PAR Technology Corporation (PAR) Q4 2021 Earnings Call Transcript

PAR Technology Corporation (PAR -1.59%)
Q4 2021 Earnings Call
Mar 01, 2022, 4:30 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good day, and thank you for standing by. Welcome to the fiscal year 2021 fourth quarter financial results conference call. [Operator instructions] After the speakers' presentation, there will be a question-and-answer session. [Operator instructions] Please be advised that today's conference is being recorded.

[Operator instructions] I would now like to hand the conference over to your speaker today, Mr. Chris Byrnes. Please go ahead.

Chris Byrnes -- Vice President of Business Development

Thank you, Chino, and good afternoon, everyone. I'd also like to welcome you today to the call for PAR's 2021 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 be sure all participants today have access to our earnings presentation and business review slide deck that we will use during the call to better communicate the momentum in our Software business. Unfortunately, we're experiencing a minor technical difficulty that should be resolved in the next few minutes to access the slide deck. The presentation and review slides will be -- have been furnished in the 8-K that we filed this afternoon. Individuals today on the webcast should have access for those just dialing in to the call this afternoon -- I'm sorry, one second.

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're recording the call this afternoon and it will be available for playback. 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, and the information on this conference call related to projections or other forward 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

Thanks, Chris, and thanks, everyone, for joining us to review PAR's fourth quarter and year-end 2021 results. As always, there's a lot we want to share with all of you today in our prepared remarks, so we'll kick off now. During the fourth quarter, we continued to drive growth in our strategic recurring revenue platform and saw continued margin expansion as we begin to get the benefits of scale. As a company, we delivered a strong fourth quarter with reported total Q4 revenues of $81.6 million, a 39% increase from one year ago.

The revenue growth is driven across all business lines and specifically around our software recurring revenues, resulting in $88.2 million of total Live ARR at the -- at quarter end and a year-over-year growth rate of 35% when adjusting for the Punchh acquisition. This increase was driven by a 47% growth in ARR coming from Punchh and 30% coming from Brink. Contracted ARR now totals more than $111 million as of December 31, paving the way for a strong 2022. Equally important as we scale ARR is the dramatic improvement we have been able to drive in gross margin within our subscription services revenue.

When new management stepped in a little over three years ago, recurring revenue gross margins were well below 45%. At the end of Q4, we're now at 70% and expect this to continue to expand over time. This growth has been driven by an intense effort on ROI focused engineering and improved Brink architecture and economies of scale. Our strong results this quarter were driven by a high level of execution across the business and continued demand for PAR's unified commerce cloud platform.

We've established strong momentum and have continued to build on that throughout 2021. In Q4, we activated 1,075 new Brink sites, a very solid number when considering two significant holiday periods in the quarter were very little if any deployments occur. On a net basis after churn, Brink's total store count now totals near 15,830, a 35% increase from one year ago. Brink bookings totaled near 1,200 stores in the quarter and saw improved cadence in Q4.

Brink continues to report extremely low churn and this quarter was no different as churn was 3.2% annualized. Now turning to Punchh. We continue to outperform at Punchh and added more than 3,200 sites in the quarter, that now totaled more than 56,000 sites, a 36% increase in the last 12 months. We signed eight new customer logos in Q4 that added to our impressive contracted store list.

Digital loyalty programs are critical to the future of restaurant marketing -- restaurant marketing. Applications like Punchh make it easier for brands to connect with our most loyal customers and increase customer lifetime value where it counts most. The National Restaurant Association suggests that if restaurants are focused on increasing their order flow through phone or tablet, whether it's delivery, online ordering or even your table-side POS, those restaurant businesses will struggle to compete. With the rapid growth of digital ordering during the pandemic, the demand for a leading loyalty app has never been stronger.

As the number of channels expands, the need to understand customer LTV expands, thereby pulling more Punchh demand. Restaurants are moving to understand individual customer lifetime value versus individual stores unit profitability. We're also beginning to see momentum within the C-store segment as the industry seeks more robust loyalty solutions similar to restaurants. PAR Payment Services pipeline grew significantly in the quarter, and we were extremely pleased to recently announce the selection by Smoothie King to use PAR Payments engine in all 1,000-plus stores.

We continue to see increased interest broadly across Brink and Punchh -- we continue to see increased interest broadly across the Brink and Punchh customer bases. I'm confident additional upsell and new customer opportunities will excite this year as more and more enterprises are seeking an integrated payment offering from a trusted technology partner with competitive and transparent pricing. PAR is all of those things and more. Although still early on -- although still early in our Payments initiative, we have seen notable acceleration in our customer wins during 2021 and believe this revenue stream will be meaningful to our future financial performance.

