3Par (PAR) Q4 2020 Earnings Call Transcript

3Par (PAR 3.31%)
Q4 2020 Earnings Call
Mar 15, 2021, 4:30 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the PAR Technology 2020 fourth-quarter and year-end financial results review conference call. [Operator instructions] As a reminder, today's conference call is being recorded. I would now turn the conference over to your host, Mr. Chris Byrnes, vice president of business development.

Sir, you may begin.

Chris Byrnes -- Vice President of Business Development and Investor Relations

Thank you, Valerie, and good afternoon to everyone. I'd also like to welcome you today to the call for PAR's 2020 fourth-quarter and year-end financial results review. The complete disclosure of our results can be found in our press release issued this afternoon, as well as, in our related Form 8-K furnished to the SEC. To access the press release and the financial details, please see the Investor Relations and News section of our website at www.partech.com.

I also want to ensure that all participants today have access to our earnings presentation and business review slide deck that will be used later in the call to better communicate the momentum in our software business. Individuals on the webcast should have access to the deck when they logged on to the call this afternoon. For those just dialing in on the conference call, the presentation can be accessed on the investor page of our website and we also included as an attachment on the 8-K we filed this afternoon. At this time, I'd like to take care of certain details in regards to the call today.

Participants on the call should be aware that we are recording the call this afternoon and it will be available for playback. Also, we are broadcasting the conference call via the worldwide web. So please be advised, if you ask a question, it will be included in both our live conference and any future use of the recording. I'd also like to remind participants that this conference call includes forward-looking statements that reflect management's expectations based on currently available data.

However, actual results are subject to future events and uncertainties. The information on this conference call related to projections or other forward-looking statements may be relied upon and subject to the safe harbor statement included in our earnings release this afternoon and in our annual and quarterly filings with the SEC. Joining me on the call today is 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 the formal remarks portion of the call which will be followed by general Q&A.

Savneet?

Savneet Singh -- Chief Executive Officer and President

Thank you, Chris, and good afternoon to everyone on the call today. I hope you and your families are well and healthy during these challenging times. As I communicated to you last quarter, 2020 presented incredible challenges for our company and the global economy as a whole, and our thoughts go out to all those impacted by the global pandemic. As I look back on 2020, I feel humbled at how hard our team worked to not only deliver our plan but serve our customers.

Our focus on long-term return, customer obsession, and product development helped us end the year on a high note. We ended 2020 with the best bookings quarter in the company's history, continuing strong momentum from Q3. We entered the year with the largest backlog in our history which should set the foundation for a very strong 2021. This rapid growth has encouraged us to continue to invest heavily into our product, and for the first time in my tenure, make investments in sales and marketing.

While the year presented a myriad of challenges, we view many of these challenges as creating opportunities that PAR is well-positioned to take advantage of. Our financial position is stronger than it was a year ago with more than $180 million in cash on our balance sheet at year end. While we'll touch on the financials a bit later, I want to highlight upfront on our EBITDA performance in 2020. As many of you know, capital allocation is a discipline at PAR owned by all.

During the crisis, we radically changed our spend, deciding to focus almost all of our investment into our software product growth. This drove our results later in the year. The early on struggles of the pandemic, the almost full shutdown of our business for seven weeks and our continued investment into our R&D investment in software. Our reported EBITDA came in at around a loss of $13 million, a remarkable feat when you realize that 2020 represented the most difficult operating period for the restaurants in history.

Our company tightened our belts early on and positioned the company to reduce cash burn without sacrificing the ability to accelerate our strategic investments regarding products and people. Our client base is large and diverse with thousands of restaurants around the globe using PAR products and services. That customer base represents our greatest asset for both future sales opportunities and the dependable revenue stream it currently produces. Restaurants are living through a dramatic change in their operating business models.

Technology will be at the center of that change. We are building PAR -- we are building at PAR the platform to lean into this change. There is no question that the volume of software purchased by restaurants will grow tremendously over the next decade. Now to briefly review the fourth quarter reported numbers before Bryan gets further detail.

In Q4, we reported revenues of $58.5 million, an increase of 10.6%, when compared to Q4 2019. We saw revenue growth across all of our segments. Today, we also reported a GAAP net loss of $13 million or $0.60 per share, compared to a GAAP net loss of $5.8 million or $0.35 per share in the same period in 2019. On an adjusted basis, non-GAAP net loss for the fourth quarter of 2020 was $8 million or $0.37 per share, compared to a GAAP net loss of $3.8 million or $0.23 per share in the same period in 2019.

Now moving to our business performance. If you jump to Slide 3 of the presentation, you'll see a snapshot of Brink's performance in Q4. I'm very pleased to report that we had a record 1,525 new store bookings in the quarter, a 67% improvement from Q4 in 2019, and a 29% increase from the sequential Q3. I think this metric, more than any other, truly demonstrates momentum and velocity of our cloud point-of-sale software offering.

Q4 Brink bookings were the highest number of signed orders in a quarter in our history and highlight the dramatic demand for the Brink product. As the slide shows, we reported ARR of $24.7 million, a 29% increase in the same quarter last year. As the pandemic continues to slow down, we expect to see an acceleration in our activations, as stores begin to open and normalize to our traditional activation pace. Said differently, as stores open, our ARR should accelerate alongside our bookings.

If you advance to Slide 4, you can see that we now have 11,722 active stores and our reported backlog at the end of Q4 was 2,546 stores yet to be installed. Entering 2021 with over 2,500 stores in signed backlog sets up foundation for a very strong year. Again, as our customers begin to open, we'll see an acceleration in activations that should help bring this backlog down. We installed 885 new Brink stores in Q4, a 42% increase from Q4 2019, a remarkable accomplishment during the pandemic.

We'll continue to work with our customers regarding implementation schedules, along with the enhanced in-store safety protocols, to ensure our book-to-bill sequence is as seamless as possible. On Slide 5, you can see ARR waterfall over the last five quarters as we continue to grow ARR. I'm proud of our consistently annualized low churn rate of 5% in Q4. This is the fifth consecutive quarter that our annual churn rate has been at or below 5% and is a testament to the stickiness of our software offerings and the strength of our enterprise customers.

To date, we have yet to lose a customer exceeding 50 stores. Slide 6 shows the improvement in COVID-related churn and improves out the minimal impact that COVID has had on store closures in our TAM and the inspiring strength of our customers. In Q4, COVID-related churn was at a low of 3% of our overall base and we'll continue to work and assist these affected customers to get back online and open their stores. These metrics are very positive signs for our business.

Slide 7 shows Restaurant Magic being impacted in the quarter due to the pandemic and the spike of infections in Q4. Bookings reported in the quarter were 146, ARR was reported $8.8 million. Combined ARR with Brink and Restaurant Magic is now at $33.5 million at the end of Q4. Slide 8 gives the current site count for Restaurant Magic with installed stores now totaling 5,900.

On Slide 9, we reported an approximate $1.5 million increase in Brink-related hardware revenues from the end of Q4 last year, a 22% increase. We continue to see robust demand for the complete PAR solution of software, hardware, and services and the capabilities it provides our customers. We're encouraged by our continued strong performance and look to expand our market share consistently. Now to quickly review our product and hardware business in the quarter, that is our point-of-sale platform and Drive-Thru Communications business.

