Park City Group Reports Fiscal Fourth Quarter and Full-Year 2017 Results

Fourth Quarter Revenue Growth Accelerates to Record 37%, Full-Year Growth to Record 35%
FY 2017 Net Income Increases to Record $3.8 million, or 20% of Revenue, from $667,000 in FY 2016
Management Expects FY 2018 Revenue Growth Within 3-5 Year Annual Target of 25% to 35%

SALT LAKE CITY, Sept. 13, 2017 (GLOBE NEWSWIRE) — Park City Group, Inc. (NASDAQ:PCYG), a software company that uses big data management to help retailers and their suppliers increase sales and lower costs, while simultaneously reducing compliance risks, announced financial results for the fourth quarter and fiscal-year ended June 30, 2017.   

Strategic and Financial Highlights:

  • Fiscal 4Q17 revenue growth accelerates to a record 37%, driving full-year revenue growth to 35%. “Our top-line growth and financial success is directly correlated to providing successful outcomes for our customers. Great execution builds trust, leads to deeper customer engagement and referrals, and expands both the scale and scope of our business,” said Randall K. Fields, Park City Group’s Chairman and CEO. “As a result, revenue increased a record 37% in fiscal 4Q17 to $5.2 million. Revenue for the full-year increased 35% to $18.9 million, at the high end of our 25% to 35% annual growth target.”
  • Fiscal 2017 net margin expands to 20%, driving record profit and cash flow performance. “Our focus on customer success drives a network effect that enables growth without the need for heavy investment in sales and marketing. As a result, we generated significant operating leverage with fiscal 4Q17 GAAP net income increasing 78% to $883,000, or 17.0% of revenue, and fiscal 2017 GAAP net income increasing 467% to $3.8 million, or 20.0% of revenue. Operating cash flow for the full-year increased to $2.3 million from $503,000 last year, lifting total cash to $14.1 million,” said Mr. Fields.
  • ReposiTrak supplier connections nearly double as momentum continues to accelerate. “During fiscal 2017, we increased the scale of our network by adding nearly as many ReposiTrak hubs and supplier connections as we did in the prior four years cumulatively,” said Mr. Fields. “Growth in total connections is being driven by the addition of large retail and wholesale hubs. However, we are also seeing a substantial acceleration in growth from smaller supplier hubs, which we expect to become an increasingly meaningful part of our business going forward, given the far greater number of prospects.”
  • Continuous expansion of ReposiTrak’s service offering reinforces industry leadership. “We have been busy increasing the scope of our network by introducing new applications that expand ReposiTrak’s capabilities. These include the ability of a hub to require deeper levels of compliance, down to individual items; new applications that help ensure product quality and safety; and tighter integration with the industry-standard food safety audit platforms. These new services enhance the value proposition to ReposiTrak’s hubs and their suppliers, reinforcing our industry leadership,” said Mr. Fields.
  • Successful introduction of converged business strategy solidifies multi-year growth outlook. “During the year, we successfully introduced Vendor Portal, our unified service delivery platform, and MarketPlace, our compliant-vendor sourcing solution, expanding ReposiTrak’s scope beyond that of a food safety and compliance platform, while helping to reinforce the scale of our network,” said Mr. Fields. “We are very encouraged by the favorable reaction from our customers and expect a more meaningful revenue contribution from both in fiscal 2018.”
  • Management continues to expect top-line growth of 25% to 35% and margin expansion. “We are benefiting from the positive network effect of our customers’ success. We look to add more ReposiTrak hubs and supplier connections in fiscal 2018 than in fiscal 2017. We are also exploring alliances both domestically and internationally to further increase the scale of our network. As a result, we are confident fiscal 2018 will be within our multi-year annual growth target of 25% to 35%, while operating leverage should drive higher margins and an even faster growing cash balance,” said Mr. Fields.

Financial Results Summary:

Fiscal 4Q17 Results: Total revenue increased 37% to $5.2 million for the three months ended June 30, 2017, as compared to $3.8 million during the same period a year ago. Total operating expenses were $4.3 million, a 30% increase from $3.3 million a year ago, reflecting planned investments. GAAP net income was $883,000, versus $498,000 a year ago, and GAAP net income to common shareholders was $677,000, or $0.03 per diluted share, as compared to $315,000, or $0.02 per diluted share, a year ago.

