PAR Technology Corporation (PAR) Earnings Call Transcript & Summary

Good day, and thank you for standing by. Welcome to the PAR Technology Strategic Announcement Call. [Operator Instructions]. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Chris Byrnes, Senior Vice President of Business Development and Investor Relations. Please go ahead.

Thank you, Liz, and good morning, everyone, and thank you for joining us on such short notice for this very important and exciting conference call. This morning, we announced 2 strategic acquisitions that expand our global vision and extend our unified commerce offerings. The press release is available on the Investor Relations page of our website at partech.com where you can also find the in-depth presentation covering the acquisitions as well as in our related Form 8-K furnished to the SEC this morning. I'd like to remind participants that this conference call may include 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 forward-looking statements included in our press release this morning in our annual and quarterly filings with the SEC. Joining me on the call today to review the acquisition is PAR's CEO and President, Savneet Singh; and Bryan Menar, PAR's Chief Financial Officer. I'd now like to turn the call over to Savneet for his remarks, which will be followed by Q&A. Savneet?

Thank you, Chris, and thanks, everyone, for joining. Today, I'm going to walk through a slide deck that we've posted on our website at partech.com, and I'll go through it quickly, so we'll leave time for Q&A. Before starting, I think it's good for us to kind of walk through the vision we're building at PAR before giving you the details of the acquisitions we pushed forward this morning. So on Slide 4, we lay our vision, which is to become the largest enterprise foodservice technology company by 2030. This vision hasn't changed and these acquisitions in many ways to accelerate that. If you flip to Slide 7 in the deck, you'll see the way that we define the global food service TAM. Today, primarily PAR operates in the first 2 categories, restaurant and retail. The majority of our business operates in that QSR and fast casual markets. And we've grown into C-store through our Punchh business line. And as you'll see, our vision is not just to be a restaurant company, but to expand our TAM in serving all food service because in many ways, we're moving to where our customers are expanding. The restaurants that many of us are used trafficking are moving. They're moving to stadiums, C-stores, grocery and hospitality. And so our solutions need to expand with this. On Slide 8, we walk through our playbook. And we've tested this playbook now on a number of acquisitions, and we feel confident that we can continue to execute on. We believe that we can acquire best-in-class products that focus on the enterprise and drive that product leadership with unmatched performance in marquee customers. And we couple that with deep vertical expertise and that expertise works to help us build an ecosystem unmatched in every single vertical we play in. And then we build better together innovation. And our idea here is that by combining more products, you, our customer get more. And together with this playbook and this largest TAM, we feel very confident we're executing on a value creation strategy. If you flip to Slide 9, you'll observe our ARR since new management came in 2018. And you can see that while we've had plenty of organic growth, the inorganic growth has been a huge part of our strategy. And during this time, we feel that we've not only created value on an aggregate basis, but if we flip to the next slide, you can see that on a per share basis, our ARR per share continues to grow at an accelerated pace. We believe this metric is incredibly important because underneath each dollar of ARR, we think is meaningful cash flow. And these 2 averages today, which in aggregate bring us well over $20 million EBITDA, I think are proof to that story. Flipping to Slide 17, you can kind of see the penetration we have at PAR today. Today, if every customer at PAR acquired all of our products, we'll be making well over $10,000 per store. We've got 80,000 unique customers, and then the average customer today maybe uses 1.25 to 1.5 products, although this number is increasing dramatically. And what's so exciting about this is that as we've acquired products, we've demonstrated an ability to have those products run in each -- in more and more of our customers, a recent acquisition MENU was a really strong example of this. So let me flip to the acquisitions we made today. If you flip to Slide 13, you can see the overview of the TASK business. We announced this morning that we signed a deal to acquire TASK, who we believe is the premier global platform for restaurant and hospitality outside the United States. The acquisition is roughly $206 million, made up of both cash and stock consideration. The combination of cash and stock will be determined during the closing process, we suspect over the next 3 to 5 months. Cash consideration would become in the form of $0.81 a share and then share consideration would come in at 0.015 shares of PAR stock, which equates to today around $0.95 per share. The stock portion of this consideration can flex from 18% all the way up to 50% -- and so the total EV will adjust over time. In total, the business does well over $40 million of recurring revenue and $6 million of adjusted EBITDA. But at PAR, what we find so exciting is actually the product underneath TASK. If you flip to Slide 14, you can see the ecosystem that TASK has built. And this slide might look somewhat familiar because it's very similar to what we have today at PAR, except the global presence is what TASK is bringing to PAR. We believe the TASK truly has built something close to Unified Commerce abroad, and we're excited to have our customers grow that way as well. One