Product revenues in the quarter increased by 8% from Q4 2019 and has been performing well during a very difficult COVID environment. As I previously mentioned earlier, our integrated offerings, and complete solution continues to be adopted by customers. I am pleased to see the performance in product sales from our Q4 number and to deliver this performance in a very challenged capital spend environment is nothing short of remarkable. Now to review our Government segment.

Our government business delivered a solid quarter, evidenced by the 6.5% increase in revenues compared to Q4 2019. Our contract backlog at the end of Q4 was $151 million as of December 31st, 2020. Our Intel Solutions business was the driving force behind the growth in the quarter, as ISR revenues increased 12% from last year's Q4. We continue to seek out contract opportunities where we can leverage our decades-long experience and our performance excellence, specifically, in value-added revenue contracts that include more direct labor and high-tech contract work within our ISR business line.

Now some takeaways on our companies and our company coming out of 2020. Restaurants are looking for a platform to handle the rapid growth in digital transformation. Today, restaurants suffer from dozens of different and disparate products, siloed unlocking, and modularity and make the solution work. We are building that connected platform.

PAR Payment Services, our new all-in-one payment processing solution, continues to be introduced in the marketplace. Although we are very early in this initiative, I'm confident over time, this will be a long-term driver of revenue growth for our company. PAR Payment Services will give our operators the opportunity to take advantage of fantastic rates, a streamlined process, and the ability to offset hardware costs. With our strengthened balance sheet, we intend to be active in the M&A space as we continue to build out our software platform.

All our focus is on adding additional software products that are feature and function rich and will allow us to increase our subscription rates and make us stickier with the customer. In an average month, the Brink API is paying almost 500 million times. This rich data set gives PAR a unique angle to value partners and future acquisitions. To recap, the last two years have been a consistent period of change for PAR.

Our team, our business, our products, and most importantly, our culture have changed dramatically. We have withstood a goal pandemic, acquired new businesses, invested in our products, and have pushed our boundaries further than ever before. We've added hundreds of talented employees which has created an energized environment and built on our storied history. I now feel strongly our company is ready to set the stage and define what the restaurant of the future will look, sound, and feel like.

For too long, technology has been a zero sum for restaurants, creating a wedge between them and their guests. We're confident the changes we've made to PAR are at the foundation to bridge that gap. As always, I'd like to thank our PAR employees, partners, and customers for their commitment to our business and hard work and helping us achieve such extraordinary success during these challenging times of the pandemic. And with that, I'll turn the call over to Bryan for more details on the Q4 numbers and then take your questions.

Bryan?

Bryan Menar -- Chief Financial Officer

Thank you, Savneet, and good afternoon, everyone. Product revenue in the quarter was $21.8 million, an increase of $1.6 million or 8% from the $20.2 million reported in the prior year. During the quarter, the increase in product revenue was primarily driven by a $2.4 million increase of drive-thru hardware sales. Additionally, the hardware associated with the deployments of Brink POS increased approximately $1.5 million or 28% versus the prior-year fourth quarter.

Offsetting these increases was a decrease associated with our traditional Tier 1 hardware customers. Service revenue that includes revenue streams from our subscription software was reported at $18.3 million, an increase of $2.9 million or 19% from the $15.5 million reported in the prior-year fourth quarter. The company continues to expand our recurring revenue base which includes both software-related services and hardware support contracts. In total, the recurring software revenue streams contributed $3.1 million of the increase in service revenue.

The company continues to gain momentum of this deployment of Brink POS and Restaurant Magic, noting a $3.2 million or 85% increase in Software-as-a-Service revenues, as compared to prior year, including $2.2 million related to the Restaurant Magic acquisition. Of the $18.3 million of service revenue reported in Q4 2020, $14.7 million or 80% is comprised of recurring revenue contracts, as compared to $10.9 million or 71% of service revenue in Q4 2019. Contract revenue from our government business was $18.4 million, an increase of $1.1 million or 6% from the $17.3 million reported in the fourth quarter 2019. This is a result of an increase in value-added ISR contracts and subcontract revenues.

Contract backlog continues to be significant, noting a total backlog of over $151 million as of December 31st. Now turning to margins. Product margin for the quarter was 17.4% versus 19.5% in Q4 2019. The 2.2% decline in profitability was a result of the disposal of inventory related to the acquisition of assets of the drive-thru communications product line.

We reported unusually low service gross margins during Q4 2020. This decline was primarily driven by $1.5 million service inventory adjustments, $0.4 million of disposal of inventory related to the acquisition of assets of drive-thru communications product line, $0.6 million in service-level credits, and $0.3 million for increased investment in our call center. Service margin for the quarter was 13%, compared to 32% reported in the fourth quarter of last year. Excluding the charges expressed above, the service margins would have been more in line with our historical service margins.

Government contract margins were 8.3%, as compared to 9.9% for the fourth-quarter 2019. This decrease was driven by our mission systems line of business impacted by contract rate adjustments and loss reserves. GAAP SG&A was $13.6 million, an increase of $3.5 million from the $10.1 million reported in Q4 2019. The increase was due to $1.2 million increase of variable compensation, $0.8 million of expenses for recently acquired Restaurant Magic, $0.6 million for increase in corporate support services, and $0.8 million increase in investments for restaurant sales, marketing, and management.

Net R&D was $5.6 million, up $1.5 million or 36% from $4.1 million reported in Q4 2019. The majority of this increase is due to software investments made for the acceleration of Brink and Restaurant Magic product lines and hardware investments primarily in our drive-thru product lines. During the fourth quarter of 2020, the company also recorded $1 million for the reduction to the contingent consideration liability related to the Restaurant Magic acquisition. Now to provide information on the company's cash flow and balance sheet position.

For the year ended 2020, cash used in operating activities was $20.2 million versus $16.1 million for 2019, primarily due to increased net income loss. Cash used in investing activities was $9 million for the year ended 2020 versus $24 million for 2019. In 2020, capital expenditures were $1.3 million versus $2.5 million for the prior year. Capitalized software associated with the investments for various hospitality software platforms for the year ended 2020 was $7.9 million versus $4.1 million for 2019.

In 2019, we used $20 million of cash for the Restaurant Magic and drive-thru acquisitions, and received $2.5 million in proceeds from the sale of the SureCheck product line. Cash provided by financing activities was $180.7 million for the year ended 2020 versus cash provided of $65.6 million for 2019. During the year ended 2020, we received net proceeds of $131.4 million for our public stock offering in the fourth quarter. And in the first quarter of 2020, we received net proceeds of $115.9 million for our sale of the 2026 notes, of which approximately $66.3 million was used to repurchase a portion of the 2024 notes.

Inventory increased from December 31st, 2019, by $2.3 million, but important to note, we reduced inventory by $5 million, sequentially from quarter ended September 30th, 2020. Accounts receivable increased $1.2 million, compared to December 31st, 2019, primarily due to increased revenue in the restaurant segment. Days outstanding improved within the restaurant and retail segment from 77 days at 12/31/2019 to 74 days at 12/31/2020. Days outstanding improved within government from 58 days at 12/31/2019 to 51 days at 12/31/2020.

