Park City Group, Inc.
Q3 2021 Earnings Call Transcript

Published: 17 May 2021

[Operator:]

Greetings, and welcome to the Park City Group Fiscal Third Quarter 2021 Earnings Call. All participants will be in listen-only mode . Please note this event is being recorded. It is now my pleasure to introduce your host, Jeff Stanlis with FNK IR. Mr. Stanlis, you may begin.

[Jeff Stanlis:]

Thank you, operator, and good afternoon, everyone. Thank you for joining us today for Park City Group's fiscal third quarter earnings call. Hosting the call today are Randy Fields, Park City Group's CEO and Chairman; and John Merrill, Park City Group's CFO. Before we begin, I would like to remind everyone that this call could contain forward-looking statements about Park City Group within the meaning of the Private Securities Litigation Reform Act of 1995. Forward looking statements are statements that are not subject to historical fact. Such forward-looking statements are based on current beliefs and expectations. Park City Group management are subject to risks and uncertainties, which could cause actual results to differ materially from those forward looking statements. Such risks are fully discussed in the company's filings with the Securities and Exchange Commission. The information set forth herein should be considered in light of such risks. Park City Group does not assume any obligation to update information contained in this conference call. Shortly after the market closed today, the company issued a press release over-viewing the financial results that we will be discussed on today's call. Investors can visit the Investor Relations section of the company's Web site at parkcitygroup.com to access this press release.

[John Merrill:]

Thanks, Jeff and good afternoon, everyone. Q3 was another strong quarter for the company. We continued our focus on growing our recurring revenue, expanded our product offerings, delivered solid profitability and drove cash. Highlights for the quarter ended March 31 are as follows. Recurring revenue for our SaaS business, which includes compliance and supply chain, was up 13% to $4.57 million. Marketplace revenue grew 225% to 1.45 million. With across the board growth revenue increased 30% to $6.02 million. SG&A expenses increased 11% against the 30% revenue growth. Net income increased 184%. Year-to-date, cash from operations surpassed $3.35 million. And our balance sheet remains strong with $23.2 million or approximately $1.90 per share in cash. The bottom line is we have built a scalable, profitable and growing business made up of two components

[Randy Fields:]

Thanks, John. To repeat, remember that our plan from a couple of years ago included the following

[Operator:]

The first question comes from Tom Forte with D.A. Davidson.

[Tom Forte:]

So Randy and John, I have three questions, one at a time. So the first question I have is you talked about still facing an elongated sales cycle. So I wanted to know if there's a difference as far as the current state of your customer distraction in US markets that have reopened faster, such as Florida and Texas versus the rest of the US?

[Randy Fields:]

Well, that's an interesting question. And what we're seeing so far is that the industry is just waking up. In other words, without any geographical limitations, we are seeing more interest, more conversations. It's not fair to say things are back to normal, whatever that is from 18 months ago. But it is fair to say that it's easier to get to people, we're more deeply engaged, more projects are looking like they're getting scheduled and now it's showing up in our revenues. So I don't think we can say with any certitude that it's a function of the states that are opening up so much as remember, supermarkets have been open and doing incredible business really for the last period of time during COVID. So it's just that they were distracted trying to keep product on the shelf. Second question…

[Tom Forte:]

My second question. So I wanted to talk about your build versus buy strategy as it pertains to You have products and services you're offering and potential M&A, including geographic expansion.

[Randy Fields:]

As a rule, we prefer to build things because we have a proprietary development environment and a fabulous team of people, world class, that have been with us for many, many years. So it's pretty easy for us to add to our existing platform additional functionality. So overall, we're inclined to do it. However, we are -- and our cash position allows us to be interested in M&A activity. And we do look at those things that are presented to us. And the most interesting opportunities are companies that are likely in a different industry, not retail food than we are in, so we could take our platform with people who are experienced into other vertical markets. So absolutely, we do look at M&A, but there's nothing that is hot at the moment.

[Tom Forte:]

Third and final question, Randy. So when I think about your now steady revenue and your cash flow generation, I'm curious what your thoughts are on potentially considering a private equity sell -- selling to a private equity firm?

[Randy Fields:]

I think it's fair to say and for reasons we're not sure of, we've had a number of inquiries from interested parties in the last few months. We have an obligation to examine those all seriously. And obviously, if there's ever a need for us to make a regulatory disclosure, because of the status of a possible transaction, we certainly will. We think the stock is attractive. That's why we're expanding our buyback. So it's probably not terribly surprising that others are finding us attractive at the moment. So I don't have any news per se. But yes, I think it's fair to say we've attracted a reasonable amount of interest at this stage.

[Operator:]

This concludes our question-and-answer session. I would like to turn the conference back over to Randy Fields for any closing remarks.

[Randy Fields:]

Well, we appreciate everybody taking the time this afternoon. We've worked hard to create a company that is, I think, easier to understand and certainly easier to forecast. From where we are, things feel very, very good. We like the fact that we've created a structurally profitable business given our relatively small size. We've been very successful with our customer set and feel that the next several years, we're going to grow into the kind of company from a size perspective that all of us would like to have. So again, we're ready anytime to answer questions. And we appreciate you taking the time this afternoon. Thank you.

[Operator:]

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.