Park City Group Reports Record First Quarter Fiscal 2013 Results

Record Quarterly Subscription Revenue and Net Income

  • Record quarterly subscription revenue of $2.0 million, a 12% increase year over year
  • Total quarterly revenue of $2.7 million, a 5% increase year over year
  • Quarterly free cash flow of $222,000, versus ($76,000) during the same quarter last year
  • Record quarterly net income of $204,000, versus a net loss of ($280,000) during prior year
  • Quarterly non-GAAP EPS of $0.03, versus non-GAAP EPS of ($0.00) during the prior year
  • Net debt decreased 36% to $1.5, versus $2.4 million at the same time last year.
  • Provides outlook for record financial results during FY13.

PARK CITY, Utah – November 8, 2012 — Park City Group (NYSE MKT: PCYG), a Software-as-a-Service (SaaS) provider of unique supply chain solutions for retailers and their suppliers, today announced results for its fiscal first quarter ended September 30, 2012.
“Since we began the shift from a licensing to a subscription model, our quarterly subscription revenue has grown from less than $100,000, to a record of $2.0 million during the first quarter of fiscal 2013. Due to the recurring nature of subscription revenue and our high rates of renewal, we have a revenue engine that can deliver predictable and sustainable growth for the next several years. Combined with the “asset light” nature of our business model that supports significant growth with limited incremental fixed costs, our bottom line growth will outpace the top line and we will continue to build on the record performance we delivered during the first quarter,” said Randall K. Fields, Park City Group’s Chairman and CEO.

Subscription revenue during the first quarter increased 12% to $2.0 million, reflecting growth in sales to new and existing customers. Total revenue increased 5% to $2.7 million, as double digit growth in subscription revenue was partially offset by a 9% decrease in other revenue. “The growth of subscription revenue kept up with the accelerated pace of recent quarters, as we expanded the scope of our existing customer relationships, moved into new retail verticals outside of the grocery industry, and benefited from the adoption of our technology as the standard for tracking and tracing food and drugs safely throughout the global supply chain. In the coming quarters, we expect further acceleration as recent agreements with large retail hubs begin to contribute to revenue,” said Mr. Fields.


Total operating expenses during the quarter ended September 30, 2012 decreased 12% year over year to $2.5 million. The decrease in operating expenses was due to decreases in all expense categories, with the exception of depreciation and amortization costs, which remained relatively unchanged versus the prior year. Combined with incremental margin contribution from increased sales and lower interest costs, first quarter net income increased to a record $204,000 versus a net loss of ($280,000) during the same period last year. “We saw a $480,000 swing in profitability during the first quarter, which illustrates our continued focus on cost control and the operating leverage in our business model. While we expect the operating expense run rate to increase modestly during the course of the year, primarily due to additional sales headcount, we expect our bottom line growth to continue to outpace the top line as we continue to benefit from this leverage,” said Mr. Fields.

Net loss available to common shareholders for the quarter ended September 30, 2012 was ($6,000), or break even on a per share basis, as compared to a net loss of ($488,000), or ($0.04) per share, during the prior year period. Non-GAAP earnings per share for the first quarter was $0.03 versus break even during the same period last year.


During the quarter ended September 30, 2012, free cash flow was $222,000, compared to ($76,000) during the same period last year. Total Cash at the end of the September 30, 2012 was $1.1 million, and net debt declined by 36% to $1.5 million, versus $2.4 million at the end of September 30, 2011. The Company expects to use its free cash flow to continue to reduce net debt to a level at, or below $1.0 million. Beyond that, excess free cash flow is expected to be used to repurchase shares under the Company’s recently announced share repurchase plan.

“With our strong performance in the first quarter, we are on track to achieve record subscription revenue, record total revenue, and record net income for the fiscal year. Our food and drug safety partnership, ReposiTrak™, is already garnering significant interest and is helping us to access a much larger base of global food and drug retailers and suppliers. Not only does this greatly expand the size and rate of growth of our “hub and spoke” network, it also provides significant opportunity to upsell these network connections to purchase additional supply chain management solutions. In addition, increasingly our focus is turning to larger customer opportunities. Both of these factors will provide meaningful revenue contribution in the quarters and years to come,” Mr. Fields concluded.

The conference call is also being webcast and is available via the investor relations section.

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.

ReposiTrak™ 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, 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 operation 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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