Stepping Back from the Noise

“And so I moved that very day into the heart of a quince, where the seeds are few and almost silent.” – Khalil Gibran, from the poem “The Pomegranate”

I was always taught that evolution is a slow process that occurs over generations.  The reality is that evolution can occur quickly.  A meteorite slams into the earth, smoke and debris deny plants of sunlight, and the dinosaurs begin to die as their food sources whither. Mammals emerge from their tunnels and thrive as they realize their former predators are quickly dying away. Any change in our external environment can lead to faster evolution as species do what it takes to survive.  Scientists have even shown[1] that a species can evolve in real time. 

Par Technology (PAR) – “Uncovering the Crown Jewels”

Company:         PAR Technology (PAR)
Sector:                Technology – Application Software
Price/Market Cap:                        $26.30/$458M
Target Price/Implied Upside:     $41/55%

Thesis

PAR Technology Corp. (PAR) is an underappreciated, cloud-based, Point-of-Sale (POS) software provider anchored by its legacy as a government contractor.  New leadership has redirected the company to be laser focused on their future in the cloud.  The Balance Sheet has been recapitalized with a $80M convertible debt raise.  Proceeds will be used to accelerate the growth of their cloud based recurring revenue, and solidify their market position through bolt-on acquisitions. Growth of SaaS recurring revenue will improve margin and profitability profile and force a multiple revaluation. The Government business will continue to be a source of cashflow until the company finds an attractive buyer leaving the company as a pure-play, cloud-based restaurant and hospitality solution. Longer-term, the real growth opportunity may be in their nascent merchant services business launching in 2H 2019.