of the most interesting aspects of our business is that today, every one of our large customers almost every one of our large customers expect more growth outside the United States than inside the United States. And having a platform now to bring our customers abroad increases our ability to win, but importantly, also allows us to help bring global brands back into the PAR [ portfolio ]. If you flip to Slide 15, you can get an idea of how well penetrated or how well -- how it like TASK is across some of the premier brands internationally. TASK is potentially most known for running the McDonald's loyalty app in over 66 countries. So as you travel globally and try that McDonald's app more often than not, your experience the TASK experience, and that's how we PAR discover TASK. Today, TASK covers over 110 customers, $40 million of revenue, over $40 million of recurring revenue and almost $0.5 billion of transactional users in 70 countries. It's an incredible set of products, an incredible team and one would really excited to move to PAR. If you flip to Slide 16, you can see some of the value metrics around the scale of TASK, not only deployed in 70 countries, they have $4 billion annual loyalty transactions, $10.5 billion API calls. This is a business that while small compared to PAR has incredible scale from a technology perspective. And that, again, gives us great confidence in combining our 2 businesses. Flipping to Slide 17, you can see the vision, which is today we think PAR is delivering on its promise of unified commerce in the United States, adding TASK takes us global and gives us 1 united organization to help -- to serve our customers. If you flip to Slide 18, you've got high-level view of metrics. Again, you'll see $40 million of revenue, $6-plus million EBITDA. That accounts for 0 synergies, and we expect there to be many and a very, very high degree of visibility into that revenue stream. And in short, we have been working with the TASK team now for almost 3 years to effectuate something here. And I don't think we've ever felt such a great strategic fit. So we're excited to bring this product to our customers. But most importantly, we're excited to bring the TASK team into PAR. I'll flip to Slide 20 and tell you about our second acquisition, Stuzo. Stuzo is the industry-leading guest engagement platform for convenience store and fuel. We, at PAR, have run at Stuzo numerous times as our Punchh businesses and Stuzo go head-to-head quite often. The business ended 2023 at $40 million of recurring revenue and over $14 million of EBITDA. So it's a fast growing, but also very, very profitable business in a category that we have been growing organically and very, very quickly. We paid $190 million for this business in the form of $170 million in cash and $20 million in PAR shares. We think that we can combine the Stuzo platform with Punchh and build the ultimate platform for our convenience store and fuel retailers. If you flip to Slide 21, you can get a view of why food service is so important in C-store. When we stumbled into C-store, it was because C-stores were evolving and adding food to their locations and they're pulling Punchh through. They wanted the same sense of loyalty that our restaurant customers are driving. And as that market started to evolve, we started to see increased demand from our customers demanding more and more loyalty solutions for C-store. And while we were doing a good job at PAR, it became very clear that for us to win this market, we needed to partner with Stuzo, who believe has the best solution. Slide 22 talks about their wallet steering technology. And what we love about it is they've really mastered this idea of one-to-one loyalty where every guest is measured on the ROI of that 1 individual guest. And again, we've been touching on this through PAR, but Stuzo really take us to the next level. Slide 23 is maybe my favorite slide in that it touches on all the aspects that the Stuzo open commerce platform is integrated in today. So similar to our PAR platform, where we're deeply integrated into the ecosystem of restaurants, Stuzo that within the C-store. And that's everything from the same POS and back-office organizations were used to, but also into car wash, gas stations, EV chargers all these areas of evolving needs and within all these evolving areas, you will continue to see food service pull-through. Slide 24 shows the power of Punchh and Stuzo together. You can see that not only do we have incredible scale of customers and members, but we also have an incredible suite of customers touching some of the best brands in the industry. Slide 25 gives you a view of how we think we can grow within this market. We think there's plenty of room to grow in C-store. While we're starting with our loyalty and engagement solutions, we think we'll expand through back-office point of sale payments, but also move down market where today, our market is almost exclusively focused on the enterprise Tier 1 set of customers. We think there's a lot more room to grow here and are excited to kind of push that forward. And on Slide 26 is the high-level view of Stuzo's financials. And as you can see, I don't know if we've seen a business with better unit economics during our time at PAR. The business LTM did $40 million recurring revenue, $14 million adjusted EBITDA, very, very high margins and a strong degree of visibility in net retention. And in aggregate between these 2 acquisitions, we're adding $80-plus million of ARR, increasing our error per share meaningfully while adding $20 million of cash flow. And as I said, all these numbers are pre-synergy and looking back from LTM. So we're very excited to welcome to PAR. We think, together with our existing solutions, we can cross-sell, upsell, but most importantly, integrate so that our customers feel like it's one part. So with that, I'll pause and open it up to questions from the analysts.

