Hello, everyone. My name is Mayank Tandon. I cover fintech at Needham. I'd like to welcome PAR to our conference, Savneet Singh, the CEO, and Chris Byrnes, Head of Investor Relations. Savneet, thank you for joining us.
Thank you for having us.
This is a regular routine for you, so glad to have you. Well, I figured maybe it might be helpful just to start on the broader market, the lay of the land on the restaurant tech side. I think what we've seen is a lot of conflicting data points in the restaurant world in terms of same-store sales being very healthy, driven by price, but traffic hasn't been that great, at least watching a lot of the fast casual and quick service names. So maybe you could just step back and talk a little bit about the market overall and PAR's positioning in the space?
So first, on the restaurant side, I think 2025 was a very challenging year for restaurants. We saw traffic down in most of the concepts that we served. We saw same-store sales mixed, across some were able to recapture some of that through price. But it was certainly the most challenging year we've seen since COVID as it relates to restaurant sales. What made it even more curious was that normally in markets like that, the quick service market actually does decently well because you trade down. And that didn't happen here. In fact, you saw people go back to full-service dining. Things like Chili's, Applebee's, did a great job of winning the value customer. So it was a messy year for most restaurants. And a lot of brands were stuck with this idea of, I'm not a value brand.
Do I become a value brand? And cheapen what I've built for all this time to sort of stay this year, or do I kind of stay the course? And so it was just a very challenging year for restaurants. December, you started to see changes. You can even see in this some of the look at Chipotle stock and others. You can see that sales and volume estimates look really good from all the data people are tracking. So hopefully that continues in 2026. So there's potential for a rebound. And usually these things do rebound and stabilize. And with a healthier consumer, maybe some of these tax refund checks, you'll have more spend over there.
As that translates to restaurant technology, restaurant tech is still very much in its infancy, and particularly in the enterprise category where most brands are still very early on in going through becoming a truly digital business. So I'd say most brands have an online ordering system. They have an integration into the third-party delivery companies like Uber and DoorDash, but they're still really early in upgrading the core parts of what they're doing. And those are really big IT decisions that I don't think a slightly softer sales year had a lot of impact on. In fact, we had a larger pipeline and more RFP activity in 2025 than we've ever had before. And so maybe it even accelerated some of that.
So I'm hopeful that in 2026, if restaurant sales continue to stabilize, continue to do what we saw in December, it should give us a bit of a tailwind.
From your standpoint, looking at the industry, what is more important? Is it the same-store sales data, which would obviously be driven by price to a large extent, or is it more about traffic, or is it more the CapEx budget of these restaurant chains? What should investors be watching as maybe a good leading indicator of the health of the restaurant tech space? Or is that not a good correlation between tech and.
In the SMB category, which we don't participate in, it is very much the AUVs of the restaurants. The restaurants are healthy. They spend money, upgrade tech, they'll buy the appeal of point of sale system. In the enterprise category, unfortunately, it's not a great corollary. In a slower market, our loyalty and online ordering businesses will actually spike up because you're trying to bring customers in. In the point of sale business, our bread and butter point of sale and back office, it doesn't really have big swings one way or the other. So if you go back to 2020, our business didn't change that much. And we grew, we're growing really fast, and we grew kind of the same rates after. There wasn't a big change because these are, again, you're not updating Workday because of a change in same-store sales.
You're not updating Salesforce.com because you had a boost in tax refund payments, right? These are bigger enterprise decisions. And so I think, honestly, stability is probably the thing that I look for the most. Volatility is probably the enemy of a slower sales cycle.
Got it. I think let's jump into some of the themes that you talked about last year, which one was the multi-product strategy, which seems to be paying off. Maybe you could kind of delve into what's the feedback from customers. It does result in longer sales cycles from what I remember, but obviously it means a stickier and larger revenue opportunity for you. So maybe just walk us through the strategy and how it's been working so far?
