Park City Group Inc. (NASDAQ:PCYG) Q4 2020 Earnings Conference Call - Final Transcript

Sep 28, 2020 • 04:15 pm ET

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Park City Group Inc. (NASDAQ:PCYG) Q4 2020 Earnings Conference Call - Final Transcript

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Presentation
Executive
John R. Merrill

the supply chain visibility and effective management is critical for our customers. We believe in the long-term and this partnership will benefit PCG. Furthermore, we expect to further penetrate and expand our existing customer base. Simply put, form the network, and we believe that the new normal post-COVID may offer opportunities of incremental compliance and supply chain logistics to both new and existing customers.

In the interim, marketplace has benefited from sales of hard to find good including personal protective equipment, which includes gloves, mask, thermometers, and other items that have been difficult to reliably source during the pandemic. This resulted in marketplace growth in the fourth quarter. Marketplace revenue was up 177% to $1.3 million in the June quarter. Despite COVID, our strategy has not changed.

We remain committed to what we have said before: Focus on recurring software revenue, replace one-time. Reduce operating expenses, non-marketplace costs. Generate cash, strengthen our balance sheet, drive earnings, and grow the network, grow the network, grow the network. As I've said before, a solid balance sheet isn't a nice to have. Our customers demand it now more than ever before. The pandemic changes nothing. It only reinforces our focus.

Turning to the numbers. Let me start with the fourth quarter. Fiscal fourth quarter 2020 revenue was 5.8 million, up 24% from 4.7 million in the same quarter last year. For fourth quarter fiscal 2020, total operating expenses in increased 20.8% from 4.4 million in Q4 2019 to 5.3 million in Q4 2020. The principal increase in total operating expenses for the quarter of 900,000 is largely a result of marketplace. Again marketplace's incremental revenue with a lower margin.

Sales and marketing expenses decreased from $1.5 million in Q4 2019 to $1.3 million in Q4 2020. This 15% decrease was the result of lower sales travel, trade shows, lower commissions, and to a lesser extent the cost-cutting measures we started at the end of Q3. G&A costs increased from $1.3 million in Q4 2019 to 1.4 million in the same period 2020. This is primarily a result of increasing our bad debt reserve to be prudent for our customer default should it occur. The increase in bad debt expense is partially offset by a decrease in cost reductions associated with rent travel and professional services fees.

For the fourth quarter of fiscal 2020, GAAP net income was 480,000 or 8% of revenue versus 182,000 or 4% of revenue. GAAP net income to common shareholders was 333,000 or $0.02 per diluted share compared to 36,000 or $0.00 per diluted share.

Turning to the full-year results. Fiscal 2020 annual revenues were 20 million, compared to $21 million for the year ended June 30, 2019, a decline of 5%. This decrease in total annual revenue was largely a result of $3.7 million planned reduction of one-time software revenue that occurred in 2019 that did not repeat in 2020, partially offset by growth in recurring revenue and marketplace. Total recurring revenue increased 13% year-over-year.

Software recurring revenue