Park City Group Reports Fourth Quarter and Full Year 2012 Results

Successfully Completes 3-year Transition from License to Software-as-a-Service Model Reports Record Annual Subscription Revenue

  • 4Q12 record subscription revenue of $1.9 million, an 11% increase year over year
  • Fiscal 2012 record annual subscription revenue of $7.0 million, a 7% increase year over year
  • 4Q12 free cash flow of $270,000
  • Fiscal 2012 free cash flow of $769,000
  • 4Q12 GAAP EPS ($0.02), versus ($0.00) during 4Q11
  • Fiscal 2012 GAAP loss per share ($0.14), versus ($0.09) during Fiscal 2011
  • 4Q12 non-GAAP EPS of $0.01, versus EPS of $0.03 during 4Q11
  • Fiscal 2012 non-GAAP loss per share of ($0.00), versus EPS of $0.07 during Fiscal 2011
  • First major win in new retail vertical market
  • Food safety partnership begins major implementations with the first retailer and supplier

PARK CITY, Utah – September 25, 2012 — Park City Group (NYSE Amex: PCYG), a Software-as-a-Service (SaaS) provider of unique supply chain solutions for retailers and their suppliers, today announced results for its fiscal fourth quarter and fiscal year ended June 30, 2012.

“2012 marked the successful completion of our three-year plan to transform the company from a license to a subscription revenue model. During the process we were successful in doubling the size of the business, shifting the mix of subscription revenue from 6% to 70% of total revenue, organically growing subscription revenue by nearly 40%, and at the same time reducing debt by nearly 70%,” said Randall K. Fields, Park City Group’s Chairman and CEO. “During that same period, we proved our ability to add new retailers “hubs” and suppliers “spokes” to our network, put in place the infrastructure to support rapid growth in connections between suppliers and retailers, and sell additional services to both suppliers and retailers in our network. With that process in our rear view mirror we are well positioned and will now accelerate the pace of growth.”

2012 Accomplishments

  • New Retail Vertical Market –During 2012, the Company made an agreement with one of a leading drug store chains in the U.S., marking its first retail customer outside of the grocery industry. “This, along with several other initiatives, demonstrates the value proposition of our technology in other new markets,” said Mr. Fields.
  • Growth of End-to-end Supply Chain Services – The Company announced that it is implementing additional supply chain management point solutions with a number of existing retail and supplier customers. “This year we have proven our ability to transition from a supplier of a diagnostic tool to a strategic partner offering end-to-end supply chain management solutions that can not only diagnose problems within customer supply chains, but also provide solutions to fix those problems,” Mr. Fields said.
  • Food Safety –The Company announced that its Food & Drug Safety partnership with Leavitt Partners has begun its first two implementations of the ReposiTrakTM track and trace solution. “We believe that there is a very large addressable market for this solution and are excited about our initial engagements and the response we have received. We expect this partnership will also fuel the growth of our supply chain management solutions, as many of our launch customers for ReposiTrakTM have led to follow-on conversations about our other end-to-end solutions,” said Mr. Fields.


Subscription revenue during the fourth quarter increased 11% to $1.9 million, reflecting growth in sales to new and existing customers. Primarily related to the Company’s strategic shift to a subscription revenue model, total revenue and other revenue declined 17%, and 56% respectively. “As anticipated, subscription revenue growth accelerated during the fourth quarter. In addition, we finalized agreements with large retail hubs that should allow for further acceleration in the coming quarters. With our transition to a subscription model complete, we believe license related revenue will stabilize at its current level of approximately 30% of sales,” said Mr. Fields.

Subscription revenue from new and existing customers increased $1.2 million, or 18% from the prior year, and was offset by previously announced customer attrition, which included the non-renewal of a significant retail client and related connections in January 2012. As a result, subscription revenue increased 7% to $7.0 million during the fiscal year. “Accelerating growth of new and existing customers more than offset business that we believed was not in the best interest of the Company and elected not to pursue,” said Edward L. Clissold, Park City Group’s Chief Financial Officer. Other revenue for the fiscal year ended June 30, 2012 was $3.1 million, a decrease of 26% over the prior year. Total revenue for fiscal 2012 was $10.1 million, a 6% decrease from the prior year. The decline was principally due to the Company’s strategic shift to a subscription revenue model.