Fiscal 2017 Results: Total revenue increased 35% to $18.9 million for the twelve months of fiscal 2017, as compared to $14.0 million in fiscal 2016. Total operating expenses were $15.0 million, a 13% increase from $13.3 million in fiscal 2016. GAAP net income for fiscal 2017 was $3.8 million, versus $667,000 in fiscal 2016, and GAAP net income to common shareholders was $3.0 million, or $0.15 per diluted share, versus a loss of $63,000, or ($0.00) per share, in fiscal 2016.

Cash and Liquidity: The Company ended fiscal 2017 with $14.1 million in cash and cash equivalents, versus $11.4 million at the end of the fiscal 2016. During fiscal 2017, the Company generated $2.3 million in operating cash flow as compared to $503,000 in operating cash flow in fiscal 2016.

Conference Call:

The Company will host a conference call at 4:15 P.M. Eastern today, September 13, 2017 to discuss the results. Investors and interested parties may participate in the call by dialing 888-778-8913 and referring to Conference ID: 8591568. The conference call is also being webcast and is available via the investor relations section of the Company’s website, www.parkcitygroup.com

About Park City Group:

Park City Group (PCYG) is a Software-as-a-Service (“SaaS”) provider that brings unique visibility to the consumer goods supply chain, delivering actionable information to ensure products are available when and where consumers demand them, helping retailers and suppliers to ‘Sell More, Stock Less, and See Everything’™. Park City Group’s technology also assists all participants in the food and drug supply chains to comply with food and drug safety regulations through the Company’s ReposiTrak subsidiary.  More information is available at www.parkcitygroup.com and www.repositrak.com.

Specific disclosure relating to Park City Group, including management’s analysis of results from operations and financial condition, are contained in the Company’s annual report on Form 10-K for the fiscal year ended June 30, 2017 and other reports filed with the Securities and Exchange Commission. Investors are encouraged to read and consider such disclosure and analysis contained in the Company’s Form 10-K and other reports, including the risk factors contained in the Form 10-K.

Investor Relations Contact:

Jeff Elliott
Three Part Advisors, LLC
972-423-7070

Dave Mossberg
Three Part Advisors, LLC
817-310-0051

Non-GAAP Financial Measures

While this press release does not include non-GAAP financial measures, the financial presentation below contains certain financial measures defined as “non-GAAP financial measures” by the Securities and Exchange Commission, including non-GAAP EBITDA and non-GAAP earnings per share. These measures may be different from non-GAAP financial measures used by other companies. The presentation of this financial information, which is not prepared under any comprehensive set of accounting rules or principles, is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with generally accepted accounting principles. Reconciliations of these non-GAAP financial measures to the nearest comparable GAAP measures will be provided upon the completion of the Company’s annual audit.

Non-GAAP EBITDA excludes items such as impairment charges, allowance for doubtful accounts, non-cash stock based compensation and other one-time cash and non-cash charges. Non-GAAP EPS excludes items such as non-cash stock based compensation, amortization of acquired intangible assets and other one-time cash and non-cash charges. The Company believes the non-GAAP measures provide useful information to both management and investors by excluding certain expenses, gains and losses or net purchases of property and equipment, as the case may be, which may not be indicative of its core operation results and business outlook. Because Park City Group has historically reported certain non-GAAP results to investors, the Company believes that the inclusion of non-GAAP measures in the financial presentation below allows investors to compare the Company’s financial results with the Company’s historical financial results reported using non-GAAP financial measures, as well as with the financial results reported by others.

Forward-Looking Statement

Any statements contained in this document that are not historical facts are forward-looking statements as defined in the U.S. Private Securities Litigation Reform Act of 1995. Words such as “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “project,” “predict,” “if”, “should” and “will” and similar expressions as they relate to Park City Group, Inc. (”Park City Group”) are intended to identify such forward-looking statements. Park City Group may from time to time update these publicly announced projections, but it is not obligated to do so. Any projections of future results of operations should not be construed in any manner as a guarantee that such results will in fact occur. These projections are subject to change and could differ materially from final reported results. For a discussion of such risks and uncertainties, see “Risk Factors” in Park City’s annual report on Form 10-K, its quarterly report on Form 10-Q, and its other reports filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the dates on which they are made.