This concludes my formal remarks and I would like to turn the call back to Valerie for questions.

Questions & Answers:

Operator

Thank you. [Operator instructions] Our first question comes from Samad Samana of Jefferies. Your line is open.

Samad Samana -- Jefferies -- Analyst

Hi, good afternoon and thanks for taking my questions. So, Savneet, maybe I want to dive in a little bit. Just the acceleration comment for ARR really stuck out to me and so if you can maybe just help frame that a little bit better, how we should think about that. That would be a helpful starting point.

Savneet Singh -- Chief Executive Officer and President

Sure. So we've had you know, in the last two quarters, we've had a tremendous growth in bookings. And remember, PAR, bookings are signed orders. So they're a real commitment from the customer.

Those bookings have -- generally are on a six- to eight-week book-to-bill cycle. So we historically have been able to turn a booking on into revenue within six to eight weeks. During the pandemic, that's been elongated as we've got to work through not our own requirements, but the requirements of our customers to get into stores. And so as a result, you've had this very, very large backlog buildup of almost 2,500 signed orders waiting to be installed.

As the pandemic wanes down, our ability to get into stores should become easier and easier, and we're beginning just to see that right now. And so you'll see this backlog burn down and ARR turn on very aggressively after that. So our goal over time is that our bookings should be relatively close to our ARR added the following quarters. It's not always that linear, but right now, I think it's too away to the other way because of the pandemic.

And so again, as the pandemic comes down, our ability to launch and activate stores accelerates back to kind of our historical cadence and we'll be able to burn down some of this large backlog, and so to me, it's incredibly exciting. We've got enormous amount the year already booked and the year hasn't even kicked off. And so we'll be able to, I think, have a really, really strong 2021 as a result.

Samad Samana -- Jefferies -- Analyst

Great. And you know, maybe just another follow-up on the bookings. Obviously, just a really strong quarter there, considering you add as many in 4Q as you did in the first half of both this year and last year. But can you help us maybe think about, in terms of those bookings, how much of it was -- was it the average number of either sites? Or just helping us double-click into that, was it more driven by larger QSRs? Was it more blended from across the spectrum? Just how should we contextualize that 1,500-plus bookings number?

Savneet Singh -- Chief Executive Officer and President

Yeah. It's a fantastic question. So I would say in Q4, we saw growth across all segments, obviously, when you have that type of growth. But we saw more accelerated growth kind of in our mid-market, the hundreds of stores as opposed to thousands of stores which has been an emerging segment for us and helps balance us without actually.

So in there, we had a couple of multi-hundred store unit chain wins. And so we saw a lot of growth there. And then I think if we were to talk pipeline, we saw the most growth in pipeline in the very large store, the 1,000-plus store which I think bodes well for a strong 2021 on that end, but I would say we had growth across all segments. The biggest growth that was in that kind of mid-market of hundreds of stores versus thousands of stores.

Samad Samana -- Jefferies -- Analyst

Great. And maybe one last one on Brink before switching gears, but I know pay -- payment is a newer opportunity and it's still early days. But any color around maybe TPV so far that's running through PAR payments or the take rate that you guys are netting out at? I understand not wanting to give away the juice to potential competitors, but just how should we think about the early traction there?

Savneet Singh -- Chief Executive Officer and President

Yeah. So I'll -- I'd say it's for the -- at the end of Q4, it's probably too early to say anything that's instructive. You know, Q1 was really our first real quarter of actually selling the product. So I would say what we learned in Q4, I think, was encouraging.

We've learned that the rates that we sell to our customers are attractive. So i.e., them switching to the -- to our payment product is not going to cost them more. Second, I think we think the TAM here is quite large. I think our ability to offset hardware costs with payments over time is a really powerful addition.

And I think as we sort of indicated, I think our take rate here, if we were to sort of back into a take rate, you know, if we were to sort of look at the average set customer that we think would come on to our product line, it roughly doubles our ARPU per store. So if the average store at Brink today is around $2,100, we think we'll get another $2,100 to $2,500 per store that we turn on to payments. So it's not so much a take rate, but a fixed deferred transaction model which is how the enterprise operates versus downmarket where it is very much a spread business. And if you sort of back into -- if you want to sort of back into basis points, you know, that's sort of 25-ish to 30 basis points.

Samad Samana -- Jefferies -- Analyst

Understood. And maybe one more from me. If I think about the Restaurant Magic, obviously, it's been impacted by what's going on with the pandemic. Can you maybe -- I know it's tough to look at the crystal ball, but how should we think about maybe what the durable growth there looks like? I know right now, there's -- it's being depressed, but it would be helpful to understand that.

Savneet Singh -- Chief Executive Officer and President

Yes. If you look at the bookings, the Restaurant Magic bookings are very sensitive to the pandemic and if you sort of look at -- you know, we had good bookings in Q3 and that's sort of the result of the summer openings. In Q4, we had weak results with, obviously, a lot of stress around November, December, and the pandemic coming back. So I think this is -- as the pandemic slows down here and the vaccines pick up, then we should get back to that normal cadence of -- it should be growing as fast as Brink.

There's no reason it shouldn't. And one of the things we've done is after the one-year completion of the transaction and the earn-out that we had with the team -- the founders, we've now integrated Restaurant Magic fully and so that sales notion is now coming out of the broader PAR sales team. And so the account will have nice attachment as opposed to treating that type of products. So I think as the pandemic hopefully comes down to an end or to a low base, this business should be growing at the same rate of Brink.

I can make an argument faster, but this should not be growing any different than Brink in a sort of a normalized world.

Samad Samana -- Jefferies -- Analyst

Great. Thanks for taking all my questions guys and congrats on the strong Brink -- book this quarter.

Operator

Thank you. Our next question comes from Stephen Sheldon, William Blair. Your line is open.

Stephen Sheldon -- William Blair -- Analyst

Hey, thanks. First one, for some of the larger 1,000-plus site wins at Brink that you talked about in the pipeline. Can you maybe roughly frame how long it could take those big brands to maybe push higher adoption of Brink within their own site base and their franchisee site base?

Savneet Singh -- Chief Executive Officer and President

Yeah. So I would say, in the large wins, their own site base comes very quickly. So if we were to sign a large customer, we would generally are able to start turning on the owned stores -- corporate-owned stores within a quarter. It's relatively quickly.

We've seen that with our big recent win that we announced last quarter. And I think we'll see that in the next quarter as we announce more of these wins. So generally, the corporate-owned stores come very quickly because a lot of the work to get us going is there. And then I think on the noncorporate-owned stores, the franchise stores, depending on the size, if it's a multi-thousand unit chain, it's a couple of year process to get through most of them.

If I look back in our prior business, five guys and a couple of years. I think some of our other customers are three years, but it's sort of in that two- to three-year window, you can get to the rest of the franchisees. Now the pandemic has changed things and changed things for the better. Our sort of next large customer that I think we'll sign, I'd expect us to get through at a much more rapid pace than normal, because again, this pull-through where we're seeing that it's not just about picking Brink up any great live, and they're kind of in that same bucket as us, like we both want to get live really, really fast.