Yeah, I mean, in many ways, the entire thesis of when we took over the company was this platform idea in that restaurants were realizing they needed to be digital, but they were going about it by trying to piece together a bunch of different products with the hope of creating a digital experience, and I think history has sort of proven that in software, particularly, platforms win, and just like you can clearly see, the AI agents are becoming platforms. They're doing things across many different verticals and opportunities. Very rarely does a customer or an enterprise want to have 10,000 products they want to manage, and so our thesis for a long time had been, let's have best-in-class products, but make sure when they work together, you get unique functionality that you couldn't get if you were buying these two products from two different areas.
You should assume that if you have an Apple iPhone and AirPods, you should get some functionality you couldn't get if you had Beats and Apple. You're trying to create that in the enterprise. And that has really played out. And I think it took us time to get there, but it had nothing to do with our go-to-market motion. It had everything to do with our ability to prove that the product actually created unique outcomes. And so what we saw in 2025 was that roughly 70% of our new deals were multiple products. That's up from like zero two years ago and probably a very small number the year before. That was pretty amazing to see. And again, it was a product-led motion. It was not a sales-led motion. The powerful aspect of that is obviously you get a much higher ARPU starting out with.
The longer sales cycle, I think, is made up for because you can pull in that product a lot faster and monetize it for a long period of time. I'd argue that if you've got two products in the customer, they're probably stickier. Thereby enhancing the LTV of that customer as well because you get them for more years.
Picking up on that in terms of the multi-product strategy, how has that impacted your TAM? I mean, I don't want to put you on the spot, but maybe you could help quantify how that TAM has maybe moved over the last several years and where do you stand today? I know you've also entered into the international market. You've got C-stores. So maybe more of a broader TAM question for you.
Yeah, and we've certainly spent a lot of time focusing on TAM. We sort of think we kind of came into the business. We were a single-product company. And really, for most of our time, we were point of sale and loyalty. And we grew fast. We really think we became winners in those markets. And so it's like, OK, what's next? What's next? How do you build something that serves the customer better and creates opportunity for our employees? The TAM within our existing base is if we were to cross-sell our existing products just into our existing base so we didn't sign another logo, you can probably two and a half X the revenue we have just from that push into our existing base. Now, that takes time, but there's a lot of TAM in there.
Now, the actual white space is probably four or five times, but I sort of cut out opportunities I don't think are real in that number, so that's sort of selling to our existing products, but we also continue to expand into adjacent TAMs. We are growing very fast in convenience stores now. Convenience stores are the fastest growing food service category in the United States. More people are buying their breakfast at convenience stores, buying their dinners at convenience stores, and so we need to be able to find our customers in those spots as well. Earlier or yesterday, we moved into the pizza category. Pizza is a huge category, obviously, in the United States. We didn't sell into that market before.
And so we continue to kind of find these new adjacencies that are additional TAM for us to go after.
Any way to put a number around that TAM and what your penetration today is when you size the whole thing?
The number would be too big, so it's just like facts. It's like McKinsey put out a research report. There's seven million restaurants in the world that use the point of sale system. In the U.S. and Canada, it's about a million. People will say there's a million United States. Our data shows probably a million in the U.S. and Canada. Roughly half of those are enterprise in nature. And so now that we service pizza, I suspect that the entire TAM becomes available to us.
Since you mentioned pizza, I'll ask you now instead of later. But let's talk about the win last night. I think at least in my space, it's all red today, but you're sticking out in a good way. Your stock is up nicely today on the Papa John's announcement. So maybe you could talk about how you won that relationship. Could you size it for us and maybe the timeline on how you scale that?
Yeah, it is a great deal for us. It'll be our second or third largest restaurant customer out of the box. It's $14 million-$15 million of ARR. And we do expect to sell additional products in there. So the number is going to climb, I think, if we do a good job for them. It's powerful for us in a few ways. So the first is I think their original desire would have been to partner with one of our competitors that's down the street from them because they know each other. They go back a long time. But clearly, that kind of, again, validated how differentiated we were because there was a pre-existing relationship. The second reason why this is so powerful is there is not an enterprise pizza provider.
