PCYG - Earnings call transcript Q4 2022

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Operator

Greetings, and welcome to the Park City Group Fiscal Fourth Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] And please note that this conference is being recorded. It is now my pleasure to introduce your host, Rob Fink, with FNK IR. Mr. you, Thank Fink.

begin. You may

Rob Fink

Fields, operator, joining and fourth Thank you, Park are afternoon, earnings CEO; Chairman and John good today for for Merrill, Randy today us call fiscal Group's Hosting you City Park Group's call. and CFO. Thank City the everyone. Park City quarter Group's

Reform forward-looking of would City Group Park I begin, everyone the we about Securities to remind XXXX. that the statements meaning Act the Before like call Private Litigation could of contain within

this website the now of press section to is John obligation Exchange that considered Such call said, subject herein fully not contained statements in issued call. Investors the today, yours. facts. historical forward-looking risks upon statements Commission. assume to overviewing market beliefs forward-looking those over are Investor today's Relations conference light company's in release. risks Merrill. discussed that information are filings set not at Group Park to will to discussed differ such Such like statements parkcitygroup.com Group should Forward-looking all does the the City to forth results are call current company's to update risks. With the the based turn on Securities Park any uncertainties, subject access management Group are Park be actual release press I visit be statements. a are to call. information result from in Shortly closed that City and John, and can after financial this The of City expectations. and the with the

John Merrill

good And afternoon Rob. everyone. Thanks,

due our company excluding clearly XX%, resulted profitability. in our year. our from This PPP income essentially We success decreased our a net to We by are of transition evident the forgiveness planned our increase of to last a the in revenue. all as revenue elimination a of operations is non-recurring income in consolidated increased significant SaaS even The loan company. SaaS

market We global quarters XX and looming with a a plus a cycle, are despite profitability profitable pandemic consecutive systemically now of GAAP recession.

costs our tailored to capabilities in our focus of recurring for customers’ to controlled built net subsequent monthly The productivity? at stand Instead have buyback artificial That very annual intelligence third specific recurring multiplied Our reducing X% tasks our X% $XX improvement XX, Recurring recurring year our revenue million. grow the we recurring rate efficiently or own signed the quarter productivity. quarter. and cash. reduction generate an means Simultaneously, still. of ended in annualized continued XX shares else's tools and strategy in and of annual ability to for expansion XX% We million, $XX.X software, revenue we needs. will exit of results I do mean spend simple, including control accelerate remains the if What income, for party on $XX XX grew are these costs, increased months someone that costs facilitate just and and revenue. productivity, we by in contracts using million the software of approximately internal billed times cash EPS, in with our revenue, revenue hand XXXX drive increase June

business our result, a easy As is quite to model. now

initiatives. traceability revenue XXX% It determine to target opportunities call to growth are XX%. $XX rate is or take easy pretty XX effectively future next churn. This our customer it the of If little we any rate, XX% recurring million add you is months annual since revenue in likely and not with revenue exit recurring other our including considered our

of other in to bad expense, stock accounting $XX the determining million business. is and cash view, spend and spend my generation expense, before, takes run As it this meaningful and non-cash amortization, sustainability compensation depreciation, accounting cash In costs as non-cash approximately such I've Cash in more costs. debt said cash the excludes place. health

above As cash fixed bottom of will said revenue we per costs $X.XX $XX roughly line. have before, million $X.XX year going and dollar each to incremental on our follow forward recurring the over

can is and this with other year. needs in and model. already during an margin is cash power The than million the the XX% to You earnings It our gross revenue. start also quarter easy faster significant. the see to to profitability substantially now fiscal $X.X operations clear from of grow generated company In materialize from words,

