William Blair & Company initiated research coverage of PAR Technology Corporation (PAR $76.15), a leading cloud technology provider to enterprise restaurants.
Analysts Stephen Sheldon and Bhavan Suri estimated the company would generate revenue of $214 million in 2020, $251 million in 2021, and $285 million in 2022. PAR reports its revenue in three segments: product, services, and contract. The product segment encompasses revenue generated by the company’s restaurant hardware. The services segment encompasses a variety of revenue streams, including PAR’s Brink and Restaurant Magic SaaS solutions and PAR’s service implementations and ongoing hardware maintenance. Sheldon and Suri view this as the most attractive vertical moving forward due to growth opportunities and the segment’s improving gross-margin profile. The contract segment encompasses all of PAR’s services provided to the U.S. Department of Defense.
“We believe PAR is in the early innings of pursuing a large market opportunity,” Sheldon said. “Historically, PAR has been better known for its hardware and related services, but in recent years has shifted focus toward cloud-based software solutions, including Brink POS, acquired in 2014, and Restaurant Magic, acquired in 2019. PAR now has an end-to-end cloud software platform that, in our view, positions it well. It is just beginning to invest more behind its go-to-market strategy and has already seen improving bookings trends over the last few quarters with a potential upcoming tailwind from the COVID-19 pandemic, which has increased demand for end-to-end cloud solutions. PAR is one of the only cloud-based restaurant technology providers investing in the end-to-end enterprise opportunity and has seen particular traction with larger quick-service and fast-casual concepts. We believe that PAR’s core market size could be $1.5 billion-$1.8 billion, in which we estimate it is only roughly 2% penetrated.”
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