So most of the big pizza companies, Domino's, Little Caesars, Papa John's, they built their own point of sale systems because the existing vendors just didn't service pizza. So this gives us an entire new market to go after that we're really excited about that we didn't go after before. And so that's just huge for us, which is like now we've got this big TAM to go after. And so I think that's the second point that's really, really powerful for us. And I'll go to why they picked us. The third thing is the team at Papa John's is a very innovative team. Kevin Vasconi, the CIO, he was the CIO of Domino's when they had their amazing technology revolution that led to that amazing stock run. He was the CIO of Wendy's.
He just this morning did a big partnership announcement with Google at NRF, where they're doing a bunch of stuff with edge compute and agentic ordering. And all of that's in partnership with us. And so that, I think, elevates how people think about us because now we're in that conversation. And we're partnering with them, obviously, to deliver a lot of that really innovative functionality. Now, the question on the process, the process here was expeditious. It went very quickly. They went from seeing sort of our product to really the core thing they had to underwrite was, did they believe that we could build the pizza functionality in a very defined period of time so they could get out to market quickly? And we had the huge advantage of that they had just seen us do that at Burger King.
In fact, they had hired somebody at Burger King to see that. And so I think for them, they felt great confidence we could actually deliver on their dreams of delivery. Normally, you wouldn't take the risk on a vendor who hasn't been in your category before, particularly when you're that large. But they were willing to bet on PAR. And we'll make that bet. We'll obviously pay that back in spades. But I think that was a huge part is they'd seen our success at scale. And they'd seen our ability to roll out very quickly. So if I was to guess, they picked us first and foremost because of that. And then second, we were the only vendor, I think, they met that could meet their innovative goals. Because their desire to be innovative is far more than the average restaurant chain.
They want to take a real risk when it comes to kind of taking a bet on the way that we as consumers are going to order in the future, and so I think it was a combination of their trust in our ability to roll out and then our ability to build to their innovative future.
You mentioned that the enterprise players are not in the pizza category. What makes pizza that unique that they're not present?
It's a few things. So one is it's like the modifiers. Just the idea that you can have half a pizza with this, half a pizza with that, cook at this temperature, cook at that temperature. The flow through the kitchen system is very different. You throw a pizza onto a thing. It goes through. That's different than a bowl or thing. Pizza has in-store dining, takeaway dining, very, very carryout. So nobody built all that functionality. The supply chain is very different. So down market, there are a bunch of point of sale vendors, or sorry, two or three that specialize in pizza. But in the enterprise side, nobody really was able to do that or has done that yet.
So the Papa John's win, it's 3,200 locations in the U.S. And can you put any ARPU figures around that? And sorry, just to go back to the timing, I think you mentioned in the press release, it'll be done over 2027.
Yeah, we'll hopefully start installing in Q4 this year. It's about $4,500 per store, so very strong pricing for PAR. Good price escalators. We and them are very aligned to making this a massive success. But again, also proving the value that people are paying for the quality of our product. So this should really, I think. And then, like I said, I suspect we'll be able to hopefully sell them additional products down the line.
Got it. So when you talked about, I believe, on the last earnings call, something in the order of one to three Tier-1 opportunities, this would be one of them. Can you provide any updates on where you sort of stand, at least on some of the other tier one opportunities that you had called out?
On one of them, we expect to hear probably sometime in Q2, and then the other one, which is the largest one, we're hoping sometime this year. It's such a large organization. We're doing a lot of work with them in partnership with them. It's very different than our more traditional deals, and so hopefully sometime this year, we'll figure out where we are. That one will be transformative to us as an organization, so we'll give as much information as we can when we get to that, and if we get to that.