Moreover, it's given our team confidence, excuse me, in our ability to upsell new products. Our product business continues to perform well in a difficult and challenged environment. Product revenues in the quarter continue to strengthen year over year and improved sequentially as well. Product sales were reported at $32.2 million in this recently ended quarter, a 48% increase.

The capital purchase environment for restaurants is always tricky, and that has been even -- that is even more so during the pandemic and the global supply chain difficulties thrust upon several end markets.As I mentioned previously, we are not immune to those challenges around the supply chain, and we've experienced some margin impact with the costs associated with the current realities. However, as with some margins, we were actually able to expand margins over the year given the strong work of our operations and procurement teams. Regarding the supply chain, specifically, we will continue to diligently manage our partners and vendors through any shortages, price inflation and increase in freight charges. We believe we're uniquely positioned to create a greater diversity of supply sources, while at the same time, technology-enabling operations and management of supply inventory.

We anticipate continued volatility in our sourcing channels and expect to closely monitor real-time upstream and downstream visibility across the supply chain to help us predict and plan for adverse events. Now to briefly report on our Government business. In the quarter, we reported revenues of $18.8 million, a 2% increase when compared to Q4 of last year. With a large new contract we announced in November, we anticipate acceleration in revenues in 2022 as task orders are assigned.

As a reminder, the U.S. Air Force Research Lab awarded a single award of $490.4 million IDIQ contract for Counter-small Unmanned Aircraft System work on software, hardware and technical documentation. The award has a contract term of 6-year ordering period, with an additional two-year order of performance beyond the original 6. We will recognize revenue as task orders are assigned, but we are seeing an immediate impact on our contract backlog that grew to $195.3 million at the end of Q4, a direct result of the new contract award.

In addition to our accelerated revenue growth in 2022, we'll continue to seek out additional contract opportunities where we can leverage our decade-long experience and performance excellence, specifically, in value-added revenue contracts that include direct labor and high-tech contract work within our Intel Solutions business line. Let me now talk a bit about where we see things going from a business perspective. Looking back on my time at PAR, there's been significant progress in driving operational improvement and an accelerated focus on meaningful growth in innovation. We believe that in order for our business to benefit all of its stakeholders, its employees, its customers, its suppliers, its shareholders and its communities, that business has to win.

Winning to us is driving a very profitable business for a very long time. While we are in -- we're in an aggressive investment period given the TAM we serve, we're also constantly focused on driving operating leverage on every expense line of our recurring revenue cost items. This focus has led to a dramatic growth in gross margin and demonstratable efficiency on our sales, marketing, and R&D line. In addition, we continue to solidify the senior leadership team, adding individuals with proven track records of delivering efficiency improvements, cost discipline and growth.

We reorganize and integrate our product engineering teams to bring needed focus on our unified commerce platform, while at the same time, better structuring the organization to move quicker to address customer needs. These changes are designed to foster collaboration across the entire product portfolio and establish linkages critical to bringing innovative new ideas to markets quickly and cost effectively, while ensuring we're aligned with the needs of our customers. As we continue to make these organizational changes, we recognize the need to maintain our focus on bringing operational discipline and accountability to the business, while realizing sustainable long-term revenue growth. As I mentioned earlier, a big part of this focus is on driving profitable growth, specifically on our subscription revenue streams.

Our goal is not only ARR -- to grow ARR consistently, but to drive operating leverage within every line of our P&L every single year. A great example of this is within Brink, where in 2021, we grew ARR in excess of 30%, while SG&A stayed almost flat, excluding our acquisition. Combining this focus with a formulaic revenue model, we expect new customer signings along with upsell and cross-sell opportunities to deliver consistently 30% to 40% year over year ARR growth and will help to find PAR as the industry leader. While we've grown ARR almost 8x in three years, we're very cognizant that we're still at the very beginning of our transformation as is the industry that we serve.

Our goal in building our unified commerce platform is not to create a bundled solution, but to deliver a product back to the customer that puts the power back in their hands. We hope our platform allows our customers to stop focusing on vendor management and instead spend that energy on delivering a unique customer experience. In closing, I and the PAR team wanted to send our support to our team members based in Ukraine into their broader community. Our primary concern is their safety and their family's safety, and we are monitoring the situation closely and in contact with them to offer assistance.

I'd also like to thank all of PAR's employees for their dedication and effort over the past quarter. We've gotten a few key items wrong and a few wrong -- a few key items, right, excuse me, and a few wrong, but our continued focus on winning together has allowed us to move quickly when we veered off course and focus on our future. It's not been easy, but it's worked because we've done it together. With that, I'd like to hand it off to Bryan, who will review our financial performance in greater detail.