[Operator Instructions] Our first question will come from the line of Mayank Tandon with Needham.

Savneet, congrats on the deal. I wanted to start with the financial side first. Could you give us a sense of how do you propose to pay forecast given some of the considerations you mentioned? And secondly, what was the private placement price set and also the shares that were issued to Stuzo's shareholders and what price would they do that would help in terms of our modeling?

Sure. So on the TASK side, today, the consideration -- we don't know the final consideration between stock and cash. We don't know how much cash we need versus how much stock. One of the things I think we're excited about is given the time line to close, we expect that we'll have flexibility on our balance sheet from some of the initiatives we have that we talked about in our 10-K. And I think that's why we feel comfortable that as we get closer to the point of closing, we'll be able to hopefully get this done without a meaningful change to our cap structure. So we're very excited that we can potentially solve the majority of that or all of that from our balance sheet moving forward. On the Stuzo deal, we priced the notes.

Yes. So we're raising in the pipe $200 million. That was at a discount of 8.5%. -- So the close -- that was on the close of Friday, it's a little bit at $38.65. The pricing on that where it is.

And as we mentioned, it's $170 million -- it went to the sellers, and then we funded the rest with stock.

Correct. And all details are in the 8-K filing this morning.

Got it. Very helpful. And then maybe the other question would be around just the product side. So Savneet, just curious, would you be going to market with the products that the companies already have. In other words, PAR is going to continue to really focus on, bring, Punchh, et cetera? Or do you have to integrate over time? Because I think you gave the example in the release where TASK is selling the loyalty solution to McDonald's, for example. So what does that mean for Punchh. I'm just trying to get a sense if there's going to be product iteration? Or will it be still sort of stand-alone going to market?

No, no. It's the beauty of these deals is that these weren't -- all the financial sides are so attractive. These are truly product solutions. As I mentioned, we've been quoting these companies for years. On the TASK side, it's pretty simplistic. We're taking our U.S. customers abroad and bringing them to the TASK team. It's a hole that we've had for a long time. It's an ask that we get all the time. And we think this is a great way to bring those customers to the international markets. International markets do run relatively independent from U.S. markets, both from the way we operate, but also the way that our end market customers operate. So I think that will be very, very synergistic. The other part of a TASK that's interesting is they have relationships with some of the large brands that we don't have, and I think we can sort of look to that in the United States. And I think our vision is we'll figure out which products best and if there's an ability to cross-sell each product in each market we will. But today, it's really a handoff to the international side of the business, and we think that's pretty exciting. And of course, the products need to be deeply integrated so that the customer doesn't notice that, it's a true handoff. On the Stuzo side, what's exciting here is that we're making our bet on Stuzo, and we're going to be following the Punchh C-store business within Stuzo, making that our platform for the future. And what that does is it obviously it saves a ton of cost on the Punchh side because -- as you remember back from Q2, we had a hiccup with our DevOps primarily related to the C-Store market. And so we've got a scale platform we can build. And I think you'll see that become our arm within that market. Our products integrated nicely, we'll be adding our payment solutions in there soon. And so it's the same exact idea, which is we've got a product that we think is best-in-class and we'll be building the same unified offering we did in restaurants. So I look at Stuzo as much more expanding our TAM more efficiently within that convenience store market. Even though we're in it, even though we're growing cotenant, we really wanted to have the best solution in that market and look at TASK as an extension of our restaurant business, but internationally.

Our next question will come from the line of Eric Martinuzzi with Lake Street Capital Markets.

You talked about synergies. Just curious to know what are you talking about specifically? Is that revenue synergies, cost synergies?