So for good or bad, the market focuses a lot on Tier -1s. But you've also said that there's a lot of other opportunities that don't fall into that category. Could you talk about how important that is to your overall ARR growth as you look ahead into 2026?
Yeah, I mean, I think PAR's had a very rapid evaluation. Ironically, this is the first conference I've ever presented at. When we came here, we had less than $10 million of software revenue seven years ago. And today, we're at 300 something. And I think that as a result, we've got a lot of focus on pipeline and next deal. And I think where we're at today is we want to get to a point where there's not one deal that really determines a year or a quarter. And I think we're getting closer and closer to that with the scale that we have and the quantum of deals, the quantity of deals that are coming in. So I think we're getting closer and closer to that. But to me, our year is more determined by the blocking and tackling.
This Papa John's one was huge because we entered pizza. We got a great price. We got the ability to sell new products. But most of that impact is a 2027 impact. And so for this year, our success will be dependent upon executing on the deals we won in the second half of 2025 and what we win in the next couple of quarters here.
Got it. And then as we think about your growth over time, how do you break it down between location adds versus ARPU expansion? And of course, ARPU will come from selling additional products over time as well. And maybe you could talk about that in the context of both Operator and Engagement?
Yeah, it's a great call out there. So historically, we have been heavily on the new logo versus upsell. Today, I think we are finally at a point where we're probably still a 75/25 new customer than we are upsell. It's probably 80/20 because even though we're rolling out Burger King this year and it's an existing customer, it's still a net new logo, net new store, right? So the accounting is complicated because you have to look at it at a per-store level. I would love to get to 50/50 one day. In the next couple of years, we have renewals coming up of our legacy super low-priced customers that will be a nice tailwind for us to start bringing up them to market pricing. We've got a bunch of opportunity for cross-sell and upsell.
But by fortune of design, the new wins we have, which continue to be new logos, are just so large that I keep hoping it's going to get to 50/50, but it's still like 90/10 new logo.
We'll take it either way. But the key is obviously to get back to maybe more of your target growth rate. And that's where I was going with it. I think in the past, you've talked about 20% being your ARR subscription growth target. And you were a little bit below that for reasons that you had discussed on the last call and the call before that in 2025. How quickly do you think you could get back to that 20% target number, just given what you're seeing in the market overall and these new logo wins?
What I say is we haven't given guidance yet. But I would say we've said we're a mid-teens grower. And we need to win these big deals to get back to the 20s to get there. So we took a big step yesterday in doing that. And hopefully, there's more to go. And I think that's going to be critical. The other levers for us to get there will be this cross-sell, this upsell. I do expect to be pleasantly surprised with us winning more and more of these deals that we historically hadn't played into. But I think we have opportunities into. But the way I think of this is that what I'm starting to continue to believe now is most companies, you grow 30, then you grow 25, 20, kind of this long deceleration. Then you kind of stick it.
I think we'll end up growing longer than expected because, as an example, we announced Papa John's yesterday, and then we got an RFP for a bigger chain than Papa John's. Now, we don't put that in pipeline yet because we've got to see if it's just how far that's going to go, but it's like we've never historically would get a new RFP like that once every three years, and now we've gotten four in the last year, and so I think that the market is also changing in front of us, and so it's a little hard to predict, but I think of us as mid-teens, and these big deals give us a chance to get higher.
Does the international opportunity with TASK sort of maybe change the math? Because if you were to start scaling with TASK, which again, I know you've invested a lot in the product and the capabilities, but I don't think we've seen the revenue yet.
Not yet.
So could that move the needle in a positive way for you?
Not big enough yet. TASK is very small internationally. The loyalty business is quite large. But we've really positioned it to try to win this one mega deal. And if we're successful in that deal, it will be a huge driver of growth for many, many years. But it'll take time. If we're not successful, then we'll start turning on the revenue because we have one good business there. We just haven't taken it live in preparation for potentially winning this larger opportunity.