Bryan Menar -- Chief Financial Officer

Thank you, Savneet, and good afternoon, everyone. Total revenues were $81.6 million for the three months ended December 31, 2021, an increase of 39.4% compared to the three months ended December 31, 2020. Net loss for the fourth quarter of 2021 was $25.6 million or $0.95 loss per share compared to a net loss of $13 million or $0.60 loss per share reported in the same period in 2020. Adjusted net loss for the fourth quarter of 2021 was $9.8 million or $0.36 loss per share compared to an adjusted net loss of $11.7 million or $0.54 loss per share for the same period in 2020.

Product revenue for the quarter was $32.2 million, an increase of $10.4 million or 48% from the $21.8 million reported in the prior year. The strong growth was primarily driven by hardware refresh investments by our domestic Tier 1 accounts. Service revenue was reported at $30.6 million, an increase of $12.3 million or 67% from the $18.3 million reported in the prior year. The increase was primarily driven by revenues from Punchh of $9.4 million, which included SaaS and related recurring services of $9.2 million and other services of $0.2 million.

Total SaaS and related recurring services reported in Q4 2021 was $19.2 million compared to $8.3 million in Q4 2020. The company continues to expand our total recurring revenue base, which includes both software-related services and hardware support contracts. Of the $30.6 million of service revenue reported in Q4 2021, $25.6 million is comprised of recurring revenue contracts as compared to $14.7 million in Q4 2020. Contract revenue from our Government business was $18.7 million, an increase of $0.4 million or 2% from the $18.4 million reported in the fourth quarter of 2020.

The increase in contract revenues was driven by a $0.4 million increase in our product services product line. We expect the 40 -- $490 million IDIQ contract announced in Q4 2021 will help drive significant contract revenue growth in 2022. Contract backlog continues to be significant, noting a total backlog of $195.3 million as of December 31, 2021, compared to $150.5 million backlog as of December 31, 2020. Now turning to margins.

Product margin for the quarter was 23.4% versus 17.4% in Q4 2020. The increase in margin was primarily due to favorable product mix and favorable absorption of overhead costs due to the increased hardware revenue. We continue to monitor our pricing to properly reflect changes in the cost structure. Service margin for the quarter was 32% compared to 12% reported in the fourth quarter of 2020.

The increase in margins was driven by non-recurring charges taken in the fourth quarter of 2020. Service margin during the three months ended December 31, 2021, included $5.2 million of amortization of identifiable intangible assets compared to $1.6 million during the three months ended December 31, 2020. Excluding the amortization of intangible assets, service margin for the three months ended December 31, 2021, was 48.6% compared to 20.8% for the three months ended December 31, 2020. This growth in margin was driven by our expanding software margins as Savneet commented earlier.

Government contract margins were 6.7% as compared to 8.3% for the fourth quarter 2020. The decrease was due to billing rate adjustments within our ISR business line in the fourth quarter of 2021. We expect contract margins to be more consistent with historical trended margins going forward in 2022. GAAP SG&A was $24.9 million, an increase of $10.6 million from the $14.2 million reported in Q4 2020.

The increase was primarily driven by $10.3 million in total Punchh operational expenses, of which $3.9 million is stock-based compensation. It's worth noting that almost the entire growth in SG&A came from an acquisition of Punchh. And as Savneet mentioned, our intense focus on the profitable growth allowed us to expand Brink revenue year over year with minimal incremental investment in SG&A. Net R&D was $10 million, an increase of $4.4 million from the $5.6 million recorded in Q4 2020.

The increase is primarily driven by $3.1 million for Punchh and $1.3 million related to additional investments in our other existing products. Net interest expense was $5.6 million compared to $2 million recorded in Q4 2020. The increase is driven by non-cash interest charges related to the 2027 convertible notes. Net interest expense for the quarter includes $3.7 million of non-cash accretion of debt discount and amortization of issuance costs, that's compared to $1.1 million for the same period last year.

Now to provide information on the company's cash flow and balance sheet position. For the 12 months ended December 31, 2021, cash used in operating activities was $53.2 million versus $20.2 million for the prior year. Cash used for the 12 months ended December 31, 2021 was primarily driven by an increase in pre-tax net loss, net of non-cash charges and additional net working capital requirements, primarily because of an increase in inventory and an increase in both other assets and other current assets as a result of the Punchh acquisition. Cash used in investing activities was $383 million for the 12 months ended December 31, 2021 versus $9 million for the 12 months ended December 31, 2020.

Investing activities during the 12 months ended December 31, 2021, included $374.7 million of cash consideration in connection with the Punchh acquisition. Capitalized software for the 12 months ended December 31, 2021, was $6.9 million, was associated with the investments for various hospitality software platform versus $7.9 million for the 12 months ended December 31, 2020. Cash provided by financing activities was $443.6 million for the 12 months ended December 31, 2021, versus $180.7 million for the prior year. On April 8, 2021, we received net proceeds of $155.7 million for the private placement of our common stock in addition to the net proceeds of $170.7 million from the term loan.