So historically, we say two to three years for a very large customer, for sort of a medium-sized customers, it's within a year. I think we'll see that two to three years from the new logos we signed come faster, because they've kind of jumped in as a result of learning from the pandemic. And so I think that their need is almost acute as opposed to this is something we have to do, this is something we must do. So I think we'll see some really -- potential for some of these sales cycles to get smaller.

Stephen Sheldon -- William Blair -- Analyst

Got it. That's helpful. On the -- between Brink and Restaurant Magic, I think you talked about some integration on the go-to-market side. So maybe an update on that and plans to better integrate on the product side and what that could potentially look like from a client's perspective in terms of ease of use and functionality? Just any detail on the integration process there.

Savneet Singh -- Chief Executive Officer and President

Sure. So, yeah, on the sales and marketing side, we are integrated. And so the team that drives the go-to-market is now one team. And so marketing is coordinated, and sales is run by the same account management team and the same go-to-market team that runs Brink.

And this creates incredible amount of simplicity for our customer, right? They're not talking to two different account owners. They're not dealing with sort of different pricing, different billing. It all sort of looks as one, but I think equally important for us is that it doesn't allow an opportunity for a new account not to look at the product, not to sort of have the opportunity to bundle that product. And so I think there's just great logic to that.

On the product side, as we sort of move forward to the more modern infrastructure of Brink, the products have to speak to each other. We're not in the business of sort of buying revenue. We're in the businesses of building great products and these products will begin to start talking to each other. So what does that mean? From the most simple sense, these products should have something like single sign-on, right? You shouldn't have to sign for both products, but over time, you should be able to take the data from both systems and have actionable insights to come back to the restaurant manager, owner or the franchisee.

And so we think that's the next level and so we are beginning that sort of product integration. Literally, I think we kicked off a week or two ago. And so we'll start to integrate the products more closely again in this year which will help, I think, our customers see the value of bundling it upfront.

Stephen Sheldon -- William Blair -- Analyst

Great. Thank you.

Operator

Thank you. Our next question comes from George Sutton of Craig-Hallum. Your line is open.

George Sutton -- Craig-Hallum Capital Group -- Analyst

Thank you. Savneet, you made a general technology future of restaurant technology statement. And obviously, major chains have been laying out some new formats that integrate things like drive-thru and pickup and delivery. I'm curious how you feel you're addressing that new area of opportunity relative to your legacy competitive players?

Savneet Singh -- Chief Executive Officer and President

Yeah. I think that change is part of the growth in bookings that we had. I never would have dreamed six months ago we'd have our best growth quarter ever in Q4. I think it's part -- it -- a lot of what you're saying is what's driving that which is if I'm the CIO or CEO of that restaurant organization, I always knew I had to upgrade, because I needed, you know, all the innovation, whether it's online ordering or QR code pickup or payments.

I think what's changed, though, is the formats are changing and they're changing and no one yet can perfectly predict that future. Is it going to be a virtual kitchen, a ghost kitchen, a dark kitchen, a drive-thru kitchen, how is this all going to connect together. And so it's creating the impetus too which is, I have to have a very, very modern infrastructure, so I can be agile and adapt to whatever that change might be. So I think it's definitely helping us.

I mean, like I said on the last call and again in continuation, the bookings we're getting are really just coming out at the pace that we're just trying to keep up with. And similarly, the pipeline is growing, because again, I think you, as the restaurant owner or concept owner, excuse me, are at a point now where you just can't wait. And so that's what's really pulling through all of the demand. So I don't know if it's subject to that demand, but I think it's part of the whole story.

George Sutton -- Craig-Hallum Capital Group -- Analyst

Perfect. And as you talk about bringing ARR growth -- and the bookings growth and the ARR growth together, you mentioned one thing on the call, constrained capital spend. And then we also have, obviously, the COVID restrictions in terms of implementations. Can you bifurcate how much of an impact both of those have been relative to that?

Savneet Singh -- Chief Executive Officer and President

Sure. So it's -- the capital spend was more tied to our hardware business, where we have been really encouraged that in this sort of market where our customers are definitely keeping their eye on their wallets, they continue to invest in our hardware solutions and our service solutions. So we've been very encouraged by that. As it relates to activations, this is just a matter of literally turning stores on.

And that's where we have limitations where certain concepts don't allow nonemployees in stores or they want a much more structured rollout schedule, because again, controlling exposure to their end markets. So that limits our ability to get the stores rolled out until we get there. Another example is, as certain state-by-state have different regulations on quarantining or visiting, so if we had an installer in New York who had to go install something in Massachusetts, here she would have to come back to New York. They'd have to quarantine, get a COVID test.

You didn't have the capacity as you normally would. As we've seen these restrictions come down, as we've seen states open, we'll see this sort of book-to-bill process come back to a more traditional sense, I believe. And so this backlog which is, again, incredibly exciting, and we'll burn through it, we'll start again turning to revenue very quickly. And so we still activated 885 stores which is pretty tremendous in this environment.

But as these limitations come down, you'll see that number continue to grow and the ARR with it and so we're really excited by that.

George Sutton -- Craig-Hallum Capital Group -- Analyst

Great stuff. Thanks, Savneet.

Operator

Thank you. Our next question comes from Timothy Caldwell of Helio. Your line is open.

Aman Mahal -- Janus Henderson Investors -- Analyst

Hi, good afternoon and thank you for taking my questions. Great quarter and a great year, guys, given the circumstances of COVID-19. In the release, Brink locations and ARR imply an incremental addition of 1,900 locations year on year and just over $100 million of ARR which equates to about $53,000 of ARR for those incremental locations. That's obviously not going to be the correct way to think about it as you have presumably had upsells and incremental increases in revenue from existing locations of Q4 2019.

Can you give me a breakdown of what the new signings are going at, as well as, how the existing locations have been upsold? In particular, how the PAR Payment Services has been working out, please?

Savneet Singh -- Chief Executive Officer and President

Sure. So I would -- the stores signed in Q4 are, I'd say, in line with our continued sort of price point of roughly $170, $175 a month per store. That number has grown over the last two years and I think will continue to grow over time and I don't know the exact number, but it's around the same price. I think over time, that number will continue to grow, as we've had this expansion in the mid-market where price is higher than our traditional Tier 1.

So I think we'll continue to see that. That growth has all been price-driven. It hasn't been module-driven yet. And so we've grown that price from $158 to whether $175 or $180 all through price.

In time, it will be module-based. We haven't had a module to upsell. Historically, Restaurant Magic is really the first upsell product that we've got going on. And as I said, now that we've just combined the sales forces earlier this year, we'll see some nice traditional ARPU expansion there.

On Payment Services, I just answered that in the last question or two questions ago, but we're -- in Q4, we launched our beta. We had great success with the beta. Obviously, not a ton of customers, purposely so, but we saw that our rates were competitive. We felt that we can make money with it.

We saw that there's value to the end customer and we learned a lot. We learned that our ability to offset that hardware cost is a real advantage to our customers. So instead of taking the capex to upgrade your hardware, we can take that on, provided we recoup it in payments and that deal is incredibly high ROIC for PAR. So I think the path in 2021 is exactly what you're suggesting which is we've got an incredible amount of just backlog and revenue that has to come out the door.