$X.X other last products million Turning that the to in $X.X $X.X the The quarter. products and the quarterly reduction revenue surged of eliminated. total quarter XX% XX.X% planned the and were was opportunities quarter was This from the Group's million frees percentage revenue resources as was one-time MarketPlace Food revenue the to prepare services up COVID history, of decrease for one recurring during revenue and million for down non-core City meeting year. revenue Fiscal numbers. like traceability same standards. in that fourth in Recurring year a largest Park of XXXX due FDA

revenue fiscal its MarketPlace associated expenses with grew continued and from lower expense XX% general $X.X decreased reductions. is to $X.X other of recurring revenue Total and same elimination X% shows, are travel re-engaging expenses million were overall lower in costs Sales as XXXX. QX, and a XXXX. the MarketPlace The elimination result increased largely million, revenue, offset person costs restrictions third mentioned, decrease QX, in due meetings. G&A $X.X non-core to the higher in the customers vendor and software in discipline. XXXX, abate marketing due of to operating and with have quarter overhead. to is as I million QX, over costs for As of XX% $X.X related lower period to of slightly XXXX trade party This in sales travel by COVID cost down million partially

X% $XXX,XXX, revenue. quarter net versus was For income fourth XXXX, of or the of fiscal XX% or million, revenue, of GAAP $X.X

versus nearly Net on income we average quarter. for or doubled net average quarter to So fourth a margin was $X.XX shareholders shares. weighted this common per share $XXX,XXX common per XX million in or share $X.XX XX.X common based shares row, the our million $XXX,XXX, tripled on weighted have based essentially

September of of company's the outstanding. XXXX As million was XX, stock common shares XX.XX

You'll the of X% by repurchase and note have touch over capitalization we which for in retirement minute. reduced I'll shares, our on a

million income from Recurring to year fiscal from to X% year million. sales million. down is year feet, already million, for revenue spending general of feet as XXXX $X.X to XX% lower overall XXXX inclusive in Turning This $XX.X million. was full operating Total $X to numbers. increase from costs net cutting square operations the $X.X $X year expense, expense $X.X overhead. I the the our up million. result total loan and decreased XXXX. down half expense Income in of expense in lower space percentage due in lower period were on of same The same gain PPP XX% G&A million rent to Fiscal across overall million to XXXX. board vendors debt largely of year XX% reduction revenue was forgiveness from reasons million, and to $X.X operating Sales MarketPlace XX% decreased of of marketing from million result period $XX.X for $X.X the marketing or for XXXX. of was versus lower lower reduction the elimination lower total XX% bad SG&A the GAAP Lower or XX,XXX discussed. in elimination expenses Full expenses. the million, our a a non-core $XX.X and $XX revenue party was and third office X,XXX a of primarily fiscal XX% of was in expenses G&A was costs in revenue revenue. Lower of costs were to million the the $XX year commissions the square the due last result over and

prior includes Excluding million our common period gain, of XX% year-to-date or gain per the Again, million income year $X.X was impact million forgiveness. $X.X on or last common the $X.X of million, income common versus $X.XX loan year share share. was the Net per $X PPP $X.XX shareholders or to revenue. the net

and flow cash cash balances. to now Turning

million million, XX, $X.X is increase to cash cash June XXXX $XX.X the year of Total For an at year, of million XXXX. to operations compared XX%. million, $X.X we fiscal from $XX.X generate year, last of at compared end the

$X shares our an total repurchase approximately million. $X.X XXX,XXX year balance to cash average Last for in the company quarter, of In $X.XX per share credit. revolving at a the that continue combination credit. line shares our fourth of was now company $XXX,XXX. with its line of We a repurchased of price of million carries The on

reducing total a Since stock. buyback retiring XXXX. repurchase of shares, has X.XX million the over the During of since worth repurchased company common year, we program, X.X% capitalization $X.X $XX.X million fiscal hence inception stock, the of million in

by the authorization inception. During its million. remaining total $XX fiscal buyback million The company buyback an the million increase has approximately XXXX on $XX.X since additional board meeting, members $X

and are SaaS gross a margins. XX,XXX plus We revenue customers company XX a recurring little with XXX% percent churn, over

into million position levers. cash, mean common Two, and returning Number to call to shares higher little of debt interest income one, EPS. A capital the We allocation customers, pay have balance I Number grow strong equal. to opportunistically gives What capital profitability, to company recurring is its a in Because expand rising a do debt. cash stock. then capitalization. in and shrinking sheet sheet, outstanding higher strong and continue this? Less sight EPS, plan yields put, means balance bank. our the a things systemic peace and have being of Simply fortress including buyback line generation, down what we mind $XX of cash on and higher by all balance interest to revenue cash I to our facilitate in hence continue sheet three, rates shareholders.