Great questions. So I think we'll see all of the above. Obviously, TASK as a public company, they're meaningful public company costs, everything from listing fees, auditor fees, board fees, so there's some of the mechanical costs that I think we can take out, but obviously, we think there's a lot more to add from the revenue side. TASK is an incredible product. Every time, I see a demo I pinch myself at the quality with the built. And I think we can bring a lot more to that organization. I think the TASK team would tell you, part of the excitement is we have these relationships with the biggest restaurant brands in the world. And we've been telling them we can't operate them internationally. And so now I think the revenue synergy side there is exciting. On the Stuzo side. Stuzo is an incredibly efficient business. And so I think we look at synergy there as well as on the revenue side. Can we accelerate their go-to-market. When you combine Punchh with Stuzo, we think you're taking the 2 best products putting them together, that should increase win rates and drive future synergy. And then I think there's the cost element, which I mentioned, which is I think on the Punchh side, we'll be able to rationalize costs on our infrastructure side, given we're leveraging the Stuzo platform going forward.

Okay. And then on the international versus domestic sticking to the TASK product capability, do you feel like you've lost out domestic wins because you did not have a global solution?

Not yet, but I think that will be the path of the future. I think we've now had enough transactions where our customers are saying, "Hey, can you take on this non-U.S. business? And we say, no. " Today, I don't think it's a headwind at all. But I think it's just an amazing tailwind for us. I always say, today, our customers take us because the majority of their business in the United States, and we have the best product in the United States. I think as they make these massive investments internationally, we've got to go with them there, and we can't just pretend that we can live in our isolated box and keep going in the U.S. and not have that impact internationally. So I don't think we've lost anything because of it, I just think it increases our ability to win, particularly for some reason, we're neck and neck, and we say, well, [indiscernible] with the same company internationally and domestically, I think that's a huge value-add to our customer.

Our next question will come from the line of George Sutton with Craig-Hallum.

Nice transaction. So I wondered if you had conversations with folks like McDonald's, which are named customers in this deal. Starbucks was also a named customer. Just curious sort of how much encouragement they've given as part of this?

I can't really talk too much about that, but I think a lot of our diligence was the quality of these products, how happy the customers with these products and the ability to grow with these products. And so I think extensively, I can answer your question, but not directly. But I think we feel really good that the customers are very, very happy. The customers continue to grow spend and the feedback is really great. And I always encourage everybody, if you're in France, open up that app and take a look, it's really, really high quality and then go to another country and you'll know how seamlessly it moves to the next country. So they've built something very special, and we feel very, very strongly about it.

So you laid out on your last earnings call, several RFPs you're working on. I'm curious how this might accelerate or impact some of those?

I don't think it will change them at all. I think those RFPs will certainly go back to them up then that, hey, we've got a solution for the national markets. I think it will help us. But those are advanced and, I think, very focused. So again, these aren't done for those deals. These were done for how do we continue building a business for the next 5, 10 years. So short answer is, it will be incremental, maybe for these deals overcome, but I think that wasn't the reason we did it.

One other thing, if I said, the stock composition of the TASK deal, can you just talk about what determines the end game here in terms of their -- they're the ones I assume making the decision of cash versus stock?

Yes. Well, if the shareholders get to the size. So we know that the CEO and management are rolling over. We just don't know what the nonmanagement shareholders have decided and that will happen over the next 3 months or so.

Our next question will come from the line of Stephen Sheldon with William Blair.

It seems like you guys are going to have a lot on your plate between the Burger King rollout, continuing to integrate and expand MENU's capabilities, and now you'll have 2 more acquisitions to integrate and layer in. How concerned are you about being able to manage all of this effectively?

It's a great question and one we think about a lot. But the short answer is I'm not -- I think we've kind of been preparing for this for a long time. And again, one of the beauties of what we're buying, it's not just great products, it's great people. And so in many ways, solving our international problem as an example, frees up more time because you're spending less time trying to answer those questions and find something to work there. And given that we run relatively -- while we integrate our products, we run relatively decentralized so that we can discover the next layer of management and give them the accountability and feeling of ownership. I'm not worried about it at all. I feel actually really good about it. And then what Stuzo, as I mentioned, this is a business that's run world class, while it's a small business. It's truly been run by an incredible team. And so I expect us to learn from that team and how we can operate that same sense of rigor on unit economics that they have. So I feel very good about it. And in many ways, C-stores, as they said is our fastest-growing category at PAR, and we just haven't given it the [ ounce ] that it needs, it certainly does that. And so again, I think it's actually eventually freeing up time because it makes [ a true ] decision for us, which is we're going to take that market serious, but then also now have a team we came back as opposed to stretching the team at Punchh. So I feel very good about it actually creating more leverage for us over time. And we built this really strong bench of talent at PAR and matters we'll put them to use on something that's big and can drive meaningful value back to us.