On September 17, 2021, we received net proceeds of $256.8 million from our offering of the 2027 and $52.5 million from our equity offering. We used approximately $183.6 million of those proceeds to repay the term loan in full. The refinancing allowed us to save over $5 million in annual cash interest. During the 12 months ended December 31, 2020, we received net proceeds of $49.5 million from our offering of the 2026 notes, which reflects our use of the $663 million to repurchase a majority of the 2024 notes, and we received net proceeds about $131.4 million for our public stock offering in the fourth quarter of 2020.

Inventory increased from December 31, 2020 by $13.5 million. We strategically increased our inventory on hand to mitigate supply chain shortages and delays, while ensuring we can service our enterprise customers' demand for installations, which resulted in a historically high hardware revenue year. This proved to be a smart investment as we were one of the few companies to successfully fulfill customer demand, while operating in the supply chain challenged environment. Accounts receivable increased $1.8 million compared to December 31, 2020, due to increased sales volume and Punchh acquisition offset by a reduction in days sales outstanding.

Days sales outstanding improved within restaurants and retail from 74 days at December 31, 2020, to 58 days at December 31, 2021. Days sales outstanding increased within government from 51 days at December 31, 2020, to 55 days at December 31, 2021. This concludes my formal remarks, and we'll now move to Q&A.

Questions & Answers:

Operator

[Operator instructions] Please stand by while we compile the Q&A roster. First question comes from the line of Mayank Tandon from Needham. Your line is now open.

Mayank Tandon -- Needham and Company -- Analyst

Thank you. Good evening and congrats on the quarter. Savneet, I wanted to see if you could maybe provide some thoughts on the trajectory in 2022? Maybe reconcile the ARR numbers that you shared with us? And even they're not giving formal guidance, how we should think about the growth between the various segments and how we think more in terms of hardware, software, and services on the restaurant and retail side?

Savneet Singh -- Chief Executive Officer and President

Sure. On the [Inaudible] and services side of what we do which is bringing Data Central [Inaudible] we expect to grow 30% to 40% a year this year, and every year going forward, and there's lots of opportunities for that to go beyond it. But that's where we're concerned and we expect to be. And we expect that to be in that range for Brink Punchh Data Central will be slower given that we were coming off of that.

In total, we expect it to be 30% to 40% growth on the scripts and services side. On the product side, which is the hardware business, last year was a refresh year so I don't think we will have a massive growth year, or an up year on the hardware side. But that's expected given last year was a refresh year. And then on the remaining set of services we'll have growth single-digit type growth on the remaining services.

But the key point, I think, is that SaaS continues to grow nicely 30% to 40% and margin's expanding as we talked about in the call.

Mayank Tandon -- Needham and Company -- Analyst

Just to surmise, based on your comments, is it fair to say that the total restaurant business can probably grow at least at a healthy, low double-digit space? Maybe I'm understating it, but just want to get some sense of like what we should be modeling as we look into the rest of the year.

Savneet Singh -- Chief Executive Officer and President

Yeah, of course. We don't look at so much as the restaurant segment as is, what is our recurring revenue base growing versus the hardware side of it, given that we think that they're very different businesses, that if you're to combine the two, absolutely.

Mayank Tandon -- Needham and Company -- Analyst

Got it. And then just as a quick follow-up in terms of investments, the focus on your side in 2022, could you talk about what are the priorities for you? And then maybe a timeline on the EBITDA profitability. When do you expect to hit breakeven or better still profits on the EBITDA line?

Savneet Singh -- Chief Executive Officer and President

Absolutely. So, from an investor perspective, for us it's pretty clear if you look at the P&L, it's obviously an R&D shop that's building product and shipping product. I'd expect in 2022, that investment in R&D to be coupled with strategic M&A, which we've talked about in the past and expect to do this year. And that's where I think you'll see the investment.

From a break-even perspective, we expect to hit it next year. And as I said, we have all the levers to turn it on very quickly but the goal is to continue to invest and grow while getting there and given the quantum of cash we have on our balance sheet, we're really comfortable position to continue to investment. But as I mentioned, as managers, we are all targeting to grow ARR while growing efficiency on every line of the P&L. And so, we expect that to happen this year which very comfortably takes us to where we want to be in 2023.

Mayank Tandon -- Needham and Company -- Analyst

Savneet to be clear, are you referring to EBITDA profitability for all of 2023 or would that be sort of an exit target?

Savneet Singh -- Chief Executive Officer and President

Before the exit of 2023. So, it wouldn't be it by the end of -- it wouldn't be for the full year but in -- within 2023.