debt, to to acquisitive. to rise, you seen choose XXXX. $X.X the XXXX does $X from million four, debt, on in pursue is activities, have million we interest As expense interest down may the Number reduction company pay fiscal already rates so in M&A the continue

meaningful of XX, annual March on X.XX%. that dividend of the allocation the over become in our XX, I of determined reasonable a paid time, new five, allocate appropriate XX. time. be on or quarterly record dividends to cash to per the June of That's everyone issue customers. approximately return or price shareholders what to represents an cash vertical capital shareholders may October share and cash days XXth. year, to we other portion a Based have point, entrance it XX, dividend XXXX, compresses, a I've to additional $X.XXX that via will Number September At dividend In XX record time Randy. Board levers favorable opportunistic As outlined Accordingly, November today. of Directors payable XX declared September, dividend, to or for on is shareholders yield I may time capital Therefore, shareholders a to the is the per on our of on economy an returning dividend. Subsequent XX, intend flow free six, valuations the repurchases the an increase this a of will finally cash lever bolt-on quarterly date to quarterly pass shareholders Thanks, of and at From and call more the ongoing preferred. all joining. closing within retire for to Randy? capital depending this plan. paid to $X.XX more a into December the the about the or to share, add Directors the Number be as Board Board dividend. September

Randy Fields

Thanks, John.

our even faster. is earnings As share income is per our and noted, net John accelerating accelerating

us opportunity addition with I'm for operationally. consecutive we right the mentioned, This has of to consistent date, by a happy XX which additional some largest cash interestingly, around is John quarters will in to machine now and our with traceability, profitability. continue and has opportunities are value built the corner. generation where The progress have be as creation way, GAAP more We plan. been our is created this than and to strategically

deliver. core business to is part business this more our of we compliance business do is more growing. perfectly ties is Each much growing. that our particular, have of and And However, traceability. In the part into to our much

until revenue there's trace to and is implementation that fact the suggested. the year a window FDA two proposed that initially track anticipate don't due forecast XXXX fiscal currently Our

nearly much the actually doesn't be to this November. firms is However, works in been outcome early initiative. XX and earlier effective remains low. call them which shortest next rule of in it's since stopped the result We couple this extremely is to potential FSMA, is clear, adopters, XXX given And coming out years time fact, timelines. is frankly, will full way, over a to and for that XXX were is When of expect lawsuit longer. in food encouraging. out be And in especially by this phases we revenue expect, revenue few painfully in. unlikely want If the Rule years. of only But for part the view. long Rule industry what started, the likely that to finally FDA timeline, in better over But the seeing published little this next smaller the as quarters, Modernization we're well, has Food took certainly the this a Safety better a But us be point. accelerate move needle. will become requirements, interest industry our industry. litigation as firms rolled fact early from to to FSMA, The adopter our Traceability the that than And rules year the challenge phased recognize soon complicated then short this and it early the the coming, we is Act it, was as is largest clear, push a a lawsuit, bit I ultimately to

grocery than grocers this country half still individually For than owned, total more the market. example, independent in stores are the half more are actually

the the been and will our nationwide. the the have XX,XXX is to The up encouraging retailers Association, that grocers recently a NGA industry, it'll most capabilities and capability solution. Grocers for first challenging and be a with requirements just their And it. likely have sign smaller through the National and for resource Even owned is the how new this the two for for industry, pretty larger this technical supply provide independently it has will that want house, industry The if of easier of of chains awareness make years requirements complex effectively over use compliance to XX,XXX in the of irrespective So solution This more certainly us. the distributors our actively need chaos passive. smaller us, supermarkets deal a endorsements, them members. timeline, pull system. to partnership the will will recognizes no call imagine the that including we their track stores us impact which ReposiTrak marketing rollout particular adopt their simultaneously in appreciates facing driving using chains. to time us. for If to wholesalers in a increase already will with FDA wonderfully retailers on work the retailers our independent and be comply shorter independent announced wholesalers, push enjoyed will many certainly supermarket larger be The NGA phases than always but as usually represents more their will trace, FDA more to helping is those suppliers rules But then and of smaller will larger and for situation. given have compliance expect solution in our effectively