Got it. That's helpful. And then just as we think about our models and as you close on these, would you expect to maintain TASK and Stuzo's current level of profitability? And again, just as we think about our models -- or are you thinking you might need to ramp the investments? I mean they are nicely profitable, but they're both playing in markets that have big opportunity [indiscernible] think there's a lot of growth opportunities. Could you be ramping the investments, think about things like go-to-market, et cetera, where maybe we shouldn't be expecting their current level of profitability to continue at least in the near term?

No. I mean, the numbers I gave you were LTM. And so I expect the LTM to be continue to grow and get better. So I feel really good. We can add value both on the revenue side and on the cost side. So we feel good. And we've been conservative going in. We wanted to make sure that the numbers we put out are true. They're verified -- these are both smaller companies, and we feel very good about that now. So the short answer is no, I think they'll get better and everything we start with for right now is LTM.

Our next question will come from the line of Anja Soderstrom with Sidoti.

Congratulations on these acquisitions. I'm just curious, do you expect it to accelerate your ARR growth beyond the stated targets or are you not comfortable to comment on that now maybe?

I think they'll be within our targets. I think certainly, a year from now, that will certainly help us accelerate, but I think it will stay within our range. I don't think they're not dilutive for our growth. I think they could accelerate our growth. And obviously, they add meaningful to our bottom line in our path to Rule of 40.

Okay. And in terms of the cross-sell and upsell opportunities here, do you see an opportunity there for the hardware side as well? Or?

Certainly, I think there's an opportunity to -- for the TASK platform to run on PAR hardware. Obviously, PAR hardware is something like 100,000 stores across the world. So we should not only look at as an opportunity to sell hardware, but also plant our flag where our software like where our hardware customers are. So certainly a real potential really nice synergy there.

Our next question will come from the line of Charles Nabhan with Stephens.

Congratulations on the deal. Just to put a finer point on some of the earlier conversations and questions. Just looking at the interim financials for TASK looks like they reported 36% growth in revenue and 57% growth in recurring revenue. I guess my question is, are there any areas or clients that they might be deemphasizing or conversely -- is there any revenue synergies that could potentially add to that growth rate? Or should we kind of think about those levels of growth as sort of a go-forward trajectory for that business?

So I think I said '25 is really the year we're going to -- we'll see the impact of whatever we can bring to these businesses because as you know, Charles, the sales cycle here isn't overnight. And so I think we'll see in '25 what synergies we can bring to these businesses. Stuzo, I think we can potentially do more as related to payments. On TASK, particularly, a lot of it is going to be our ability to cross-sell. Can we bring our U.S. market customers abroad? And then can we help ramp up their existing international presence, which is, I think, so much of the value. So the short answer to your question is, I think it's a '25 thing to see the success of our cross-sell. I think in '24, both of these businesses will grow within our normal range of 20% to 30%, and I think there's room to be optimistic on each of them.

Got it. Okay. And as a follow-up, just looking at Slide 7, you outlined the various areas of the TAM and obviously, this expands our penetration into the C-store area. But you had alluded to stadiums as well. My question is, do you feel like you have the assets and capabilities in place to expand into various areas of the TAM right now. And if you could just kind of elaborate maybe on stadiums or other areas of interest as well, I think that would be helpful.