Mayank Tandon -- Needham and Company -- Analyst

Got it. Thank you so much.

Operator

Next one on the queue is Stephen Sheldon from William Blair. Your line is now open.

Stephen Sheldon -- William Blair and Company -- Analyst

Hey. Thanks, guys. Just first here. Congrats on the Smoothie King payments plan.

It seems like a big win for you guys. You talked about some of the prepared remarks, but how are conversations going there with other potential enterprise clients to potentially adopt the paybacks solutions. And does this win potentially give you more ammo to go after that opportunity, I guess it's a reference point for other customers. And then just stepping back, what are you targeting? I guess if you think about the payment side as you think about the next, call it, two to three years.

Savneet Singh -- Chief Executive Officer and President

So on your first question, absolutely. I think when we've talked in the past, we never thought we'd be in the market for the enterprise accounts for something this large. And we feel really good about the economics there. And so, it certainly given us the confidence that we can sell our solution, not just to smaller concepts, but many large concepts that we work with and will push us more aggressively.

But it's also given us a lot of confidence to push even more down market where margins are even better for us in payments. So, we feel really, really good about the payments business and we've always been cautious here, but given that win, it's certainly made a lot of people wonder why they did it. And obviously we were super competitive, but the entire solution was very attractive to them, and I think it will be for many other customers. So, as our customers roll-off their existing contracts, we expect to be in the mix for their business and continue.

From the high we want to go in the next two, three years, we want it to be a very, very large portion of our revenue. It's still small, as revenue rolls out, you'll get to see the velocity of installments which is much faster than a point-of-sale, if you will. But we expect it to be a meaningful contributor revenue two to three years from now. And this year we'll see it will be at the core driver of Brink growth this year.

So, in addition to Brink growing from a site-based this will drive tremendous growth. And one of the things that paints in my mind is that it actually helps all parts of the business, because it allows you flexibility in winning a deal by offsetting potential capex costs for hardware, which accelerates deployments, maybe pulls our peace forward. And so, it has a lot of parts of payments that make it very attractive. But in the short run, we expect it grow considerably next several years and then become a very large portion of revenue in 2023, '24 and going forward.

Now, I don't think we will be in a situation, whereas 80% of revenue, like it is in some of our down-market comps, but there's no reason it couldn't in time be very meaningful development to our sale software revenues.

Stephen Sheldon -- William Blair and Company -- Analyst

Got it. Yes, good to hear. And that's really helpful color. Maybe shifting, I got curious where we're at in terms of seeing restaurant owners and operators maybe shifting focus from predominantly front of house solutions over the last few years to maybe looking once again at adding Data Central for back-of-house solutions.

Our growth for the essential has been a lot lower than Brink or Punchh. But curious how you're thinking about Data Central in 2022 and 2023 given what you're seeing, and maybe the current pipeline there?

Savneet Singh -- Chief Executive Officer and President

It's early. We've got some good wins in the first two months of the year, and we've got a great new leader who has been driving a lot of change there very early on. I think what's exciting about back-office is -- back office for the restaurant has not been nearly as innovative as the front of house [Inaudible] the pandemic made that even more glaring. And so, I would expect us not only to grow organically here, but also look at some inorganic opportunities as we think there's a lot of room for growth here.

It's too early to say if it will be a great year or an OK year but we are seeing that increased focus with revenue growth returning in Q4 and some of the wins that we've had. It should be a good year. But it's too early to say it will be a blowout year. We'll see after we print Q1 in April, we'll have a good view of where we are.

Stephen Sheldon -- William Blair and Company -- Analyst

Great. And then just one more quick one. I think you may have given contracted ARR for the first time this quarter. I think you've given it for Punchh before but it seems like given the step-up maybe.

What -- is that for all three of the SaaS businesses combined, is that how we should think about the 111 million [Inaudible] ARR?

Savneet Singh -- Chief Executive Officer and President

That's exactly right. So that's really a truly under contract. So that's not hopes and dreams, but signed deals across all the businesses which makes us very excited about. You can underwrite a very decent growth rate, even if we didn't grow that at all year over year.

Stephen Sheldon -- William Blair and Company -- Analyst

Got it. Great. Thank you.

Operator

Next one on the line is Samad Samana from Jefferies. Your line is open.

Samad Samana -- Jefferies -- Analyst

Hi. Great. Thanks, guys, for taking my questions. Maybe one just as a follow-up on the guidance.

I want to appreciate kind of putting some guardrails there. But Savneet does that include -- I know you said that it's on your contract revenue but does that include payments contribution or would payments be incremental to that 30% to 40% ARR?