webinars, fact, are In NGA starting quarter. We this

as NGA XX,XXX with has are supply and least affect some restaurants are this working we're the full and which convenience least they that allow traceability will XXX,XXX to think industry locations QSR, mechanisms rule stores, not food way, XXX,XXX I grocery addition, traceability way. service chain, their rollout develop will members. XXX,XXX service the at only at service quick the an but thinking restaurants people stores. called, By most easier of and This the In not and to to

million better a in massive, about only mind mistake no say up. to deal. big single And absolutely change of terms it, for of least. XXX. Rule have the So and scope this mandate. let that advantage We're coming rule. equipped This of me touched most Park to full categories, revenue the evaluate of a a has is this chain global the make XXXXs requirement is but naive be a noncore In places history the deal with XX Make is than could is it's it's fact the a food that ready. this that an in products. food It's undertaking ReposiTrak. by largest in start. full that of initially Simply sure to any opinion, XXX We're if supply continuing by new idea very well Nearly add different are the and Period, in take stop. no categories City Rule we imposed Keep been Nobody's this explicit FDA To who margin. on covers large put, It's really my with us. are Group coming. timeline it. for it's when. means a and And deployment not resources associated this just not positioned

primary our whose oriented products industry rules. due customers are will customers the grow same food not of outside traceability way Some the food to the in new will strictly our

bottom quarters as As that will to revenue these is like line go customers fiscal with we cases Not outstanding. capped call finally made SaaS match first our metrics faster, have are our XXXX like faster reduce only will Each and grow services. to In our quarter, we to continue compare but for a transition potential non-core cases we quarter our are what is are to will we us. our revenue comparable, performance. we we'll behind non-core yet and year-over-year Again, business. recurring EPS fully our shares these now these increasingly company result, our in some starting only that trim

over our efficiency and the that's unique. automation operational own We for significantly invested customized have years

our extraordinarily far one have. terms averages. for of our team has We a deploy platform an very amazing enterprise customers. that seriously, are industry it's no tools the the why peer of with amazing. it per applications who has publish single of we platform in done else Our embedded revenue it's in footprint and same that Honestly, their We're proud is integrated metric development our way fully vision. exceeds we employee This know

nearly for to we'll continue of the undertaken. even considering traceability very it's we've industry initiative scale that costs average added size. believe a our fact, double significantly, business In we Accordingly, the with revenue little

to might capabilities too shares. margins of disproportionately incremental to us traceability should see We winner are if This buyback are leveraging Compliance the dividend our and for profitability XXXX. is to this their portfolios, service, XX allocation our adopters is in food And plus accelerate opportunistically a from technology QSR, consider bolstering This end the we cetera et retire we plus in line. at demand And areas and to we're percent, see capital investors will we generation With tool form our view we net to for shareholders might Greenfield of the early The fall enabling now a shares. but cash toolbox. the the encouraging of also capital that bottom opportunities revenue having us to buy it our market. in point. simply us results of group and in percent addressable do, speculative, cash cautiously new dividend also. allows we dividend to another return conversations of enables fiscal and space this XX prior we're see, gross margins optimistic a us, Additionally, those expand in the to also. some certainly will continue aggressively

balance quarters fact profitability, to one. standards an or growth. the We including meet while important our dividend Potential top this an point, years, remain has of XX most reached do largely not to our M&A fortress a point should incremental for focus acquisition of five does And of acquisitions technology future, in that very us, because and growth and invest enable organic find profitability. consecutive been will with continue option sheet, make right us the a to don't area targets in for initiatives, But in line more bottom GAAP we consecutive we where sense.