So the short answer is we don't do anything in that market today, but the product suite of TASK does operate in stadiums and -- what we call nontraditional markets. If you remember when we announced Burger King back in, I think, December, one of the comments we made is that we're not in the nontraditional units. Well, today, we potentially have a solution to do that. So TASK would be our bet into moving into those markets. And it's really a good question because one of the things that I think we've all learned over the last, call it, decade or so is that every foodservice location is sort of has this debate if you create a private label brand or you create your own brand. When you go to a baseball game, more often than not, it's not the random stadium restaurant, it's a well-known brand, whether it be Burger King, Shake Shack, so on and so forth. When you go to an airport, it's generally not viable brands. When you go to a convenience store, you're seeing the big brands like a Dunkin' Donuts or Subway and all those brands. And so you're seeing our customers get pulled into those nontraditional markets. And historically, we haven't been able to operate there because we didn't have a CPG integration or we didn't have reading technology. These acquisitions kind of full there. And so we're making this big bet on C-Store with Stuzo. And I think -- that will be our first sort of true push in that second vertical. And again, it's a little bit [ ingenious ] that we're already there. It's a big part of our revenue. We're growing fast. But certainly, I think you'll see us expand there. And then if we get that right, I think you'll see us continue moving these other markets. And as I mentioned, TASK does have a product suite that touches casinos, stadiums, but we'll see -- I think there's just a lot of opportunity. We've got to prioritize the stuff that's going to work for us to do at all. And so we feel great to open restaurants. Now we feel great about C-stores and then we'll see where the future takes us.

Our next question will come from the line of Andrew Harte with BTIG.

Savneet, I think -- I thought, you mentioned that Punchh and Stuzo king of bumped into each other fairly regularly. Can you just kind of unpack that just from a competitive standpoint, what that looked like historically?

Yes. I think we believe we're in the 2 most competitive solutions in that market. And you know some of our big brands on the C-store side. But I would say Stuzo -- again, we wouldn't be going after Stuzo if we didn't think it was the best product in the market. And that's sort of a full stop comment. We think -- there's no one that can compete with us on the restaurants at the scale that we do. We think we're really good at convenience store, but we saw a product that is just -- it's just very elegant. The founding team there is just fantastic. Everything they do is clean -- there's a real cultural ethos and it's highly focused on that vertical. And I think we saw the limitations of our us not being all in. And so this really takes us all in. So the short answer is, I think there are categories of C-stores that we potentially do better in. There are categories that they potentially do better in. But I think the combination is going to be a wow factor for the industry going forward.

And then I guess maybe just thinking about C-store, you made the other comment that there's a lot of whitespace for POS in the future. I guess from a product perspective, where is kind of -- was Brink able to go into a C-store -- or is that we should really just be thinking about that as restaurants right now?

Well, we're in a couple of C-stores already within Brink. But I think the way we're thinking about it first is expanding the TAM of Stuzo by going into -- historically, Stuzo has been large, large enterprise -- we think the mid-market in that place -- that market is super interesting. I think we're going to quickly look to pull in payments and then slowly try to bring in PAR products or continue to buy best-in-class products to fulfill that need. And so I'm spending a ton of time with the founder of Stuzo, as is our usual engagement team is, so we're going to pull that out. But the short answer is, yes, we're already in it. And I think by having a focus to our team, we can have that honest conversation is can we win with Brink, win with Data Central. I know we can win our payments, but can we win other products. And obviously, we wouldn't have done this acquisition if we didn't think we could. And so I think we feel pretty good that we've got a couple of products we can bring in right away, and then we'll see how we bring in the rest.

Our next question will come from the line of Adam Wyden with ADW Capital.

So obviously, [ cases ], you guys hit some -- an R&D snap or sort of a mailer step-through. Now with you guys owning basically Stuzo and Punchh and not having to compete in C-store. I mean can you talk a little bit about sort of the pricing power you think you now have in the marketplace, considering you sort of have the 2 best solutions? And the potential to sort of combine those resources on the R&D front maybe into 1 single solution. Is that something you guys could think about? I mean, because that historically loyalty has been a product where people sort of bounce around a lot and now that you own the 2 best products, I would think that, that could have meaningful sort of R&D sort of cost savings and then also just sort of pricing power because people just sort of don't bounce around. Can you talk a little bit about that?