We'll see really strong revenue growth. And then that revenue growth will come not just from sites which has historically been completely -- our revenue growth has been 100% tied to site growth. That will start changing to site growth plus what module that we upsell, whether it was payments, whether it was back office, and hopefully, more and more as we acquire or build along that framework.

Aman Mahal -- Janus Henderson Investors -- Analyst

Great. Thank you very much. Just one follow-up. Do you have a view on when you might get to EBITDA positive or GAAP positive net income?

Savneet Singh -- Chief Executive Officer and President

So I think it's going to be very dependent on our growth. If we deliver our growth projections in 2021, I would suggest we should continue to burn. I don't think we're going to burn a lot of money, particularly relative to our cash balance. But if our growth slows down, we can quite quickly turn the business back to breakeven.

The levers are there already for us to get to breakeven. We are making a tremendous amount of investment in R&D spend. And as I mentioned, we sort of just made our first investments in sales and marketing spend which is leading to, obviously, some of the great results that we have now. So we could turn that on if we needed to.

But I think for the next year or so, we want to continue that dramatic investment because we're seeing great results from it. And given how low churn the base is, how much we think we can upsell, I just think the LTV continues to expand pretty considerably, right? Our LTV in 2019 and 2018 and 2020, I mean, it's the lowest it'll ever be, because it was a single-product company that didn't have the product and service capabilities to actually serve that customer base. Now we're a multiproduct company with the ability to actually upsell and handling ability and so I think it's -- there's a -- the LTV-to-CAC equation is incredible. We will invest along that.

Again, if it ever turns or if wherever it will not keep up this growth, we can help it pick it on. So I wouldn't be surprised if the business as of today is profitable in 2022. But at the same time, if revenue growth accelerates, as I think it will, there might be an argument for us to not do that. So I think we're dynamic with how we allocate capital and I think we'll sort of see how the first couple of quarters go and can potentially give some guidance on that.

I'd say we can turn this business profitable by the end of the year if we need to. I'd argue if we see the growth that I think we're going to see, we'd probably wait to postpone that goal.

Aman Mahal -- Janus Henderson Investors -- Analyst

Thanks very much for taking my questions. I completely agree. Focusing on the growth, should it be there, is the way to go forward and increasing the market share. That's what you should be doing.

Thanks so much.

Savneet Singh -- Chief Executive Officer and President

Sure.

Operator

Thank you. Our next question comes from Anja Soderstrom of Sidoti. Your line is open.

Anja Soderstrom -- Sidoti & Company -- Analyst

Hi, thank you for taking my questions, and congratulations on a great quarter. A lot of good questions asked already, but I'm just curious to see, in the sales and marketing, the progress you made there. Do you have more changes to be made there to capture or --

Savneet Singh -- Chief Executive Officer and President

Hi, we do. We are -- in Q3, we restructured our department in Q4. We put in a new head of sales and you had a marketing. You know, we've seen tremendous results from it already.

We just went through a rebrand. And I think for the first time, we'll start to see some nice investments in there. I'm really encouraged by this. As I said, we did not expect the results to come so quickly and I think we'll continue that.

Part of that sales and marketing spend is not sort of what you think of, go sign the next big logo or go do a big brand marketing campaign. It's also just getting much more aggressive about our existing customers. We have, not only do we have sort of these 2,500-plus stores that are waiting to be installed. And again, these are signed orders waiting to be installed, but then we also have an enormous amount of white space in our existing logos that we have yet to sort of mine, if you will.

So we have a number of customers that we are 50% penetrated in that we need to get to 100%, and so some of our investments is also going to be how do we attack those customer bases more effectively. And now that our product is finally to the point where we feel comfortable churning on that spend, we're quickly seeing the result of that spend and I think Q4 was a great demonstration of that.

Anja Soderstrom -- Sidoti & Company -- Analyst

OK. Thank you. And you were alluding to the rebranding, have you got any initial feedback on that?

Savneet Singh -- Chief Executive Officer and President

We have. So we focused most of our industrial rebrand at -- we put it out publicly a week or two ago and we focused on it first internally to our customers and our partners. In the next quarter, we'll go out externally and we can share some of the feedback, but so far the feedback has been quite positive. I would say it's not as much about the optical rebrand, but it's also sort of what does that brand mean to our customers? What does that brand promise? What are we looking to achieve? PAR means a lot of things to a lot of people, that's not the rest of your success.

We sort of need to sort of say, this is what PAR stands for and help drive that change and so a lot of work is going into getting that out there. So I would expect us to -- expect for you to see a lot of stuff coming out in Q2, the month of the quarter of Q2 externally. That helps kind of lay out what does that brand promise mean, what do our customers think on it. But so far, it's been really positive and we also engaged our partners, suppliers or employees, and made it a little bit more of a collective endeavor.

Anja Soderstrom -- Sidoti & Company -- Analyst

OK. Thank you. And then with the strong backlog you have, and as you say, you're going to have to be able to accelerate the installments as the pandemic -- we're getting through the pandemic. Do you have the capacity to do those installments? Or is that going to be like a slower progress?

Savneet Singh -- Chief Executive Officer and President

We do have the capacity. As I said, most of the limitations in getting out has been purely pandemic-driven. In December, January, and February, we had many of our customers said, listen, we want -- we really need Brink. We'll sign the order form and commit to it.

We just need to slow our rollout because we're trying to limit the amount of nonemployees in stores, and so it was a little bit out of our control. As I think, again, stores opening is a huge, huge boom for us to sort of accelerate those activations coming forward. So it's not so much our own capacity. It's very much right now at the limitation of our customers, who I think are looking at the same data we're looking at as it relates to pandemic and feeling more comfortable about it.

Anja Soderstrom -- Sidoti & Company -- Analyst

OK. Thank you. That was all for me.

Operator

Thank you. [Operator instructions] Our next question comes from Adam Wyden of ADW Capital. Your line is open.

Adam Wyden -- ADW Capital -- Analyst

Hey, guys. Terrific, terrific quarter, coming out of COVID, really excited about what you guys have in store. So I'm going to take a step back because I feel like a lot of these questions have been super short-term and it's kind of pissing me off. But I had a couple of kind of high-level questions for you.

You know, McDonald's announced that they were divesting dynamic yield. You guys are clearly piloting inside of Taco Bell. We've seen it in the stores. YOu know, I use this as an analogy.

What attracted us to Brink and PAR initially was the scalability and the ability to get bigger customers. And when we look at Toast, Toast has grown 100, but they're getting onesies, twosies, and it doesn't scale. Once you get the 50,000 customers, it's much harder to grow 50,000 customers when you're adding one restaurant at a time. You've got five guys that which led to a bigger announcement with Arby's, which led to a bigger announcement with CKE, which lead to a bigger announcement to Dairy Queen.

So Dairy Queen is out 5,300 units. You're doing 3,500, 3,000, 3,500 ARPU, you know, fabulous. My question to you is, now everyone said McDonald's was going to build their own point-of-sale system. They're clearly taking a step back and divesting.