                                       
Park City Group, Inc.                                      
INCOME STATEMENT                                      
                   
                                       
      3 Months Ended       12 Months Ended
FY ENDS June     6/30/17
      6/30/16
      % Chg.
      6/30/17
      6/30/16
      % Chg.
                                       
Total Revenues     $    5,188,477       $    3,794,941       37 %       $    18,939,263       $    14,010,693       35 %
                                       
Operating Expenses                                      
Cost of Services and Product Support       1,581,351         1,056,176       50 %         5,318,042         4,279,724       24 %
Sales and Marketing       1,394,097         1,263,329       10 %         5,097,072         5,371,005       (5 %)
General and Administrative       1,169,154         847,761       38 %         4,136,996         3,165,077       31 %
Depreciation and Amortization       149,684         124,993       20 %         486,024         507,446       (4 %)
Total Operating Expenses       4,294,286         3,292,259       30 %         15,038,134         13,323,252       13 %
                                       
Income (Loss) from Operations     $    894,191       $    502,682       78 %       $    3,901,129       $    687,441       467 %
                                       
Other Income (Expenses)                                      
Interest Income (Expense)       (8,356 )       (5,138 )     63 %         (26,408 )       5,190       NM  
Gain (Loss) on Disposal of Investment       10,380               NM           10,380         (26,128 )     NM  
                                         
Income (Loss) Before Taxes       896,215         497,544       80 %         3,885,101         666,503       NM  
                                         
(Provision) Benefit for Taxes       (12,914 )             NM           (107,569 )             NM  
                                       
Net Income (Loss)     $    883,301       $    497,544       78 %       $    3,777,532       $    666,503       467 %
                                       
Dividends on Preferred Stock       (206,523 )       (182,752 )     13 %         (790,811 )       (729,288 )     8 %
                                       
                                       
Net Income (Loss) to Common Shareholders $ 676,778       $ 314,792       115 %       $ 2,986,721       $ (62,785 )     NM  
                                         
GAAP EPS, Basic     $    0.03       $    0.02       113 %       $    0.15       $    (0.00 )     NM  
GAAP EPS, Diluted     $    0.03       $    0.02       112 %       $    0.15       $    (0.00 )     NM  
                                         
Weighted Average Shares, Basic       19,419,000         19,219,000                 19,353,000         19,151,000        
Weighted Average Shares, Diluted       20,324,000         19,994,000                 20,264,000         19,151,000        
                                       
                                       
                                       
                                       
Park City Group, Inc.                                      
RECONCILIATION OF NON-GAAP ITEMS                                
                   
                                       
      3 Months Ended       12 Months Ended
FY ENDS June       6/30/17         6/30/16       % Change
        6/30/17         6/30/16       % Change 
                                       
Net Income (Loss)     $ 883,301       $ 497,544       78 %       $ 3,777,532       $ 666,503       NM  
                                         
Adjustments:                                        
Depreciation and Amortization       149,684         124,993       20 %         486,024         507,446       (4 %)
Interest Income (Expense)       8,356         5,138       63 %         26,408         (5,190 )     NM  
Other (Incl. Bad Debt Exp.)       104,620         51,128       105 %         335,320         94,268       256 %
Stock Compensation Expense       305,216         235,110       30 %         1,266,805         1,010,312       25 %
                                       
Adjusted EBITDA     $    1,451,177       $    913,913       59 %       $    5,892,089       $    2,273,339       159 %
                                       
                                       
Net Income (Loss)     $ 883,301       $ 497,544       78 %       $ 3,777,532       $ 666,503       467 %
                                       
Adjustments:                                      
Stock Compensation Expense       305,216         235,110       30 %         1,266,805         1,010,312       25 %
Acquisition Related Amortization       32,850         32,850                 131,400         131,400        
Other       (10,380 )             NM           (10,380 )       26,128       NM  
                                       
Adjusted non-GAAP Net Income (Loss)       1,210,987         765,504       58 %         5,165,357         1,834,343       182 %
                                       
Dividends on Preferred Stock       (206,523 )       (182,752 )     13 %         (790,811 )       (729,288 )     8 %
                                       
Adjusted non-GAAP Net Income (Loss)                                      
to Common Shareholders     $ 1,004,464       $ 582,752       72 %       $ 4,374,546       $ 1,105,055       296 %
                                       
Adjusted Non-GAAP EPS     $    0.05       $    0.03       70 %       $    0.22       $    0.06       278 %
                                       
Weighted Average Shares, Diluted       20,324,000         19,994,000                 20,264,000         19,332,000        
                                       
                                       
                                       
                                       
Park City Group, Inc.                                      
CONSOLIDATED BALANCE SHEET                                
                                       
                          Fiscal Year Ended      
FY ENDS June                           6/30/17         6/30/16        
                                       
Assets                                      
                                       
Current Assets:                                      
Cash & Equivalents                         $ 14,054,006       $ 11,443,388        
Accounts Receivables, Net Allowances                           4,009,127         3,048,774        
Prepaid Expenses and Other Current Assets                     643,600         393,275        
Total Current Assets                         $    18,706,733       $    14,885,437        
                                       