I think on the pricing power point, I always tell our product teams, you can say you have the best product, but if people aren't going to -- if you want those expensive product, then you can say you've got the best product that people aren't paying for it. And I think Stuzo has delivered on that. Their product is 2, 2.5x the cost of Punchh in that market. And I think they deserve it because they drive incredible ROI to their customers. And so obviously, I think combining Punchh and Stuzo, we have the opportunity to take up price on our Punchh customers, but really deliver just a world-class solution back to our customers. And again, obviously, I don't believe in taking price for taking price stake. I think we have to add the value to our customers so that they get ROI, we get ROI and we will be able to demonstrate that with Stuzo really, really quickly. So to your point, yes, I think it's going to be amazing. I think having the 2 best products in the market combined resources. And both of us are committed not to hurt our customers that actually get meaningful outcomes for them. I think that's why we'll win. One of the things I said on our last earnings call, and I really mean it, is consolidation has always been this trade-off between simplicity and functionality, and we're working so hard to prove that wrong. I don't want you to think because you bought 2 products in PAR, you're giving up something. We actually want you to think you're getting something more. And in this example, while it's not a consolidation, it's not too distinct product. I think the idea is we're not combining Punchh and Stuzo to kill 1 product and make push on another product, actually build you a better product that we can -- you can make more money on hands, so we can take make more money on. So I feel great about that. On the cost side, this part, I think is really interesting. You sort of referenced our challenges in Q2. And certainly, combining the DevOps and infrastructure cost of this organization will make us more efficient. We didn't build the product when we started for the C-store market, which uses loyalty solutions far more than restaurant customers do. And so that lack of vision from us, I think, limited our ability to grow, but also dramatically hurt -- and you'll see us combine those resources. And so you'll see the Punchh restaurant margins go up, and I think you'll see the C-store margins do not go up. So I think it's a win for both.

Yes. And then you talked on some of the previous calls about going to [indiscernible] you sort of elected to sort of do MENU in the United States because you didn't really have a go-to-market because there was currency and all this other stuff. It's our understanding that TASK has a point of sale. So obviously, you can cross-sell into existing TASK units, Punchh and MENU and other stuff, it's a beachhead and sort of manage that currency. But I mean do you see this as an opportunity now that you have TASK as a point of sale internationally that you can go and sell Data Central, MENU payments, all these other stuff. I mean, does TASK sort of provide the beachhead for sort of international expansion for your existing products in your mind?

Yes, I think so. I mean TASK, we think is the best POS abroad, and I think it creates an opportunity for us to do that. But I also say we have no problem if the TASK products end up being better than our products, bringing their products onshore. So to me, it's just about figuring out the best product. But the short answer is of course. And you got to remember, how literally all of our large customers have more growth outside the United States than inside the United States. And so we've got to be able to serve that. And so to me, the synergies actually say is bringing our U.S. customers broad giving them solution so that they've got a complete global solution versus stitching together different -- all these various different markets. And I would say, what we love about the TASK team is they're so product focused, but I think what we can bring to them is a lot more of the go-to-market muscle. So we feel very pride about that.

So -- and you mentioned -- last question, you mentioned Rule of 40. I mean, obviously, TASK is growing really fast and Stuzo seems to be growing really fast and obviously not dilutive to your growth rates. I mean -- do you think that you guys can exit the year at a Rule of 40 or close to a Rule of 40, I mean, because there's obviously a meaningful disconnect in valuation between where PAR is and for example, a company like Agilisys, I mean this company now is bigger than Olo, double Agilysys, International. I think this is obviously the last piece of the puzzle. I mean, do you think that everything in your core is on path that you think that with this in conjunction, you guys could be getting close to Rule of 40 by the end of the year?

I think this brings our path of profitability up meaningfully, right? So if we're targeting end of the year, I think we get there far faster now. And so obviously have Rule of 40 score gross of that. And so short answers, yes, I think this is going to be incredible for the financial side of PAR, but moving up our profitability targets helps our real force. But what it does more thing else is give us -- increases our TAM, and increases our ability to grow for many years to come. We've been growing nicely for a long time, and this logistics allows us to grow longer and longer, put our team in a better position. So I feel excited that we're going to pull forward the profitability and then -- and we would have gotten there anyway. We're feeling really good about that on our own, but this sort of accelerates it. And then obviously, it has an impact on Rule of 40. Adam, we're going to jump the other caller.

Our next question will come from the line of Samad Samana with Jefferies.

I guess first -- I don't know someone asked earlier how you feel about all of the things that are going on at once. I guess I wanted to ask a question in a slightly different way, which is as we think about the BK rollout ramping payments and now digesting acquisitions, how should we think about the [indiscernible] organization. What is the #1 priority now? Or if you could just stack rank those? And then I have a couple of follow-ups as well.

