ReposiTrak(TRAK) - 2020 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenue for Q2 of fiscal 2020 was $4.84 million, down 13% from $5.56 million in the same quarter in 2019, largely due to a decrease in one-time revenue [15] - Recurring revenue for Q2 of 2020 grew 3% to $4.04 million, up from $3.89 million in the same quarter of fiscal 2019, with recurring revenue as a percentage of total revenue increasing to 83% [16] - Year-to-date total revenue decreased from $11.51 million to $9.64 million, down 16% from the same period of fiscal 2019, attributed to a decline in one-time revenue [17] - Net income for Q2 of fiscal 2020 was $517,000, or $0.03 per diluted share, compared to $1.5 million or $0.08 per diluted share in the prior year [21] - Total cash as of December 31, 2019, reached $19 million, with $2.7 million generated in cash from operations for the first six months of fiscal 2020, a 46% increase from the prior year [14][18] Business Line Data and Key Metrics Changes - The company added 42 new Tier 2 hubs since June 30, 2019, bringing the total to 90 as of December 31, 2019, an increase of 88% [10] - The supplier network grew from 23,000 unique participants to over 27,000, a 16% increase, largely driven by the addition of Tier 2 hubs [12] - The marketplace grew 13% year-over-year, although it remains largely transactional and difficult to predict [13] Market Data and Key Metrics Changes - The company anticipates a significant increase in the number of customers, projecting nearly 12,000 new customers this year, which would represent a 50% increase from the beginning of the year [41] - The exit rate for monthly recurring revenue increased to 8% by the end of December, doubling the rate from the previous quarter [42] Company Strategy and Development Direction - The company aims to grow recurring revenue and reduce reliance on one-time revenue, with a focus on maintaining flat annual operating expenses and increasing profitability [8] - The strategy includes expanding the network, cross-selling, and upselling within the supply chain offering [9] - The company is focused on further penetrating its current customer base and enhancing its sales force to support growth initiatives [33][79] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the transition to a recurring revenue model, indicating that revenue declines from this transition are transient and already abating [28] - The company expects to achieve double-digit growth in recurring revenue by the end of fiscal 2020, with a strong line of sight for future growth [30][74] - Management highlighted the importance of maintaining a strong balance sheet and generating cash, which is critical for customer confidence [32] Other Important Information - The company has repurchased a total of 342,170 shares of common stock at an average price of $5.37 per share under its stock buyback program [24] - The Out-of-Stock management solution has been endorsed by the Food Marketing Institute, which is expected to enhance the company's market position [46] Q&A Session Summary Question: Impact of global events on Park City Group - Management noted that the coronavirus has heightened awareness of food safety issues, which could benefit the company's business model [60] - There has been increased interest in the marketplace for sourcing products that are not stuck in ports due to supply chain disruptions [61] Question: Structure of the sales force - The company has two different sales organizations, one focused on compliance and the other on supply chain, both of which have been expanded recently [62] Question: Return to revenue growth - Management expressed optimism about achieving positive revenue growth before the end of the fiscal year, with expectations for double-digit growth in the following year [70][71] Question: Key initiatives for the year - The focus remains on the Tier 2 initiative, growing the network, and enhancing customer service, with expectations for significant growth in the number of participants [78]