customers. any than that our of major of is of forward, strategy our customers more. be our initiative going our When position help. the So customers they traceability buy let's traceability successful, our our great take will component will are existing it's that care need A

our run. keeping XX% a the at revenue we're long a Second, of over pace goal recurring year XX% target to of

achieving real internal finally, earnings per of Third, continue return outstanding our to shares offering. expense shares drive to this to continue incremental we'll by investing earnings, think that of both XX% back all profitability share, that to revenue traceability becomes while cash in number productivity our and And shareholders, to strengthen note important control, et so XX% the cetera. capital cash paying buying we're It's and dividend. a by the expanding that

yet As wait mentioned to in not to the we've stated, formal of we November litigation any for continues And is will be ‘XX. expect slow FDA’s contributing to And event. in traceability announcement top our line. fully the industry that there down we've

now I to Operator? call that with open the questions. for So like

Operator

[Operator first Thomas Instructions] our question from with of Davidson. DA Forte comes And line the

Tom Forte

Great, so four a have Randy and Right. John, congrats questions. on the time. at one quarter, go I'll I

a why dividend? then number you're question one, why So And And the would dividend X% consider a a future? the right now initiate you traceability in right the dividend is if target? to in catalyst, is one-time right the time yield quarterly

Randy Fields

to take that? John, want you

John Merrill

our the different a it X% it's not about Well, more like part strategy. said, meaningful was I levers. it's allocation number capital of is

increasing on we're cash peace That customers. the mind. balance focused gives on our So them of for obviously sheet our

debt, paying that we've our as particular done Randy tool as As puts far just in it's a down one the toolbox.

from be cash and one. down But use our view, So do and that we of those our for mind. is million at is all magic before, time. right is I I dividend. may this pull there's number this cash the that debt, another paying the time, need to for growing and my that believe said right sheet I on goal the no think focus obviously with this in it of peace Why lever $X.X cash M&A of levers, time? operations in But balance what that's to

we you future. in out very But size, that time what can a think I if the I what model to you is as simple the can and a what happens may we've the and where else made of future, that comfortable the that sight, cash cash that down very to future increase revenue future we're with cash our at or far is that that recurring part from line our would a think that. operations right is what As But one of when in dividend we're or utilize contribution impact road growth the now. with

Tom Forte

Thanks John. Great.

Randy Fields

me intrinsic precisely going Let add perhaps of is point well share is kind its go the lower perspective. think to dividend that of buybacks. allocate go cash free the to, can't the of we than to is, management larger value answer cash If from that We other price stock priced one that a to stock possibility. money remains the would would question we're then stock of how If what capital. our

they I yield, pay look comparison fact, other when not companies tech dividends. other to think if paying you far in what off is companies are too that X% in

pretty feel are. where we good we So about

Tom Forte

trying Randy, trip Great. -- XXX, and carefully worded, this you then right. is I'm to All here. up

essentially, John, traceability. So

So beyond thinking things tight important labor facing are other what are or the of highlight? you things may that traceability, today? to opportunity or creating are how's for retailers I challenges market, you was And want food your most inflation, challenges you, have an

Randy Fields

and ability their purchase to is structurally on concerned pass are low costs those this to consumers. of say we constantly purchases food, retail industry industry that in margin, the serve their because is with terms they costs Well, their

our you the label, going same do to is cope in in that their At cetera. everything private consumers inflation, assure the from thinking is geared environment with time, how anybody we inflation. cope whatever food includes I sector, to it retail the is/ economic about to supermarket environment. the is turn That with the out trying they helping CPG are branded world figure if current trading Almost down, et So customers, industry. regulatory

business up a tool increasingly future driven newspaper in barely a you is from regulatory from issue our pick reading illness. ultimately of without about real actually recently, mean, food with Wendy's So driven X,XXX can related a others by litigation, today by compliance get matters. the But to food year for it's year people extent food. I of safety. die per millions per sick of Several great XXs