For sure. And one of our values at PAR is focus. And so for us, it's an obsession on you get to be strategic, only if you execute it. You have the luxury to be strategic when you executed well. And so we tried that tremendously. And so we've got a group of leaders at PAR that owns different [indiscernible] business -- we've got our operator business and then we've got our digital engagement business. And both of those leaders need to drive the execution in front of us. And so as a company, obviously, execute on Burger King, it comes #1. We've got to execute on that so that we can win more business, prove the trust they put into us, we have not lost on how much trust that organization put into us, and we need to deliver on that. And so without question, is executing on that rollout and driving that forward and our entire team is aligned with that. I think after that, it's about driving the synergies from these acquisitions. While it's so much work, I said it's been years in some cases to get these transactions to a point where they could execute where we could buy them at such accretive prices, and deliver value back to their own shareholders. Now we've got to prove it, and the hard work starts now. And so we're aggressively working on our integration plans, and it's overnight. We don't wait today. We're playing out today to push that forward. And then I think as the CEO, so much of what my job has been to sort of constantly have an objective conversation with our team and say, do we make the right decisions or we're doing the right thing. And so hey, maybe 6 months from now, we don't -- we look at our priority and say, hey, this is not the thing to drive on those shareholder value over time. But just short answer is, we are obsessive with execution this year. We're -- as I said, we were excessively getting profitable before this. This certainly accelerates it, and that doesn't take the gas off that execution on profitability. But from a strategic perspective, I'd say, getting the Burger King right, getting these deals integrated is number #2. But given the depth of management that we have now, each leader has the 3 to 5 things that we have that started in Jan 1 for them to hit their conversation, and that doesn't change now.

Understood. And then maybe -- if I think about what this does, it gives you a relationship to some of these large brands that you serve here in the U.S. abroad and vice versa. When you think about the buying motion at a large brand, whether it's McDonald's or Burger King, is there a different executive that's making the decision on the international front versus U.S. domestic, and how can you tackle that or? Or is it typically a decision being made at the most corporate senior level at the corporate and now this gives you multiple as you point this, how should we think about how this impacts how the buyer is approaching PAR at the decisions are being made on the buyer side?

It's a really, really good question. So the short answer, unfortunately, is it depends on the brand and how they're structured. Some brands run incredibly centralized, some brands run decentralized. But I would say even the decentralized brand, gosh, there's a real push to unify the core part of the technology. So there may not be a push to sort of say, "Oh, we want to run our kitchens differently in a country different than we do in United States. But the core infrastructure technology of POS, I don't think I've heard a brand not suggest they want to unify that across the globe. And so we -- I think in conversation with investors have sort of talked about how in some of these big brands we want, they just said, "Hey, do you want the international business, and we had to be like, no, we can. And what's been painful is many times that international business was as large or larger than the United States. So the short answer is it depends on how the brands are run, some run very decentral, someone very centralized. I'd say most brands are trying to add more centralization to the international efforts because the international efforts are such a high-growth area that they like to control that. But regardless, there is just a real, real focus on trying to find more simplistic solutions. And again, they have the learnings now of having been big businesses in the United States for so long and learning from the mistakes in the wins they had here and then applying that internationally. So I think that all benefits us.

Great. And just last question for me. I think for the most part, there seems to be more synergies than not between both the acquisitions but to the extent that there's areas where there's product overlap, is the long-term view that want to determine whichever one is, let's call it, the category leader post integration. Is it the shutdown on the other parts? Or is it to continue to kind of let them operate under the umbrella with the PAR brand? How should we think about where there's product overlap? Is there going be one kind of centralized brand, one central product?

Yes, I think -- I don't think we want to have 5 different POSs running in the United States as an example. I think we always have to focus on one product that's -- that's going to be our winner in the market. And so in C-store you can see the bet we've made there, which is we really think we can grow the Stuzo product, and there's no pride of authorship there. They've got a product that we think we can build better, we're going to use that, and that can be our product there. I think as it relates to the TASK side, we'll figure it out as we go. And again, this is -- we have to be completely objective of best product wins. And it's that combination of best products, ability to scale and then, obviously, time line to do that. So of course, I don't think we want to have duplicative resources across the organization.

That concludes today's question-and-answer session. I'd like to turn the call back to Savneet Singh for closing remarks.

Thank you, everyone, for joining us. We look forward to updating you on our next quarterly call.

This concludes today's conference call. Thank you for participating. You may now disconnect.