You're in Taco Bell. You're getting deeper and deeper with Inspire, Jimmy John's, SONIC, Buffalo Wild Wings, all fair game. I mean, can you talk to me about the potential of winning, you know, I guess, what it would be a four-digit unit chain, because right now, you're at 11,700 units. We know that's going to grow, but I mean, you could win 7,000-, 8,000-, 9,000-, 10,000-unit chain and double the company, and that to me is kind of the holy grail here relative to Toast.

And then please answer that and I want to -- and then I kind of have a follow-up around it.

Savneet Singh -- Chief Executive Officer and President

Let me first say this. We'll double the size of the company with the existing customers we have signed. We're not -- we've done a tremendous amount of stores that are in backlog or the yet-to-be installed of our existing logos and I think we'll double the company just from that. There's just a ton of white space, as I call it, to get through.

I'm reticent to use customer names, but a number of our large customers, we're not even halfway through, right? We've got so much white space to pull forward. So I think we'll do that. As it relates to our competitive positioning and the industry dynamics, there's no question that there's never been a better time to sell the product that we have. Large restaurants, I think, have made the decision that they need to build in partnership with people like ourselves to make their technology vision come through.

Twenty years ago, a company building its own software, its own point of sale, made tremendous sense, because their competitors couldn't build the product as well, gave them a competitive advantage. Today, software companies build better products than restaurants, on average, and I think will be on, on average. I don't think that's debatable. And so I think the idea that you're going to keep a captive point-of-sale system, maintaining the innovation for that system on your own is a ton of cost and burden for an organization that doesn't focus on building software.

Think of it this way, if I had a large restaurant organization, the technology development group would be an important part of it, but I don't know if the best talent, the best leaders are going to go to that part of the organization as opposed to a software company where that's all the talent. And so I think that shift is there, that shift and sort of desire to sort of build building partnership now sort of dominates the industry thinking which wasn't there just a couple of years ago. The last thing I'd say is our position relative to our competitors is getting stronger and stronger. Listen, us growing to 1,500-plus bookings in a quarter is incredible, but it's as much a result of our success as much of our competitors not being able to keep up with the industry dynamics that we've seen.

As we come through the next few weeks and sort of start to get more of our customer wins and talk more about our pipeline, a lot of this is that our large customers say, hey, I want this change in technology now, and then not being able to find a provider that can give it to them in time or the flexibility, modularity that we can bring. And so in the long-term --

Adam Wyden -- ADW Capital -- Analyst

No longer [Inaudible] has been really been implemented in the cloud. I mean there's some legacy Aloha and Chipotle and stuff like that. But from what we understand, no one is -- there has been no real successful deployment in a purely cloud technology in over a couple of hundred units. I mean we know that Burger King did an RFP and Toast basically said, we can't do it.

We can't do the customization. And so at least unless our channel checks are bad, our understanding is that there has been no successful fully cloud deployment in a chain more than a few hundred units. So like from what we understand, you guys are literally competing with yourselves. Am I looking into this the wrong way?

Savneet Singh -- Chief Executive Officer and President

I don't think so. I think the best way to say is when we compete against incumbency, it's very rarely against a competitive solution, where we feel like we don't have the edge to win. When we lose its incumbency and I think the pandemic has really sort of challenged that incumbency which is can I really survive with the vendor that I've been with for the last decade that hasn't made these innovations. So that's how I look at it which is, we were competing against our incumbency more than we compete against any specific competitor.

Adam Wyden -- ADW Capital -- Analyst

OK. That -- that makes sense. So I just want to ask you a different -- ask you something else. There was a slide on Twitter.

I think it was from one of Toast kind of go-to-market, kind of test-the-waters deal, where they talk about the SaaS per restaurant of addressable market of like $40,000 to $50,000, not including payments. So obviously, you guys, Karen Sammon gave you some real bonehead deals and you're kind of waiting. But you know, you're seeing $3,000 ARPU on really great Tier 1 customers. But even with Restaurant Magic at $1,000 to $1,500, you're still only looking at like $4,500 per box on kind of what I would call new adds.

Can you comment about your ability to penetrate that, you know, call it, $20,000, $30,000, $40,000 number? And then I guess my question is really like it kind of seems that Toast says that they can get that because it's much harder to cross-sell products to onesies, twosies. I mean if you get -- use an example, let's say you get Dairy Queen and there's 5,300 units and they all get on to Brink, it's much easier for you to sell them Restaurant Magic or whatever loyalty or back office than it is to sell up to one unit. So I mean, can you talk about kind of the strengths of this platform and your ability to capture that ARPU and TAM in a much more aggressive and efficient way than kind of your peers and how you think about the cadence of that? Because Toast basically said in their thing that they're going to get to $16,000 of ARPU, not including payments by 2024. And I'm like -- it doesn't even make sense to me.

I mean I think you guys can do it, but I'm just kind of curious how you think about all that.

Savneet Singh -- Chief Executive Officer and President

Yeah. So I think the TAM -- let me say this way. The TAM for restaurants is whatever it is today is going to be a fraction of what it is in the future. I don't think if you ask any person in the restaurant business that they expected to have as much software as they have today that they would have ever dreamed.

And I think if we did ask the same set of restaurants in five years, the same question, I think they'd again be shocked. The reason why I'm here and why our team is here is that we see that change where software is eating this industry in a good way. The idea that you might need computer vision, robotics, delivery management, artificial intelligence, all of these things are just now hitting the restaurant industry. And so whatever that TAM is, whether it's 20,000 or 10,000, it's expanding tremendously and that's why we see this great opportunity because the point-of-sale system is the foundational platform that much of this comes off of.

The idea that just in the 11,700-ish stores that we had at the end of Q4 takes on average half a billion things for API. I think it's just as how important that product is as, again, the foundation of that platform. So I expect us to rapidly grow into that TAM, both through new products, and again, as we grow some of your price, but going through new product and acquisitions. We see it, I think, and in my point, I think the industry sees it.

I think the single product companies are coming back and realizing that their path to success is by partnering or being sold to a company like PAR as opposed to going at it on their own because it just doesn't make sense if you're that restaurant operator to manage 15 or 20 or 10 products per store. That is just asking for failure and so I think that our position there is incredibly strong. And whatever I sort of tell you today, I think it's going to be a dramatic understatement of where it will go in the future.

Adam Wyden -- ADW Capital -- Analyst

I mean, look, if I look at Oracle or Salesforce.com or the one that I like is MarketAxess which does fixed income pricing. I mean, you've seen a number of what I would call vertical SaaS companies cross-sell successfully. So I mean, look, obviously, the playbook is there. I mean, look, Lightspeed does a deal any -- every five minutes.

Now I don't know whether they're good or not. And obviously, it's SMB and I think that the churn rate is much higher. But I mean, look, I see that Toast has talked about going public at $20 billion. Lightspeed is trading at like 30-plus times revenue.

I mean you guys basically have -- I mean, if I could just kind of go backwards on that, you guys basically did 1,500 sell on bookings. You've got a backlog of 2,500. That backlog is going to get worked down as stuff opens up which it will. It looks like you guys are probably on pace this year, in Brink at least to get to 2,000 bookings or installs a quarter.