Savneet Singh -- Chief Executive Officer and President

Payments stay within there and payments to be the lever for us to get to the high end of that or surpassed that. We're very -- as you've heard, very conservatively project out our payments revenue because we were new to it. But the way we began [Inaudible] be the driver of that contracted ARR number growing month over month.

Samad Samana -- Jefferies -- Analyst

OK. That's helpful because you answered what was going to be my follow-up which is like what is really the delta between the 30 to 40 in the range. And I know that we're still in a relatively unpredictable world, but it sounds like the 30 you have a fairly comfortable, clean line of sight to on just the software part of it. And if we layer in payments that may be a stronger demand environment could turbocharge it to the high-end of the range.

And is that a fair representation of what you just said?

Savneet Singh -- Chief Executive Officer and President

Yeah. That will be a very simple way to look at it. And I think that's the right way to look at it.

Samad Samana -- Jefferies -- Analyst

OK. And then just I appreciate you speaking of additional disclosures, the additional margin color as well in the investor presentation, Bryan, I was wondering, is there any type of seasonality that we should be aware of on how those software gross margins will move around from quarter-to-quarter, or how should we think about maybe the trajectory of that? I know there's 2019 versus '20 different because of the timing of customers going live and the revenue mix, but just from baselining off of that 4Q, 70%, how should I think about that going forward?

Bryan Menar -- Chief Financial Officer

Yeah, there's no seasonality in the actual margin throughout the year. What we experienced during last year was we saw significant improvement in our margins for sure on our Brink business and how we were able to manage out the cost per site in there. And so, we exit this year pretty strong. And so, you will see that increase throughout.

But we were expecting continued to see improvement and that especially as we have product mix shift, more on the SaaS growth within the subscription services. And some continued improvement on the actual cost themselves, but no seasonality.

Samad Samana -- Jefferies -- Analyst

Great. And then just last question for me. When I think about the core subscription ARPU, how are you seeing ARPU for stand-alone deals for PAR, for Brink versus Punchh? And maybe what are you seeing on a consolidated basis when you're doing a multi-product type of deal? How does that compare to maybe the historical ARPU?

Savneet Singh -- Chief Executive Officer and President

Great question. So on the Brink side we did raise prices, leaving 2021 up double-digit. I don't want to disclose it, it's better in [Inaudible]. We didn't raise prices double-digits on the Brink side so new deals are being quoted higher.

And importantly, we've also been able to bring in deals across all products now. And generally, we're not in the business of bundling for a discount. What we'll do is package the deal for accelerated deployment. But if the customer buying up through product with a traditional multiyear deployment, the ARPU calls really nicely and we've got a couple of great examples of that.

We're in the business of [Inaudible] for value, that's telling for costs and we should have continued. So across the product lines, Brink has most significant price increase followed by Punchh and then Data Central. So, we are raising prices. And even though we don't focus on it a lot, I mentioned on the call, but even in this crazy supply chain environment, we expanded margins pretty considerably on the hardware side, and a lot of that was caused in Asia, but it was also through price increases.

Samad Samana -- Jefferies -- Analyst

Great. Very helpful. And thank you, guys.

Operator

All right. [Operator instructions]. Next one on queue is George Sutton from Craig-Hallum. Your line is now open.

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

Thank you. We're coming up on a year since you acquired Punchh and one of the areas of enthusiasm when you did that was, they sell at a headquarter level versus the more regional and franchise level that you typically sell at for point-of-sale. I'm curious if you can kind of give us a sense of how that combination has started to work to your cross-selling favor. And could you also just let us know what in general do you see as the sales cycle for both sides of the business relative to now this one you have ownership?

Savneet Singh -- Chief Executive Officer and President

Yeah. Sure, Sutton. To answer your question of selling at the corporate level versus the franchisee level. It's an amazing experience for us to sort of win the deal be rolled out in six months and never have to make a call.

It's a probability of Pinterest like it so much and think there's a lot to do with it. Brink is still winning the corporate deal and then convert the franchisees. Where you'll see that change, George solved is when we finished the release of our unified platform which will be a new product in itself that comes as one. And so, until that happens, it will still be like that.

But it's like I said, on the last question, what's helping us when we are able to sell the value of the solution combined upfront. And there's a lot of value just and having all the product say one, we're able to then pull in our ups that before we'd be out a year, and saying, hey, if we do this now here, the benefit of the solution that you can get, so it's been that way. So that's how it's handled today, but I think what we're excited about is when we come out with our unified platform, the ability to leverage the Punchh model as the model as opposed to the current point-of-sale model which is a much longer rollout period.

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

Got you. Secondly, I'm happy to tell you if you haven't heard, we are leaving the pandemic era and moving toward an endemic era. And that means we're going back to restaurants and sitting at tables and you had been ready to really launch your table service offering a couple of years back. Can you just give us an update on that part of the opportunity?