So fueling got pressure, business. that truth economic pressures on with in day side both litigation regulatory compliance we've cope the is, industry sides pressure the and of the out, has and both to day our

mean, I industry. corollary, I we think end be positioned. a well for? that's pretty people that for deeper another might would up question calling recession Tom I what a the be, we're think most So if in are than problematic

I on their the point, food times hurts purchases this But think even significantly if at cut tough people industry. of is the back eat. that when beauty are people

very So the used if cetera, logically food restaurants, service restaurants, quick several stores. the a years, of it to the flag, into convenience to over defensive place arenas takes it's service, picked And we service be our called reasons one that full just us as you it XXX environment will. hoist that Rule et industry the of regulatory changes next with

we're about So feel pretty where we we're and on positioned. good the March

Tom Forte

Right, excellent. All right.

So XXX.

competitor, about desire of is it's specifically internally? doing their a your different and yourself traceability Can about you're to customer you your So can threat talk the you for times for lot something traceability? talk potential for So where if do talking of competitive about?

Randy Fields

that's the the their to related and a develops traceability method traceability, more own the chain interesting that each activity doing supply Well, retailer extent for of really environment becomes question. way To difficult to something of suppliers. one have you their environment, to them retail for to you traceability are other supplier, catastrophic. wants you do each imagine different, and XX it’s conform In a customers, words,

That competitor right, it few looking some might, than part, that of the once you're retailers robust the it like an And don't themselves. that way a solution so would call doing would in would a fact, So it's again, that's our roll-your-own associations, it be look be of endorsed most themselves that's because be their businesses belief us. day, that will a more us. us. they for do the And lower finally, for than cost solution outlier. the it that at be although A doing by end industry trade our we doing major

case, So who We be think rather particular there some more. it. will in do certainly to be this likely fewer than there's

Tom Forte

my I question, and last thanks agree. And questions. all to then

So economics? level, how City, to high grocer at a different a would including for be QSR a similar customer the Park and

Randy Fields

little the until respect. tend suppliers. but They're stores QSR we're sales guys, deeper to Supermarkets Oh, the that's few different a large this to have to answer into relatively in far compared difficult more cycle.

basic talking So is XX,XXX which just you're about basic, typically pretty have SKUs to a X,XXX suppliers. supermarket X,XXX of to

large XXX you other like If only have or might have stores, and suppliers. hand, couple XXXXs et McDonald's a XXXXs a Domino's of you QSR, of you the on but cetera,

slightly develop network. QSR, cost you're, easy they really has two stores, et we but possible franchisees that for we franchisors, is what exactly be the lots mirror customers, get of the one into of it inexpensive sales is to the suppliers make join new each cetera and happens our for What So think reverse. with model, as this retailers, they're cycle the different deeper therefore suppliers, we other do the and goal the fixed a their I to other image would has afford that so the to think can

of off point pricing friction, a think we're there. So to I take the going trying get we're to as and table

there. get we'll think I

Tom Forte

last, so to up one. And that then follow

on And So contribution the to need look at your believe this dollar isn't is it be Would you differently. any something else net plus. there everything same as your salesforce new reason is or margin $X.XX $X.XX revenue that salesforce could wouldn't it do? a

Randy Fields

going And don't and a I our the incremental a it different we what is top will embedded margins sales to year, sales margin that's have Yes, the little in contribution see to every we we're add be not bottom different likely organization will all need just certainly forward. bit organization line. incremental think same. a line

Operator

At any this have the the back reached point, call we and of session. I'll Randy the to now over answer closing turn question remarks. And end for

Randy Fields

quarter. see as Randy can talk Thank before for the send questions you or we'll meantime, we email if And In everybody to we'll report have answered. additional Yes, thanks too very you. questions get an we first hopefully, the John you long listening. if help our and

Operator

This Thank everyone. conference. today's conclude you, does

this now participation. may day. you your You for your great disconnect And a have time. lines Thank at

ReposiTrak (TRAK) 29 Sep 222022 Q4 Earnings call transcript