Restaurant technology provider PAR Technology (NYSE: PAR) reported revenue ahead of Wall Streets expectations in Q3 CY2025, with sales up 23.2% year on year to $119.2 million. Its non-GAAP profit of $0.06 per share was significantly above analysts’ consensus estimates.

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PAR Technology CEO, Savneet Singh, commented on the quarter, “PAR continues to scale our business as ARR approaches $300M and revenues in the quarter increased by 23% from Q3 last year. We continue to feel confident in our ability to grow our revenue base well above our market, while making progress on large tier 1 deals, all while maintaining strong financial discipline. In Q3 we launched PAR AI, a new intelligence layer embedded directly into the PAR product Suite. PAR AI delivers real-time intelligence across the restaurant tech stack without the need for extra apps or training. We expect our ability to utilize AI along with our “Better Together" multi-product strategy will drive better outcomes for enterprise customers and allow us to win new market share and increase ARPU with existing customers.

Company Overview

Originally founded in 1968 as a defense contractor for the U.S. government, PAR Technology (NYSE: PAR) provides cloud-based software, payment processing, and hardware solutions that help restaurants manage everything from point-of-sale to customer loyalty programs.

Revenue Growth

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but many enduring ones grow for years.

With $440.5 million in revenue over the past 12 months, PAR Technology is a small player in the business services space, which sometimes brings disadvantages compared to larger competitors benefiting from economies of scale and numerous distribution channels. On the bright side, it can grow faster because it has more room to expand.

As you can see below, PAR Technology’s sales grew at an incredible 16.2% compounded annual growth rate over the last five years. This shows it had high demand, a useful starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within business services, a half-decade historical view may miss recent innovations or disruptive industry trends. PAR Technology’s annualized revenue growth of 20.3% over the last two years is above its five-year trend, suggesting its demand was strong and recently accelerated.

We can better understand the company’s sales dynamics by analyzing its annual recurring revenue (ARR), or the revenue it expects to generate from its existing customer base in the next 12 months. PAR Technology’s ARR reached $298.4 million in the latest quarter and averaged 56.6% year-on-year growth over the last two years. Because this number is better than its normal revenue growth, we can see the company generated more revenue from its existing customers than new customers. Holding everything else constant, this is a positive sign as it should lead to lower sales and marketing expenses.

This quarter, PAR Technology reported robust year-on-year revenue growth of 23.2%, and its $119.2 million of revenue topped Wall Street estimates by 5.8%.

Looking ahead, sell-side analysts expect revenue to grow 11.7% over the next 12 months, a deceleration versus the last two years. Still, this projection is admirable and suggests the market is baking in success for its products and services.

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Operating Margin

Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.

PAR Technology’s high expenses have contributed to an average operating margin of negative 19.6% over the last five years. Unprofitable business services companies require extra attention because they could get caught swimming naked when the tide goes out. It’s hard to trust that the business can endure a full cycle.

On the plus side, PAR Technology’s operating margin rose by 3.6 percentage points over the last five years, as its sales growth gave it operating leverage. Still, it will take much more for the company to reach long-term profitability.

In Q3, PAR Technology generated a negative 14.8% operating margin.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

PAR Technology’s full-year EPS flipped from negative to positive over the last five years. This is a good sign and shows it’s at an inflection point.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For PAR Technology, its two-year annual EPS growth of 43.4% was higher than its five-year trend. We love it when earnings growth accelerates, especially when it accelerates off an already high base.

In Q3, PAR Technology reported adjusted EPS of $0.06, up from negative $0.09 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects PAR Technology’s full-year EPS of $0.08 to grow 432%.

Key Takeaways from PAR Technology’s Q3 Results

It was good to see PAR Technology beat analysts’ EPS expectations this quarter. We were also excited its revenue outperformed Wall Street’s estimates by a wide margin. On the other hand, its ARR missed. Zooming out, we think this quarter featured some important positives. The stock traded up 5.4% to $35 immediately after reporting.

PAR Technology put up rock-solid earnings, but one quarter doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.