Got it. Maybe I'll just switch over to the hottest topic, obviously, in the market around AI. I know you've talked about that in meetings and on the earnings call. But if you could maybe just, again, walk through sort of how you're looking at AI in terms of embracing it into your platforms. Do we see any tangible impact in terms of numbers from that AI investment? Or is that, again, maybe TBD? Or are you still out on that?
No. I mean, I think that we are highly confident in saying that AI has allowed us to scale our engineering spends more efficiently. So when we reported last, 21% or 23% of our revenues went to R&D. That's really, really, really efficient. I think the bodies in our engineering team haven't grown in 18 months. I think a lot of that has to do with our ability to be more efficient as we've shipped product. And also, the speed has gone up. And so I do think that is a direct result of AI internally. We've done an OK job with support, an OK job, sort of elsewhere. But I think if you talk to anybody that works at our company, they would say we're clearly all in pushing everything to be an AI-first solution. However, it's the product side that matters more.
This is where we've kind of put the gauntlet down to our teams, which is you can't just put out a LinkedIn post talking about the future of AI. You've got to give a SKU that has revenue associated to prove it. A long time ago, you might remember me saying this. Whenever a product person would come to me and say, I built the best product, I'm like, there's only one way to prove you built the best product. Is it the highest priced product in the market? And do you have the highest market share? And to me, in AI, it's your ability to actually get people to pay for it. So we launched our first SKU at the end of September called Coach AI. We've got a very, very strong pipeline.
We've got, I don't know, a dozen or a couple dozen customers on it already that are paying us monthly for it. The early data is awesome. They're using it. And they're using it a lot. And the way that we've told our product team, or the way our product team and we've kind of brainstormed AI, is there's going to be we call it sort of like three layers of AI at PAR. But I think it's going to be everywhere. Which is the first layer is the UI/UX layer of every product becoming chat-based. So if you look at the products that we sell, we do tons of reporting for the back office, tons of reporting for the marketing. Usually, you had a marketing expert download a report and say, was this campaign effective? How do I segment this tool?
How do I figure out X, Y, and Z? Well, now you can use AI to ask all those questions. Hey, what campaign is working? What product is expiring? Where should I run a this, that, whatever? How do I do this? What store should I focus on today? What campaign is that working and should I kill? Really removing the need to be an expert in that tool. And it becomes like a ChatGPT. And so we've launched that there. We've launched that in our loyalty program next so that you can then say, tell me the most profitable segment of customers I have, and tell me why. The second, and the really big win, I think, for product-led for us at PAR is we look at it as what are products we can create with AI that you could not create before GenAI.
So not AI, but GenAI, meaning ostensibly, if there was not GenAI, this product wouldn't exist anymore. And so there are some really cool things that we're doing that allow us to give a better perspective. So as an example, one of the visions we have that we're building really quickly towards is in marketing, there's the concept of a segment of one. How do I market to my as a one person so that campaign is completely tailored to exactly everything you do? That is impossible without a massive amount of compute and processing. And then we said, well, let's take it to the next level. How do we maximize an individual store? Imagine you're, I don't know, a random franchisee of a 3,000-unit chain. The marketing campaign that your corporate runs is not meant for your store. It's meant for all of whatever, Arby's or McDonald's or whatever.
But what if you could leverage GenAI to say, I'm going to run a marketing campaign for that one store to target the perfect customers to monetize the excess inventory that I have on that day? That's the kind of stuff that we're trying to build out. And so that's the next layer that we're really, really focused on getting out in the market next. So anyways, long story short, we're really, really, really focused on it. Our product managers have a revenue target of AI SKUs. So again, AI SKU is a SKU that we couldn't build before there wasn't AI. And so they all have an AI SKU that they've got a target for 2026.