So I just kind of do back-of-the-envelope math, in conjunction with the wind down of the backlog and getting to kind of 2,000. I mean, if you do, you know, call it, 8,000 installs this year at $3,000, that's $24 million. You're talking about $50 million, $50 million Brink plus, call it, $10 million, $12 million wherever, Restaurant Magic. I mean, you're looking at something that should be $60 million to $80 million of ARR, not including acquisition.

If I put a 30 multiple on that that's two to two four, not including the hardware business which is making money and government. So the market is still kind of saying, you're a loser. So I mean, I guess my question to you is like what do you think it's going to take to let people know that you're the winner here? That you're going to be the one that is going to basically become the vertical SaaS player? Because -- I mean Lightspeed trades at double the multiple and it's an inferior business, and they don't have the opportunity. I mean, neither Toast nor Lightspeed has the opportunity to cross-sell through these deep networks.

So like arguably, we should be trading at a much higher multiple given our ability to upsell and cross-sell. So I just -- I'm trying to figure out what I'm missing and what -- how you're getting the market --

Savneet Singh -- Chief Executive Officer and President

Sure. So let me -- I think, listen, I think our execution is catching up tremendously, right? Again, I don't -- again, I wouldn't have dreamed that we had this type of bookings backlog into the year. It truly is incredible and I've never been more excited about -- I'm always careful not to use hyperbole, but to have 2,500 stores already signed going into a year, it's hard for us to screw up this year. So I just think it's continued execution is really what delivers that.

And as we sort of said in our script and we've always said, the platform that we're building has tremendous value to our customers. And that's where I think every investment starts which are actually delivering value, we are, and I think we'll add more value than anyone else as we acquire and build new products. So I think it's us executing on that plan, like we've been doing, and continue to do. And again, as the pandemic rolls off, it very much changes our lives to a real acceleration in revenue growth.

So I think the pandemic has been interesting in the sense that we've, I think, proven that we are a unique product in this market. We've proven that we've got sort of a dramatic advantage over our competitors and how we've got this unique ability that as the pandemic winds down, we get the benefit of a tremendous amount of tailwind of revenue growth because we've already signed all these stores. So I think we get, I hate to say, the best of both worlds with that opportunity. Adam, we've got a couple of more questions.

Adam Wyden -- ADW Capital -- Analyst

I have one last question. I have one last question. I have one last question.

Savneet Singh -- Chief Executive Officer and President

Sure.

Adam Wyden -- ADW Capital -- Analyst

If I take a step back and I look at you guys with all these monster chains, right, is it unreasonable to think that several years out, you have 1 million restaurants in the United States, and obviously, a lot of these chains are global. I mean if I take a step back and say, several years out, could this be a 100,000-unit restaurant deployment and 40,000, including payments. I mean, that's $4 billion in SaaS. You know, at a 20, 30 multiple, you're talking about a $100 billion company.

I mean you don't --

Savneet Singh -- Chief Executive Officer and President

So I would say this, our [Inaudible] at PAR is to be the largest company in the industry, largest outside technology company by 2030, and within five years, I think we'll be tremendously on the way there already. I think we're going to hopefully beat our targets. To get the numbers you talked about, I think, they're very reasonable. There are 1 million restaurants United States, 7.5 million globally that use point-of-sale systems, and we are building for that.

I think -- we think this TAM is enormous. And again, I think the more important part of it is, yes, the sort of volume count is high which is the number of restaurants. But it's the ARPU side that I think is growing at a rate that the world under-appreciates just how much software is being bought by restaurants and how much of that is dependent upon the point-of-sale system which is sort of our wedge in there. So I do believe that these --

Adam Wyden -- ADW Capital -- Analyst

Yeah, but it's basically like rent, right? I mean if I think about it, my grandfather was in the steel service center business and you said, look, you have a few costs, right? You've got labor and you've got rent and you've got cost of goods. So you know what your cost of goods are, that's your R&D and your software development costs, right? You have your labor cost, right? And then you have your rent, right? Now if you're -- if you think about a restaurant, whether a ghost kitchen or a virtual kitchen, I mean, look, you're not going to be on Fifth Avenue anymore. So for all we know, all these restaurants are going to be in these tin sheds in the middle of fricking nowhere. But at the end of the day, I can have your software and that can eliminate the number of amount of labor that I need to do online ordering and this and that.

I mean, why can't -- I mean the math I'm doing is you have $2 million restaurants growing with inflation, you have 2% of sales is $40,000. That doesn't seem unreasonable and that's not including payments. So like there's so much economic waste in a restaurant, I mean, why isn't this just like rent? I mean, I guess, the math makes sense to me. And it doesn't make sense to me in the context of Toast and Lightspeed, because they're going after restaurants that are doing $500,000 or $700,000, and they can't be cross-sold into.

So when I look at our store base and I look at restaurant doing $2 million and growing and the ability to cross-sell, I mean, like, to me, it's like we're going to do it. So I just -- I don't know. It's silly to me that the market is gravitating to these SMB, lower quality, higher churn.

Savneet Singh -- Chief Executive Officer and President

Let me take this, Adam, and then we do got to move to that last caller before time expires. But I'd say we did the TAM, it's enormous. I think all of these companies are all fantastic. They're all going to grow at incredible rates.

I've always said we could be a really average management team. We'll still have tremendous revenue growth. And then for a great team, we'll have well above industry growth. We're riding a wave and we happen to be lucky to be the beneficiary of it.

We're not sort of -- there's no hubris and that we're actually that great. This is just a secular trend that's going to continue for a long, long time. And I think that's what you're touching on. Adam, I'm going to pause you.

We're going to go to the next caller just for the function of time.

Operator

Thank you. Our next question comes from Aman Mahal, investor. Your line is open.

Aman Mahal

Yeah. Hi there, guys. Just have a few questions. The first which is on the -- you talked about the acceleration this year from the booking sort of backlog, the 400 closed stores that were reopened.

I'm just wondering about -- of the existing 11,700 site count on Brink, how many of those are kind of under-earnings? I'm thinking of kind of partially limited hours, partially opened stores where there is -- is there like a variable element to the Brink ARR that you'll also see a benefit from as some of these stores revert to kind of normal operating hours?

Savneet Singh -- Chief Executive Officer and President

So at the moment, there's no variable element to it. So if the store is open and running, we're billing them. And we've -- for stores that are down for a period of time, we don't bill them. And so we take a conservative view on that.

So over time, though, there will be a variable element as payments becomes a bigger part of our base which is transaction-based as opposed to the lights being on. So at the moment, you don't have variability from stores being partially open. But there -- again, there is tailwind. As these stores come back online, we start billing them again and we'll start to see that.

I think, again, as the pandemic winds down, we'll see some nice pull-through there.

Aman Mahal

And when you look at that installed base, where do you see kind of most -- and you look at the history of that, where are you seeing kind of most upsell and additional product kind of purchases coming from within that installed base today? I'm just intrigued kind of what's the main upsell that you're sort of generating right now?

Savneet Singh -- Chief Executive Officer and President

Sure. So at PAR, we've never upsold the product. So it's historically been a single product which is a Brink point-of-sale. Now there've been small modular add-ons that we're sort of bundling to Brink.