Net (Loss) Income

Net loss available to common shareholders for the quarter ended June 30, 2012 was ($259,000), or ($0.02) per share, as compared to a net loss of ($49,000), or ($0.00) per share, during the prior year period. Non-GAAP earnings per share for the fourth quarter was $0.01 versus $0.03 during the same period last year.

For the fiscal year ended June 30, 2012, the net loss available to common shareholders was $1.7 million, or ($0.14) per share, compared to a net loss of $1.0 million, or ($0.09) per share, during the same period in fiscal 2011. Non-GAAP loss per share for fiscal 2012 was ($0.00) versus earnings per share of $0.07 during the same period last year.


During the quarter ended June 30, 2012, free cash flow was $270,000, compared to $524,000 during the same period last year. For fiscal 2012, free cash flow was $769,000 versus $1,194,000 reported during fiscal 2011. Total cash at the end of the fiscal 2012 was $1.1 million, and net debt declined by 29% to $1.6 million at June 30, 2012.

“The heavy lifting has been done to build an infrastructure capable of providing exceptional service to our customers. The fourth quarter marked an inflection point in the growth of our subscription revenue. With opportunities that we already have in place to provide base-level services to our existing retail/ supplier network, we can reasonably anticipate significant revenue growth for the next several years. Beyond that, we expect to layer on additional growth as we take advantage of opportunities with food and drug safety, new retail verticals, new services, and continue to expand the size of the network,” Mr. Fields concluded.

The Company will host a conference call at 4:30 P.M. Eastern today, September 25, 2012, to discuss the results. Investors and interested parties may participate in the call by dialing (877) 675-3568 and referring to Conference ID: 33030391. The conference call is also being webcast and is available via the investor relations section. A toll free replay of the conference call will be available until October 2, 2012 by dialing (855) 859-2056 and entering conference ID: 33030391.

About Park City Group

Park City Group (NYSE Amex: PCYG) is a Software-as-a-Service (“SaaS”) provider that brings unique visibility to the consumer goods supply chain, delivering actionable information that ensures product is on the shelf when the consumer expects it as well as providing food safety tracking information. The Company’s service increases customers’ sales and profitability while enabling lower inventory levels and ensuring regulatory compliance for both retailers and their suppliers.

Through a process known as Consumer Driven Sales OptimizationTM, Park City Group helps its customers turn information into cash and increased sales, using the largest scan based platform in the world. Scan based trading provides retail trading partners with a distinct competitive advantage through scan sales that provides store level visibility and sets the supply chain in motion. And since it is scan based, it can be used in a Direct Store Delivery (DSD) or warehouse setting.

ReposiTrakTM provides food retailers and suppliers with a robust solution that will help them protect their brands and remain in compliance with rapidly evolving regulations in the recently passed Food Safety Modernization Act. An internet-based technology, ReposiTrak™, will enable all participants in the farm-to-table supply chain to easily manage tracking and traceability requirements as products move between trading partners.

Non-GAAP Financial Measures

This press release includes the following financial measures defined as “non-GAAP financial measures” by the Securities and Exchange Commission: non-GAAP EBITDA, non-GAAP earnings per share, non-GAAP loss per share, net debt and free cash flow. 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, charges to consolidate and integrate recently acquired businesses, costs of closing corporate facilities, 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, charges to consolidate and integrate recently acquired businesses, costs for closing corporate facilities, amortization of acquired intangible assets and other one-time cash and non-cash charges. Net debt is the total debt balance less the cash balance. Free cash flow includes net cash provided (used) by operating activities less replacement purchases of property and equipment. 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 operating results and business outlook. In addition, because Park City Group has historically reported certain non-GAAP results to investors, the Company believes that the inclusion of non-GAAP measures provides consistency in the Company’s financial reporting.

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.

Dave Mossberg
Three Part Advisors, LLC
P.O. Box 92698
Southlake, TX 76092
Phone: (817) 310-0051

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