Very helpful. A few more questions for you, Savneet. One is on, I should have asked you this earlier, the BK rollout. I know there was a little bit of a delay because of the additional product that you sold, but bigger ARR. Where are we today in terms of BK rollout? And how critical is that to getting back to maybe more of your target ARR growth for this year?
We're kicking butt. I think we had a really good, as I mentioned, we ended September really high. October was our best month ever. November, December were good if you exclude the holiday weeks. January is usually a little bit slower, but we're rocking and rolling, and I think our goal is to be as close to done as by the end of this year. So we're moving really fast. We finally got some clearance to release the number of sites we're at. So that'll be out, in like a, you'll see, that'll be out there in a week or two. You'll see how many sites we're actually in now, but it's going very fast and very well.
Excellent. And then turning to margins.
Which is probably leading to, I think, a lot of these RFPs and deals.
Sure. Right. And then turning to profitability, I think, again, you've shown great progression. You've been able to manage OpEx very well. Given the mix of business, do you have any sort of aspirations for where EBITDA margins could be in the near term, medium term, long term? How do you see it playing out?
In the long term, I do. I think in the medium term, it's very dependent on the mega deals that we're looking at. And so, for example, we're making a pizza investment now. We didn't make it before. And so that's not going to be an enormous investment. But that's still an investment that we have to make to make sure that we not only just get this customer launch, but we build pizza now for hopefully a lot more pizza customers. If we win this mega deal, there'll be a tremendous investment to support it, but with incredible IRRs back to us, which we'll absolutely be transparent about and share with you and the street to make sure we're not there. But in the long run, I look at our margin profile. It's actually not that complicated to figure out. Here's why.
I've always said that generally in software, if you look at the ACV, average ACV of a software company, you can pretty much figure out their margin. The higher the ACV, the higher the margin generally over time. And so if you look at companies of our rough ACV, they historically have been mid-20s cash flow, free cash flow margin companies. I suspect we have the opportunity to be even higher because the two main levers that you as a CEO have a ton of impact on are R&D and sales and marketing. And today, our R&D line is near best in class. We're spending 21%, 22%, 23%, whatever it is on R&D. And we're spending 11% of sales on sales and marketing, revenue on sales and marketing. So the two lines that normally you have overspend on, we're really, really efficient.
And so what's critical for us to get to very high margin is our G&A continuing to stay relatively flat and fixed because we do have a higher G&A base than most companies or not anymore. But historically, because we had this big hardware, this big legacy hardware business. And then too, our gross margins going up from our software gross margins are about 71%, getting that up over time, which is also just a function of scale as we scale the DevOps infrastructure cost. And we redo one important contract.
Then finally, for me, on the capital allocation side, again, you've been very active on M&A historically. Where do you stand today? Are there any holes to fill in terms of capabilities, geographic expansion? How do you view M&A going forward?
Up until now, our M&A has been spear phishing. We've been very focused on we want this category, we want this product. And today, we are being very, very careful and opportunistically looking at things that could expand our flywheel. So an example would be in the category of restaurant and retail technology. VCs have not had a great run. If you weren't like, I don't know, DoorDash or Toast, you probably didn't make a lot of money in the category. And so there are a lot of companies that have built some really cool tools that are kind of stalling out on the revenue and are looking at down rounds or debt rounds or extension rounds. And I think those founders are more and more willing to sell and come and build their vision within PAR.
Very, very small things that we could wave in as a technology acquisition that would give us something special that we couldn't have before. We are not fans of our stock price today. I don't think you'll see us do anything big because we don't want to, even if it's a creative. I just feel like we don't want to dilute our shareholders until hopefully we get some more good news going and we can build that reflexive motion again. Today, we have a few things going on. They're very small, very, very important technology for what we want. Think of them more as like tech that we really want versus a gigantic business.
Got it. I think we have a few minutes left. Any questions from the audience? I'll open the floor. Mark?