Again, this is going back a decade, you know, some integrate loyalty solution, integrate online ordering solution. But for most of our customers, they buy a point-of-sale and then they use our API to buy additional product, whether it be online ordering or delivery or loyalty or something else. It all sort of plugs into that point-of-sale system. We now are starting to just begin that upsell motion with our back-office product and our payment product this quarter and I think you'll see us do more.

The underlying trend underneath this, though, is very positive which is our restaurant customers are not looking to manage 50 different vendors per store. They sort of want this platform impact, both for them to build on to simplify their lives and that's where I think that also happens. So historically, we don't have data. It's never, as I say, gross and net retention have been the same.

We just have it because there's never been an upsell and I think that is like the excitement here which is the last call or the TAM is just getting tapped into.

Aman Mahal

And I guess, maybe a follow-up to that or some of the questions previously. On the Tier 1 customers, could you maybe just talk a little bit more around sort of the sales cycle to get some of those guys on and also how their demands and what their sort of needs -- how it differs from kind of Tier 2 and Tier 3 customers that you've been signing more regularly on Brink?

Savneet Singh -- Chief Executive Officer and President

Sure. So Tier 1 customers are generally a sort of year-long sales cycle to win the corporate mandate. Now that has changed during the pandemic, where we've had some real shortened sales cycles which we'll talk about, I don't know, next quarter. But historically, it's around a year sales cycle and then subsequent to that, you quickly roll out the corporate stores.

And then as I mentioned, if it's a multi-thousand unit chain, it will be a two- to three-year process to convert those franchise stores on to Brink. So that's generally how we look at it. In the mid-market, it's three to six months. It's a very different program where you're generally mostly corporate-owned and you can sign and turn the stores on very, very quickly which is where we've seen a lot of the growth as I mentioned in Q4.

And then the very down market, where we sell through resellers, call it, chains that are less than 50 stores, you know, again, it's sort of a couple of month sales cycle. We have a lot less visibility down there because we're not talking to the customers directly and that is ultimately only part of our market that really has churn. As I mentioned, we've never really lost a large chain since the Brink existed and I think, again, so the durability of the business, but also the bit of upsell, because they must like the product if they've never set it off.

Aman Mahal

And then maybe just on gross margins, on kind of your service revenues. Are you going to consolidate food chains to other line items, kind of call it in the mid-30s now? And the software elements, I imagine, are substantially higher than that, but can you just give me a sense of how we should think about that trending going forward?

Savneet Singh -- Chief Executive Officer and President

Yeah, absolutely. So in our service line, we combine our software-related businesses and then our service businesses which are anything from field service to warranty, advanced exchange type repair work. That margins over time will expand. We -- the software business is much higher-margin than our traditional service business, and over time, we'll see a nice growth in that business.

And I think over time, we'll look to sort of give a lot more breakout of that business line, so you can sort of follow that margin growth. So I think you'll see really nice margin growth in that business historically, because again, the mix shift is moving much to the higher-margin business. The non-software side of the business should stay consistent, should be nice margin, as it's been for 20, 30 years, but the growth will really be coming from the software side.

Aman Mahal

Can you give me a rough split between the gross margin and software versus gross margin on field and warranty services? Just to get a sense of the difference in profitability.

Savneet Singh -- Chief Executive Officer and President

Yeah. So we historically haven't -- in MD&A, we give a lot more specific here, but we haven't broken it out. I would say that our software businesses will be very much like other software products to sell to the same ACV levels that we do. We should be 70% to 80% gross margin in time with our product.

We aren't there today, primarily because as we've talked about in the past. The business has run incredibly inefficiently and we've sort of had excess spend. But we see a really nice trajectory in gross margin growth for the next couple of years and I would expect us to be in that range over time. I don't expect this to not be in that range as we -- I don't see us being any different than any other software product that sells at the price point that we sell to.

And so that's already happening, and again, the new products we built, the new products that we've acquired have all come in that sort of 70% to 80% gross margin range. We should be no different. On the, excuse me, on the non-software side of our services revenue, you know, you're in the 30s of gross margin and that is somewhat volume dependent. So as we grow Brink, that business line sells more hardware, so more services are affiliate with that and that -- and I think it's very traditional that sort of hardware business as a package software.

Installation implementation is not a business that we make a ton of money in on the gross margin level, but warranty and exchange, those field services is actually where we make nice margins. And so as we grow, I think that business line will -- that part of the margin line will stay relatively flat. As growth slows, you'll see also increased margin there because you're doing less implementations where the gross margins are relatively low.

Aman Mahal

Yeah. I think it is great, if over time, you could separate out the software gross margins and report outside because that would really good to see.

Savneet Singh -- Chief Executive Officer and President

Absolutely.

Aman Mahal

Maybe just one last question from me. Just on kind of competing with incumbency when you're looking to gain customers. Has COVID actually kind of helped maybe drive some of those sort of lagging competitors with weaker products to actually raise their game and kind of add online ordering or curb collection to that product? Have you seen sort of them raising their game in any way over the last sort of six to nine months?

Savneet Singh -- Chief Executive Officer and President

You know, I'd say -- this is what we've seen. I think the younger, more dynamic companies that reacted, I think well during the pandemic, focused on the down market part of the business. So those that were trying to come up into our part of the world which is the enterprise side, I think retrenched and said, hey, where are we going to be great? Let's focus on the market we're great which is that sort of SMB customer base. It never removed a chunk of competition from our world today.

On the traditional competitors, the other companies, I don't think we've seen a dramatic change. I think there's no doubt that everybody reacted to help their customer base, nobody was trying to hurt their customers. But I think it's very hard to see innovative dilemma. How do you turn a product line that's made a ton of money for you? Sit on a ton of cash and turn that into a dramatic reinvestment vehicle.

You know, I think it's tough and so I think they're structurally challenged to make such a drastic change to their business. And so -- and again, I think our results sort of show it. I don't think we would have had this dramatic growth in bookings we've seen in the last couple of quarters if the competitive response was very strong.

Aman Mahal

Yeah. Again, that's great. Thanks very much. We've got some good quarter and I'm looking forward to see how these actually develops.

Savneet Singh -- Chief Executive Officer and President

Thank you.

Operator

Thank you. I'm showing no further questions at this time. I'd like to turn the call back over to Mr. Savneet Singh for any closing remarks.

Savneet Singh -- Chief Executive Officer and President

Thanks, everybody, for joining. Look forward to welcoming you on future calls.

Operator

[Operator signoff]

Duration: 65 minutes

Call participants:

Chris Byrnes -- Vice President of Business Development and Investor Relations

Savneet Singh -- Chief Executive Officer and President

Bryan Menar -- Chief Financial Officer

Samad Samana -- Jefferies -- Analyst

Stephen Sheldon -- William Blair -- Analyst

George Sutton -- Craig-Hallum Capital Group -- Analyst

Aman Mahal -- Janus Henderson Investors -- Analyst

Unknown speaker -- Janus Henderson Investors -- Analyst

Anja Soderstrom -- Sidoti & Company -- Analyst

Adam Wyden -- ADW Capital -- Analyst

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