Property and Equipment, Net                         $ 2,115,277       $ 469,383        
                                       
Other Assets:                                      
Long-Term Receivables, Deposits, and Other                     2,540,291         514,060        
Investments                           477,884         471,584        
Customer Relationships                           1,051,200         1,182,600        
Goodwill                           20,883,886         20,883,886        
Capitalized Software Costs, Net                           137,205         182,942        
Total Other Assets                         $ 25,090,466       $ 23,235,072        
                                       
Total Assets                         $    45,912,476       $    38,589,892        
                                       
                                       
Liabilities                                      
                                       
Current Liabilities:                                      
Accounts Payable                         $ 565,487       $ 580,309        
Accrued Liabilities                           2,084,980         1,502,203        
Deferred Revenue                           2,350,846         2,717,094        
Lines of Credit                           2,850,000         2,500,000        
Current Portion of Notes Payable                           318,616         239,199        
Total Current Liabilities                         $    8,169,929       $    7,538,805        
                                       
Long-Term Liabilities:                                      
Notes Payable, Less Current Portion                           1,996,953         491,253        
Other Long-Term Liabilities                           36,743         57,275        
Total Long-Term Liabilities                         $ 2,033,696       $ 548,528        
                                       
Total Liabilities                         $    10,203,625       $    8,087,333        
                                       
Shareholder Equity                                      
                                       
Series B Preferred                         $ 6,254       $ 6,254        
Series B-1 Preferred                           2,859         1,802        
Common Stock                           194,241         192,296        
Additional Paid-In Capital                           75,489,189         73,272,620        
Accumulated Deficit                           (39,983,692 )       (42,970,413 )      
                                       
Total Shareholder Equity                         $    35,708,851       $    30,502,559        
                                       
Total Liabilities and Shareholder Equity                         $    45,912,476       $    38,589,892        
                                       
                                       
                                       
                                       
Park City Group, Inc.                                      
CONSOLIDATED STATEMENT OF CASH FLOWS                                
                                 
                                 
                          Fiscal Year Ended      
FY ENDS June                           6/30/17         6/30/16        
                                       
Cash Flows From Operating Activities:                                      
Net Income (Loss)                         $ 3,777,532       $ 666,503        
                                       
Adjustments to Reconcile Net Income (Loss), in Operating Activities:                                
Depreciation and Amortization                           486,024         507,446        
Bad Debt Expense                           345,700         68,140        
Stock Compensation Expense                           1,266,805         1,010,312        
Loss on Short-Term Marketable Securities                     (10,380 )       26,128        
Decrease (Increase) in Trade Receivables                     (2,325,075 )       (1,975,517 )      
Decrease (Increase) in Prepaid Expenses and Other Assets                     (1,257,534 )       70,152        
Increase (Decrease) in Accounts Payable                       (14,822 )       (236,810 )      
Increase (Decrease) in Accrued Liabilities                       355,136         (18,305 )      
Increase (Decrease) in Deferred Revenue                       (366,248 )       385,174        
                                       
Net Cash From (Used In) Operating Activities                   $    2,257,138       $    503,223        
                                       
Cash Flows From Investing Activities:                                      
Purchase of Marketable Securities                                   (4,639,036 )      
Cash from Sale of Marketable Securities                                   4,612,908        
Cash from Sale of Property and Equipment                       13,000                
Capitalization of Software Costs                                   (182,942 )      
Purchase of Property and Equipment                           (1,957,402 )       (80,987 )      
Purchase of Long-Term Investments                           (6,300 )       (75,584 )      
                                       
Net Cash From (Used In) Investing Activities                   $    (1,950,702 )     $    (365,641 )      
                                       
Cash Flows From Financing Activities:                                      
Proceeds from Employee Stock Plans                           223,465         199,848        
Proceeds from Exercise of Options and Warrants                     156,176         33,002        
Proceeds from Issuance of Notes Payable                       1,824,617                
Net Increase in Line of Credit                           350,000                
Dividends Paid                           (10,576 )       (10,575 )      
Payments on Notes Payable and Capital Leases                     (239,500 )       (242,041 )      
                                       
Net Cash From (Used In) Financing Activities                   $    2,304,182       $    (19,766 )      
                                       
Net Increase (Decrease) in Cash                         $    2,610,618       $    117,816        
                                       
Cash at Beginning of Period                           11,443,388         11,325,572        
                                       
Cash at End of Period                         $    14,054,006       $    11,443,388