could not get independent of each other? That's where we are most excited. Again, the foundation of our M&A strategy has not been to acquire revenue or cross-sell. It's been acquiring product. It's through that lens that I think we've been able to engender the excitement of our employees and our customers and hopefully our shareholders to come.
Next question, kind of along the same lines. What does the competitive environment look like for all of PAR's kind of front-end and back-end capabilities? Does the integrated platform give us a leg up on the competition?
I think it does without question. We have to execute on that platform, and we're just at the beginning of that. When we come out with that platform in time, I believe it only gives a leg up. I do not know if there is another provider that can give that end-to-end execution. It is important to sort of suggest that a platform is not a bundled product. A platform is essentially giving our customers the building blocks to build their own digital future. We are not pumping and sticking them with a ton of product.
If they do not want to turn on our back-office solution, as an example, they do not have to turn it on. The platform gives them the ability to control their innovative future. Again, for us, it puts us in the same bucket as our customers. If our products are not adding value and you do not turn them on, we do not get paid. I think it creates perfect alignment between the customer and the vendor, in this case, PAR.
Next question. Can you update us on what steady-state margins in software will look like? And how does Punchh impact that math?
Sure.
Assuming we'll get SaaS-like margins going forward, at what unit count do we really start seeing that flowing through in a material way?
Absolutely. As we talked about in the past, Brink gross margins have historically been low relative to software, somewhere in the 50s, as we've said in the past. That will climb its way up to traditional software margins within the next 18 months, is my guess, and we'll start seeing real progress exiting Q4.
As we've had a massive development run the last year, and I think that'll continue until the end of this year, to deal with the issues that we've, again, talked about many times in the past. As we roll off that incredible set of investments, our margins will expand nicely because we're getting the benefits of not only scale, but focusing our R&D efforts off of our existing products and our new product development. Our acquisition of Punchh only helps our margins. Punchh was at a relatively high gross margin, I believe high 60% at the time of the acquisition, and I think there's a strong path for that to be in the mid-70% down the road.
I've always said our margins are lower today, and we've always expected that, but they should move forward very nicely in 2022 and the out years as we not only have the scale, but we move from fixing to sort of on-offense. We think there's a very clear path and feel that our product should be like any other similar software product that's priced in the same buckets that we are.
Again, just as a reminder, if attendees at today's meeting have a question, please submit it through the portal, and we'd be happy to review it. Next question is, we talk a lot about PAR's open API and the value of it. How does that open stack and open API distinguish PAR in the industry and give us, again, a competitive advantage?
I think PAR being open is foundationally different than our competitors. Our competitors, for a long time, were very closed systems, not open to outside development because with a closed system, you can extract revenue. Our open API is more focused on delivering value to our customers and our customers being able to control their innovative future. It has been a foundational tenet of Brink and Punchh, and I think will continue to move us forward. Us moving to a platform is just continuing that commitment to being open and being fast.
The final question is, there is a lot of positive feedback on your letter in 2020 to investors. Should we expect another investor letter from Savneet in 2021?
I hope so. To me, the investor letter is not something that I think we'll do on any regular cadence, but it is really meant to communicate valuable information when we have it. Our first letter was foundational to hopefully set not the tone, but the spirit of what we're trying to build and create alignment across all stakeholders, including our shareholders, our employees, and even our customers. A lot has happened at PAR over the last year, if you will. We've had a pandemic. We went from, unfortunately, laying off employees in the middle of the pandemic to hiring very rapidly, to pulling an acquisition, to, I think, doing very creative stuff around our capital structure. There is a lot to say. I think now that we're beyond the acquisition, we can move to putting out an additional letter sometime soon.
The final question today is, can you review and explain kind of the value of having the development teams in India with the Punchh acquisition and also in Ukraine surrounding Restaurant Magic?
Absolutely. I think we talked about this in the letter, but software development continues to get more expensive. I know this is counter to what many believe, but there's an argument that compute costs have come down, AWS costs have come down, Google Cloud costs have come down, and as a result, software should be cheaper to make. At PAR, I think what we've seen is the opposite. Every other input cost into building software, whether it be employee cost, dev cost, product cost, service cost, every other input cost has gone up. In addition, the customer demands have grown exponentially. You cannot deliver a half-baked product. You cannot deliver a product without great service. I think one of the smart things our acquisitions have is that they've been able to build software at scale across remote workforces.
I think there's no doubt that these remote teams will become huge, huge parts of PAR's success. We want to continue to invest in India, Ukraine, alongside our onshore talent so that we can—my dream is, hey, we can throw two or three bodies at a problem when our competitors can put one. If we can make those team members abroad feel like they're part of PAR, absorb the same culture, to be frank, absorb the same intensity, it will really, really give us a foundational difference.
It's incredibly hard to do this well, but I think we've gone in with open eyes and with the commitment that our teams, whether they're in Kiev, India, or Australia, they're all part of PAR. I think they'll be keys for us growing and a big part of our talent engine going forward. We look for us to continue to invest and hire in those regions very aggressively.
There do not seem to be any additional questions submitted today. We, as a team here at PAR, really thank your participation and your support throughout the years. Please, we are available for any other questions or dialogue. Thank you again for participating, and we will end the meeting right now. Thank you.