Savneet Singh -- Chief Executive Officer and President

Yes. And hold on that question. [Inaudible] the year but we are looking at some creative solutions to help solve [Inaudible] challenges, things like [Inaudible] ordering, things like circuit payments to make our solution more robust in that market. We do agree with you, we think it's a great opportunity.

And I think one of the things that we're also very cognizant of is, as the economy potentially heads toward a recession, or an economic slowdown, our existing base is the best place to be. That QSR market tends to take share during challenged times and we'll invest in more technology. And so, we feel pretty good on both ends [Inaudible], but we aren't coming out that sandwiches market in a very creative way, which we'll talk about a little later in the year.

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

Great. Thanks, guys.

Savneet Singh -- Chief Executive Officer and President

Thank you.

Operator

Next one on the line is Adam Wyden from ADW Capital. Your line is open.

Adam Wyden -- ADW Capital Partners -- Analyst

Hey, guys. A couple of questions. Building on what Samad said, when I first invested in this company, previous management had made some real gas ease as it relates to pricing now. I won't call out any specific Tier 1 chain, but paid $50 a month.

But can you talk a little bit about how you're rectifying kind of previous management's [Inaudible] as it relates to pricing. What's the cadence of kind of bringing those guys up to market? And I guess another thing is people have criticized PAR a little bit but you haven't gotten up into the super Tier 1s. Can you talk a little bit about how you've kind of focus on these kinds of 500 to 1000-unit change that have basically not ripping out other oil point-of-sales, actually value technology, are willing to pay the right price and aren't going to [Inaudible] over the coals? I mean, in that super Tier 1 are lowered, the bottom end of the funnel. Can you talk about the pricing strategy on existing, how you think about going after growing size change and pricing knows and the cadence of all that?

Savneet Singh -- Chief Executive Officer and President

Sure. I think I got it all, you were cutting a little bit in and out, but I think I got it all. So first on the pricing side, it's a great question and I should add a smart comment about premiums being levered. Pricing is also a big lever for us this year.

In 2021, we suffered from the low-priced deals that were committed to years ago and rolling those deals out. And so, we had activation is the ARPU is lower because we're rolling out on deals. This year as I mentioned, we put through some significant price increases on new customers to make up for the new environment that we're in. But in addition, every single deal is now done through a very formal CPQ process.

And we feel very, very good about our ability to raise price. The most important part of raising pricing in any business is, is the customer getting value. And with Brink candidly being stable and working and as you can see from the dramatic growth in Brink margin, products are working great now. And as a result, we were able to go back to customers and demonstrate the value, demonstrate the quality of the product.

And we're not having challenges raising price. In Q4 we raised -- we'd be at first enterprises raise on existing customers, and we had no pushback and we had no pushback because we have a great product that has been underpriced and we expect to continue to do that this year across the product Brink product line. And we'll apply that as well for the Punchh product, which in itself is had the same, I call it entrepreneurial type deals that we'll address. Does that answer your question?

Adam Wyden -- ADW Capital Partners -- Analyst

Yeah. Basically, what you're saying is that you will start getting as you demonstrate the value that you're creating for folks, it was hard to raise prices on guys when the net promoter score was down, but you've invested a lot of money in technical bed and making sure the product is working. And so, look, what NCR is charging 68,000 for their cloud point of sale. There's a lot of distance between what our average RP for Brink is kind of what other people are charging.

But it's an interactive process. And...

Savneet Singh -- Chief Executive Officer and President

Adam, I realize I get your second question, which was the Tier 1 versus Tier 2. And one of the things that payments has opened up for us is, is Tier 2 market is extremely juicy for us. It's a market we went really well in and you not only get to sell Brink, Punchh, and Data Central but you sell a very healthy painless product which actually accelerate point-of-sale because you can then offset hardware capex with payments. And so, we're very excited to be much more aggressive in that market.

And it is a really healthy customers that are growing, but we do -- we are in processes with large Tier 1 accounts and expected when they're two. So, it sounds like we're avoiding those markets at all, but we feel really good about that sort of, call it a few 100 stores up to 5,000 where there's a lot more activity from an RP perspective. We feel very good about that space.

Adam Wyden -- ADW Capital Partners -- Analyst

OK. This is my last question and by the way, to the extent that you went in this Tier 1 but I know you've got super Tier 1 by now. I might just hope that we get them at multiples of [Inaudible] standard pricing. Obviously, the value is devastrable and the public people can card 6000 to 8000.

We clearly can charge it. So, like let's just keep that in mind. But my second question or last question is, when you think about kind of ecosystem and I call it kind of work the restaurant software modules. I think about Brink and kind of the brain.