Savneet, thanks for appearing today. Congratulations on the recent announcement. You discussed being able to empower clients to drive hyper-localized marketing and to do so based on, say, their inventories and be able to sort of manage the market. Where are you today in that, like that ability to drive that for clients? It seems like it's a pretty compelling.
We're very close. We can show you a demo. We don't have a customer there yet, but we can show you a demo. So what we've done is kind of stitch together this. You get a flag that your hot dogs are expiring in 11 days. And you can then trigger to the marketing system to build a campaign, segment the campaign, A/B test the campaign, figure out what, let's send it to our favorite hot dog customers or people who have never had our hot dogs or who've also never had a chargeback. And that's all done through AI. And then you can schedule that campaign. And then it'll trigger back to the back office software saying, hey, trigger an extra labor unit on the day that we're running that campaign so the store is not overrun.
And all within that is also then how do you update the third-party delivery menus, so on and so forth. And so we've got it sketched out. We've got a demo. We're still probably a little bit of ways away from getting customers there because it's also a completely new motion for them. When I'm talking to these big CIOs, I'm like, the one part of the restaurant that no one has ever really figured out the profitability is like, how do you maximize that single unit's marketing ability? Because there's so many restrictions. You can be the franchisee of a big chain, but you are very limited in how you can market to your community and to your stores. And now imagine if you could use digital marketing.
If I'm in the zip code of your store, how can my app look completely different than the app if I live in Upstate New York? How can my app be rebranded, Go Bills and Buffalo Bills thing, this thing, that? Those things have huge influence. Then if you take it a step forward, I think what's going to happen is we're going to move to this app-less world. But for the apps that stay around, those apps will look very different. My app, I might like the color black, and you might like the color green. And so the apps will look totally different. The buttons will look different. Everything is going to be segment of one. And so I think when you combine that with the personalization of the store, it's a really powerful tool. Today, we're still super early.
We've got a demo, but we've got to get customers to say yes.
Is McDonald's, according to your SEC filing, still the largest customer?
Correct.
Yeah, we haven't heard too much about the McDonald's. So do they buy software? Do they buy hardware? Do they buy a combo? Give us some.
They buy combo. So they've been usually our largest hardware customer for 40 or 50 years. They were the first customer, and it's continued to buy a lot of hardware and services. It spikes. It changes a lot year over year. So if they're refreshing their storage, you'll see a big spike up. And like this year, they spent a lot of money on hardware and services. And so it spikes up. They're also a very large software customer. We run their loyalty program in 65 or 70 countries and territories internationally. So we're in Spain, Hong Kong, Japan. If you use the McDonald's loyalty app, that's us.
Great. If I can have a follow-up question. If you look at your operating cash flow, it has been actually quite volatile. I mean, you guys actually turned positive in the second quarter of 2023, then negative, then positive, then negative, negative, positive, positive, negative, negative, and the most recent quarter is positive. So how should we think about that? Are you guys going to break out?
The way I would think about it is the flux is almost always related to our hardware business, the AR and AP in particular. So we charge you if you just think of the first month of a customer's bill that buys our software business. They'll spend $250 a month on the point of sale software, $10,000 on the hardware. Now, the hardware is one time. And we charge the $250 for the next 10 years, if you will. And so the AR/AP does fluctuate as we collect. We have very low bad debt expense, so we do collect. But that's generally the fluctuation. What I tend to look at is if you look over time, the conversion from EBITDA to free cash flow is really just an interest expense exercise on the quarters that we don't have an acquisition.
So is your company going to consistently generate free cash flow?
Yes.
What is the timeline there?
Now, I mean, we generated about $7 million or $8 million last quarter. We expect next year to be free cash flow positive as well. So.
Even with the hardware?
Yeah, yeah, yeah. Because that's just a short-term working capital. That's not a capital investment we need to continue to make.
Great. I think with that, we have to sign off. Savneet, thank you again. Chris, thank you. And again, congratulations on the big creative start there.