And then I think about all the little modules underneath that. Brink is a large, is a -- Brink itself is the brain. It's Microsoft Windows. And then all of the programs underneath it is like Microsoft Excel or PowerPoint and you need Windows to run those.

But the irony is, the pricing power and the ARPU opportunity on Excel and PowerPoint is very, very high. I mean, you see Presto, you see all these things that where we kind of play chicken soup with all the different things we get to on ARPU that is substantially higher than kind of where we are right now. And you guys say 25, we're getting to number's closer to 50,000 when you include payments. Can you talk about you talked little bit about payable service, but there's rails, there's online ordering, there's drive through, there's kiosks, there's data, common expert bridge.

We're hearing people 10,000, 20,000 for that. Can you talk about how you're thinking about the internal development of these modules because it's like the Brink is very hard to get in. It's hard to get and it's hard to get out, but it's much easier to sell these value-added modules to existing customers. Can you talk about the organic and inorganic initiatives that's going to bridge us the gap between the 6000 to 70,000 that we have now than the 50?

Savneet Singh -- Chief Executive Officer and President

Absolutely. I think that's the higher thesis of the company, as I mentioned. We are going to grow very comfortably at 30% or 40% a year. And that's what I call -- that's a very [Inaudible] emotion.

We think there's a ton of innovation to have, a ton of products to sell, and before all this innovation happens. I mentioned earlier, but obviously there's a lot happening. [Inaudible] that sort of front end. But there's also an immense not to happen in the back-office, the kitchen, and the team management parts of the world.

And so, we will be aggressively and organically investing to get after that. As you said, ironically, as we sell more products, it becomes easier to sell the next product. And so, it becomes reflected in nature and we feel very good about it. And as I said, while it's been incredibly exciting to see how much payments momentum we've gotten so quickly, particularly in these large customers, it's also shown us how much more we should be up selling across the base because we've been successful in one product.

Operator

All right. Next one on the queue is Anja Soderstrom from Sidoti. Your line is now open.

Anja Soderstrom -- Sidoti and Company -- Analyst

Hi. Thank you for taking my questions. Just wondering and curious about the installments. You said it's slowed down a little bit there in the fourth quarter due to holidays, you had a very strong third quarter, what should we expect then from the first quarter and the couple of coming quarters?

Savneet Singh -- Chief Executive Officer and President

It's a little bit too early to say, but generally, Q4, is called an activation quarter because of the holiday period, you don't touch the stores during those periods of time. Ten days are installed and lots of planning and so on and so forth. We expect to be a good quarter in activation. And the goal this year is to combine strong activations with ARPU growth as the last caller mentioned in, that combo could get us to that 30% to 40% very, very comfortably.

So I expect this to be higher than our current gauges in going forward. But combining that now with ARPU growth, which is a big thing for us this year.

Anja Soderstrom -- Sidoti and Company -- Analyst

OK. Thank you. And you mentioned you are competing and looking at the M&A opportunities. What are you seeing there in terms of the opportunities and valuation levels in this market?

Savneet Singh -- Chief Executive Officer and President

It's very dynamic. Obviously, with SaaS selling off and it's being part of that, maybe M&A been a little more challenging, but not nearly impossible. We feel still very good about some of the stuff working on. I would say in the last week or two, we have seen the private market valuations finally start to tick downward and that's Hallac markets, which is very-very.

very exciting for us. So obviously we can't talk too much about it, but we've been very open that we built a really strong M&A team. We feel great about the successes have the Punchh, obviously you can see from the numbers, but also from the culture of the team, the quality that we are ability to promote both from Punchh and Brink across PAR. And we feel like we are a great home for a lot of these businesses that are now running without potentially the VC treadmill into economic recession PAR is a great home for a lot of businesses.

And so, we hope that this has changed in many ways, is very beneficial for PAR.

Anja Soderstrom -- Sidoti and Company -- Analyst

OK. Thank you. That was all from me.

Operator

All right. [Operator Instruction]. There are no further questions on queue, sir.

Bryan Menar -- Chief Financial Officer

We just like to thank everyone for participating on today's call and then enjoy the rest of the evening. Thank you.

Operator

[Operator signoff]

Duration: 47 minutes

Call participants:

Chris Byrnes -- Vice President of Business Development

Savneet Singh -- Chief Executive Officer and President

Bryan Menar -- Chief Financial Officer

Mayank Tandon -- Needham and Company -- Analyst

Stephen Sheldon -- William Blair and Company -- Analyst

Samad Samana -- Jefferies -- Analyst

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

Adam Wyden -- ADW Capital Partners -- Analyst

Anja Soderstrom -- Sidoti and Company -- Analyst

More PAR analysis

All earnings call transcripts